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A book that teaches you how to get rich is flash. A book that teaches you the inner workings of the financial system is substance.

A handbag that has the logo of a company printed all over it is flash. A handbag that lasts for 20 years and remains aesthetically pleasing is substance.

A customer support service that uses sophisticated phone and computer systems is flash. A customer support service that solves customer’s problems with speed and courtesy is substance.


Does your business focus on flash? Or on substance?

Are you sure?

When a company makes artisan soaps and sells them individually, they have their 1st product.

When they cut the soap in half, repackage it, and call it a “Traveller’s Pack”, they have their 2nd product.

When they cut the soap into the shape of little animals and call it a “Kid’s Fun Size”, they have their 3rd product.

When they put different types of soap together, put them into a nice basket, and call it a “Gift Basket”, they have their 4th product.

When they package a few bars of the same soap together, lower the total price a bit, and call it a “Family Value Pack”, they have their 5th product.

Same soap, but five different products serving five different needs.

Would-be entrepreneurs are often unsure whether they should talk about their business ideas.  On one hand, they’re rightfully concerned that word might spread to their competitors.  On the other hand, here are five reasons we think most entrepreneurs should share more with their family, friends, and advisors.

1.  It’s not the idea, it’s the execution.
Raw ideas are overrated.  Other people may have already tried your idea and failed, either due to weak execution or because the idea itself isn’t viable as-is.  We found it hard to excite our friends with the idea of building inventory software, but we’re doing well because we were able to execute building the best software out there.

2.  Think more clearly about your idea.
Many educators will tell you that the best way to learn is to teach.  Similarly, talking about your ideas will force you to crystallize them clearly from a perspective that makes sense to each person you talk to.  Have you ever had a friend come to you about a problem, then realize halfway through that just talking about it helped her come up with a solution?  Thinking aloud helps you think well.

3.  Get a reality check.
Even the best of us are wrong sometimes, due to missing crucial information or misjudgment.  It takes an optimist to start a business, but by talking with a number of other people, you make sure that your ideas are solidly grounded to reality.  Maybe somebody will point out a competing product that makes your idea not viable as a business, or bring some complexities to your awareness that help you re-evaluate your business plan.

4.  Look for unexpected opportunities.
I’m always surprised how often when I talk to people and find we can help each other in some totally unexpected way.  Chance encounters have lead to business partnerships, suggestions for improved working methodologies, sales leads, marketing channels, and so on.  Most people love to help.  The more people you talk to, the more doors you open.

5.  Let your excitement flow.
Your enthusiasm is a key resource for your fledgling business project; nothing gets done without it.  Expand this resource by going with the natural urge to talk about it.

People often ask me how the recession is affecting us.  In my most sagely voice, I respond, “I don’t know”.

We’re continually improving our product, our marketing, and the way we do business.  As a result, we’re continuing to do better, despite the trends in the overall economy.  We might come up with a new way of promoting our product that helps increase sales 50%, or improve the product in such a way that doubles our revenue.  If we remove some roadblock that’s turning away one quarter of your potential customers, we increase sales by 33%.  Perhaps in a more prosperous general economy we’d see our numbers increasing by an extra 10-20%, but that’s just gravy - the things we can do have a much greater impact.

Whether you’re trying to grow your business, cope with extra work for the same money, or find a job; don’t let the economy or the news make you feel helpless.  It may be more of an uphill battle, but it’s still your battle.

If you had two choices:

A trap many big companies fall into is losing touch with their customers.  Many executives never talk to customers directly, only learning through statistics and demographics.  As a result, they often make decisions to treat their customers like numbers, not human beings.  Customers dread calling into these sorts of companies, like AOL.

Small businesses have the advantage that the owners and decision-makers are often forced to be on the front lines dealing with customers.  This helps in gaining a deep understanding of what customers want.  In fact, I often prefer buying from small businesses because they usually have a more personal touch.  Ironically, as the business prospers, the folks in charge often throw away this connection with customers by hiring poorly-paid customer service people.

It doesn’t have to be like this.  Some big companies, like Nordstrom, are famous for their customer service.  The key is growing your company intelligently.

Make sure all the decision makers in your company spend at least some time keeping in touch directly with customers by doing customer service, taking orders, or making some calls.  This will help them understand how your offerings can be improved.  They’ll get to hear problems and suggestions right from the customers.  Or if customers are confused, they can think about how to tweak the product or information to clarify.  It’s also an incredible motivational boost when they know exactly whom their work will help.

It may be humbling, and you might hear some complaints that they don’t have time for it, but you can’t afford to let the business be run by people who don’t know your customers inside out.

When you’re making decisions on different marketing or advertising channels, a big question is how much can you afford to pay for each visitor or sales lead.  This can help you make informed and profitable decisions.  All it takes is gathering the right information and some simple math.

If you’re selling things online, you can use an online tool to track how many visitors you’re getting.  Say on average you get 5000 different people visiting each per month.  From your sales statistics, you had 250 customers last month with an average profit of $15.  Then you can estimate that 5% of your visitors turn into customers, so each visitor will contribute on average 5% of $15, or $0.75 to your sales.  This is just a quick estimate - it doesn’t account for things like repeat purchases or the chance that they’ll tell their friends - but it’ll serve as a starting point.

So now you can use this as a quick test to figure out whether you should use certain forms of advertising.  If you pay 50 cents per click for a sponsored search result on Google Adwords, you’re still earning an average profit of 25 cents each time someone clicks, so you should do as much of this as you can.  On the other hand, if you’re paying $200 a month for a banner ad that brings in 100 visitors, you’re paying $2 per visitor, which probably means you’re losing money, unless visitors from that banner are particularly likely to buy.

You can use a similar analysis to find out how much a retail window shopper or sales lead is worth to you.  But after you make your marketing decisions, go back to treating your visitors as human beings, not dollar signs.  This’ll be both more enjoyable and profitable in the long run.

Business owners need to make a lot of decisions on a daily basis.  They range from small ones such as whether to do a questionable refund or not, to big ones such as how much money should they allocate for marketing.  For small business owners, it might be difficult to make the right call when these decisions are tightly tied to their own personal finances.  This is especially bad when the owners are faced with influential emotions like greed, stress, and pressure.

The easy way out is to maximize short-term profit in those situations.  Questionable refunds?  Just keep their money.  Marketing budget?  As little as we can afford.  Hiring for talent?  Just tell the current staff to do more.

When these situations are laid out on paper, most people are able to make a good decision that balances both the short-term gain and the long-term benefits.  The tricky thing is to make a good call under stressful circumstances.

Here are a few tricks that might help you in those situations:

1)  Stay calm. Try to detach yourself from any negative emotions so that you can make a more rational decision.

2)  Get away for a while. Remove yourself from the environment, even for just 5 minutes.  This can help clear your head.

3)  Remind yourself of what’s important. Your beliefs in the fundamentals such as integrity, customer satisfaction, etc. can help you get over greed and pressure.

4)  Set a policy. Make one good, level-headed decision so that you don’t need to think about it every time.

Do you have any stories to share where you had to make a tough business decision under pressure?  How did you handle it?