Startup Marketing Skills: Eliminate Switching Costs to Increase Sales

I have been a member of a yoga studio for the past 2 years. Lately, the studio has been getting very crowded. There is barely an arm’s length between two students. I am considering quitting this studio for another one. There are many students who are also contemplating this.

But I am unsure if the grass will really be greener on the other side. Without knowing how the other studios operate, how can I be certain that leaving the current studio will be a wise choice?

How do I know if the current situation is worse-off?
How do I know if I am missing out on better quality elsewhere?
Should I take the chance and move to another studio?
What about the goodwill from the staff, relationships built with the teachers and other intangible benefits accumulated over the last 2 years?

Every customer of every product will have gripes about their products. But they won’t change to another brand, just yet. Why? Switching cost! You may end up losing a lot more by leaving your current product even though you have complains about it.

In my case, I have not acted on my thoughts of switching for 6 months. Why? One reason is that any yoga studio will require a 1 year contract to be signed. That is a high price to pay without being assured of the quality that I am looking out for. What if I sign for a year and it turns out to have the same problems? Now not only will I be stuck with them for year, I would have zero rapport with the staff and less emotional attachment.

These other studios are missing out on their competitors’ unsatisfied clients because the costs of switching are high.

There are many barriers to switching that all businesses should be aware of. Switching costs occur because customers are unsure of what the other brands offer and if they can fulfill their requirements. What if these other brands turn out to be worse? Switching costs can be either tangible or intangible.

Lessons from a messy (financial) affair

Recently my partner and I realized our accounts are very messy. We have been procrastinating far too long (this is the reason there has not been a post here for a long time).
We hear it all too often about how start-ups should keep the finances clean and in order but it never hits you till you are in the midst of it.

We now understand how crucial it is for a start-up, or a company of any size, to maintain its books in order. This is all the more for a PTE. Juggling between a day job and a business on the side, its been very convenient to put off doing what I call “non revenue-generating” tasks. Now that the business has stabilized reasonably, I find that we do not have the accounts under control.

Issues we currently face include, no paper trail of income and expenses, lack of clarity over our actual cash balance, unsure of our accounts receivables and payables and inability to confidently make forward financial decisions.

Having (almost) sorted things out, here’s what I think a PTE should do to keep things in order:

1. Do accounts every week (make sunday mornings “accounts session”. bring your stuff out to a cafe, sip a coffee and clear all those receipts for the last week)
2. Bank-in all income without netting-off any expenses paid off. (major mistake we made, resulting in a very very very very very messy situation)
3. Write checks for every single cash flowing out of the business. (checks are an amazing tool for tracking cash flow!!!)

Write in to share other suggestions to better manage finances.

Life Skills: Time Management for a Part Time Entrepreneur (Concept of ROT)

step 1: write down everything that you believe you want to get done
step 2: put a star beside any task that will result in income generation if you get it done right away/within the next 3 days. these are the thing that should be your highest priority. everything else is important but not as decisive as the “starred” tasks.
step 3: start completing those starred activities immediately. NOW. till you complete them.

as you get used to doing this, you’ll start to program your brain to “see” what are operational tasks and what are income generational tasks. for me, as a PTE, spending too much time on operational tasks means my return on time (ROT) is very low.

ROT is a measure of the amount of returns you derive from the time you put in. ROT is particularly important for PTEs as this helps you to track if all those sacrifices are worth it. The key is to calculate if you are being rewarded well for the time you are putting in. Doubters will say it takes years to develop a sustainable business and this ROT might demotivate entrepreneurs into giving up prematurely. My take is that you need to measure your progress and determine if your hours are being spent wisely. Remember, we all have finite hours and the mantra should be to maximize every minute (that’s why TV is a complete waste of time).

At the start, you should measure your ROT over a 6 month period but as you get along, you have to measure it monthly, eventually coming down to a daily measurement. By continually focusing on ROT, you will ultimately get to a stage where you delegate things to others, maybe hire employee(s) or outsource to freelancers. This way, your energy, time and focus is always kept on starting, running, managing and growing businesses.

To get to where I want, my ROT has to be very high. I typically have 6hours of business time a day. In those 6 hours, I demand to generate at least $100. How do you calculate your ROT? At the end of a month, take the net business income you have generated INTO your pocket and divide it by the total business hours you put in for that month.

The trouble with national grants

they have very strict criteria,
a brand new, fresh start-up is almost always ineligible for it,
you must display a proven and sustaining business (typically 2 years of operations) before they will consider you,
grant names are misleading (e.g. start-up loan doesn’t really mean for a new start-up)

What if we could put together a pool of sponsors to support new businesses/start-ups (MUST be less than 6 months old)?
Are there any sponsors willing to put up their money?
What criteria or parameters should any distributions have?

Write in if you are keen to participate.

Fight Club

So I finally watched Fight Club (I know, I’m outdated when it comes to movies).

I believe every wannabe entrepreneur MUST watch Fight Club. There’s plenty of business lessons in there.

Quote-worthy #2

If you’re going to fail, fail early. Then try differently.

~ not sure who 1st came up with this quote but credit to the person.

When exhaustion hits...

I finally succumbed to exhaustion. Last week was mad. Working almost 18hours for 6 days straight was very tough. By the time Saturday came around, I was losing it. By Sunday, I was snapping at people and things. I need a break.

How do you handle exhaustion while juggling your business together with your day job?

Business Skills: Asking the right questions

Business is all about asking the right questions. Only when you can do that, will you begin to experience success. But to get there, you have to actually make decisions, ask the wrong questions, fail (miserably sometimes), understand what made your questions wrong and discover what should have been asked. This is antithesis of being an employee, where mistakes are usually not tolerated and asking (wrong) questions could show you up as incompetent.

As you learn from your mistakes, you will learn to ask the right questions the next time around. And when you get the questions right, decision-making becomes so easy as the answers naturally lead you to making the right and, in turn, the profitable decisions.

Write-in and share your experiences on learning how to ask the right questions…

If you must ask...

People reading this blog might be asking, who is the person behind this blog and how qualified is he to be writing on entrepreneurship? Well, If you must know, I am…

• an investor in a US oil-well partnership (Google US shale oil boom)
• a partner in a travel business (I do new-market development and advise on e-business strategy)
• a founding shareholder of a vocational training institute that assists workers improve their employability and also move up the career ladder
• a founding shareholder of a Workplace Safety and Health (WSH) consultancy
• owner of 2 f&b outlets serving local delights

And… I work at a day job that goes from 9-5

Everything there has given me the experiences to write on entrepreneurship, specifically part-time entrepreneurship. By diving in head first, I have had a fantastic first-hand education on what it takes to get a business started up. My standing in various business interests has given me unique perspectives in managing different kinds of business issues and different types of  clients.

This blog was started to share those experiences, connect with other PTEs and tell the world that it is possible to do this! Sure its been tough sometimes, felt lost at other times and made numerous mistakes often, but those are what has brought me to where I am today and where I will be tomorrow and beyond.

Who are you?

Trials & Tribulations of a Part Time Entrepreneur

Last Thursday I faced a serious issue concerning one of my employees. Just as I was about to fall asleep, I got the call at 11.30pm on a working day. After determining that it was indeed an emergency, I rushed off to my office at midnight, together with my business partner.
By the time I got back home after resolving the issue, it was 3am. Despite that, I was up at 7.30am in the morning to go to work at my day job.

Before you start a part-time business, ask yourself: are you willing to make such sacrifices?

How trying to be perfect holds you back from success

By trying to be perfect, it actually works against you. Stalls our progress, limits your talent and keeps you from being successful.

When you say your product is imperfect, in who’s eyes is it imperfect? YOURSELF
When you say you want your product to be perfect before unleashing it onto the market, who are you making it perfect for? YOURSELF

Your product seems imperfect to you only. No one else has experienced your product, yet.

Beauty is in the eye of the holder. So is perfection. What I’ve discovered in my journey is that there is no such thing as perfect.

Will your customers see it as perfect just because you do?

Its the entrepreneurs who take the plunge and release their products onto the market that succeed. It sounds weird but the truly successful people took their products out there, got feedback, tweaked things, sent it back out, tweaked multiple times. Note that this never made their product perfect. It was brought to a level that satisfied customers demand at that point in time.

Do you see Google, Facebook and other businesses continuously releasing updates and modifications to their products? If they were striving for perfection at the first release, why then would they require updates? Are they successful now? U bet. Will they require further changes to their products? Certainly.

So stop over-worrying, get your product to a reasonable standard with a distinction against your competition and start marketing it! The market will tell you what changes it requires to be better (not perfect).

Quote-worthy

Absolutely love this quote from Mark Suster (http://www.bothsidesofthetable.com/)

“It’s better to beg for forgiveness than to ask for permission.It’s a way of life. It’s not about abusing the situations but about knowing when to push the boundaries. It’s about knowing that the overwhelming number of people in life are naysayers and “no sayers” and sometimes you gotta just roll the dice and say WTF”

Business takeaways from Yoga

Recently during the yoga class, the instructor brought up an interesting issue. For some reason, the management had decided to radically change the class schedules for this week. Obviously they must have received plenty of angry feedback and complaints from students who had tailored their lives to their preferred classes and were shocked at the drastic change.

So the instructor was explaining that the reason for the change was management responding to earlier feedback and suggestions from students on classes and schedules. And also feedback from the instructors on how to make the client experience better.

the instructor added that next week’s schedule would be more or less back to the previous schedules, save for minor tweaks.

As a PartTime Entrepreneur (PTE), two things that I take-away:

1. people’s resistance to change. People were so used to the routine of Monday-Hatha, Wednesday-Vinyasa that they cannot fathom any deviation from the norm. Imagine if a class reschedule had this effect, what would a career reschedule do to that person?

2. the management actually took in feedback and responded with changes to make things better. unfortunately, the changes were not well-received. Makes you wonder who exactly gave the feedback. Should it not be the exact students who were taking the classes? How then do we explain the frustration?

And then finally the instructor made a very very good point. When students give feedback, it should be with an explanation. Most people simply wrote-in “the class is fantastic” or “the instructor was sucky” or whatever else. Where is the because of?

How can we expect organizations to change without a “because of” attached to any feedback. Example, “your classes are awesome because the number of students is not overwhelming, giving enough space to spread my arms during the motions”. Do you think that will help the management understand that they should not pack the classes so full that students have no breathing space? Definitely!

Business expansion in 2 months? I can't believe it myself

Today, We met a childhood friend of mine to discuss business expansion plans. Coincidentally, he is also in the same industry and recently took the plunge in business. Its amazing that in just two months of operations, we are at a stage where we can confidently speak about making the next move to expand the business. Plus, its always a huge bonus to have a good partner join us in this adventure.

Remember: business is about working together, growing together and having fun in the process. Just not worth it any other way!

A book worthy of your time: The Education of Millionaires by Michael Ellsberg

Michael Ellsberg might not be an instantly recognisable name, but he has written a brilliant book on living YOUR LIFE on YOUR TERMS.

Please read it and read it well. Comes highly recommended, by me. Every entrepreneur MUST read this before starting anything.

Visit Michael's website

Memorable Service is...

not about loading everything you can offer into the client’s face,
learning about what truly pleases each of your market segment,
delivering the right value proposition with the right attitude to the right market,
tailoring your it to fit the target audience so its appreciated.

Drop in your comments about your idea of memorable service.

A PartTime Entrepreneur's Dilemma....

can be summed up in two words: Opportunity Cost!

You see, juggling a full time job and part time business means certain compromises have to be made. Everyone has finite energy for a day which you decide how to allocate to various activities.

• Should you pour more energy at your current job or instead into your fledgling business?
• Would your diversion of energy from your job be noticed and harm your promotion prospects?
• Is it worth sacrificing personal time, skip dates or spend less hours on your hobbies?

For myself, I have put most of my energy to build businesses for the past year. As a result, less energy has been used at my day job, which pays my bills.

Many times I ask myself if I am doing the right thing. What if the business does not succeed? What if all that sacrifice is misplaced? What will be the implications of this opportunity cost? By losing sight of career advancement, will I be disadvantaged later on if the business closes? Should I put in more energy in moving up my company or even looking for a new job?

I am sure other part time entrepreneurs would have faced similar doubts and not found the right answers (if there are any).

But I believe it boils down to this: is your goal to eventually go into business full time or are you contented to remain a part time trailblazer?

At some point, you will reach a juncture where you have to decide one way or another. Personally, my long term goal is be a businessperson, own my destiny and offer meaningful products to the world. But even then, doubting thoughts constantly swirl around my head, especially when I see others progressing in their careers.

So there you have it, every part-time entrepreneurs dilemma: Opportunity Cost!