Marketing Today

I have been in business for a long time.  Over the years, marketing has changed quite a bit.  From TV and radio ads to Yellow Page ads, direct mail, variable data direct mail and now the various forms of internet and social media marketing, it has been difficult to stay on top of what works best.

Having spent over 20 years in the printing industry (and not being in the industry any more), I can tell you that print ads just don’t produce like they used to.  Personalized variable data mailings provided a huge leap in response %.  However, they are so common now that most of us just throw them away too, don’t we?  To be honest, I would not recommend spending much, if any, on print marketing other than business cards (apologies to my friends still in the industry).

Where to spend your ad budgets?  It’s all about the web, my friends.  SEO (search engine optimization) is important but don’t blow your entire budget on that.  There are a lot of simple free, or nearly-free, things that you can do for that.  The key is to make sure, if you own a small business, that you are on the 1st search page when a smart phone searches you nearby.  Don’t worry if you aren’t on the 1st page of a search in LA for your Wisconsin business.  They won’t be a customer anytime soon.

Where you really want to focus is on Facebook.  70% of Facebook users log in every day.  Couple that with all the demographic data that Facebook collects (themselves or via business partners) and you can target your marketing very specifically at reasonable prices.  I have just begun to learn about this and the potential is amazing (if a not a bit scary with respect to the data Facebook has on each of us).  I paid for a service to help me do it the right way.  It was under $500 to learn how to do it.  There are email marketing subscriptions that I will need to purchase, but they are not terribly expensive, either.  Time will tell just how effective this will be, but it seems to make good sense to me to skip paying for ink-on-paper and target my “ideal customers” using all that demographic data.  I expect it to minimize my cost per new client.   Once I work out the kinks on my more established business, I will set out to work on my newer business.  It’s going to be interesting.

A New Tax System

OK, I know this blog is about business.  But the issue of income taxes and the behavior our friends at the IRS impacts your business, my business and the business of our personal lives.  So, here are my thoughts…..

One evening recently, I was about to fall asleep when I awoke instantly wide awake with a new federal income tax structure.  As you read this, please bear in mind that it’s a framework.  The details of which I will leave to more talented bean counters than me.

What was rattling around in my head was something that I truly believe can make a huge impact on our government, our freedoms and our economy.   I propose a TRUE flat tax (not a FAIR tax as some are proposing.  I will let you research the differences).  Before you run away screaming, walk along with me for a bit as I summarize the framework.

Individual Income Taxes – We would all pay a certain % of our gross income.  No deductions (why should the g0vernment tell us that home ownership is better than renting, for example.  The renters get screwed).  We could eliminate the individual tax division of the IRS (or whatever it is called) and replace it with a much smaller,  computer-driven group that verifies our income as reported on our 1/2 page tax return.  The only reason for a return, at all, is to pay taxes on our passive income (our employers will withhold and pay taxes on our earned income).  Now, there is a place for debating an income floor for the truly poor.  However, even if someone can only pay $10 because of low income, they should.

This model would keep the rich from sheltering income and have the low income individuals pay at least a little.  Plus, the government would save $billions with the smaller IRS (yes, the current employees would have to look for jobs, but a lot of us have survived that in our lives, including me).

Organization Net Income Taxes – You will note here, that I used the term “organization” instead of “business.”  I will explain in a moment.  Each organization will pay a certain % on the net income of the entity (similar to today).  The difference is that there will be no such thing as a tax-exempt entity.  They have to pay taxes on their NET, too.  Before all the charities have a fit, take a breath and read on.  Charities are supposed to give away their funds (after operating costs), right?  So give it away like you are supposed to.  If your expenses and “giveaways” equal your income (donations), you pay no taxes.  If, as some supposed-charities do, you hoard funds, you pay income taxes on the remaining “net income.”  This includes churches, synagogues and mosques,  too.  As a man of faith, I struggled with this, but I want my church to be missional (which we very much are) and spend on community outreach.  We give offerings to our church to be spent, not kept.  Here is the incentive to do so (in case one is needed)!

This set-up will also obviate the division of the IRS that is causing all the wailing and gnashing of teeth.  There will be no reason for any group to need tax-exempt status, so there won’t be any politically motivated abuse of those applying for it.  How much $$ will that save tax payers?

To monitor this type of entity, the IRS business division would be replaced by the department of organization taxation (or something of that nature).  Admittedly, this division might be larger than  the current similar IRS division because of the broader base.  However, I am hoping that the flat-tax environment will be simpler to enforce and make it no larger, at a minimum.

Naturally, the status quo in congress and all the tax attorneys will scoff (they will need new jobs as a result).  “You can’t do this and we have to be able to deduct that.” ….Open your minds, you fossils!   Will someone likely pay more taxes than they do now?  Of course.   But, we have to make some serious changes in this country.  We are in debt, as a nation, way over our heads and the economy is still fragile.  The tax code seems like the logical place to start (with more restructuring to follow).

What I propose is simpler, which is pretty much always better and cheaper.  It puts the rich and  poor under the same rules (special interests have no footing without deductions), which creates a more cohesive country as opposed to our currently polarized country.     We are the UNITED States of America.  Let’s set up the tax rules to encourage that.

What Does Your Business Stand For

Most business owners/executives are rightly concerned about the customers’ perception of their business.  They work very hard at trying to manage that perception through their marketing program.  The really successful ones have a very clear vision of what their business is about and what it stands for.  From there, they make sure that all communication and customer interaction reflects that vision.  Now, being human, mistakes are made in this endeavor.  The key is to get back on track immediately.

In order to do this in your business, answer this one question:  “What do you stand for?”  Sounds simple, doesn’t it?  It really takes a lot of self examination, especially for a leader of a small business like me.  This is because every step you take has a direct reflection on you.  Plus, if you actually stand for something, there may be potential customers that aren’t comfortable with that and decide not to patronize your business.  It’s tough self-love and can be risky, but critical to identifying what your business stands for.

When I purchased my auto repair business two years ago, I thought long and hard about the experience I wanted to provide for our clients with respect to what I wanted our image to be; what I personally stood for.  Believing firmly that God put me in this place at this time, I believed that the business was my opportunity to do His work through this business.  I made that clear by putting the Christian Fish symbol on our company’s sign and a reference to my faith on our business cards.

Clearly, there will be people that don’t come to our shop because they don’t believe what I believe.  So be it.  That’s their right.  I can look in the mirror and know that we stand for something good and right AND our clients know that.  That gives us a baseline from which to operate and makes it clear What We Stand For.

It Starts With Integrity

The longer I am in business (regardless of the industry), the more I am convinced that the organization’s success starts with the integrity of the Leadership Team.  There has to be boundaries that they will not cross and all the employees need to understand these boundaries.  Hiring the right people becomes even more critical when you add this complication.  Skills are nice and industry experience is good to get.  But if you don’t have rock-solid integrity, nothing else really matters.

It boils down to this:  Integrity leads to trust.  Trust leads to relationships.  Relationships lead to repeat clients.  Repeat clients give word-of-mouth recommendations.   You can’t buy that type of advertising.

This is one of the issues my industry (auto repair) really struggles with.  The generally held belief is that you need to sell every possible service when a client comes in because you don’t know if they will come back to complete the recommended service if you don’t sell it NOW.  It’s a common theme in our trade publications.  I’ll bet you’ve been on the receiving end of a $1,000 up-sell list.  I was before I got into this business

In our business….we know that they will be back.  How?  We take the time to build relationships with them.  I know of other shops that do the same thing with similar results.  The relationships won’t last, though, if they aren’t backed by integrity.

It’s not too late to start making integrity your starting place.

Improve or Die

You’ve either worked for, read about or know someone who worked at a company that made a ton of money for a long time doing the same things they’d always done. Then, all of the sudden, the market/industry changed. Now, efficiency and higher levels of customer service and speed are what it takes to compete. Unfortunately, the company didn’t have some or all of those attributes. This was mostly because they spent years or even decades without any quantum changes in their processes. Now what?

It’s time to get on the process improvement band wagon. You know; the stuff you’ve been reading about for years. It doesn’t matter what set of tools you use. My personal preference is to embrace Lean Enterprise because of its common sense thought process regarding waste elimination. I’ve found that every person in the organization can grasp its concepts. There’s also Six Sigma, TQM and a number of hi-bred programs. Get to learning and get improving. Not doing so will seal the fate of your organization.

More to come on this topic.

Integrity

As I watch, with my mouth likely hanging open, at the lies, vitriol, closed mindedness and overall lack of character going on in Washington, I find my self hoping this does not pour over as normal behavior into the rest of society. Now, Washington’s behavior shouldn’t surprise me. They continue to under-perform and fail to meet already low expectations on a daily basis (just look at their approval rating). However, I’m still amazed by the behavior of people who are supposedly adults; supposedly leaders.

As you look to set the course of your business, use the Washington example of what NOT to do. Whether you are the CEO, VP or the Mail room Manager:

DO treat people with respect and dignity.
DO communicate frequently and clearly with your team and your customers (internal and external).
DO maintain calm in tough situations. Your team is looking to be led.
DO lead by example.
DO involve your team in decisions that affect their day to day activities.
DO have something else in your life more important than work (your team probably does).
DO say please and thank you.
DO have open and honest dialog.
DO be a person of good character.
DO insist on absolute integrity from your team.

Let Washington be Washington. Emulate someone better.

The Three P’s

People, Processes and Products.

Simply put, if you have excellence  in all three of these areas, your organization is bound to be successful.  If you have been around business for any length of time, this isn’t exactly a revelation.  However, it keeps it simple (a common theme of mine).   When you are wondering why your results aren’t quite what you want them to be, come back to the three P’s to re-center yourself as a leader.  Analyze each of the P’s and find out where the weakness(s) lie.

People – We all want to hire the best people.  While it’s not easy and we do make mistakes from time to time, having a thorough and systematic hiring process will limit those errors.  Beyond hiring, we have to be aware that our business is changing.  Are our people keeping up with the changes?  Can they still handle the new environment?  Has the business outgrown them?  These are some of the things to consider to ensure that the three P’s stay in balance.

Processes – If you have great people, but the processes within which they work are not up to snuff, the opportunities for failure increase significantly.  Conversely, you can be successful with air-tight procedures and some average people.  Now, I wouldn’t recommend a whole staff of mediocrity because that’s asking for trouble.  However, the power of an excellent process multiplies every team member’s ability to succeed.

Products – This is where the rubber meets the road.   Do you have products/services that customers actually want to purchase?  Do they see enough value in your offerings that they will pay a profitable price or are you selling a commodity?  You can make money either way, but a commodity product requires a low-cost operation with a much smaller margin for error.  In my experience, a high-value product is a lot more fun.  You can afford a few more key people and the helps prevent your team from burning out.  Again, this is something that needs to be monitored.  What used to be a high-value product, my become commoditized one day.  It’s important to recognize this and be ready with new high-value offerings or be prepared to adjust your cost structure rapidly.

Our mothers used to tell us to mind our P’s and Q’s.  Keep it simple and just focus on the P’s.