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These Married Co-Founders Poured Their Life Savings Into Their Company. Then a Mistake Almost Cost Them Everything

In 2017 Farzan Dehmoubed, a marketer, and his wife Jennifer, a schoolteacher, created the Lotus Trolley Bag, a set of washable bags with attached rods that can be hung inside a shopping cart. The bags, with features like secure pockets for egg cartons and wine bottles and an insulated pocket for frozen foods, quickly became the top-selling reusable bag on Amazon, and are now sold in stores like Wegman’s, Albertson’s, Kroger, and TJ Maxx. But getting to that point required overcoming a mishap that nearly sunk their startup. –As told to Kevin J. Ryan

We invested $45,000 into our first inventory. It sold out in 10 days. We were really excited. We called up our manufacturer and placed another order. We wired them $50,000–everything we made on the first batch and more.

Six weeks later a big container arrived. We had our friends and family help us unload it. We opened up the boxes and looked at the product, and it was nothing like the first set of bags. It looked the same from a distance, but when you actually looked at the stitching and the quality of the printing and the logo, it was not what we had ordered. My wife and I looked at each other and said, “This can’t be real.”

I remember thinking to myself, ‘We can fix this, maybe it’s just some loose thread.’ But it wasn’t salvageable. We placed a complaint with the manufacturer, even though we knew it wouldn’t go anywhere, since we were just a family business with very little leverage. We later learned it had outsourced the order to save pennies on the dollar.

We decided pretty quickly we couldn’t sell the bags. We didn’t feel comfortable putting our name on them. That meant we would have to take the $50,000 loss. I don’t think Jenn and I talked for the rest of the day. It took a day or two to absorb the shock. 

Even though the manufacturer promised us they would do better the next time around, we weren’t going to be fooled twice. I flew to multiple manufacturers in Vietnam until we found a new one we were happy with. We hired a third-party quality check company. When the goods were ready to ship, they would go in and do an audit: open up each box and check them, and send us videos. We kicked ourselves for not doing that in the first place.

We placed a new $50,000 order, which required emptying our life savings and practically maxing out our credit cards. It was two months before the new inventory came. We were pretty upfront with our customers during that time. We told them very frankly: The bags didn’t come out the way we ordered them, the shipment is going to be delayed, and we really thank you for your patience.

I think letting your customers know you’re just like them, and that you’re just trying to provide a product that they’ll be happy with, goes a long way. People related to us. They were very understanding.

We still had a lot of orders canceled though, and we gave discounts to customers who had been patient. We were nervous when the new container came–if the product was bad, we would have lost everything. But it was exactly what we’d ordered. We sold out almost right away. Because of the discounts, we didn’t make much money at all on that order, but we had our reputation.

Not putting that product on the market was one of the best decisions we ever made. If we had, I can guarantee you we wouldn’t be where we are right now. It would have killed our reviews. It would have ruined our brand.

We now have a 4.6-star rating on Amazon with more than 700 five-star reviews. We’re on pace for $3 million in sales this year. We just launched our second product, a reusable produce bag, and those same early consumers are buying it.

As a business owner, you have to make your decisions for the long-term. For us to take that financial hit was scary, but we had bigger goals in mind. We got through it. And we made a lot of loyal fans in the process.

By Kevin J. RyanStaff writer, Inc.

Source: These Married Co-Founders Poured Their Life Savings Into Their Company. Then a Mistake Almost Cost Them Everything

7.98K subscribers
Every business has risk associated with it. In this video Mr. Ashok Ajmera in very simple words talks about various kind of risks and how to manage them which can be very useful in any business.

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3 Key Signs Your Startup’s Business Plan Needs to Change

Pivoting is expensive, but so is making smaller changes to your business plan to address the present-day realities of your market, your customers and your company. Revising your plan and implementing those changes can be time-consuming and expensive, and it can result in considerable operational upheaval.

But sometimes that’s exactly what your small business must do to ensure future success. How will you know it’s time to re-write your small business’s playbook? Here, three key signs:

1. Your growth is stagnant.

In a startup, momentum is everything. Growth provides the resources to continue to expand, beat the competition, improve quality and service, and increase efficiency through economies of scale.

Unfortunately, most small businesses can’t afford to simply plow additional funds into advertising in order to grow. Keeping customer acquisition costs down — and churn rate down as well — is key in the early stages for any bootstrapped startup.

In that case, growth might require jettisoning — or at the very least de-emphasizing — some products to focus on more profitable products. (See Steve Jobs when he returned to Apple in 1997.) That may require you to shift employees into new seats: sales, service, operations, etc.

Do this and the result might be a ripple effect of positives: Shifting employees provides opportunities for them to learn new skills, demonstrate new talents and learn about other functional areas. Moving a few employees into different roles can help re-energize and re-engage a number of other people.

Growth could also require introducing new products or services, especially when they complement existing offerings. Complementary offerings are a great way to re-engage existing customers as well as to bring in new customers who may then purchase other products or services.

In short: If your growth has stalled, what you planned to offer may not be sufficient. So how will you know what changes to make?

Ask your customers. They’ll tell you.

2. The needs of your “ideal” customer have changed.

Every business plan includes information on the target market: Demographics, interests, needs, pain points, etc. Over time, those needs can change (or maybe they never actually existed, at least on a sufficiently broad scale).

If you’re a tech company, evolving technologies can change the way customers interact with your service. If you’re in the restaurant business, today’s hot trend can be tomorrow’s outdated fad.

More likely, as your business has grown, so too has your infrastructure — meaning the level of one-on-one service you planned to provide is no longer necessary. (Or even desired.)

A great business plan lays out a blueprint for meeting customer needs and solving customer pain points. A great business constantly evolves to ensure those needs are met and those pains are eliminated.

Stay on top of metrics like return, service calls, churn rate, etc. to keep up with changing customer needs. Talk to your customers to find out how their needs may have changed.

Then revise your plan to make sure you provide not just what your plan says, but what customers really want and will pay to get.

3. You need full-time people in freelancer seats

Early on you may not have needed — or maybe couldn’t afford — to hire full-time people to perform certain functions. Wisely, you turned to freelancers. Freelancers are great for completing specific tasks, especially when sufficient expertise or specialized knowledge is a necessity.

The problem with freelancers is that they can only perform specific tasks. They can’t step into other roles. They can’t step into other functions. Because they aren’t a part of your company, they can’t learn and grow and develop with your company.

At some point it makes sense to hire a full-time employee. While they might not currently possess every drop of skill and experience they need to succeed in the role, when you hire people who are adaptable and eager to learn, they soon will.

And then they will help create an outstanding foundation upon which your company can grow.

By: Craig Bloem Founder and CEO, FreeLogoServices.com

Source: 3 Key Signs Your Startup’s Business Plan Needs to Change

275K subscribers
Tutorial starts at 1:20 Whether you’re starting a new business or just trying to get your existing business a bit more organized, writing a business plan is the perfect way to clearly outline how your business operates, declare goals, and set out a strategy to reach those goals. In this video you’ll learn about the six essential pages every business plan should have, what to record on each of those pages, and also how to write your business plan as quickly and easily as possible — even if you’re a complete beginner! 🔹 Download the FREE Six-Step Business Success Plan: https://www.gillianperkins.com/downlo… // WHAT TO WATCH NEXT Six Ways to Earn Six Figures Working from Home https://www.youtube.com/watch?v=Y1i8x… How I (actually) Got My First Client Online https://www.youtube.com/watch?v=AST3P… How I Created Multiple Streams of Income for Myself https://www.youtube.com/watch?v=dfaH_… How to Decide What Business to Start https://www.youtube.com/watch?v=Mid_A… // LINKS Learn more about Gillian and find resources to build your online business: https://www.gillianperkins.com Join our private Facebook group! https://www.facebook.com/groups/start… Follow Gillian on Instagram to get a BTS look at what it’s like to be a digital entrepreneur: https://www.instagram.com/gillianzper… // MAIL Gillian Perkins International P.O. Box 13573 Salem, OR 97309 NOTE: This description may contains affiliate links to products we enjoy using ourselves. Should you choose to use these links, this channel may earn affiliate commissions at no additional cost to you. We appreciate your support! KEYWORDS how to write a business plan, free business plan, do i need a business plan, #entrepreneurship, #gillianperkins, business plan how-to guide, business plan step by step, business plan tips ,gillian perkins, gillianperkins, do you need a business plan, How To Write a Business Plan To Start Your Own Business, how to write a business plan step by step, business plan for beginners, simple business plan, business 101, business plan template, business plan example, how to write a business plan for beginners

Your Bank Could Be Holding Your Business Back From Growth. Here’s When You Should Consider Breaking Up

The bankers you work with may seem like great men and women, and they probably are truly nice people. They greet you by name, ask about your spouse and kids and appear to take a real interest in how well your enterprise is doing. Their financial products may be meeting your needs to a T.

But how strongly do you feel about your relationship with your bank? How do you think they’ll cooperate with you when the stuff hits the fan — which it most certainly will at some point? That’s the real test.

True colors

Here’s a true-life example: I’ve been working with an entrepreneur who finds himself in a down cycle. The company’s business plan is sound, the management team is experienced, and the product remains viable, so the problem isn’t terminal. But it may be awhile before the company’s prospects brighten.

The company works with a popular bank, which is starting to get nervous about its loans and is considering adding demanding conditions or even calling the loans.

The entrepreneur, however, feels a sense of loyalty to the bank, which has worked with him for several years. I have counseled him to consider other options. The reality is that bankers seven states away that he’s never met, not his local team — are the ones making the decisions.

He’s holding fast– and that’s a big mistake.

The entrepreneur has the opportunity to move to a smaller, regional bank. That bank’s rates may be slightly higher, but they’re more interested in a relationship.

And there’s certainly value in being in the room with the actual decision-makers — for both sides. Yes, your financials are going to be the primary determinant in lending decisions, but the human element can sway an on-the-fence lender to your team. Meantime, you’ll be able to tell a lot about the banker by meeting in person. Sometimes, it’s okay to trust your gut.

Loyalty only takes you so far

I get why entrepreneurs are loyal to bankers that have brought them success, but passing up the opportunity for a better financial situation is a kin to resting on your laurels.

As an entrepreneur, your best chances for success are by finding every possible edge you can. Incremental gains add up nicely over time, you should be taking advantage of them.

As for your spurned banker — they will get over it. Yes, that’s cynical, but that’s the way the business world works, especially with the larger banks. Remember also that your financial needs are a living, changing thing. What worked for you at one point may not be the most appropriate thing for you now.

The most successful entrepreneurs and companies are never satisfied with the status quo. Neither should you.

By: Ami Kassar CEO, MultiFunding.com

Source: Your Bank Could Be Holding Your Business Back From Growth. Here’s When You Should Consider Breaking Up

38K subscribers
Are you struggling in your business? Does each month feel like it’s a mad dash to figure out who’s going to get paid? I want to teach you what I do to turn around businesses to make them profitable again. Are you an entrepreneur? Get free weekly video training here: http://www.danmartell.com/newsletter + Join me on FB: http://FB.com/DanMartell + Connect w/ me live: http://periscope.tv/danmartell + Tweet me: http://twitter.com/danmartell + Instagram awesomeness: http://instagram.com/danmartell I’m the guy that gets the call when a business is in trouble… … when a business is on the verge of bankruptcy. Friends call me. Banks call me. If I’m lucky, the entrepreneur calls me before it’s too late. The truth is, it’s always challenging for me to see another entrepreneur failing… … especially when they have major debt owed, personal guarantees and their biggest dreams hanging in the air as collateral. It’s even more heartbreaking when kids are involved. It crushes me inside. That being said, the game plan to turn things around is ALWAYS the same. The #1 thing it takes is uncomfortable discussions, honest assessments and quick decisions. Hard? You have no idea. However, staring at the light waiting for the train to hit you isn’t the right move either. Recently I was able to take a company losing tens of thousands each month, to profitable in 14 days. In this week’s video I provide a step by step process for getting you off the tracks, and pulling a sharp 180 regardless of the challenges you’re facing. When it comes to the steps and process they go like this: 1) Get clarity on the numbers (scary as hell, but necessary) 2) Test the business model 3) Cut deep but not the bone 4) Focus on the customers 5) Write the rules 6) Build it back up The truth is, this strategy is something most companies should use to evaluate their real success. Too many times I’ve had founders tell me their business is doing “GREAT” only to ask a few questions and have them realize they’re way below the market norm. Stop being romantic about your business and get serious about how you’re measuring your progress. Leave a comment below with your business, industry and top question you have about your business model or challenges and I’ll be sure to provide some insights to help you evaluate your progress! Dan “saving businesses daily” Martell Don’t forget to share this entrepreneurial advice with your friends, so they can learn too: https://youtu.be/JyfE6jzcOGI ===================== ABOUT DAN MARTELL ===================== “You can only keep what you give away.” That’s the mantra that’s shaped Dan Martell from a struggling 20-something business owner in the Canadian Maritimes (which is waaay out east) to a successful startup founder who’s raised more than $3 million in venture funding and exited not one… not two… but three tech businesses: Clarity.fm, Spheric and Flowtown. You can only keep what you give away. That philosophy has led Dan to invest in 33+ early stage startups such as Udemy, Intercom, Unbounce and Foodspotting. It’s also helped him shape the future of Hootsuite as an advisor to the social media tour de force. An activator, a tech geek, an adrenaline junkie and, yes, a romantic (ask his wife Renee), Dan has recently turned his attention to teaching startups a fundamental, little-discussed lesson that directly impacts their growth: how to scale. You’ll find not only incredible insights in every moment of every talk Dan gives – but also highly actionable takeaways that will propel your business forward. Because Dan gives freely of all that he knows. After all, you can only keep what you give away. Get free training videos, invites to private events, and cutting edge business strategies: http://www.danmartell.com/newsletter

9 Marketing Metrics Every Business Should Use

In the first quarter of 2009, total ad spend in America fell by more 10%. That was the midst of the recession. Those two things are not unrelated.

Marketing and advertising budgets are often the first things cut during tough financial times. During hard financial times, individuals cut costs on things deemed “not necessary,” and it turns out, businesses act the same way.

The reason marketing is often filed under “not necessary” is that it can be incredibly difficult to measure return on marketing spending. If you show an ad during the Super Bowl, where would you even begin when trying to attribute subsequent sales to that ad? And how about all of the non-revenue value it creates, like brand awareness?

It’s not that marketing is not valuable, it’s just incredibly difficult to quantify its value.

The good news is, we’ve been getting better and better at quantifying it. Thanks, in part, to the internet and the increased ease of attribution, but also due to the recognized need for it.

If your marketing team is struggling to quantify its value, there are a number of go-to metrics you should start measuring. It’s worth noting, there are countless metrics you can choose from, so I’ve narrowed it down to 11 that are easily generalizable regardless of your business industry.

Let’s get started.

#1: Return on Marketing Investment (ROMI)

Okay, I’m putting this metric first because if you can calculate it accurately, it’s the most important one. On its face, it’s a very simple metric and is measured by the sales growth during a marketing initiative munis the marketing costs and then divide that number by the marketing costs.

To make this less abstract, here’s an example.

Before a Google AdWords campaign, a used bookstore had sales of $4,000 per month. After the campaign, sales bumped up to $5,000 per month, making the sales growth $1,000 per month. The campaign cost $100. So, the calculation would look like this:

(($1,000 – $100) / $100) = 900%

Here comes the but:

First of all, these returns shouldn’t be expected from an AdWords campaign, this was just an example.
Second of all, this example doesn’t consider the numerous other potential moving parts that could have an effect on sales growth. This would really only work if you did everything the exact same before and during the campaign (except for the campaign, of course), and even then, it wouldn’t account for some external factors.

Changing your hours of operation, hiring a new cashier, changing the sign in the front of the store, or even HBO’s upcoming Fahrenheit 451 movie inspiring the country to start reading more could all impact your sales and throw a wrench in your ROMI calculation.

The point is, you can try to control for as many factors as possible to get an accurate ROMI number, but it’ll never be perfect. This is not to say you shouldn’t track it, but rather just be aware that it has its flaws and should be just a part of your marketing reporting and not the whole thing.

#2 Customer Acquisition Cost (CAC)

Customer acquisition cost is simply the amount of money it costs to acquire a customer. Divide all of the costs spent towards getting new customers—these are largely, though not necessarily exclusively, marketing costs—by the number of customers you’ve acquired.

Voila! You’ve got yourself your CAC.

This is a crucial metric as it tells you how effective your marketing efforts are. Generally speaking, the higher your CAC, the less efficient your marketing is.

This rule of thumb does not apply equally to every company of course. Typically, CAC is going to be higher for companies that sell things that are worth more.

And while CAC is an important metric on its own, its real value is apparent when combined with another crucial marketing metric…

#3 Customer Lifetime Value (CLV)

This is another somewhat self-explanatory one. A customer’s lifetime value is the projected revenue that a customer will generate will generate during their lifetime. You can take the average revenue generated by all of your customers and use that to tell you how much each customer (on average) is worth.

It might be obvious, but the reason this metric and CAC are so useful when combined is it can serve as a guide for how much you should be willing to spend to bring in new customers. Also, the bigger the gap between your CLV and your CAC the better (assuming the CLV is the higher number).

Kissmetrics provides a nice infographic to help explain how to calculate CLV:

++ Click Image to Enlarge ++
How To Calculate Customer Lifetime Value
Source: How To Calculate Lifetime Value

#4 Churn

Churn is as much a customer service metric as it is a marketing metric, but it’s certainly worth mentioning, as the organizations are often intertwined. Churn tracks the number of customers that you are losing and can be viewed from the total customer or total revenue perspective.

This metric isn’t going to be useful for every kind of business. It’s often used in subscription-based businesses and wouldn’t be particularly useful for, say, an e-commerce company (although e-commerce companies could use this metric to measure things like churn as it relates to an email list).

Here’s the formula for calculating customer churn:

    (Customers at beginning of month—customers at end of month*) / customers at beginning of month = customer churn rate

*The customers at the end of the month number should not include any new customers gained during that month.

You can also use different time periods to calculate this—maybe quarterly or annually.

Revenue churn functions differently from customer churn, and in many organizations, it is the more valued number. It’s a tad more complicated. Here’s the formula for calculating revenue churn:

    {[monthly recurring revenue (MRR) beginning of month – (MRR beginning of month – MRR lost during month)] – MRR in expansions} / MRR beginning of month = revenue churn

Let’s clarify this formula with an example.

Your MRR at the beginning of the month is $100,000. You lost $10,000 in MRR from customers leaving or downsizing. However, you had $20,000 in expansion revenue from people upgrading their subscriptions. That leaves you with:

    {[$100,000 – ($100,000 – $10,000)] – $20,000} / $100,000
    [($100,000 – $90,000) – $20,000] / $100,000
    -$10,000 / $100,000 = -10%

As you can see, in this example, we’ve come out with negative churn. This is a good thing. Since expansion revenue outweighed the revenue lost, you’ve got negative churn, signifying a growing business.

If there was only $5,000 in expansion revenue, your churn would be at 5%, which would be an issue.

The reason revenue churn is often more valued than customer churn is it accounts for customer size. You can lose five customers, but if they’re your smallest customers, it may not be all that big a deal.

#5 Take Rate

The take rate is a very simple metric that does an great job of measuring the effectiveness of a particular campaign. Put simply, it is the percentage of people you contacted who accept an offer.

We can look at a practical example of deriving this metric by looking at when auto mechanics leave fliers under windshields.

Let’s say a mechanic printed 1,000 flyers advertising a deal for a discounted oil change and left all of them on cars. 25 people come in with the flier to get the discounted oil change. This means, of the 1,000 people contacted, 25 accepted the offer, making the take rate 2.5%.

You can then use the take rate to measure CAC for a specific campaign. If the fliers cost $.25 each, the cost of the campaign was $250. Since 25 people became customers, you can divide $250 by 25 to get your CAC for this campaign of $10.

#6 The Test-Drive

In Mark Jeffery’s book Data Driven Marketing: The 15 Metrics Everyone in Marketing Should Know, Jeffery outlines the story of a Porsche ad campaign during the peak (or valley) of the recession. In 2009, the luxury car company delivered “more than 241 million online display impressions and 17 million in print” aimed at getting potential customers to take a test-drive.

Given the state of the economy, many met this campaign with pessimism, especially considering the primary call-to-action was to just test-drive the car and had nothing to do with buying it.

Soon, however, dealers changed their tune, as they were making sales they wouldn’t have under ordinary circumstances. They realized how crucial marketing for a test-drive was.

The test-drive metric is simply of the people who take a test drive (or trial whatever your product is), how many make a purchase. If you give 100 test-drives and 20 people make a purchase, your test-drive conversion rate is 20%.

Once you know your test-drive conversion rate, you can more easily predict total conversions when marketing for a test-drive, or free trial.

#7 Transaction Conversion Rate (TCR)

People often look at traffic and clicks when evaluating the success of their website. Nobody would be wrong to use those metrics, but unless it’s for a website that makes the lion’s share of its revenue from advertising, those numbers leave a lot to be desired.

If you’re bringing people to your site with the hopes of selling them something, it doesn’t matter how much traffic you generate if nobody is buying. You could have a million unique visitors per month, but if 0% of those million result in a transactional conversion, you might as well pack up your things and go home.

This is why your transaction conversion rate is so important. It’s easily calculated as the percentage of customers who purchase after clicking through to your website. So if you get 100 visitors, and 10 of those visitors make a purchase, you have a 10% TCR.

It’s hard to say what a good TCR is because it really depends on your industry and what your selling. However, by knowing what your TCR is, it becomes much easier to predict the value of a marketing campaign.

#8 Customer Satisfaction (CSAT)

These last two metrics are a little different from the first seven because they’re much more difficult to measure and sometimes rely on things like surveys.

CSAT is a measure of how likely a customer is likely to become a product evangelist and help you sell by recommending your product to a friend. CSAT is derived from surveying customers and the question behind it is “how likely would you be to recommend [product] to a friend or colleague?” You might also know this metric as the Net Promoter Score.

We all know the value of word-of-mouth, so it’s no surprise that the higher this score, the better. However, obtaining this metric is a little tougher than the others. You can’t just look at a spreadsheet, make a calculation and have your answer.

Getting your CSAT score means actively surveying customers, but if you can do it well, you can get valuable insights about future sales, as well as identify trends. If your CSAT score is trending upward, good news, you’re doing well. If it’s trending down, you need to identify the problem and find a solution.

#9 Brand Equity

I don’t think there are too many people out there who would question the value of a strong brand, but you might find a fair amount of people who are skeptical about measuring the power of a brand.

Their skepticism is not unfounded. Measuring brand equity is very difficult, but not impossible.

To drive home the point that brands matter, Mark Jeffery, in his book, takes a look at water.

“Pure water is an odorless, tasteless liquid made from molecules of two hydrogen atoms and one oxygen atom,” he writes. “So why spend $2 a bottle for the brand and not 25 cents for the generic grocery store brand when the products are identical?”

Right now you might be shouting that Dasani is different from Aquafina. This just demonstrates the power of a brand.

But how do you measure a brand? Well, there are several ways to do it.

One way to do it is to subtract all the tangible assets of a business from the total market valuation of the business. The remaining value is the brand. This is probably the most black and white measurement, but it’s unreliable because it relies on so many approximations and assumptions.

The other approach is to use surveys.

Brand equity surveys are simple but can be laborious. They’re often based on two questions (with several follow-ups meant to refine the answers depending on the product/industry).

  • Question 1: “For [category of product], what is the first [product or company] name you think of?”
  • Question 2: “For [category of product], what other [companies or products] have you heard of?”

Again, these two questions are a great jumping off point, but they are not the finish line. Other questions like “How much more would you be willing to pay for [brand x] than [brand y]?” can help you refine your brand equity.

Conclusion: Using Key Marketing Metrics

Remember, there is no magic bullet when it comes to measuring the success of your marketing campaigns, but that’s no reason not to do it. By using a combination of different metrics, you can get a good view of not only the success of individual tactics but also a holistic view of your overall marketing performance.

By: Kevin Armstrong |  May 17, 2018

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