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Archives for April 2007

Building A Grass Roots Movement: The Billion Dollar Take-Down

Buzz Fuel

I got an email from a friend the other day. You know the kind … the pass-it-to-10-people chain-mail powerpoint presentation kind. This one’s plight was simple: Stop buying gas at selected gas stations to spark a price war that would push the price of gas down.

The Pitch

In Canada, PetroCan and Shell are a couple of big players. They’re named in the email. I know a lot of you come to Zoomstart from the US, the UK and Australia among other countries. You know who the targets would be in your corner of the bright blue planet better than I would.

The whole idea behind this email is to pick a major gas company and stop buying gas from them. And just them. And of course, spread the word. Theoretically, they would then lower the price of gas to bring people back, and all the other gas stations would have to also lower their prices to compete.

And then everybody gets cheaper gas. Happily ever after.

Really?

No, not really. It’s a grand idea. It’s got buzz. And it’s an issue that strikes people because we’ve all gone to the pump, filled up, and swore at how it cost us 10 or 20 bucks more than the previous fill-up.

But from a business perspective, it’s an idea with a lot of holes:

  • Getting enough people on board to put the squeeze on. Very tough to do.
  • We have to wait out the target companies while all the other gas companies hose us by raising their prices.
  • They’d just sell their gas to the companies we were buying from because the demand is not going away, it’s just going elsewhere.

The list goes on.

Grass roots ideas can work. But they have to be backed up by solid fundamentals or else they just fizzle and die. Just because something has buzz, doesn’t mean it’s a solid idea. It just means that more people are going to hear about it.

If you really want to bring the price of gas down, buy less. Ride your bike. Walk. Buy a pogo stick. It’s not a billion dollar take-down, but you’ll save a couple bucks, get some exercise, and who knows …

It just might catch on.

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Aikido Negotiation Tactics

Striking Point

Good negotiation skill in business is critical to success. You’re buying, you’re selling, and you need to get the best deals possible or the numbers won’t add up.

In The Art of Negotiation I layed out the basics of preparing to negotiate. I also stressed the importance of a win-win situation. The object of a negotiation is to create something new. Something ideal. And something bigger than either party could ever do or be alone.

To do that, you both have to defend your interests. You both have to make it out alive. And you both have to help each other do that.

Aikido and Negotiation

Aikido is an amazing martial art created by Sensei Morihei Ueshiba. It’s based on principles of the highest integrity. In Aikido, you have the right to defend yourself against attack, and yet, neither you nor your opponent should be critically harmed during the conflict. Aikido achieves this using two basic elements:

  1. It’s designed to use your opponents force against them. To redirect it, guide it, and diffuse it.
  2. Every type of assault has a striking distance. A point of impact where maximum damage occurs. Moving inside or outside of the striking distance diminishes the impact of the strike. This is what allows you to evade and redirect the attack.

The result is an effective defense, and an offense that is in control of the situation, that directs the outcome without damaging your opponent severely. This is what makes Aikido a perfect framework for creating a win-win outcome out of a potentially harmful engagement.

The Negotiation Tactics

The table illustrates the tactics. The striking distance is a list of common negotiating tactics. They’re crude street-fighting tactics used in business and if you’re not prepared, they can be very effective.

The Aikido negotiation tactics give you two options against each type of strike. You can move inside the point of impact or outside it. Which you choose depends on the situation, but most people tend to move outside because it’s easier. Moving inside can sometimes be much more effective. You have to be able to do both.

Move Inside Striking Distance Move Outside
  (Common negotiating tactics)  
Brainstorm solutions Circumstance, theory or fact Detail the facts
Explore other options with them Go with the competition Explore your options
Separate the options Looking for small concessions Note the extras included
Note the extras included Package deal required Separate the options
Stress thoroughness Delaying Set deadlines
Set deadlines Urgency Stress thoroughness
Ask for confirmation Bluffing Track down confirmation
Tip balance in their favor Standoff or impasse Tip balance in your favor
Agree on difficulties Walking out Disagree on difficulties
High regard for their authority Limited Authority Get authorizations
Have compassion Emotional plea Remain professional

The Aikido Negotiation tactics can be used offensively as well as defensively. In both cases, you’re taking control of the situation and directing it. To be a true master of negotiation, you have to practice these techniques until they become instinct, just as you would any martial art.

Use the table. Train. Stage mock negotiation sessions and practice the techniques. Once they become automatic, you’ll not just be a formidable negotiator, but one capable of creating the kinds of amazing deals that everyone talks about.

OSensei Ueshiba is also the author of The Art of Peace. The illustration is from the book Aikido and the Dynamic Sphere which is easily the best book on Aikido ever written.

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Trader Tom Strikes Again

Radiant InfraTek HangarA couple weeks ago, my good buddy Tom made 25% overnight by betting on bad news in the stock market. It’s a great example of how there’s opportunity in adversity.

Well, he’s done it again. But this time he put his money down on good news.

About 3 weeks ago he bought into a company called Radiant Energy Corp at $0.11 a share. He sold the shares this week for $0.28. That’s a yield of 154% in just 3 weeks.

Radiant Energy Corp makes a patented infrared pre-flight aircraft deicing system. Basically, the system is a hanger which the plane drives through before take-off. Most airports use a chemical called glycol to de-ice a plane’s wings. The InfraTek system by Radiant means you don’t need glycol, so it cuts out the expense of buying it. Environmental regulations are also frowning on the use of glycol, so the InfraTek system also gets around that issue.

Good News Is Good News For Small Caps

Radiant Energy got a good boost because of two announcements:

  1. They recently signed a distribution agreement with China to sell and license it’s technology there. People equate China with growth right now and that translates into profit.
  2. They also completed a private placement of shares. This is usually good news because it means a few serious investors like what they see and want to get in on the action. They buy the shares via private placement to get a discount rather than paying market price for them.

If this were a higher priced stock, the ROI for investing wouldn’t be nearly as good. But because it was an 11 cent stock, it wasn’t too difficult for good news to pump the price up and create a killer ROI.

That’s because, if a $4 stock goes up $1.00 you get a 25% yield. That turns a $1000 dollar investment into $1250. But take a stock from $0.11 up to only $0.28 and you get a 154% yield or $2540. It’s a lot easier to get a better percentage on a lower priced stock.

At the same time, investing in these small cap companies can also be a lot riskier.

Tom missed the boat last Friday when the stock hit $0.36. He was hoping that maybe it would continue to climb. That’s dangerous thinking and I urged him to get out and start looking for the next wave to ride. Luckily, he did and he still got $0.28 for it this week.

Maybe the stock will climb significantly again next week or rocket up next month. Who knows. But he made good money. And if you try and ride a wave for too long, eventually you get washed into the rocks.

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Getting Creative Fuel

Creative GalleryExercise your brain.

It’s easy to get burned out if you do the same thing the same way at the same time every same day of the week. But that’s the beauty of the internet. It’s endless. And it’s full of endless ideas, large and small, that can all throw a little fuel on your creative fire when you need it.

And even if you don’t need it, it’s good to exercise your brain anyway. So here are a few things to go check out:

Rob Watts over at Yack Yack wants you to ask yourself “What’s my tumbleweed ratio?“. He’s even going to put together a WordPress plugin that figures it out for you. For now, exercise your brain and do the math.

Everybody has dropped something in the toilet at one point or another. It’s at that moment you have decide; flush or fish? But what if it’s your iPod? Mark Robinson explores the science of iPod retrieval. I don’t know why this wasn’t in the Worst-Case-Scenario survival guide.

Ever just want to punk somebody? How about punking everybody? It happened, and Dave Zatz reveals all. Now zatz funny!

If all else fails you can step into the world of Q. No, not the weird guy from Star Trek. I’m talking about Ms Q (miscue?). Take a ride through her fantasy world and then remember … even though you’re not 10 anymore, you still have a brain.

Exercise it.

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The Real Million Dollar Man

Logo ManHere’s a million dollar idea … for somebody.

Usually, when you sit around and talk about famous million dollar ideas, you get a few of your own. Now I’m not going to do this … but someone might.

The idea came up when I was talking with a buddy of mine about Alex Tew’s incredibly successful million dollar home page. Check out the site and read the blog there if you’re not familiar with the story.

The first idea that always comes up when you discuss a great idea that actually worked is “Hey, we should do that”. That’s always a bad idea. It’s simply impossible to get the same kind of buzz factor that the original idea generated with a copycat project. On top of that, you always generate a lot of negative buzz as a copycat.

And then I got a brainstorm. Instead of the million dollar home page … how about the million dollar man!

Here’s How It Works

Instead of selling pixels on a webpage for a dollar each, you’re selling millimeters. Of skin. There are about 25 millimeters in an inch so that’s 625 square mm per square inch. That works out to $625 per square inch of real estate. What you’re selling is advertising. Tattooed on. Permanently.

All the way up until you’ve got 1600 square inches of skin covered in corporate logos. That’s a million dollars. And that’s the real million dollar man.

How Do You Do It?

Like any business idea, you have to get out and sell that ad space. Publicity, publicity, publicity. And this definitely has buzz factor. But publicity is not enough. You have to actively contact potential advertisers. And you have to keep doing that until all the ad space is sold.

The other thing you have to put together is a way to display the ads so advertisers get some kind of real benefit from it. This might involve some combination of public appearances and maybe even a book deal that tells the story and features photographs of all the artwork.

The last thing you need to pull this off is a whole lot of “crazy”. I said it was a million dollar idea. I didn’t say it was going to be sane.

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Every Great Idea Needs The Right People To Execute It

The Right StuffSuccess happens when you do the right things and do them in the right order. In business, that means following the business chain.

Companies that follow the business chain succeed. Those that don’t, fail.

And it’s not just a formula for building success. It’s also a formula for trouble-shooting problems in your business and getting to the real problem. The root problem.

Sometimes that means the people don’t fit the idea. You can have a brilliant idea and amazing people. But if they’re not the right people for that particular idea, it doesn’t gel.

The Complete Business Chain

Here’s the business chain, step-by-step, from start to finish:

  1. The Idea. Everything starts with a great idea. It’s not a plan yet. Just an idea.
  2. The People. This is the most critical part of the chain. It’s the pivot point between taking a great idea and turning it into a solid plan. You have to take this idea and not just turn it into a plan. You have to execute that plan. You need the skills and the experience and the drive to make it happen. You need the right people. You need to be the right person.
  3. The Plan. Only the right people can take a great idea and put together a plan that can succeed. The best plan covers the next three points. And it’s executed in the order they’re listed.
  4. Sales. Start small and start selling. Pre-sell. Get commitments. Get out and bang on doors.
  5. Capital. Once you’re selling, you’re building capital. And if you can show that you can sell whatever you’re selling, you can raise capital from investors if you need it.
  6. Purchasing. The less you purchase, the better. Every sale you can lock in and leverage to raise capital before you have to deliver the goods is a great sale. Especially in the beginning.

If selling before you buy doesn’t make sense, find out more about how sales, capital and purchasing works. It’s important, because the people that follow these steps, in this order, are the ones that succeed.

Using The Business Chain To Diagnose Trouble

At the end of the business chain is profitability. Or if there’s a problem, lack of it. The way to figure out what’s wrong is to follow the chain backwards. So start with purchasing and work back towards the people.

Most companies cut purchasing costs when they’re having trouble. And they stop there. But that’s not usually the root problem. You have to go back further in the chain. You have to go back to sales at the very least. Sometimes you have to go back even further and craft a whole new plan.

Many times, you need new people. You might have great people, but for this idea, for this business, they’re not the right people.

If you’re a lone entrepreneur and you’re not the right person to pull off your idea, there are two solutions. You can either get a partner on board who can help you execute the idea. Or, drop the idea and find a new one. One that fits you. One that you can execute. One where you are the right person.

Then the rest is easy.

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Taking Risks … Are You Scared Riskless?

Tiger vs ElephantNothing ventured, nothing gained.

Chances are, this tiger can’t take down an elephant by itself. And the chances are, he’s going to get shot in the process. But if he can pull this off, everybody with stripes is gonna be eating real good for quite a while.

That’s risk. Plain and simple.

There are all different kinds of risk. There’s reckless abandon, calculated risk, there’s rolling the dice and betting the farm. There’s taking a chance and knowing you’re going to lose. There’s taking a chance and knowing you can’t.

Most of the risks that manage to stare us down are pretty small. There’s not much to lose and a lot to gain, but we still can’t take the risk because of perspective. We believe we’re going to lose a lot more than we will. The truth is, almost anything you can imagine, but can’t do, has been done by someone else who took the risk and made it happen.

And every risk you take, no matter how small, no matter whether you win or lose, teaches you that. Here’s an old ad I clipped out of Rolling Stone a long time ago:

Too often we are scared.
Scared of what people might think if we tried.
We let our fears stand in the way of our hopes.
We say no when we want to say yes.
We sit quietly when we want to scream.
And we shout with the others,
when we should keep our mouths shut.
Why?
After all,
we do only go around once.
There’s really no time to be afraid.
So stop.
Try something you’ve never tried.
Risk it.
Enter a triathalon.
Write a letter to the editor.
Demand a raise.
Call winners at the toughest court.
Throw away your television.
Bicycle across the country.
Try bobsledding.
Try anything.
Speak out against the designated hitter.
Travel to a country where you don’t speak the language.
Patent something.
Call her.
You have nothing to lose
and everything
everything
everything to gain.

JUST DO IT.

Go on. Get out of here. Go take a risk. And I’ll promise you one thing …

Maybe you won’t pull it off. But if you do, everybody with stripes is gonna be eating real good for quite a while.

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Delinquent Clients: Getting Paid 101

Cash RegisterThere are a few scary things that you have to face in business. Whether or not you’re going to get paid, and what happens if you don’t, is a big one. Especially if your business in new, small, and strapped for cash.

That’s okay. There’s some things you can do. And for the most part, they’re just part of the normal process of doing business.

Getting Down

If you’re operating a retail store, it’s cash and carry, so no big deal. But a lot of businesses that sell goods or perform services get paid after they deliver. One of the things that you can do is get a down payment.

Getting a down payment up front accomplishes 3 things:

  • It minimizes your loss if you don’t get the rest
  • It helps lock in the commitment of the buyer to complete the sale
  • And it’s a good way to put sales before purchasing

Every industry has it’s own acceptable standards for how much a down payment should be. It could be anywhere from 5% up to 90%. Sometimes the payment structure is multi-tiered like 45% down, another 45% on delivery, and the last 10% within 30 days after the invoice date.

Check around and see what people are doing in your industry. It might be nice to get full payment up front or 90% down, but if you don’t stick to the standard practices used in your industry, it’s going to be a tough sell.

How To Make Sure You Get Paid

It’s all about documentation. And it’s a pretty simple step by step process. Here are the documents you need to generate:

The Quotation

Give your customers a written quotation. Even if you give someone a verbal quote over the phone, email or fax them a written quotation. If there’s some price haggling after you issue the quotation, write up a new one and send that to them.

The Credit Application

Once a customer likes your quote and decides they want to buy from you, get them to fill out and sign a credit app before proceeding any further. The credit app should require company contact info, banking info, and trade references (other people the client does business with). It should also include a standard terms and conditions clause above the signature line. That clause might go something like this:

We authorize your-company-name  to make any credit inquiries about us from time to time and give our consent to disclose information of a credit nature to credit reporting agencies or to persons with which we have, expect to have, or may have, financial dealings.

We agree that our liability for any charges is not waived and agree to be held personally liable in the event that any person that we authorize to charge fails to pay for any part or the full amount of such charges. A charge of 2% per month, but not to exceed the lawful maximum, shall be charged on all overdue accounts. Terms of sale shall be net 30 days. Any account, which is outstanding after (30) days from the date of the invoices, shall be considered overdue. A charge of $25.00 shall be charged to an account for each check tendered in respect of that account which is returned for any reason by the Bank on which it is drawn. The Buyer shall be responsible for all costs of collection, including reasonable attorney’s fees and court costs, incurred by your-company-name in collecting or attempting to collect any amounts owed by Buyer. Your-company-name has the right to close this account after a period of inactivity, or at any time for any reason. Terms and conditions of this agreement may be amended without prior written notice by us.

The Purchase Order

Get the customer to send you a purchase order and document the PO number on all the following documents. If they don’t use POs, ask them if you can use their name in place of the number.

The Sales Order

The sales order is an itemized list of the purchase that includes the pricing and the customers ‘bill to’ and ‘ship to’ addresses. Larger companies also generate a packing slip which is the same as the sales order but without the pricing.

The Invoice

The day a good or service is delivered, an invoice should be sent out. An invoice contains all the same information as the sales order. It just says invoice on it and has the current date. The invoice date is when the clock starts ticking when you give your customers credit so it’s important to get it out right away.

Using Your Paperwork To Get Paid

So you made a sale, all the paperwork is in order, you delivered the goods. And you didn’t get paid. After 30 days, send out a second invoice and talk to the client. Let them know they need to pay their bill. A lot of times they’ve forgotten and they’ll send you a check right away.

If they still don’t pay you, it’s time to remind them about the overdue fees that are going to be charged for late payment. If they’re really stalling, then after 90 days it’s time to send a collections agency after them. Call them and let them know this is going to happen if they don’t pay the bill.

This is where the credit app and the rest of your paperwork becomes really important. Find a good collections agency and hand a copy of the whole file over to them. Collections agencies are relentless. There’s a cost to using them but your clause in the credit app allows you to bill these costs to the tardy client. 

A lot of times the collections agency will get the client on some kind of payment plan and do all the work for you. And it’s better than going to court because litigation is always a 50/50 coin toss.

Hopefully you don’t run into too many situations like this, but the bottom line is, if you’ve never gotten burned in business, you haven’t been in business. Everybody gets burned. It happens. It’s how you guard against it and deal with the situation that counts.

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Business Contracts Always Favour The Contract Writer

Business ContractWhen two companies put a deal together, it’s usually the bigger, more established company that puts the contract on the table. That’s because they know from experience that if they take the time to write it up, they can write it in their favour.

There Are Two Perspectives To Every Contract

Any clause in a contract can be written to the benefit of one company or the other. Usually it’s the buyer vs the seller. And every clause that doesn’t favour you is not necessarily bad. There are a lot of standard clauses you see in different contracts that are sort of like your promise of quality or service to the other party. They’re selling features.

Getting Comfortable With Contracts

A contract is no substitute for doing business with good people, but contracts are a way of life in business. Even if you have a lawyer or a whole legal team, take the time to get familiar with how contracts are put together, what makes a good one, and what makes a bad one.

A couple things you can do:

  • Take some law courses so you can understand the basic fundamentals of contract law
  • Search the internet and find examples of the kind of contracts you need to deal with. Grab 6 or 8 examples and study the different clauses. Which clauses are in every example? Which clauses grant added protection that’s important for you? Which ones are just silly?

The more familiar you are with different kinds of contracts and the clauses in them, the less intimidated by them you’ll be. Plus, you’ll have some ammunition on you to better negotiate the conditions of the deal.

Next thing you know, you’ll be the one writing the contracts. In your favour.

The Benefits Of Writing Your Own Contracts

A lot of small to medium sized businesses write up contracts and agreements in-house. There are some good advantages for doing this:

  1. You know your business better than anyone else. If you’re up to speed, you know what needs to be in the contract more than an outside person does. Especially if you’ve participated in many similar deals before.
  2. It’s often cheaper than getting a lawyer.

Once you start researching, writing, and building a collection of contracts that are tailored to your business, you can use many of them over and over with minor tweaking to suit the particular deal you’re working on.

Of course, if the deal is big or complicated, if you’re venturing into unfamiliar territory, or if you’re just overwhelmed by the whole process … get a lawyer. And get a good one.

Resources

  • Findlaw has a number of contracts for different industries you can use as examples
  • Nolo sells all sorts of ready-made legal contracts and agreements. You can also purchase and download Quicken’s Legal Business Pro at Nolo to get a whole collection of contracts and agreements

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Branding Your Blog. Does Your Blog Have A Greeter?

Smiley GreeterWhether you’re blogging for love or money, ultimately you want people to read what you write and you want your readership to grow. To help build your readership you need to be memorable. You have to build a brand.

And that brand is you. Yes, you.

There are a number of elements that go into building your blog brand. Here are a few:

  • Your blog theme. If you can’t code or afford a custom theme for your blog, try to choose a theme that’s maybe a little less used than some of the ones that you see everywhere. You can’t stand out if you look like everybody else. Another thing you can do is change the color scheme of the theme you’re using and use your own custom picture in the header which is a good start. Then you can work on changing the whole look of the theme over time.
  • Your topics. What are you writing about? This is a critical component of your blog brand. Content is king if you want readers to come and to come back. You can write about whatever is popular or you can write about what you know and are interested in. Go with the latter. Blog writing takes time and effort. If you’re jazzed about the things you’re writing about and you know something about the topic, that time and effort is reduced drastically. It’s easier. And your readers are going to pick up on your enthusiasm and enjoy reading the stuff you write.
  • You. The first thing that people want to know when they read something they really like is ‘Who is this? Who wrote this? What’s this person all about?’ Put some time and effort into your ‘About’ page. And put up a picture. When people can attach a face and a personality to a brand, it helps cement the bond and makes a more human connection. You need to greet the people that come to your blog, and since they can’t just walk up and say hello, your bio and your picture has to do that for you.

The Zoomstart Greeter

I finally got around to putting my ugly mug on the about page. It might be stronger branding to put yourself in the header or the sidebar of your blog, but the about page works. Some people are shy and they don’t want to be known or seen. They just want to write their blog in anonymity. That’s fine, but it doesn’t help your brand. You have to be bold to build something big.

Feel free to rip my pic off the site and give me a Photoshop mohawk or whatever. Post it on your blog with a link to Zoomstart and if I’m amused enough, I just might link back to you!

Some Good About Pages

Here are some good about pages to check out to help you build your own:

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