What Small Business Owners Can Learn From Reality TV Shows
There’s no doubt about it: there are tons of trivial, low-budget, poor quality TV programs currently being aired, that give justification to the label of “ boob tube”.
There are talk shows that don’t “say” much. Programs that promote girls behaving badly. And a host of other fluff stuff.
But, with some selective viewing, you might be surprised to discover that there’s much to be learned on TV that can enhance professional and personal development, and shorten the learning curve.
Particularly when it comes to owning and operating a business.
Below are a few quality choices to check out, for your viewing pleasure and enlightenment.
1. THE CELEBRITY APPRENTICE
When it comes to business, Donald Trump is no chump. The creator of this weekly program, and a larger-than-life leader in real estate, provides many lessons worth heeding regularly for business owners in any field.
The story line? Essentially the show takes famous folks from different industries, (i.e. models, actors, comedians, singers, wrestlers) and divides them into two equal teams of men and women. He then provides them with weekly “assignments” or tasks where each is pitted against the other for the ultimate title of his “apprentice”. The project manager, (each episode), of the winning team is rewarded with a donation to his favorite designated charity. On the losing team, someone has to be fired.
Much like any work “environment” Donald has to deal with egos, catfights, ineffective team members, and general mayhem.
You’ll never be bored in his boardroom. Even though he’s the boss that America “loves to hate”, Donald is decisive, discerning, and demanding. Note that he always surrounds himself with a good “team” (usually his family members or trusted long time friends). He gets feedback from the various people he manages to get a broader perspective of the success of his projects. He’s a survivor. He’s tough, but he also gives praise when earned. Just a few principles and policies that today’s business owner should incorporate in their management practices as well. Visit their site at: http://www.nbc.com/the-apprentice/
2. SHARK TANK
Produced by ABC and originally launched back in 2009, this reality show features five filthy-rich investors, (a.k.a. “sharks”) that are presented with products and services from entrepreneurs where the panel has the opportunity to “buy into” the business, both figuratively and literally.
What can business owners take away from this show? Pertinent questions like why should consumers, advertisers, or lenders “invest” in their business? How are they different from their competitors? Is their price structure realistic? Does there “elevator pitch” quickly and accurately convey what their business is about when presenting to others?
Watch episodes here: http://abc.go.com/shows/shark-tank
3. TV COURTROOM SHOWS
Whether it’s Judge Judy, Judge Mathis, or People’s Court, business owners can benefit on discussions and rulings related to labor laws, liability, wrongful termination, and contractual compliance. Knowing a little about the law can potentially save money and serve as a protective measure when conducting business.
These are just a few examples of how reality shows can be used as teaching tools, much like textbooks and real-life experience, to enhance business owners’ know-how, and ultimately their net worth!
About the Author: Jennifer Brown Banks is a noted blogger, veteran freelance writer, and ghost writer.
Her blog, Pen and Prosper was chosen as a Top 10 Finalist at Write to Done’s annual contest. Banks has been featured at award-winning sites such as: Men With Pens, Technorati, Write to Done, Pro Blogger, and Daily Blog Tips.
Vist her site @ http://penandprosper.blogspot.com/
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Photo Credit: linh.ngân
Essential Tools for Scaling Your Start-Up
So you’ve built your idea into a real deal company, made it through the grind and finally making some cash. The question is can you continue to grow; can you scale? A vital part of scaling your business will be using the right tools to handle more and continue working as you grow.
CRM
A big piece of making a scalable business is having insight into your sales and marketing activities, this is where CRM comes in. Without a system to manage your sale process and measure marketing activities impact on leads and sales you are essentially working in the dark. The biggest keys in sales and marketing are measurement to see what works and what doesn’t. A good CRM system can be invaluable in helping to get to your business goals since it solves 2 major problems that happen in growing startups: data fragmentation and boosting productivity.
When it comes to selection, there are a number of solutions available including Salesforce.com, Sugar and Leads360. Depending on what your business is, the nature of your sales cycle and the technical capabilities of your team your choice will be different. In general Salesforce.com would probably be the best defacto solutions because of its ability scale from very small all the way to enterprise levels with very little need for implementation other than training. Salesforce also has the advantage of the most heavily integrated with other business applications via its massive AppExchange. That being said, given your situation you really need define, in detail, what your main requirements are given your sales process to pick the solution that best fits you. For some help I would recommend checking out this great piece that goes into much more detail from CRMbuyer on CRM for the Small Business (it says for small business but can work for anyone).
Document Management
While it may not seem vital to your business, the documents and records you have are incredibly valuable. The edge in business today is the ability to collect, retrieve and analyze your business data better, faster and more efficient than the competition. A document management system is really vital to getting most out of the documents and the processes associated with them. While in their infancy these systems were little more than a paper conversion system but nowadays they do a whole heck of a lot more. Beyond having advanced indexing to let you retrieve vital information in seconds, the best system provide insight into what steps in document processes are inefficient as well as providing valuable info on what the workload for many of your departments are.
Out of the more advanced systems available docSTAR is one to check out. Similar to the way Saleforce operates, docSTAR has an advantage in that it can scale with nearly any size business. If you’re still pretty small you can go with their more basic option that’s cloud based, but they can easily transition you to their more advanced system that includes all sorts of goodys including a thing called PackageWorks that provides detailed data on all your document processes.
Customer/User Feedback Systems
Growing a source of feedback from customers is extremely important to know how to improve your product/business and continue to grow. These aren’t really one tool but a variety to continue to measure and refine.
Web Analytics
Know what and how people are interacting with your website; Sounds simple but a ton of people in non web centric startups don’t focus on this awesome (free) data! Using Google Analytics you can learn a lot about what’s working and how/if buzz is growing around your business. I could write a whole post on Google Analytics but if you’re serious about learning it check out this Google Analytics Guide (props to Slingshot SEO).
Feedback Surveys
Too often startups rely on instinctual gut feelings to determine product or service offerings and changes…if you’re trying to scale, stop doing it. Start getting qualitative feedback from your user base and actually know what’s working and what’s not. Survey.io is an awesome tool to use that helps you understand your most passionate customers. The survey questions from the system revolves around emotion “How would you feel if you could no longer use [your product/service]” and have only 4 options ranging from very disappointed to no longer using. If you can get to over 40% of users reporting “very disappointed” then you are on your way to building a scalable business. The 40% benchmark was determined across hundreds of startups, those who were above 40% were generally able to continue their growth, and those who were under tend to struggle.
Scaling isn’t the finish line
Now that you’ve got some tools you should be looking at to scale your business it’s important to point out that once you get some traction, scaling isn’t the end of the road. There is still much work to be done to really make your business continue to grow; you’ll need to go into executive mode and rely more on data. Use some of these tools and the transition should be a bit easier.
About the Author
Gerad Hoyt is an online marketing strategist who specializes working with start-up clients. Currently Gerad is working with Pre Employment Testing software provider Chequed.com.
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4 Great Places to Find Investment Without Having To Give Away Equity
I’ve recently been looking into getting some investment in my company. I don’t need a massive amount of money, just a bit of financing to accelerate certain marketing activities. However, as the millionaire and poet Felix Dennis once wrote, making profit is all about “equity, equity, equity”. He was loathed to ever give away any percentage of his company and so am I.
This got me thinking though, where can I find money that won’t put me in big financial risk and won’t force me to give over equity. Here are four of the best places I came up with, but I would love to hear examples of others if anyone knows any?
Friends
I once read that you should never lend a friend money if you are expecting it back. That is to say the amount you lend them should never be more than you would give them anyway. Whilst it’s true that lending friends money can open up a massive can of worms, I don’t strictly agree with this sentiment. It of course depends on the amount of money in question and how close friends you are, but I certainly think it is acceptable to give and receive loans from friends. I always pay friends back a little more than I borrowed as a way of saying thank you and ensuring they are not at a loss (interest wise) for lending me the money.
Family
Unlike my friends, I hate asking my family for money. I don’t know whether it’s because I want to appear self sufficient to them or I’m afraid of being turned down, but whatever it is my family is usually last on the list of people to ask. This is of course foolish as pride should not stand in the way of progress and actually family is a very good place to get finance from. Not only are they likely to be more understanding should you delay in paying them back, but it’s also often very rewarding for the family member/s to feel like they are helping you and your business out. On the rare occasions I have received money from a family member, it has given us more to talk about when we meet and actually brought us closer.
Credit Card/Loans
Now these you have to be very careful with. Getting credit cards and loans to finance business expenses can mark the beginning of a long road to debt and despair. Having said this, many people rule these options out far too soon and they can be very effective if managed correctly.
The first thing to think about is can you manage the repayments? If you are speculating your investment and relying on this to enable repayments, it’s best to look else ware. If you have steady money coming in however that can cover the repayments, this could be a great option. The second thing to consider is your credit rating. If you have a poor credit rating then you might only be able to get credit cards and loans that have high interest rates and this is where the danger lies. The larger your repayments and the higher the interest rates, the bigger the risk to you and your company. However, if you have a healthy credit rating, you should be able to qualify for one of the many interest free credit cards or low interest loans that are available. Some credit card companies are offing 18 months interest free right now, and so this is a great place to find money for your company with very low risk indeed. Just make sure you always pay at least the minimum repayments.
Overdraft
Not many people consider their overdraft as a viable source of money, but I can assure you it is. I first started using my overdraft at university when my bank kindly gave me quite a large interest free facility. This is not uncommon and can be used as a great source of extra money with little risk. I’m not saying be reckless and rely on your overdraft all the time, but used at the right time it can make perfect financial sense. Now that I am no longer a student I don’t have an interest free overdraft, but have found that the interest I now pay is much lower than most credit cards and loans anyway, making it a great source of money still.
Just a word of warning with this one though – You don’t want to hurt your credit rating by using your overdraft too much . Most banks are happy for you to use it, but it’s best to check with them first about penalties and the impact on your rating. Be careful with your overdraft limit as well. Whilst overdraft interest rates are usually low, banks often slap you with a big charge if you exceed it.
About the Author: Duncan is a the owner of a surf clothing company that compares prices on anything from mens backpacks to girls board shorts. He’s been in business for a few years now, but is still learning every day.
Photo Credit: the.serial.chiller
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What is a SWOT Analysis?
No it’s not about someone who was really clever and nerdy at school. This SWOT is an acronym which stands for Strengths, Weaknesses, Opportunities and Threats.
What is SWOT?
Basically, it is a model which is used as a tool for analysing all the above elements before you set off on a new venture.
It’s used in education as a method for identifying development areas, in project management and lots of environments and can be easily adapted to any decision-making situation.
It is a way of taking a business objective and identifying the internal and external factors which are likely pose an opportunity or a threat to your business and it was first used in the 1960s. You can take the SWOT analysis even further and use the match or convert process where you look in more detail at how strengths and opportunities can be linked and also at how weaknesses and threats can be converted.
Create Your Own SWOT Analysis
OK so as a beginners’ guide, take a piece of paper and draw a cross or plus sign through the middle (+). You now have four segments on your piece of paper. Write S in one of the segments, W in another and so on. Once the artistic bit is done, now you can actually start to fill the segments with something meaningful.
The S and the W speak for themselves so write down all the things that you think are your business’s strengths and weaknesses. Now look at the threats and opportunities. S and O are likely to derive from internal situations and W and T are more likely to come from external forces.
If your SWOT analysis then tells you that your business venture or objective is not going to work, you need to find another idea and repeat the whole process. If you can’t minimise the threats and overturn the weaknesses, meaning that they outweigh the strengths and opportunities, then it is advisable not to go ahead.
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Essentially, what you are doing is assessing a business situation and planning ahead. Marketers use it all the time, or other methods which are similar. You can use the analysis as a foundation on which to build further and it can be used to assess competitive advantages and so on. It should form the first part of the planning process for any start-up or small business.
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So what are you waiting for? You want to set up your own business and you can do it just like anyone else. Don’t forget that it is worth concentrating on weaknesses and threats because they can be overturned and converted into great selling points. Don’t overlook them or you may miss out on an opportunity in reverse.
About the Author: Pete Moore is a UK based author and co-founder of http://www.EzWeb123.com, an award winning website builder that is ideal for any small or start up business, organization, group, club, society, association, guild or charity looking to create a professional looking website.
Photo Credit: Stéfan
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The 5 Major Pitfalls of Business Start-Ups and How to Overcome
Entrepreneurship demands the ability to understand, appropriate and make use of risk. Successful entrepreneurs are those men and women who can develop a gut feeling, hunch, instinct or curiosity into a tangible project. Among the obstacles facing entrepreneurs, one must include self-doubt, hesitation and the inability to make wise decisions. New entrepreneurs in particular can be faced with a particularly powerful kind of doubt, one that suggests that an entrepreneurial idea “cannot be done”.
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An entrepreneur must engage in intelligent, proactive risk-taking in order to succeed in a new start-up. Paying attention to the process involved is crucial, and this article explains five major pitfalls and how to overcome.
1. Failure to Transform an Idea into a Sound Business Plan
Entrepreneurial success begins with two key factors: a good idea and its subsequent development. However, having a good or unique idea is not enough to form an entire business or launch a project. Your idea must be analyzed for its weaknesses, its strengths, and how it will unfurl into a marketable and potentially profitable project.
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For this to happen, you must transform your idea into a disciplined and thoughtful business plan. Your business plan outlines the execution of your idea. It takes the abstract aspects of an idea and transforms them into something tangible. Your business plan must include a cost analysis, a timeline of potential growth with various benchmarks, the expertise required to launch your project, and an analysis of the risks involved.
2. Failure to Overcome Fear
Fear is healthy and understandable but do not let it cripple your potential success. The obstacles you face are not yet mistakes! They are simply challenges.
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For young entrepreneurs, facing the rounds of self-doubt can be particularly daunting. Consider your status as a uniquely affirmative one: you are a maverick and not a wallflower. Act as such and you will start to believe it.
3. Failure to Find the Right Mentors
As you create a business plan and conquer self-doubt, be sure to surround yourself with people who complement and enhance your project. You cannot accomplish everything on your own. Recognize where your expertise lies and where it does not and form alliances with those who add what you do not have. This can include hiring experts in finance, negotiation, marketing, business strategy, law and tax. Engage such experts from the start to optimize your project’s potential.
4. Underperforming by Over Committing
Part of recognizing where your expertise lies involves recognizing what you can and cannot do in terms of personal resources, time and effort. As a new business owner you may also have an active family life, which may include raising children, running a household and holding down a job. These responsibilities will not lessen. Understand early on how to balance entrepreneurship with the rest of your life, or else both your project and your family life will suffer.
5. Overexposure
Whether male or female, first-time entrepreneurs run the risk of encountering untrustworthy individuals who are prepared to rob you. In your business start up you may face additional hazards because some may assume that you are a novice when it comes to business negotiation. Careful preparation of your business plan and your projected capacity for work and growth should help limit your exposure to swindles and scams. However, taking a small amount of time each week and reviewing the trust you have invested in certain people, companies, facilities and practices is crucial. Do this on your own or with your most trusted advisor. The key is to weigh the risk you are taking when dealing with any person or company.
About the Author: Alex Papa is an investor and owner of several offline and online businesses. He often helps people find new business ideas, build their own small businesses and enjoy the lifestyle they desire. In his blog he also offers a business start-up audio CD course and the latest Norton 360 Coupon Code.
Photo Credit: Michael | Ruiz
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How to Decide to Quit the Day Job to Start a Business
Today is the first part of our four part series in response to a reader’s question. Today we’re looking at how to decide it’s worth quitting the safe, well paid day job to start a business.
I’m choosing to focus on the personal, emotional, side of that question and in the upcoming parts to this series I’ll cover the economical side of going into business.
You have a lot to think about and consider when transitioning from full time employment to starting your own business…let’s get started.
First Things First
The first thing you have to consider when contemplating starting your own business, and thus leaving the creature comforts of the “day job” is: Do you really want to quit your job?
When I finally took the leap and started my company I thought there was no way I would miss the 9-5. And for the most part I didn’t, but every so often I’d miss work friends, or the “steadiness” of it.
I don’t regret the decision one bit, but I still had to work through the emotional side of not working for anyone but myself.
Think about the following:
For many the jobs people perform define them. They are an Accountant, a Nurse, or a Cab Driver. When someone asks what they do for a living, they have a concrete response. There is self identity there, and some comfort, comfort they wouldn’t get from saying “oh, I’m starting a business”.
It is hard to accept that yesterday you were a successful Construction Manager, and today you are a struggling business owner.
Jobs are a big part of our social lives. After college you don’t have as many opportunities to meet new people…this is where the job comes in. Most people have a close network of colleagues, and some genuine friends in the workplace, and giving up that social outlet can be daunting.
Also, whether it be good or bad you are getting human contact day in and out, which strengthens our social associations and makes us feel “connected”.
A job provides a comfortable, structured lifestyle. You have structure at work, usually clear expectations, time off each year, and benefits. When working for yourself a lot of that structure and stability go out the window.
No such thing as coming in at eight and leaving at five with the mentality of “oh well, what I didn’t get done today will get done tomorrow”. Two weeks off a year, guaranteed? Forget it! You could have more time off than that, or you could work years without ever taking a day for yourself.
Believe it or not, like it or not, there are social stigmas that exists for people starting their own business. When I started my first business I was amazed at the reaction I got from some of my friends and family. Genuine concern about my well being, and utter amazement that I was “throwing my successful career out the window to be a dreamer!”
Some people thought that I was literally throwing it all away, and giving up! For people who don’t understand the entrepreneurial spirit I’m sure it seemed that way, while from my perspective staying in my job was giving up.
As a would be entrepreneur you’ll need to make the decision for yourself if giving up the above is worth it to pursue your dreams of working for yourself.
Is Starting a Business Right For You?
After you’ve come to terms with some of what you’ll be “missing” by giving up the day job, you’ll still need to assess if starting a business is right for YOU. It may be a dream, it may be something you think you need to do in order to better your life, but unless you have some of the characteristics listed below you will have a long road ahead of you.
- Do you enjoy making decisions and being in charge?
- Are you willing to take risks and accept the outcome?
- Are you adequately capitalized?
- Are you flexible, and can you adapt to change well?
- Are you good at short and long term planning?
- Do you have strong people skills and build relationships easily?
Let’s look at these one by one.
Do you enjoy making decisions and being in charge?
From the first day you decide to go into business you will be the decision maker for your operation. From your business name, to who you will use as a supplier, to whether or not to hire help, these decisions and more you will need to make.
Also as your business grows you will continually be accessing and making decisions that could positively or negatively affect the success of your business. When running your own business there is nobody to hand off the tough decisions too or escalate an issue. You will need to be comfortable in this role, and able to act decisively when needed.
Are you willing to take risks and accept the outcome?
The key word here is to accept the outcomes of the risk you take. Many people say they are okay with risk, or that they don’t have a problem taking a risk, but the more important side of that equation is the acceptance of the outcomes those risk involve.
If for example you choose to put your life savings into a business venture because you think it’s “worth the risk” then you must be able to accept the outcome of loosing your savings if the business does not perform as you thought it would. I’m not saying you will loose your life savings if you start a business, but even something that has a 90% chance of success still has a 10% chance of failure and you need to be able to accept the downside possibilities.
Are you adequately capitalized?
This isn’t to say you need to be wealthy or rich to start a business, but you will need to have some money. While starting a business on a shoestring is possible, to give your business the best chance for success having some money as reserves is a must.
While there are programs to get the money you need to start your business, buy products, and market, some emergency reserves are a good idea in case personal expenses creep into the mix as well. I can’t tell you exactly how much money is enough (that will depend on the type of business you start and what your personal financial needs are), I can say without a doubt the more the merrier.
You will have a little more leeway if you intend to keep working while setting up your business, but if you intend for your business to support you and your family from day one cash reserves are necessary to bridge the gap until your business replaces your earned income. The last thing you need is to be worry about how to pay the mortgage when you should be focusing on building your business, and concentrating on operational efficiency during the startup phase.
Are you good at short and long term planning?
Planning is extremely important when starting a business. You will need to be comfortable planning 1 month, 6 months, 1 year, 5 years, and even 10 years down the road to properly address the needs of your business. The last thing you want to do is start your business without a plan for the future only to see a successful idea get blindsided 1 year down the road because of something you didn’t plan for.
Do you have strong people skills and build relationships easily?
This many be the most important skill a business owner can have. All businesses are built around relationships with people…I don’t care what product, or service your business sells, or what market you operate in, your ability to make connections with people and build relationships are the cornerstone to being successful in the long term.
Hedge Your Bets
After assessing all the above if you still want to take the leap from 9-5 to business owner, you may consider hedging your bets a little bit. You don’t have to jump from steady pay check to business owner all in one day.
- Can you slowly transition into working for yourself before leaving your regular job?
- Can you cut your hours back at the regular job in order to work on your biz as a side project?
- Can you contract what you currently do with your employer, freeing up more time to work on your own business?
You may want to see if you can baby step your way into your own business. You’ll have a bit of a safety net if things don’t work out, and you’ll get a flavor for what running your own company feels like.
When you do decide to transition to full time business owner you’ll have more confidence that it will work out, and you’ll be sure that the business fits your needs emotionally, as well as financially.
Putting it All Together
The decision to quit your job goes a lot farther than just coming up with a good business idea. And as you can see there is a lot to think about. A good business idea and a plan will get you a long ways, but knowing yourself and working through all the above will lay the foundation for an easier transition.
None of this is here to scare you, or to talk you out of making that leap, but the more prepared you are emotionally, and the more you know how a business will fit with your personality, goals, and lifestyle, the better chance you will have of making it a success.
Coming Up
Coming up next in this series we’ll look at:
Stay tuned…
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Q&A With Jim Sinegal Founder of Costco
I had the pleasure of attending a Q&A session this morning with Jim Sinegal, co- founder and CEO of Costco.
Costco racks up around $53 billion in sales, has over 500 outlets and employs over 120,000 workers. For his efforts as the founder of one of the nations largest retail companies, Mr. Sinegal takes home about $350,000 a year for his troubles.
Summarizing the Q&A
What impressed me with Mr. Sinegal was is unassuming, down to earth persona, mixed with a laser sharp focus on what his business does. In every answer, to every question it was apparent he not only knows the retail business inside and out, but the business model he has set for Costco permeates everything his does – he has never wavered.
I thought I’d try to summarize some key points from his talk this morning and hit on some of the highlights and “ah-ha” moments I had.
As you read through his thoughts and ideas, keep in mind he didn’t start the $50 billion dollar behemoth until he was nearly 50 years old. For those of you who think there is only one window of opportunity to start your own business, let Mr. Sinegal serve as a model for what can be accomplished at any stage of life.
Also keep in mind that Costco didn’t start out as “Big Business”, it’s beginnings trace back to 3 outlets in the Pacific Northwest.
On Starting-Up
Sinegal spent nearly 25 years in retail before he decided to build a retail business of his own. Here are some key points he made about the start-up phase:
- Have enthusiasm – he truly loved retail
- Be an expert in your field – he knew retail backwards and forwards
- Understand you can’t do it all, you’ll need to surround yourself with good people
- Know your market – Sinegal was from California and decided to start his company in Seattle, WA which market research told him was one of the “least competitive” regions in the US when it came to retail competition.
- Have a long term outlook – “Short term outlooks lead to short term goals”
- Be realistic about goals, but also stretch yourself – originally Costco’s goal was to get to 12 outlets. They thought that was the most they could do. He said he still has the original business plan with that number on it, and it’s a bit embarrassing now.
On Employees
Sinegal runs his company on the belief that if you treat people good, good things will happen. In every answer he gave, he referenced how important the employees are.
- Hire great people, who identify with your business
- Treat them well
- Give them good jobs
- If you do right by the people working for you, they will build you a successful business
On Management
Costco managers are always promoted from within. As Mr. Sinegal put it, “I can’t conceive of a time when we’d hire management from outside the company”.
Therefore his thoughts on how to manage were from the perspective that any one of the employees could some day be running the company.
- Training happens constantly – not just in classes or training sessions
- Grow your own talent – those are the employees who get what your business is trying to do
- Model what you want from your employees – Sinegal said that when he goes to a CostCo store, and takes the time to pick up a piece of trash on the ground, the employees see that and immediately know it’s important and therefore do it themselves.
On Business
Above I said Mr Sinegal has a laser focus on what his business does, and that focus is the core of what makes his company successful. A few of the highlights:
- Know who your customers are and why they do business with you
- Stay focused on your core business.
- Don’t try to be too much to too many, you’ll dilute your business model and loose focus
- Know on what level you compete – For Costco they compete on quality and price. They want the highest quality merchandise for the best value. Mr. Sinegal shared a story of selling designer jeans for $29.99 and selling out as quickly as they could stock the shelves. Every retailer in the nation had these jeans priced at $50 and above. He was asked why not move the price up just a bit, maybe capture another $2-3 per jean and still be the lowest price. His answer – that’s not our business. Our business is to give the customer the best value we can.
On Growth
Mr Sinegal sees no slow down, in fact he mentioned:
- Still opening new stores as we speak, with new stores opening in Hawaii, and parts of the Northeast
- Same growth plan as before – open 50-60 Costco locations a year (even one planned for Australia)
- Internet sales are growing, nearly $2 billion in revenue from the net
- Will run the business for long term sustainability. He wants Costco to be here long after he’s gone.
On Marketing
Someone asked how in the early stages of growing a business he could get away with not having any advertising, his answer:
- Word of mouth is the most powerful marketing tool there is
- It sounds better when somebody else talks about you than when you talk about yourself
- Costco still has no PR department and probably never will.
On Ethics
As Costco grows, becomes even more multinational, and his span of control widens, somebody asked if ethics plays a bigger part in his thinking. Again, his answer was very straightforward. He said they will continue to do business like they’ve always done:
- Obey the law
- Treat customers right
- Treat employees right
- Treat suppliers right
If they do the above, he felt ethically they would be just fine.
On Challenges
Of course he was asked what he see’s as the biggest challenges facing Costco, especially in tough times. His answer to this question struck more of a chord with me than anything else he said. Essentially,
- The biggest challenge will be what it always has been, not to loose focus of what we do, and our business model
- Focusing on our core business, and ensuring we do not loose sight of that, transcends any economical challenge we may face.
- He sighted other retailers who lost focus, and eventually lost their way and their business/market share.
Other Interesting Anecdotes
Mr Sinegal seemed to be a very unassuming, down to earth guy. Which means many of his answers were peppered with stories, and he really is quite funny. Here were some of my favorite facts/stories.
- His first retail job (just out of college) was a one day employment to help unload some mattresses off a truck and into the company’s warehouse. He did his job, but they didn’t pay him at the end of the day ($1.25/hr), instead they told him to come back the next. He came back, they had more work and again didn’t pay him at the end of the day. He said he just kept coming back everyday, hoping they’d eventually pay him, and after leaving the company 25 years later he felt it all worked out okay.
- The maximum markup at Costco is 14%. Meaning you never pay more than 14% more than Costco paid for the item.
- Costco has some of the lowest shrinkage in the industry (unexplained disappearing of merchandise) at 1/10 of 1%.
- Those people at the door who check your receipt before you leave aren’t just looking for theft, they find as many mistakes in the customers favor as they do against. It’s another way to make sure you got the best value.
- He likes to visit as many of the stores as he can every year, and still “perpetuates the myth” that he goes to all of them once a year. He said he likes them to think that he can show up anytime!
It was great getting a few minutes in the same room with someone so successful. After listening to him talk it is satisfying to know that great businesses can be made and sustained on the back of a set of core values, and that even at his level he hasn’t wavered from what makes his company great.
For Costco that means giving customers the best value, at the best price. Treating people right, and with respect. Acting ethically, and most importantly never loosing sight of what the purpose of your business is.
Inspiring.
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Top 10 Must Have For a Start-up Success
What are the ten things start-ups need to be successful? According to Frank Levinson, it’s the following.
And Frank may know a thing or two about start-ups, considering he founded Finisar in 1988 with $60,000 and 12 years later hit the Forbes 400 list of richest Americans.
10 Must Have for Start-Up Success
- Spending everything on a good team and equipment
- Letting people know the company is in business
- Raising limited capital
- Taking stock of a company and determining its needs
- Being open to opportunities
- Having a supportive family
- Targeting mass markets, not just niche markets
- Having confidence in new ideas
- Acquiring and selling to real customers
- Choosing a great partner
Did Frank cover the essentials for start-up success? Let me know your thoughts in the comment section below.
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