Tag: strategy

When to quit

Posted on by Steve Sammartino

This is the fifth of my crowd sourced blog entry ideas as suggested by Cameron Reilly. Cam wanted to get my thoughts on the following: When to call it a day. When to close up shop.

This is one of the most difficult propositions as an entrepreneur – when to stick and when to quit? My view is a simple analogy. When the startup or business feels like a bad romantic relationship you’ve had. The type of relationship you knew you had to get out of, but couldn’t. The type of relationship you had an unhealthy addition to, or found it too hard to leave emotionally, or was scared of the financial losses and asset split associated with leaving it. When your business feels like that, it’s time to leave. If you view your business as a relationship you have with it, then it will become clear if it’s over. Because we all know that feeling. And we usually know the truth deep down in our hearts when things are just not right.  When your startup feels like that, it’s time to shut up shop.

Here’s some simple sentences that may also help you know if it’s time to quit:

It’s time to quit when, you’ve lost interest in the project, and your only doing it for the money.

It’s time to quit when, you only keep going because of the time and money you’ve already invested.

It’s time to quit when, you can’t sustain yourself or family on the income it provides, or the little time it leaves.

it’s time to quit when, you’ve had enough and would have a less stressful life in a job.

It’s time to quit when, you’ve run out of money, time or desire.

It’s time to quit when, you know who can achieve more moving onto the next project.

It’s time to quit when, your not quitting because the newness has worn off, but the business is genuinely not working.

it’s time to quit when, you achieved multiple set milestones set and they still didn’t pay off financially.

it’s time to quit when you no longer believe in what your doing.

It’s time to stay the course when none of the above applies.

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Nice idea, but what’s in it for us?

Posted on by Steve Sammartino

I took this photo while shopping at Australian supermarket giant Coles yesterday.

I’ll start by saying not returning supermarket trolleys, or worse stealing them is not cool. It probably adds some cost to our grocery bills, albeit small.

But when I saw this poster up in my local Coles, I tweeted it and made the comment that it was reasonably amusing. Then Cameron Reilly, made what I thought was an insightful comment from a marketing perspective:

then I responded with this….

and Cameron finished it off with this 140 characters…

Which to be honest is probably the sentiments of most of Coles’ customers.

I’ll say it again – ‘Incentives shape behaviour’ – on this occasion there is no incentive for customers to care. How hard would it be for Coles to offer a shopping voucher for lost trolley returns? Or some other small incentive? In fact, it’s an insult to their customers to ask for help in a such a one sided manner. It’s very 1970’s marketing.

Startup blog says: respect your customers and reward the right behaviour.

How to make your business appear smaller

Posted on by Steve Sammartino

I was inspired by a recent article from the Australian Anthill about making our business appear bigger than we are. But in the age of authenticity, do we really want that? Sure, appearing big can be a good thing depending on our audience. Certainly, the key point in the article to me was ‘How to appear professional’. But why should professional be inextricably associated with big?  Maybe the strategy should be to appear as small as possible. The current market place is not short of large corporates who are starting to understand the importance of personal service again. An example that comes to mind is the Bank of Queensland moving to a franchised branch model – where local ownership is of strategic importance to customers. Especially in such a tarnished industry as banking.

So why would we want to appear smaller than we are? Here’s a couple of thought starters:

Service – it is implicit that service is better when dealing directly with a small group of people rather than a faceless corporation

Trust – Smaller companies are way more dependent on you as a customer. You matter more, so you can trust the fact that they will do all they can to keep you.

Underdog – People love to support the up and comer. The person having a real go. Being small should be embraced and leveraged. Often this might be the only reason people do business with you.

So in the spirit of small = good, here’s the startup blog top 10 list of how to act small. Regardless of our actual revenue:

  1. Have personal contact details of team members on your website. Email, Skype cell phone.
  2. Remove pointless gatekeepers from your office who insulate hierarchy members from real customers
  3. Use real language in all written forms of communication. Use a human voice not corporate PR brochure parlance.
  4. Be honest when you stuff up. Admit it openly and quickly. Don’t make decisions based on repercussions, but on what’s right.
  5. Write terms and conditions (if you must have them) in a language anyone could understand
  6. Never call your audience your target. Business is is not skeet shooting, it is about delighting. You are performing for an audience, who can get up and leave at any time…. or even throw rotten tomatoes.
  7. Give responsibility to individuals not committees. Give them decision authority. It’ll get done quicker and better.
  8. Don’t gag your people. Allow anyone to comment on the company and what’s happening. It’ll be the best research you can ever do to find out what’s really going on in your company. No ships will be sunk.
  9. Have a policy of common sense. Not written manuals no employee will ever read.
  10. Say, “Yes we are only a small company…. and here’s why we are better…”

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Incentives

Posted on by Steve Sammartino

Financial incentives are only useful insofar as they help people fulfill their physical and emotional needs.

Great marketers and entrepreneurs are able to circumvent the financial bridge and help people with these deep seeded human needs directly.

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How to price your product

Posted on by Steve Sammartino

Pricing is a difficult thing to get right in the marketing mix. Often we get all other 3 P’s (product, place promotion) right and that wrong…. and instead of revisiting it, we mess with the product.

There is no hard and fast answer on how to price a product in a startup or a web service, especially as it pertains to pricing models. But there are two simple pieces of advice I can give.

1. If there is an established pricing method which is accepted and liked in the market, go with it.

2. If consumers generally despise how things are priced in the category you are entering, change the model, and let everyone know about it.

In the first example the ethos is this: It’s hard enough gaining cut through with our product without adding unnecessary complexity to the decision making process. Especially when you have a new and untested offer.

In the second example the ethos is this: The pricing model becomes the main feature. It’s the reason for the switch to you, other parts of the marketing mix will then require far less innovation to gain the cut through a startup needs.

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Don’t take any advice

Posted on by Steve Sammartino

While watching Eddie Murphy on Inside The Actors Studio Interview – he said some amazing things which I thought were great for entrepreneurs. When asked by the audience what advice he’d give to any aspiring actors this is what he said:

The advice I would give an actor is not to take any advice from anyone. Because I remember when I was younger, I would ask for advice… because with actors when you make that choice, you know it deep down, and you know in your heart, you know what you wanna do and you know what your abilities are and lots of time advice could screw you up. A great advice story was from Rodney Dangerfield. I did the comic strip in Fort Lauder Dale when I was like 16 or 17 years old and Dangerfield walks in. And the whole room was ‘Oh Dangerfield is here’ – everyone bumped all the comics and no one wanted to go up cause Dangerfield was in the room. And I was so confident back then I was like Mr Dangerfield, I want you to watch my show… I want you to watch.. He said, Oh yeh, I’ll stick around kid. And he watches. And I did my thing, and I was really dirty (with my language) and after the show, he said… ‘Hey kid, you said a lot of bad things there, hey watch your language”. He gave me a big speech about my language and the words I was using, and it really took the wind out of my sails, and I was like WOW, cause I really killed that night…


Then 5 or 6 years later, I’m at the bathroom at Caesars Palace, and Dangerfield comes in and he’s in the urinal right next to me, and I haven’t seen him since that night. I look over and he looks back and said: “Hey, who knew?”

Startup Blog would love to know what advice have you ignored to advantage?

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Timing vs Time in

Posted on by Steve Sammartino

The timing versus time in argument is a long standing one in investment circles. And it gos a little bit like this:

People who are for ‘timing’ the market proclaim that smart investors should time their entry and exit for their investments. And that investors should exit when markets are too hot, for example when price earnings ratios are well above the long term average. And enter at the opposite end of the spectrum. Resulting in higher profits.

People are are for ‘time in’ the market proclaim that smart investors should stay in the market at all times. That when you enter or exit the market does not matter so long as the investment has been in market long enough. Which will result in a long term result of profitability due to the period of time in the market, allowing market averages to endure.

Both parties happen to be correct.

What neither side bothers to discuss is most important factor in either strategy. Probability. The probability of success of either the two different investment strategies. It turns out that it’s a pretty simple proposition related to risk and probability.

Timing the market – Can have very high returns (losses) but a much lower probability of success.

Time in the market – Has average returns (rarely losses) and a very high probability of success.

Numerous studies have proven the above to be fact.

How does this pertain top startups? Well it reminds me a lot of the internet and entrepreneurs attitude towards it. Most entrepreneurs believe that the only way to succeed is to win big. To sell out our startup to some digital behemoth. Our business brains have been hijacked by the Techcrunch stories and the large novelty checks presented to the likes of My Space, Facebook, Digg, Flickr and friends …

These are a little bit like investments where the market has been timed. It’s a low probability event. Sure there’s a lot more to it than a passive investment vehicle, but the probability of it happening is so to us, is so low that it’s not worth considering.

What we ought do instead is focus on the high probability events. In an entrepreneurial sense success is a very long term proposition. So our goal should be to remain in the entrepreneurial game as long as possible. As we do this we inevitability move up the learning curve and increase our chance of winning at some time in the future. Winning may not mean a cheque in the millions, but it might mean earning 5 times what we could in wages, as well as having a lot more fun doing it.

So how do we stay in the game?

Keep our costs low. Know how to bootstrap. Enjoy the simple things in life. Know that the having is in the doing, not in the owning of stuff.

Startup Blog says: Use probability to your advantage

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