Marketing is Still an Art (and a Science)

Data-driven decision making has been the mantra of most good CEOs and CMOs over the better part of the last decade. They want all marketing decisions to be based on solid data that had previously not been available, but is today in high amounts. But, data can be deceiving. It may lead you in one direction, when in fact the right answer may be completely in the opposite direction. Allow me to explain with this marketing case study from my Restaurant Furniture Plus business.

Read the rest of the post in Entrepreneur, where I guest authored it this week.

For future posts, please follow me on Twitter at: @georgedeeb.

Red Rocket's Best Startups of 2019

Red Rocket gets introduced to hundreds of startups each year, in the normal course of doing business, or via our involvement with various startup groups or events.  We wanted to honor the best of these startups that we met in 2019, in Red Rocket's 8th Annual "Best Startups of the Year".  This list is not intended to be an all-encompassing best startups list, as there are many additional great startups that we are not personally exposed to each year.  And, this list is not intended to be only for businesses that launched in 2019, it is open to startups of any age, that they or their advisors had some personal interaction with us in the last 12 months.  The business simply needed to have a good idea, good team or good traction, that caught our attention.  Congrats to you all!!


THE BEST STARTUPS OF 2019 (in alphabetical order):

ABC Insights (President, Steve Beisser) - B2B financial benchmarking universities

Annex Tech Partners (CEO, Doug Speight) - B2B corporate divestiture service

Craft Brew Systems (CEO, Andrew Baker) - B2B small batch brew systems

Fytte (CEO, Adam Spisak) - B2C on-demand yoga app

How U Dish (CEO, Michael Gayed) - B2C restaurant food discovery app

Intake (CEO, Michael Bender) - B2B and B2C urine testing at home

Kelaca (CEO, Keith Langbo) - B2B talent advisory service

Keona Health (CEO, Oakkar Oakkar) - B2B call center phone system for healthcare

Luca & Danni (CEO, Fred Magnanimi) - B2C ecommerce jewelry brand

Momentum (CEO, Jessica Mitsch) - B2C technology coding school

Root Bioscience (CEO, Garrett Perdue) - B2B and B2C CBD manufacturer

Shortcut (CEO, John Meurer) - B2C and B2B haircuts on demand

Sock Fancy (CEO, Stefan Lewinger) - B2C customized socks ecommerce

TrueCare24 (CEO, Leo Popov) - B2C marketplace to find caregivers

Wellistic (CEO, Oz Merchant) - B2C to find and review doctors


And, don't forget to check out the 2012 winners, 2013 winners, 2014 winners, 2015 winners, 2016 winners, 2017 winners and 2018 winners, many of whom continue to be doing great things.


Congratulations to you all!!  Keep up the good work.


For future posts, please follow us at: @RedRocketVC

[VIDEO] George Deeb Discusses 'Driving Growth vs. Driving Profits--Which is Right for You?' on ASBN

I was recently interviewed by the Atlanta Small Business Network (ASBN), an online "television network" serving the small business community, about when it is best to drive growth vs. when it is best to drive profits for you business.  I thought this video turned out great, and I wanted to share it with all of you, to help you assess whether it is better for you to focus on your top line revenue (growth) or your bottom line (profits).  I hope you like!!

The embedded video player didn't give me the option to change the size of this video.  But, if you want to see a bigger version, simply click the expand size button in the player above, or feel free to watch it on the ASBN website.

Thanks again to Jim Fitzpatrick and the ASBN team for having me on the show.  I look forward to our next interview together.

For future posts, please follow me on Twitter at: @georgedeeb.

[PODCAST] George Deeb Shares Entrepreneurial Lessons with John Vuong

Red Rocket partner George Deeb was recently interviewed by John Vuong who publishes a podcast with entrepreneurial lessons for startups on this Local SEO Today website.  In this podcast, he features George, who discusses his journey and experiences in growing his businesses, including:

• Business mistakes
• Choosing investment options
• Pitching your business
• Importance of sales and marketing
• Strengths and weaknesses in business
• Importance of networking

Nice work, John.  We thought this turned out great.  Thanks for letting us share this with our readers.

If you have any problems listening to the podcast from this page, you can also listen to it on the Local SEO Today website.


For future posts, please follow us on Twitter:  @georgedeeb, @RedRocketVC, @LocalSEO_Search

Lesson #319: How to Pitch a Business Investment Case to Your CFO

Chief Financial Officers are often the “gatekeepers” to the company’s cash coffers.  And, as you can imagine, the have a lot of people tugging on their sleeves looking for investments into various projects within the company.  But, CFO’s need to prioritize their spend, based on what is in the best interests of the company.  This post will help you learn to think like a CFO and how best to pitch your business investment case with the highest odds of success.

First of all, there are many different scenarios in which the business may require capital.  Perhaps the CEO wants to make a big strategic acquisition.  Or, the CMO needs to scale up the company’s sales and marketing efforts.  Or, the head of product wants to launch a new business line.  Or, the CTO needs to develop new technologies for the business.  Or, the head of HR needs to make a few new hires.  The ways capital can be invested in the business are limitless, and the asks from the team are endless.  So, you better make sure your pitch resonates to break through the clutter.

Here are examples of the best ways to pitch for internal funds, for each of the scenarios above:

Pitching for Strategic Capital

Like in any investment, your CFO is going to be most focused on the potential return on investment (ROI).  It is no different than pitching a venture capitalist for outside funds; now you are pitching your inside team for internal funds with an “ROI First” mindset.  Let’s say the CEO wants to invest $5MM into an acquisition of a competitor.  The business case he would want to make is: (i) it adds $10MM of revenues and $1MM in annual cash flow to the business; (ii) it removes a big competitor, making it easy to price our products and grow our margins; (iii) it grows our market share in the space; (iv) it will help us accelerate revenue growth by cross-selling our respective products into non-overlapping industries; and (v) it will help us to achieve a 10x return on the invested capital within the next five years, based on these reasonable financial assumptions.

Pitching for Marketing Growth Capital

Your CMO may be looking for capital to spend on $1MM on additional marketing activities or to expand the sales team.  So, she is going to have to communicate things like: (i) I am expecting a 5x return on my advertising spend, adding $5MM in revenues; (ii) the investment should realize a return of funds invested within 6 months of the spend; (iii) my expected cost of customer acquisition is $250, well below our expected gross profit of $1,000 per transaction; or (iv) we will be able to sell into twice as many regions or sectors than we are today, increasing our potential reach and ability to scale the business.

Pitching for Product R&D Capital

Your head of product research and development may want to invest $1MM into launching a new product line.  So, she is going to have emphasize points like: (i) by doubling our product line, we should be able to double our sales, by increasing our average order size; (ii) the new product line will be a “first mover” in the space, with limited competition; (iii) it will make us less dependent on our original product suppliers, better diversifying our vendor concentration risk; (iv) we have researched our customers, and 75% of them said they would buy this new product if it was available for sale; and (v) I expect the investment to allow to build $10MM in additional revenues, a 10x ROI, within the first three years.

Pitching for Technology Capital

The process is exactly the same for your CTO, when asking for $1MM to develop and upgrade the companies systems in the next year.  He is going to have to impress your CFO with information like: (i) our old technology can crash at any time and is putting our current $10MM in revenues at risk if the site goes down (saving a -10x loss); (ii) by improving our user experience on the website, I expect to reduce our abandoned cart percentage by 25%, theoretically adding $2.5MM in new revenues  (a 2.5x ROI); and (iii) if we don’t make this investment, hackers will be able to get into our systems and get access to all of our customer data, which we don’t want to happen to our customers or ourselves for competitive reasons.

Pitching for Human Capital

Adding $1MM of payroll happens throughout the organization, by department, but adding human resources to the organization requires the same ROI-driven financial disciplines: (i) we need that new salesperson because we are under capacity, with more leads than we can reasonably handle today, and we expect to close $1MM of new sales from that $250K investment in a new salesperson (4x ROI); (ii) our employees are on the “hamster wheel”, getting burned out working at 110% capacity; if we don’t add additional staff members, 25% of our current team is going to quit, taking those relationships and institutional knowledge with them; and (iii) to improve our recruiting, retention and morale, we are going to have to upgrade our employee benefits offering, which should improve our hiring time by 25% (helping us drive efficiencies and revenues faster) and reduce our employee turnover rate by 30% (which stops the revolving door we have with talent, and the inefficiencies and lost revenues that come with that—aggregating around a 5x ROI).

Rinse and Repeat This Process Within Departments

And, this logic needs to flow all the way down to the department level, as well.  Your CMO needs to have their heads of search engine marketing, social media marketing and display advertising each make their ROI case to her, so she can prioritize her overall marketing spend. And, your CTO needs to prioritize the 100 technology improvement requests from the technology team, based on the expected ROI of each one, so he knows which projects to tackle first.  You get the point.

Concluding Thoughts

So, as you can see, if you know how to ask for capital from your CFO, in the language that he is used thinking about it (with an ROI mindset), you should materially improve your odds of securing it.  Your company should develop a template business investment case form that everyone asking for capital should fill in.  First, that will require everyone to “think” before they ask; and second, that will help your CFO to better prioritize the investments based on the expected ROIs from each one. 

But, just because you ask, and have a well-thought plan, does not necessarily mean you will get the capital.  You never know what other competing forces are out there, tugging on the company’s purse strings.  Your CFO’s job is to keep the company liquid and out of trouble, and their job is to make sure all investments are made within the overall budget of the company.  You can count on the CFO to prioritize his spend based on the amount of the ask, the expected timeframe to return the funds and the expected ROI from that investment.

So, based on the above examples: (i) the CEO asked for $5MM to return 10x in five years; (ii) the CMO asked for $1MM to return 5x in six months; (iii) the head of product asked for $1MM to return 10x in three years; (iv) the CTO asked for $1MM to protect 10x and add 2.5x in one year; and (v) the head of HR asked for $1MM to add 4x ROI on the new hire and 5x ROI by making the current hires happier and more efficient.  So, you decide; put on your CFO hat and tell me how you would prioritize the spend?  I have a hint for you:  the CEO’s acquisition would not be my first choice.  (Gulp!)  I’ll let you tell him that!

For future posts, please follow me on Twitter at: @georgedeeb.

Should I Bootstrap or Look for Investors?

I was recently interviewed by the U.S. Chamber of Commerce for my thoughts on the big question:  should I bootstrap finance my business or look for investors?  I figured this was an important enough topic to share my answer with all of you.  You can read the full article at this link at the U.S. Chamber of Commerce website.

For future posts, please follow me at: @georgedeeb.

Lesson #318: A New Workforce Optimization Algorithm

I was recently introduced to Todd Zaugg, the CEO at Matrix Achievement, a consulting firm that helps companies improve their sales.  In our discussions, Todd made it clear that optimizing your workforce is a vital component to maximizing your sales.  So much so, that he actually created a workforce optimization algorithm that he believes all companies should follow.  It was so interesting to me, that I had to share it with all of you.

The Changing Employment Market Demands Different Thinking

The demands of today's workplace environment are real and intense, and the Age of the Employee is clearly upon us. There are several workforce trends that proving this point, including a war for talent, compressed on-boarding times, generally disengaged employees, and declining retention rates.  What can organizations do in order to maintain its competitive advantage? Follow this workforce algorithm for success: MEEE=SV™ (Manager + Empathy + Engagement Mechanisms + Employee Assistance Programs = Shareholder Value).  Let's break this down.

M = Manager.

Employees leave companies because of their managers. Does your organization have an effective performance coaching effort that provides managers with the insights and skills to retain key talent while driving performance?  Have they been trained to build “emotional bank accounts” with employees during the hiring and onboarding process that will help the manager push when necessary? Do they have a road map to help onboard quickly and compress the employee’s feeling of competency and success (hint: if you are experiencing higher than the industry average turnover, then you have a problem)? Do managers focus solely on the results (retrospective) versus focusing on the best practices of activities (proactive)? We have all heard that culture trumps strategy; the key is that Managers are the guardians of culture as well as process execution and therefore everything starts and ends with them. Organizations are very quickly going to have the revelation that for every action there is a reaction and the “Age of the Employee” creates “the Age of the Manager”.

E = Empathy.

Harvard has proven that Emotional Quotient is a far greater indicator of success than IQ. The great news is that your EQ can be increased with proper training and your front-line managers need this training yesterday in order to help balance results with retention.

E = Engagement Mechanisms.

There are at least 15 ways to drive higher engagement. New employees are demanding to be trained. Millennials were raised during a period of time in which they are used to receiving consistent feedback, coaching, and recognition. This will require organizations to be purposeful in their engagement touchpoints. Some of those touchpoints can be automated. But keep in mind that with more technology, a counterbalance will be an increased need for human interaction. One of the powerful areas of employee engagement impact is related to helping the employee connect to a purpose. Having the employee take a tactical journey in the self-discovery of their “story”, values, strengths, and positivity is an accelerator and sustainer for corporate performance. The years of research on mindset paradigms is moving some areas of our human work experience from what at one time may have been considered the New Age to now being noted as the New Normal. Positivity is one of those. To help prove this point, below are some key statistics from Shawn Achor’s The Happiness Advantage:

• Doctors put in a positive mood before making a diagnosis show almost 3 times more intelligence and creativity than doctors in a neutral state, and they make accurate diagnosis 19 percent faster.
• Optimistic salespeople outsell their pessimistic counterparts by 56 percent.
• Students primed to feel happy before taking math achievement tests far outperform their neutral peers.
• It turns out that our brains are literally hardwired to perform at their best not when they are negative or even neutral, but when they are positive.

Positivity directly correlates to business impact. Here are additional research data points from Dr. Sonja Lyubomirsky that scream about the following impacts related to developing happier people:

• Earn more money.
• Better leaders.
• More fulfilling marriages.
• More friends.
• More philanthropic.
• Cope better with stress and trauma.
• Healthier, stronger immune systems.
• Live longer.
• Perform better at work.

Having a positive or negative lens can have a ripple effect impacting the internal and external personnel that employees’ interface with and has a direct line to commercialization success. Meghan Forsey, the National Training Educator for Zimmer Biomet Canada experienced some of this training and stated “We were looking for something that helped us focus on the individual connecting themselves personally to the company's mission, their specific personal and business goals as well as the day-to-day activities that drive results. Training our sales managers and a cross-section of our sales team had a positive ripple impact on engagement, customer experience, and customer loyalty. Participant feedback showed how hungry individuals are to find the intersection between personal meaning and work. What we found most surprising was that the group that seemed to benefit the most were our self-described skeptics," Forsey said. "One of these skeptics is an analytical-minded and vocal sales manager who thought the program would be a waste of time and was sharing that opinion with others. He was surprised by the amount of data that exists supporting how a positive mindset can directly impact performance. By making a shift in his thought process, his team did as well. It quickly became clear that the trickle-down effect was real. The key was to provide an actionable architecture for the individual and the manager”.

E = Employee Assistance Programs (EAP).

Approximately 50% of employees state that their stress is high to overwhelming. EAP programs are being updated to include life coaches and the emergence of para-professionals that can help employees navigate critical milestones and unanticipated life events that have the potential to derail their performance at work (check out the emerging platform LifeGuides as an example).  The days of asking an employee to compartmentalize their personal life from work life are going the way of the caveman. Very few people can compartmentalize, and it leads to unproductive, or even worse, counter-productive behaviors.

Concluding Thoughts

In some ways, the next wave of your competitive advantage is really just an updated augmentation of known insights---your people are your competitive advantage. The MEEE=SV™ is a commercialization algorithm because nothing else in the organization matters more than engaged employees with an emphasis on having meaningful interactions with prospects and customers.  The algorithm is a good baseline scorecard that has a lot of sub-categories that are being defined and built out by high performing organizations. It may be time to ask how you measure up to this scorecard and your readiness for the Age of the Employee/Age of the Manager.

Thanks again, Todd, for your wisdom and inspiration for this post.  I think most entrepreneurs are simply too busy building out their products, that they don't know they need to be investing an equal amount of time investing in the development of their teams.  If you need any help here, Todd has made himself available through the contact form on his website.

For future posts, please follow me on Twitter at: @georgedeeb.

The Rise of Account Based Marketing

I've witnessed many evolutions in marketing best practices, from the rise of digital and social media marketing to automation technologies replacing human tasks. And now there's a new trend that is starting to take off called Account Based Marketing (ABM), and it has the potential to change everything for B2B professionals.

Most B2B marketing campaigns have traditionally been designed to support the B2B sales team, which includes building all internal collateral materials and performing both inbound “pull” marketing and outbound “push” marketing efforts. The goal has always been to make everyone and anyone that could be interested in your product or service aware of your company. The problem is not all companies in an industry are created equal. You may need to better focus on companies of a certain revenue size that can afford your product or service, or others within a certain geographic region. Otherwise, there may be a lot of wasted effort and spending.

Read the rest of this post in Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter at: @georgedeeb.

Lesson #317: The Best Employees Have These '31 Flavors'

Having good employees will make or break a company’s success.  I have previously written about how best to read resumes and screen employee candidates, but that is before they are actually working for the company and you get a chance to see their “true colors” when they are not “on show” during the interview process.  This post is designed to help you identify the best traits that most successful employees share, so you can “double down” on those best employees and “weed out” the rest, as nothing can take down a company faster than a bunch of toxic employees that don’t beat to the company’s drum.  The best employees have these “31 Flavors” blended into one.

The Basics for the Job

1. The Right Skillsets—Obviously, they have to have the basic knowledge and experience in how to do their job.  You can’t put a square peg in a round hole.

2. Smart Intelligence—The right combination of “book smarts” and “street smarts” should yield good business instincts to help manage the business.

3. Good Attitude and Passion—Someone that is passionate about their job will do much better than someone that is simply looking for a paycheck.  And you want someone whose enthusiasm as infectious to others.

4. A Good Communicator—Clear communications is at the core of every company.  You need someone that can clearly articulate their needs and listens well to others.

5. Detail Oriented and Organized—In most businesses, there are many moving pieces.  Whether you are managing a project or working your sales leads, the better organized a person is, the better odds they won’t let any of the needed details slip through the cracks.

6. Confident, But Knows Their Limits—Someone that feels confident in their own abilities is a lot better than someone that is unsure of themselves, provided they are not over-confident to the point of “driving right off the cliff”.

A Good Fit for the Company

7. Fits the Culture—Every business has unique drivers of the company culture.  You want employees that embrace the company culture and works well with others.

8. A Team Player—As the old adage goes, there is no “I” in “TEAM”.  Lone wolves that only listen to themselves and prefer to work alone won’t have a long life inside a company, where good team dynamics are critical and must thrive.

9. Hungry & Driven—I love employees that have something to prove, or are working for some grander cause outside of the office.  Nothing beats a good “fire in the belly”.

10. Loyal & Dedicated—Good employees know to put the needs of the business, before the needs of themselves.  They are loyal to the business in good times and in bad . . . especially the bad.

11. Can Neutralize Toxic Peers—Good employees do not engage with the “fire stoking” behaviors of toxic employees.  And, better yet, they know how to neutralize them, not allowing them an open forum for public criticisms.

12. Never Publicly Complains—If you have something on your mind that is bothering you, take it up with your manager.  Don’t take it up in the next all-company meeting, bringing everyone else down with you.

A Good Fit for the Manager

13. Highly Dependable—When a good employee is given a task, you can trust they are actually going to get the job done, on time and on budget.

14. A Strong Work Ethic—Good employees are hard-workers at their core.  They don’t mess around surfing the web while at work, or watching the clock, waiting for the hours to pass by.

15. Action-Oriented, Problem Solving Leader—The best employees are the ones that can identify problems within their domain, and actually fix them.  They don’t need to ask for permission or ask for help to improve the business.

16. Takes Direction Well—Good employees respect the chain of command inside a company, and follows the direction of their managers, who are presumably more experienced in their departments.

17. Autonomous & Self Motivated—Good employees don’t need their hands held.  They can work well on their own with limited supervision by their managers.

18. Focused—Good employees will stay focused on the goal at hand and are not easily distracted by the “flavors of the month”.

19. Accountable—Good employees take responsibilities for their own actions, even when something goes wrong.  It is not about trying to get an employee in trouble, it is more important how they learn from those mistakes and take the business forward.

20. Not Afraid to Speak Up—If something is on your mind, say it.  The worst thing that can happen is if you bury hard feelings or strong desires deep down inside, where no one knows about them, and can solve for them.

A Good Fit as a Person

21. Likable Personality—Nobody wants to work with mean people or hermits.  They want to be surrounded by nice people that are easy to work with.

22. Honest With Integrity—There is no room for dishonest people or criminal behavior in your business.  Period!  If you can’t trust your employees, they need to go.

23. Flexible & Adaptable—Most businesses, especially startups, are pivoting to take advantage of new market opportunities.  Your employees need to be nimble in their thinking to be able to “go with the flow”.

24. Humble—Good employees never put themselves first or brag about their successes.  There is fine line between confidence and cockiness.

25. Optimistic—Always look for employees that can see the glass as “half full” and not “half empty”.  Good employees see the opportunity to improve a situation and not harp on what they are missing, with a positive mental attitude.

26. Creative—Business solutions are not always easily identified. Employees that can creatively think “out of the box” are the ones that often have the biggest impact on moving a business forward in new directions.

A Good Fit Emotionally

27. Okay With Delayed Gratification—This generation has become too driven by immediate gratification, without actually putting the hard work in that is required to achieve that “pay day”.   It is less about, “what can you do for me today”, and more about “what can you do for me next year” in building a long-term and meaningful pay day for all involved.  Patience, young Jedi!!

28. Can Tolerate Conflict—Things don’t always go smoothly in business, and often times, personalities can clash.  Conflict can often be good, as it often means people are passionate about the issue.  But, the best employees can easily endure and solve for conflicts inside the business.

29. Doesn’t Need Ego Stroked—Good employees do their jobs without the constant need for being complimented.  Good managers will praise their employees for jobs well done, but don’t expect to have your ego stroked for every action you do.  Good work is normally well rewarded in the long run.

30. Never Settles for the Status Quo—When things are going smoothly, it is really easy to sit back and do nothing, or simply keep running in place on the same “hamster wheel”.  Good employees are always looking for improvements, tinkering and fiddling with the business with each iteration of their role.

31. Willing to Take Smart Bets—Yes, businesses need good “lead-off hitters” that are capable of getting on base with “singles”.  But, sometimes, you need a good “clean-up hitter” to “swing for the fences”, taking calculated gambles with a high odds of paying off for the company.



Phew, what a list.  The odds of finding all “31 Flavors” in one person is the equivalent of trying to find a needle in a haystack.  But, if you can find as many of these traits as you can in your employees, the company’s performance and morale will certainly benefit from it.  And, when necessary, you must prune out the “bad apples”, before they spoil the whole “bushel”.  After writing this post, I suddenly have a  hankering for some Baskin & Robbins ice cream!!  ;-)

[VIDEO] George Deeb Discusses Entrepreneurial Mindsets for Success on ASBN

I was recently interviewed by the Atlanta Small Business Network (ASBN), an online "television network" serving the small business community, about how to choose the right entrepreneurial mindset to maximize the odds of success.  This includes comparing the differences between "driven to win" vs. "fear of failure".  I thought this video turned out great, and I wanted to share it with all of you, to help you assess your startup's "psychology".  I hope you like!!

The embedded video player didn't give me the option to change the size of this video.  But, if you want to see a bigger version, simply click the expand size button in the player above, or feel free to watch it on the ASBN website.

Thanks again to Jim Fitzpatrick and the ASBN team for having me on the show.  I look forward to our next interview together.

For future posts, please follow me on Twitter at: @georgedeeb.

How to Pitch Your Business Investment Case

Chief Financial Officers are often the gatekeepers to a company’s cash coffers. And, as you can imagine, they have a lot of people tugging on their sleeves looking for investments into various projects. Perhaps the CEO wants to make a big strategic acquisition, the CMO needs to scale up sales and marketing efforts or the head of product wants to launch a new business line. The ways capital can be invested are limitless, and the asks are endless, so you better make sure your pitch breaks through the clutter.  Below are examples of the best ways to pitch for internal funds in several common scenarios.

Read the rest of this post in Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter: @georgedeeb.

Lesson #316: Decision Making Only as Good as Quality of Data Studied

Over the years, I have become a “data hound”, looking for every morsel of wisdom I can get about my business, to help make smarter decisions.  The good news here:  data is king.  You can’t effectively manage your business without it.  But, using accurate data is critical, and getting that is not always easy.  And, if you don’t have accurate data, you may be making the wrong business decisions that could end up hurting your business, when you thought you were helping it.  Allow me to explain.

CASE STUDY #1:  MANAGING SALES PIPELINE

In most B2B businesses that have a long sales cycle, the only way assess the effectiveness of your sales team and predict future revenues is based on data your sales team enters into your CRM.  Here you would be looking to see a salesperson’s number of accounts growing, see how those leads are working their way through the sales funnel from qualified lead to closed sales and the total dollar value of the pipeline being managed.

But, think about what I just said: you are valuing the success of your sales team based on the data that they themselves are entering (or not entering) in the CRM system.  That creates multiple problems.  First, I have seen situations where salespeople will actually enter false information, to make it look like their efforts are more successful than they really are, trying to save their jobs.  And, second, any time you are reliant on humans for data, there is plenty of room for error.

For example, did the salesperson remember to enter a new lead into the CRM?  Did they remember to update the status of a lead (e.g., from active to dead)?  Did they update the dollar value of that lead from $20,000 to $10,000 after they learned the client didn’t need as many products as they first thought?  Did they update the expected close date from April to June, after they learned the project has been delayed?  You get the point.  Most businesses are making mission critical decisions based on future expected revenues from this data.  And, more often than not, the data in the system is not very accurate, updated or reliable.

If your CRM suggests you are working with over $1,000,000 of potential leads, and your normal conversion rate is 20%.  You would think there is a reasonable chance to close $200,000 in sales.  Monies you would be running the business with and paying your bills and payroll.  If that $200,000 doesn’t show up on time, as predicted, and you don’t have cash in the bank in reserve, bad data could put you in an illiquid position and potentially take you out of business.

So, when managing sales pipelines like this, you need to do to your best to scrub the data.  Every week, remind your salespeople to update their data in the system for any changes?  In your one-on-one meetings with the team, talk through their list, line by line, to ensure what the system data is telling you, is actually the reality.  And, where you can, build automated systems that updates data for any actions made (e.g., as new email leads come into business, they automatically get entered in CRM).  This includes building in automated tasks and reminders for each lead, to make sure the leads are actually being moved forward and the salespeople are getting system-triggered actions they need to take for each lead.  Most good CRMs or sales enablement tools can help you here.

CASE STUDY #2:  MANAGING MARKETING SPEND

The quality of your marketing efforts is also dependent on the quality of the data being managed and studied.  Here are the two most-typical problems: (1) is your marketing team managing towards the right data metrics in the first place; and (2) is the appropriate credit being given to the marketing channel that actually drove the lead, in a multi-device world where getting the proper attribution is not always easy (e.g., first learned about you through Google paid advertising on their office PC, but came to you direct from the mobile phone where you lost the Google tracking).

Let me talk through a recent example I lived through.  We recently hired an ad agency to manage our paid search campaign.  We told them immediate return on ad spend (ROAS), defined as clearly attributed revenues from the campaign divided by marketing cost of campaign, as the key metric to drive.  A strange thing started to happen in our business:  our low ticket, online ecommerce transactions started to take off, but our desired high ticket, offline B2B transactions were not growing at all.  By telling our agency to focus on “immediate” ROAS, the only way they could hit the desired target was by focusing on smaller orders that were immediately ready to book online.  That excluded the desired longer sales cycle leads we really wanted to be growing.

So, after six months of these learnings, we switched directions.  We told the agency immediate ROAS was no longer the goal.  We would be happy waiting our three month sales cycle, before studying our ROAS.  Instead, the leading indicator of future desired B2B sales, was immediate B2B leads that came in from that marketing effort.  That would be the key metric to manage for.  And, as soon as we made that change, our quick, low ticket sales started to fall back to more normal levels, and our desired B2B leads started to reach record heights.  We were thrilled, thinking we had finally “cracked the code” to scaling our business.

But, did we?  A B2B lead is only valuable, if they ultimately convert into B2B transactions and revenues.  So, in April, we did a retroactive cohort analysis of all B2B leads that came into the business in January (our normal three month booking window).  And, what we learned was concerning:  the B2B leads were coming into the business in record numbers, but very few of them were actually converting into sales, at levels far lower than our typical conversion rates.  And, after researching this further with our sales team, we learned the leads that were coming in, were very price sensitive, shopping many websites at once looking for the lowest price, and were often looking for last minute deliveries that were impossible to get the products to them in time.

So, now we are back to the drawing board, trying to figure out the right metric to be managing to?  Or, if the same B2B lead metric, how to optimize the campaign trying to find leads we can actually work with.  And, making sure we are giving proper attribution to all the leads coming into the business, to ensure we are not missing anything important in our look at the data.  We also want to be careful not to “throw the baby out with the bath water”.  Maybe there is something going on operationally, that is getting in the way of sales not converting, and the marketing agency is actually doing a great job.  Time well tell.

CONCLUDING THOUGHTS

So, any you can see, data is critical to managing your business.  I gave you examples in sales and marketing.  But, I easily could have given you data-driven examples in other areas of your business, like operations, finance, human resources or technology.  So, make sure you are living in a world where data is king.  But, more importantly, accurate data is king with the business being driven by metrics that are the most important and reliable for predicting and driving future success and desired outcomes.  The data is only as good as the effort you put into it!!

For future posts, please follow me on Twitter at: @georgedeeb.

Lesson #315: Why We Turned Down a Chance to Double Sales

As you may remember, back in 2018, we acquired Restaurant Furniture Plus, a B2B ecommerce business that sells foodservice furniture to restaurants and other hospitality companies.  We recently received a request for proposal from one of the most-recognized restaurant brands in the world.  If secured, the project would have doubled our sales overnight.  We walked from the opportunity, which may sound silly to you.  But, here’s why.

OUR CORE BUSINESS

First a little background on our business.  To date, our core business has revolved around two key things.  First, we are marketing company first and foremost.  Which means we resell the products of others and don’t typically take part in product design, manufacturing, importing or warehousing.  And, second, our average B2B transactions are typically in the $5K-$200K range, sold most typically to up-and-coming chains that have yet to build in-house procurement departments like the national brands.  In no year has any one of our customers comprised more than 10% of our sales.

THE NEW CLIENT OPPORTUNITY

The proposal we received is summarized as follows.  First, it was a huge order for over 1,000 franchise locations of the chain, which meant it would have been a huge multi-million dollar order, around 25x bigger than any other order we have ever closed.  Second, it was a complex order that involved custom manufacturing new designs exactly to the customers’ exact specifications, where the customer required us to build prototypes upfront at our own cost.  And, third, it was not an ideal contract, where the customer was not buying from us, their individual franchisees were (one at a time), and the contract included a 10 year product warranty.

WHY THE PROJECT SIZE WAS A PROBLEM

If we had closed this sale, yes, we would have loved doubling our sales.  But, all of a sudden, we now have a customer that comprised more than 50% of our sales.  Which is a really high concentration of sales in one customer, especially since the nature of the transaction was a “one and done” project.  Those sales would have evaporated in the following year.  So, instead of showing nice growth in 2020, we would most likely have shown sales declining in that year.  Which was not an optic we wanted to share with banks or other investors down the road.

And, when you have a client as large as this one, it is really easy for that project to become “all-consuming”, at the expense of all of our other long-term clients.  We didn’t want to risk mis-serving our loyal base of customers, by investing the vast majority of our energy into this one big project.  Which is what this project would have required.

WHY THE COMPLEX PRODUCT WAS A PROBLEM

If we had been selling “off the shelf” products from our typical vendors, this project would have been a layup.  There would have been no new product to design or warehouse.  But, the fact we needed to custom manufacturer a specific solution meant we needed to go around $50,000 out of pocket to build the required prototypes for the customer to approve, as they would not fund prototype development.  To us, that was a big number to swallow without any guarantee of a sale on the backend.  And, this particular product had to be manufactured with required components only available from one overseas manufacturer, which would have made assembling the product with other U.S. or China based components a logistical challenge.

WHY THE CONTRACT WAS A PROBLEM

This $5,000,000 project wasn’t going to be funded in one check from the customer.  It was coming in $5,000 at a time from 1,000 individual global franchisees over the course of a year.  Which meant going out of pocket on around $3,500,000 worth of inventory day one to get the best-priced manufacturing terms, without any financial support or guarantees from the customer, and then, crossing our fingers all the franchisees actually buy the product over time as there were supposed to.

Then, there was the issue of having to send the orders individually to 5,000 locations across the globe; it wasn’t simply going to one customer warehouse.  So, the warehousing of the items and the shipping logistics for heavy furniture going overseas, would have certainly created its challenges, operationally and financially, as that was not part of our core competency of selling only to U.S. based customers to date.

And, the final deal breaker was the 10 year warranty.  How many products have you purchased come with a product warranty of 10 years.  And, this was for outdoor patio furniture getting baked in the sun, and being used in a commercial setting where things could naturally go wrong.  The last thing we needed, were warranty claims showing up in years eight, nine and ten, that could have bankrupted the company down the road.

WHY WE PASSED THE DEAL

So, as you can see, there were a lot of reasons we decided to pass on this opportunity.  It would have been so tempting to close the sale, and pat ourselves on the back for doubling sales.  But, the downside risks here were way too high to swallow:  the upfront prototype costs, the upfront inventory financing, the global warehousing and logistics, the 10 year warranty, etc. were all potential pitfalls that we were unwilling to take that risk.

CONCLUDING THOUGHTS

So, the lesson here:  be careful what you ask for, because it could be your undoing.  Don’t get so romanced by the idea of driving revenues, that you don’t think through the operational or financial challenges it is going to result in.  Only bite off what you can easily chew, otherwise your business will “choke”.   Know what your core competencies are, and stay firmly focused on what you can do best.  It is perfectly acceptable and prudent to say no to a sale, if there is a high odds it will end up capsizing your boat.  For more insights here, be sure to read this companion article:  Pitfalls to Avoid When “Reeling in the Whale”.


For future posts, please follow me on Twitter at: @georgedeeb.

[VIDEO] George Deeb Discusses 'Pain Killer vs. Vitamin' Business Models

I was recently interviewed by the Atlanta Small Business Network (ASBN), an online "television network" serving the small business community, about how to make your business a "need to have" painkiller and not a "nice to have" vitamin.  I thought this video turned out great, and I wanted to share it with all of you, to help with your product strategy needs.  I hope you like!!

The embedded video player didn't give me the option to change the size of this video.  But, if you want to see a bigger version, simply click the expand size button in the player above, or feel free to watch it on the ASBN website.

Thanks again to Jim Fitzpatrick and the ASBN team for having me on the show.  I look forward to our next interview together.

For future posts, please follow me on Twitter at: @georgedeeb.

The Best Employees Have These '31 Flavors'

Having good employees will make or break a company’s success. I have previously written about how best to read resumes and screen employee candidates, but that is before they are actually working for the company and you get a chance to see their “true colors” when they are not “on show” during the interview process.  This post is designed to help you identify the best traits that most successful employees share, so you can “double down” on those best employees and “weed out” the rest, as nothing can take down a company faster than a bunch of toxic employees that don’t beat to the company’s drum.  The best employees have these “31 Flavors” blended into one.

Read the rest of this post in Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter at: @georgedeeb.

Lesson #314: The Only Winners in Ecommerce? Amazon, Google and Facebook!

I have been a long-time fan of the ecommerce industry.  As offline retailers were struggling to compete with online retailers, many large chains went out of business, and an increasing amount of consumer buying moved online.  For a long time, ecommerce startups were printing money, in what felt like a “can’t lose” industry over the last couple decades.  But, like with any “gold rush”, empowered by ecommerce platforms like Shopify that made it quick and inexpensive to get your online store up and running, ecommerce attracted a bunch of competitors trying to get their products discovered online.

But, what happens when millions of ecommerce stores are fighting to get discovered on only three primary websites (Amazong, Google and Facebook) where consumers are looking for potential shopping solutions?  All hell breaks loose, wreaking havoc on your cost of customer acquisition and your bottom line profits.  Which means the only long term winners in ecommerce are going to be Amazon, Google and Facebook (“The Big Three”), who keep raking in all the highly-profitable advertising dollars, while the ecommerce businesses themselves are starting to struggle to make a profit.  Allow me to explain.

THE GROWING ECOMMERCE INDUSTRY

The ecommerce industry in the U.S. was approximately $500BN in size in 2018, and has been one of the fastest growing areas of the economy.  This big market has been attracting tons of large retail corporations and startup entrepreneurs that have been trying to capture their piece of the pie.  What started off as a handful of ecommerce sites in the infancy of the internet has grown to over one million ecommerce businesses in the U.S. alone (and growing daily), each competing for consumer attention.

THE RISING COSTS OF GETTING DISCOVERED

But, how to do you get consumer attention?  In today’s market, that largely means The Big Three websites.  But, there is a limited supply of positions on the first page of The Big Three’s website search results.  Which means with limited supply and growing demand, the price of getting discovered keeps going up and up.  Which means the cost of acquiring a new ecommerce customer is quickly increasing, eating into the profitability margins of those ecommerce businesses.

To me, it is quickly becoming a race to the bottom for the ecommerce businesses, many of which can no longer drive a profit on their first sale.  They now must cross their fingers that they have a quick and frequent repeat sale cycle, to make their profits from the second and third transactions down the road.  Which may work well for a consumable vitamin business, but doesn’t work so well for a non-consumable mattress business, as an example.

GOOGLE, FACEBOOK AND AMAZON CAPTURING ALL THE PROFITS

As costs keep going up and up for the ecommerce businesses, that means advertising revenues keep going up and up for The Big Three.  Which means the only true long term winners in ecommerce will be The Big Three!!  Said another way, if advertisers are willing to invest up to one third of their revenues into consumer marketing efforts, that is over $150BN of largely free and clear profits for The Big Three to share between themselves.  While at the same time, all the ecommerce businesses will simply struggle to break even as their marketing costs continue to soar to higher and higher levels.  Pretty picture for The Big Three; ugly picture for the ecommerce businesses.

AN IEXPLORE CASE STUDY—COSTS UP 10X

Let me provide an example here.  When I was running iExplore in the year 2000, I could buy a Google “adventure travel” search click for $0.25, competing against a handful of competitors.  Those clicks would net me around a $200 cost of acquisition per new customer, or around 20% of my $1,000 gross profit margin.  Resulting in a very healthy bottom line profit margin.  Fast forward to today, that same click may cost $2.50 (10x more), as hundreds of competitors are now fighting for the top positions on those keywords.  Which means my cost of customer acquisition has grown to $2,000 today.  And, instead of driving an $800 profit on the first sale, I am now losing $1,000 on the first sale.  A pretty grim reality, to say the least.

MAKING A DEAL WITH THE DEVIL (AMAZON)

Google and Facebook clearly present their marketing challenges, but Amazon is even worse.  Over half of all shopping searches start at Amazon.  But, there is a price to pay for that distribution.  Amazon charges around a 15% revenue share to get promoted on their website, assuming you do your own fulfillment (the fee rises to around 25% if you need Amazon to do the fulfillment).  And, that is before Amazon has fully exploited their ambition of building a Google-like advertising marketplace to ensure your products get discovered on their platform.  When you layer marketing costs on top of the distribution and fulfillment fees, there is going to be no profits left for anyone except Amazon.  And, if you were hoping for repeat sales to drive your long term profits, good luck, as Amazon does not allow you to share in any of the customer records created.  They are Amazon’s customers, not yours, and you are not allowed to repeat market to them anywhere except on Amazon.  All in all, a great win for Amazon, and a strong kick in the gut for the ecommerce businesses.

CONCLUDING THOUGHTS

Even if you are one of the lucky ecommerce businesses that are driving a healthy profit today.  Enjoy it while it lasts.  It is only a matter of time before new competitors learn of your success on The Big Three websites, and try to enter your market.  We’ll see what your profits look like in a couple years, after the flock of competitors start fighting for position around your keywords.  And, this will be the case in nearly every category of ecommerce, so it doesn’t really matter what products you sell.

So, for all you ecommerce lovers out there (myself included), I have these cautionary words of wisdom for you:  think twice before getting into the ecommerce business.  If you want to win long term in ecommerce, stop thinking about what products you are trying to sell, and think more about how you can profitability grow your business without relying on The Big Three websites (e.g., viral word of mouth, direct mail, smaller websites) with proprietary or patented products only found on your website.  Or, better yet, think about how you are going to build a new fourth competitor to The Big Three, as that is where the real profits are long term, without having to deal with all the merchandising, warehousing, markdowns and other headaches that come with running an ecommerce business.

For future posts, please follow me on Twitter at: @georgedeeb.

[VIDEO] George Deeb Discusses Recruitment Strategies on ASBN

I was recently interviewed by the Atlanta Small Business Network (ASBN), an online "television network" serving the small business community, about recruitment strategies for startups.  I thought this video turned out great, and I wanted to share it with all of you, to help with your recruitment needs.  I hope you like!!

The embedded video player didn't give me the option to change the size of this video.  But, if you want to see a bigger version, simply click the expand size button in the player above, or feel free to watch it on the ASBN website.

Thanks again to Jim Fitzpatrick and the ASBN team for having me on the show.  I look forward to our next interview together.

For future posts, please follow me on Twitter at: @georgedeeb.

Lesson #313: The Top 5 Benefits of Marketing Personalization

Marketing has evolved from one-size fits all mass marketing to your entire target list, to laser-focused personalized messaging customized to that exact individual.  Personalized digital marketing is now the rule rather than the exception. From email campaigns to pay-per-click, personalized targeting is the accepted standard across most of the digital marketing world.  And, it’s not just ubiquitous—it’s increasingly close to the strategic core of how good marketers do business. To help me dig deeper on this topic, I solicited the wisdom of my colleague, Ronald Dod, the CMO and Co-Founder at Visiture, a leading ecommerce marketing agency with expertise on this topic.

Here are the top five reasons why increasing the level of personalization in your digital marketing is one of the most impactful marketing investments you can make. 

1.  Improved Knowledge of Customer Base

One key aspect of marketing personalization is gathering the data you need to effectively segment and target your customers. In an omnichannel world, you need omnichannel data collection. A savvy 21st century marketing team will always be on the lookout for opportunities to get more customer data, whether it’s through opt-ins like surveys or tracking and analytics tools. Thus, as your marketing personalization works toward its other goals, it can simultaneously work to provide you with better information on your customers and what they respond to.

A customer data platform, or CDP, is one of the most popular ways to collect and organize customer data into an easily usable format. These software packages integrate all of the customer data you collect through email, sites or apps and create customer profiles. You can then examine these profiles, find insights, create segments and create data sets for other tools like email marketing and PPC platforms.

A side benefit is that these customer profiles are useful for much more than just marketing. Examining your customers, their demographics and their interests will yield insights that you can use to drive decisions in distribution, product development and other areas. It’s a perfect example of how taking the plunge into personalization can have positive ripple effects across your business. 

2.  More Sales and Conversions

The numbers are clear: when it comes to driving sales and conversions, personalization works, and it works well. In one study, 88% of businesses said that personalized marketing gave them a measurable sales lift, and 53% reported the boost as 10% or more. Another study found that businesses using various personalized marketing techniques reported revenue gains between 8% and 21%. 

Personalized ads can even serve as a second line of defense to catch conversions that might slip away, thanks to the practice of retargeting. Retargeting, which involves serving targeted ads to people who have already visited a company's website, has been associated with a 70% higher conversion rate in visitors who see a retargeted ad. With figures like that, it’s not hard to see why personalization has planted itself firmly in the marketing mainstream, and why marketers are scrambling to realign their sales strategies with these new realities.

3.  Better Customer Engagement

Loyal customers who engage with a brand through multiple channels are incredibly valuable to the brand’s health and longevity. But with more choices and competition than ever—and brand loyalty possibly on the wane among millennials—it’s become critically important to foster that engagement through personalized service and content.

Loyalty programs, to name one example, have always been a popular way to increase customer engagement, but they’re undergoing a strategic shift. Now, it’s more common to find businesses concentrating on personalization and relationships in their loyalty programs. It’s a re-imagining from the somewhat impersonal traditional loyalty program, where a customer spends money and receives points, to one in which the retailer acts more like a trusted guide and partner. 

This is a good time to make another point: there’s definitely such a thing as going too far with personalized marketing. Although many customers enjoy being courted by businesses, it can be deceptively easy to cross the line into a situation in which a customer feels uncomfortable or creeped-out, so businesses need to tread carefully. Be especially wary of pushing into a customer’s family life or personal relationships and, of course, take steps to ensure that customers’ data is safeguarded. 

4.  More Efficient Marketing Spending

When applied correctly, personalization makes your marketing dollars go farther and do more. By creating the perfect match of content and customer, personalized marketing can materially improve ROI by making it possible to precisely target and fine-tune messaging. 

This is an especially important part of PPC advertising, where segmentation and personalization are both easy and necessary. Most PPC platforms include robust audience targeting tools, allowing you to serve ads to people whose data indicates they’re interested in your product using keyword bids and audience customization. If you’re thoughtful about your bid strategies and put in the work to learn the tools, the ROI can be impressive (as much as 5-8x greater than without personalization).

Email marketing is another channel where personalization can drive great ROI. The personal nature of the email inbox makes it the perfect place to deliver targeted pitches and personalized copy. Marketers in one study found an eye-popping 760 percent increase in email-based revenue after introducing segmented campaigns. 

5.  Shorter Sales Cycles

Personalized marketing can be helpful for shortening the time it takes a customer to move down the sales funnel. Using smart segmentation and audience metrics, marketers can identify and target customers who are further along their path to purchase, helping to create conversions more quickly and prioritize the most promising leads. 

This can be especially important for B2B companies and other businesses that struggle with their longer sales cycles. A long sales cycle usually indicates that a customer has numerous decisions to make that may have to go through multiple levels, so it’s critically important that a business establish itself as a helpful and interested partner who’s invested in creating a relationship. Personal attention to the customer’s needs is key to moving a customer confidently through the path to purchase—and that’s something that personalized digital marketing excels at providing. 

Concluding Thoughts

Personalized digital marketing may have once been a leg-up strategy to break out of the pack, but it’s now integral to the whole playbook. If your business has yet to fully dive into this field, now is the time. It has mature and well-developed tools, in addition to an exciting cutting-edge frontier. By learning about and speaking directly to your customers, you’ll set your business up for continued success. 

Thanks again to Ronald and Visiture for helping me write this post.  Your insights on this topic will be of terrific benefit to the Red Rocket blog readers.

For future posts, please follow me on Twitter at: @georgedeeb.  And, you can also follow Ronald Dod at @Visiture_Search and Visiture at @Visiture.

Lesson #312: Don’t Let Short-Term Thinking Hurt Long-Term Success

I recently met a business where the owner made 100% of her decisions based on how it impacts the immediate cash flow of the business.  And I mean every decision!  Whether it was hiring business professionals like accountants or lawyers that were advising the business.  Or, making marketing decisions based on what drove revenues this minute.  All the way down to minute things like figuring out which credit card to use, to drive immediate cash back rewards on expenses.  Some of this is admirable.  But, most of this was completely short-sighted and hurting the business long term. 

I get it.  Most entrepreneurs are cash starved and looking to save every penny they can.  But, in this case study post, you are going to learn that cutting pennies today, could be costing you millions of dollars tomorrow.  Allow me to explain.

DON’T MAKE SHORT TERM DECISIONS THAT HURT LONG TERM GROWTH

One of the actions this entrepreneur made was only investing in marketing tactics that would drive an immediate sale and immediate return on marketing investment.  The problem with that focus was that she was running a B2B business, where the highest ROI spend this minute, may not be the best tactic for maximizing long term sales, given the long sales cycle lead time of B2B.  For example, if you focus on driving sales, profits and returns today, you would most likely select Google as your primary marketing channel.  And that will most likely result in lower ticket transactions, where the client budget is already in place and can be spent today.  If she was focused on the long term, perhaps she should have invested in big trade shows in her industry, where very large ticket orders could be secured, albeit on a slower and more patient timeline.  So, yes, trying to drive an immediate return is nice.  But, not if you are sacrificing 10x that amount of sales and profits down the road.  It would be more ideal, to better capitalize the business to better focus on the biggest long term ROI opportunities, even if it requires needing some short term working capital to bridge the gap.

DON’T BE CHEAP ON STRATEGIC ISSUES, YOU GET WHAT YOU PAY FOR

When I presented this client with around 10 accountants and 10 lawyers to consider to help her business, I gave her a complete picture of the strengths and weaknesses of each of these professionals, and gave recommendations on which ones I thought were the best to help her business and her specific needs.  For example, I knew she was going to need advisors with a lot of M&A experience to help her accomplish her desired roll up strategy.  But, the only metric she focused on was price.  She ended up picking the cheapest lawyer and the cheapest accountant on this list, neither of which had the required M&A experience she was going to need, which came at a slightly higher hourly rate.  That is like cutting off your nose to spite your face!  You need advisors that know your business needs or industry.  Engaging human talent should not be the same mindset as buying a commodity, like loaf of bread.  With human talent, you really do get what you pay for, based on their expertise.

DON’T PICK THE CHEAPEST SOLUTION, PICK THE BEST SOLUTION

Then I was helping this client with setting up various off-the-shelf technologies, service providers or other point solutions for her business.  This included things like her advertising agency, her CRM software, her SEO firm, etc.  And, again, like with the lawyers and the accountants, it was more of the same.  She would see five options for every need, would ignore the strengths or weaknesses of those solutions, and focus only on price.  She didn’t care that there may be better options out there, to help propel her business to new heights.  All she cared about was how the investment would impact today’s cash flow.  Stop the madness!  Price should be one of the major considerations when picking solutions, but not the only driver.  It is much more important you find solutions that present the best value—offering the most advantages and least disadvantages at the most acceptable price (which is not necessarily the cheapest price).

DON’T LET SHORT TERM DECISIONS, HURT YOUR CUSTOMER EXPERIENCE

One of the short term decisions she made was in picking her shipping provider, moving goods from her warehouse to her customers.  She considered around five solutions, and again picked the cheapest, trying to maximize gross margin.  The problem was, she didn’t investigate other important data points, like the percentage of successful online deliveries of each vendor.  It turned out, that the cheapest shipping vendor, was also the one with the highest instances of late deliveries to customers.  And, guess what happened next; customers started complaining about missing shipments, which put the company in a negative light, and they started to lose repeat sales.  Again, vendor decisions should be much more than simply a price-based decision, to avoid customer facing situations like the above.

DON’T BE SO FOCUSED ON THE WEEDS, THAT YOU LOSE FOCUS ON THE GOAL

This entrepreneur was so focused on short term cash flow, that is was like an obsession.  It just entirely consumed her and drove all of her attention.  She would pull out her monthly income statement, run through every expense item, line by line, and figure out how to drive down the cost of each item.  She put hours and hours of work into that sole goal.  Congrats, you saved a few bucks.  But, shame on you for not putting those same hours into figuring out how to propel your revenues to newer heights, which to me, should have been an even more important area of the business that required her attention.  You may have saved $10K in monthly expenses, but you probably hurt your revenues by $100K per month had you focused your energies there.  The point here: you need to prioritize your time and invest it in the best ways possible.

CONCLUDING THOUGHTS

So, the moral of this story here:  don’t be a cheap ass!!  Yes, you want to keep your expenses as low as possible.  But, you don’t want to make cash flow driven decisions that end up slicing your own throat.  Each business decision needs to do what is right for the business, overall for the long term.  Not, simply what is best for the bottom line in the immediate term, for the reasons summarized above.  Instead, make sure your business is properly capitalized to allow it to afford the “right” solution for the business, that will help give the business the highest odds of long term success.  And, remember, it is impossible to maximize long term growth and short term profitability at the same time, you have to pick one or the other.

For future posts, please follow me on Twitter at: @georgedeeb.