You cannot be successful in small business without having good negotiation skills. You are required to negotiate at each and every step while operating the business – with vendors, customers, employees, franchisors and so on.

Some people are natural born negotiators and they even enjoy the experience. Many others, however, think of negotiation as necessary evil they have to deal with and dread dealing with it. No matter which camp you belong to learning good negotiation skills and understanding the rules of negotiation will help you becoming successful small business owner.

I discussed 5 fundamental rules of negotiation for small business in the earlier post. In this article, I would like to elaborate more on what virtues are necessary to help you become successful negotiator. Not everyone is born with these virtues, however, with little practice and understanding you can learn and improve your winning odds at the game of negotiation.

1. Patience – If there is one virtue you must possess for successful negotiation it is this. Negotiation is a long, arduous process not unlike the game of “who blinks first”. Those who can hold out the longest are likely to succeed at the end. When the other party senses that you are in rush to wrap up negotiations, they will take advantage of the situation and extract more concessions from you during the process.
2. Poker Face – This is probably the second most important virtue to have during negotiation after patience. While it is important to be fair and honest during negotiation, it does not mean you should open up all your cards. The more cards you keep to your chest the more leverage you will have during negotiation. Even simple expressions and body movements can make a big difference in the outcome when you are sitting face-to-face during negotiation.
3. Open Mind – Negotiation is all about give and take. While everyone would like to have the whole cake by himself, in reality it never works that way. People who are willing keep open mind and compromise are able to get ahead. Keeping an open mind also involves looking at the big picture rather than staking a claim to one position and sticking to it throughout negotiation. As mentioned in earlier post, you have to look at all options besides price to get the best out of negotiation.
4. Ability to Listen – People with big mouth put themselves at great danger when negotiating. You need to learn to use less of mouth and more of ears. The more you can listen to the other party the better position you will be in. This results from increasing your understanding of other party’s wants and needs and also stops you from revealing your positions. As we already mentioned, having a poker face is very important during negotiation.
5. Planning and Preparation – Having more information at your disposal before you go into negotiation has a huge impact on the outcome. It enables you come up with the plan of action before negotiation as well as present your arguments in a convincing manner during it.

Have we missed any other important virtues? Do let us know in the comments.

Small business owners who do not have good negotiation skills risk losing big (or at least not earn what they deserve). Many business owners find negotiation very stressful and try to avoid it as much as possible. They think of negotiation as a long, drawn-out process where one party wins at the expense of other, and when it’s over the “loser” hates the winner for not giving enough. It doesn’t have to be this way. Professional negotiators tell us negotiation is a skill where it is possible for both parties to come out winners and still be “friends” at the end.

To clear the misconceptions about negotiation we have come up with 5 fundamental rules that you should keep in mind. Once you accept these rules and arm yourself with the tactics to use them effectively you can not only “win” the negotiation, but also feel good about it at the end, and make the other party feel the same. Here they are:

1. Everything is negotiable. Many people think of negotiation process as coming up with a final price of something. This is a very limited view. There are many other aspects of that something you can. And should, negotiate on. While price is certainly the biggest factor, you can focus on exchanging warranty, quantity, payment terms and other ancillary items. The more options you have at disposal the better success you will have in coming to an amicable agreement.
2. There always exists a win-win solution in negotiation. Ok, maybe there are some extreme cases where the parties just cannot come to an agreement. But those are very few and far-between. In most other cases if you go into negotiation with open mind and variety of options, you will find an agreement that satisfies both parties. The key is to think of negotiation as win-win rather than win-lose process.
3. Honesty and fairness wins at the end. You don’t have to be mean and manipulative to win at negotiation. Humans will reciprocate to other humans in the same way they are treated. Honesty breeds honesty. Once in a while, people will give in and let the manipulation win, but you need to remember that burning the bridges is never a good idea. You never know when you may need to come back to the other person you have manipulated. When that situation arises he / she is going to remember the past experience. Now, being honest and fair doesn’t mean you have to open up all your cards on the negotiating table. You can be honest and fair without telling everything.
4. Keeping communication lines open is crucial to reach an agreement. Just like marriage, if the negotiating parties are not talking they don’t know what each other is looking for. Negotiation is a give-and-take process and for it to work both parties have to let the other know what they want. Novice negotiators get frustrated easily during negotiation process and throw down the gauntlet. Many of those impasses can be overcome by taking a brief timeout and resuming with a different viewpoint in conversation.
5. Preparation is key to success. The person with the best preparation is always the one who gets what he is after in the negotiation. Preparation involves learning the facts about the situation, finding the needs and wants of the other party and gathering data. Information is power!

What is your experience with negotiation?

The actions you take in the first 90 days after you have purchased a business are crucial for its long-term success. We showed what things you need to take care of in the first 30 days after you buy the business. I asked you not to take any major decision in that time, but to learn and document everything about the business by asking questions and observing. By the end of 30 days you should have a plan of action to improve the business in the coming days and months. The plan of action needs to fall in two categories – short-term tactical improvements and long-term strategic direction.

Your focus in the first 90 days should mostly focus on short-term improvements. The idea is to get quick benefits by taking advantage of “low hanging fruits”, while at the same time keeping long-term direction in mind. These steps you take in the first 90 days will position your business well for coming months and years.

Let me emphasize that you still want to refrain from making very sweeping changes in the first 90 days, but rather take baby steps towards long-term vision so that you can backtrack and change direction, if needed. With that in mind, here is a list of what you should focus on in the first 90 days.

• Employees – At the end of 30 days you should have a pretty good idea about who your best employees are and which ones will not cut it. Now it’s a good time to incentivize the best employees by giving them performance based bonus plan. You also need to make decision about what to do with the rest – most likely letting them go. If you have any trusted employees from past ventures you should bring them in at this time. Also, if you have asked previous owner to stay on during transition, now is the time to release him.
• Customers – You should also have a good understanding of your best customers at the end of 30 days. You need to ensure they continue to do business with you by working closely with them in the 90 days. Now is also the time to make any changes to the terms and conditions to contracts, if necessary. Also, it is important to prepare a marketing plan to attract new customers. Having a “Grand Opening” day to appreciate existing customers and attract new ones after 30-40 days is a proven technique.
• Vendors – I suggested in the last post that you should refrain from signing any long-term contracts with the vendors in the first 30 days. Within 90 days you should still try to stay away from signing 2-3 year contracts. Your needs will change based on the strategic changes you will implement after 90 days, so you don’t want to get locked in. In addition, you should explore other vendors to see if you can obtain better pricing and terms compared to existing ones.
• Facility – It may be a good idea to repair and spruce up the facility and equipments in the first 90 days if you have not taken care of already. You want to give the place your own signature look. Finish the remodeling before Grand Opening day to get maximum benefit out of it.

Did we miss any important points? Be sure to let us know in the comments below.

The first 30 days after you buy a business is the most critical time in owning a new business. Done right it will take your business to new heights, but done wrong you will be paying the price for a long time.

Buying a business can be exciting as well as nerve-racking for both, veteran as well as first-time, business owners. On one hand, you are eager to implement all the new ideas you have thought about during homework done at the time of due diligence. On the other hand, you could be losing sleep from the thought of all the things that could go wrong right after you step in.

While you may be tempted to go in and start making all the improvements you have thought about, this could be a big mistake. The best thing to do in the first 30 days of owning a new business is to do nothing. That’s right, don’t take any major action! As counter-intuitive as it may sound the best action to take is to watch and learn as much as you can about the business, including customers, employees, competitors and everything else. In addition, you will want need to take the actions mentioned below to make sure the transition prepares you to do what you had planned.

• Schedule an all employee meeting on the first day to inform them about the change in ownership. Make sure to bring the previous owner to the meeting and have him deliver the news. In addition, give assurance to your employees that you intend to run the business in the same fashion as before during transition.
• Have the previous owner stay with you for some time to help you get up to speed and provide training. The previous owner will be very useful resource for you to learn everything necessary to run the business.
• Identify key customers and call them personally to inform about the change in ownership. Provide them assurance that you will continue to provide the same level of excellent service as before. Also ask them for what can be improved to serve them better.
• Talk to critical vendors to ensure that you will continue to receive the supply. Sign necessary contracts to guarantee the supply of material. Having previous owner with you helps smooth this transition.
• Get involved in the community. Meet your neighbors. Go to association or Chamber of Commerce meetings and introduce yourself as new owner. You never know whose help you will need in the coming days.
• Look at the reports and key metrics to get better understanding of the business. You probably have looked at some of these during due diligence, but now you have an opportunity to dig deeper and get better understanding of how the business is run.
• If there is customized technology or equipment being utilized, learn it from previous owner and employees as quickly as possible. You don’t want to get stranded by technology at a critical time.
• Avoid signing any long-term contracts during transition. You will be inundated by marketing and other vendors eager to get your business, but you want to take time learning about business before getting locked into long-term contracts.
• Finally, ask lots of questions to everyone around you, including previous owner, employees, customers and vendors. This is the time to watch and learn. After the honeymoon is over in 30 days you will be expected to provide answers to all those people.

Did we miss any important point? Be sure to let us know in the comments below.

Many small business owners think of marketing as a black magic that involves spending lots of money in advertising in the hope that it will magically bring additional customers and sales. They get frustrated when not as many customers as they had hoped show up and the scant few that do never return again. The worst part is business owners feel they have no choice but to continue doing this because they will lose even more customers and sales otherwise. As a result, they end up wasting their hard earned money on marketing when they could have received better return on their money.

While consulting with number of small business owners we have uncovered several recurring mistakes that many of us make in terms of marketing. By simply understanding those mistakes and taking steps to avoid them from happening with your business you can not only save money on marketing, but also get much better return. The list below shows 7 common mistakes many small business owners make. We also show references to other articles that provide additional details and explain how to prevent them from hurting your business.

1. Spending money on advertising without having good understanding of target customer base. Not all customers are created equal. You first have to select the right customers for your business and target your marketing to attract those customers.
2. Not getting involved in the community you do business in. Just like any good citizen it behooves you to give back to the community that gives you business. The best part is community involvement can improve your sales. What can be better than having win-win situation for all parties?
3. Putting marketing ahead of products. Ok, repeat after me several times – “great marketing without having great products is a waste of money.” Many small business owners think that just by enticing customers with slogans and coupons they will not have pay as much attention on products. This is a big mistake! You just cannot build sustainable business on marketing jargon alone, period.
4. Not backing marketing claims with customer service. Here is the scenario – you advertise how great your products are and promise them to give the best customer service on earth. There is only one problem – you forget to tell your employees about it or you hire employees who do not care for your passion for customer service. How long your marketing claims will last?
5. Spending money on acquiring new customers, while ignoring the existing ones. This is probably the most common and most harmful mistake you can make. As we all know it is easier and lot less expensive to hold onto existing customers than getting new ones. Do whatever you have to hold onto existing customers.
6. Not differentiating between “bad” and “good” customers. As any businessmen will tell you not all customers are equally profitable. You have to learn to identify and deal appropriately with “bad” customers. At the same time, you also have to learn to pamper your best customers.
7. Not leveraging low-cost or no-cost marketing tactics. Contrary to what marketers have led us to believe, marketing doesn’t have to cost lot of money. In fact, I would argue that good marketing doesn’t cost you anything. Ever heard of “word-of-mouth”! There are number of ways by which customers can do marketing for you, free of charge!

Which one of these mistakes do you think is most common? Why?

Effective interior and outdoor signage is essential to the branding efforts of almost any business. From wall decals to billboards, signage can help bring in new customers and retain the attention of regulars. To improve your signage, consider placement, graphics, short messages and frequent changes.

Better sign design and placement not only improves the image of your business, but it can help increase your sales from existing customers as well as by attracting new ones. The tips provided below will help you improve your business sign design.

Proper Sign Placement

The right sign in the wrong place is useless. Signs in buildings should be placed at eye level. Drivers must be able to read outdoor signs without taking their eyes off the road for too long. If they have to crane their necks, your sign efforts will have been in vain. If there is a lot of foot traffic in front of your location, consider a sandwich board on the sidewalk to capture people’s attention as they stroll by.

Branding With Impactful Graphics

Make your sign eye-catching. Vivid colors, a large, simple font and strong contrast are visually appealing and easy to read. Think of the color combinations the world’s biggest players use to brand their famous names. McDonald’s red and yellow color scheme is bold and basic. You can’t miss Burger King’s primary colors of yellow, red and blue against a white background, and who could forget Target’s stark red-and-white bulls-eye? Keep signs impactful but on-brand by pairing a bright color from your brand pallet with a neutral such as white or black. Colored text on white, or white text on a colored background are highly-legible combinations.

And now for this brief message…

There’s a reason TV spots are usually short. You’re trying to get prospective customers’ attention, not provide them with reading material. A few catchy words are easy to read and digest, and the more short and memorable they are, the likelier they are to be recalled later. It’s even better if you can design the message that can offer an obvious benefit to the reader.

Mix it Up

Plan to create several variations of the same signage so you can switch it up from time to time. Customers like variety, and changing out your wall decals and other business signs will keep them interested. For example, regular customers at a pizza joint usually have a few minutes to look at the restaurant’s wall decals while waiting for carry-out orders. They’re likely to notice a new decal if it contains relevant information they haven’t seen before. Wall decals are also an excellent way to decorate a store location for seasons or holidays without bulky displays or messy paint jobs.


Do you have any other tips for others? How has your busienss sign improvement helped increase sales?

If there is one company that is loved by its customers, employees and shareholders equally it is Apple!! It is hard to find any other company that generates the excitement that Apple does. The company is valued at almost $600 Billion that is estimated to reach $1 Trillion in too distant future. That amount will be higher than the GDP of many countries on the planet. The amazing thing is even at this size Apple manages to grow its revenue and profit at astronomical rate of 70-80%! There has never been a company in the history that has achieved what Apple has in the last 10 years.

While it may not be possible for small business owners to achieve success at the same level as Apple there are important lessons you can learn that will help you grow your business. Below we analyze Apple’s critical success factors and explain how you can apply them in your business.

• Focus – This is one thing that differentiates Apple from most other companies. They have razor-sharp focus on everything they do and take it to perfection. Any product that comes out from Apple is a master piece! They are able to do this by focusing their resources on few items – there is only one model of iPhone or iPad introduced every year in contrast to 20-30 models introduced by their competitors every year. With limited resources it is equally imperative for small business owners to focus. By applying them on fewer bets you can use them more effectively. We showed how you can do this in earlier post on how to focus your resources by deciding not to pursue all opportunities.
• Must-have Products – The earlier point on focus leads Apple to introduce products that are loved by their customers. Just look at the lines that are formed outside their stores whenever new products are introduced. Because of this they are able to charge premium price for their products and high margins. In the fundamental rules of marketing we explained why great marketing without great products is a waste of money. Apple clearly proves this. Focus first on making great products and customers will follow without much marketing effort.
• Buzz Factor – Apple is known for its secrecy both inside and outside the company. Very few people even within the company know what Apple is planning to introduce in the coming years. Months before the products are introduced the media is buzzed with speculation on what it is going to be. The free publicity that Apple gets as a result is priceless. While small business owners will never be able to match Apple in this area there are things they can do to mimic. They should focus on surprising customers with customer service that goes beyond their expectations. They can also try low-cost marketing tactics that can generate media buzz. Here are some tips on how to generate marketing buzz for your business along with practical tips on generating marketing buzz.
• Succession Planning – When Steve Jobs passed away last year everyone thought the company was doomed. After all, he was considered the man behind everything Apple was doing. However, in the months since his death not only has Apple survived, but thrived. While you may not immediately have to worry about handing your business to someone else you can learn to delegate so that the business continues to run well in your absence leaving you with more free time to focus on important strategic matters.

What other lessons can small businesses learn from Apple? Let us know in the comments below.

What small business owners in his right mind would not treat his customers well if that leads to business growth. Yet there is no shortage of companies, large and small, that fail to take care of this basic fact resulting in disastrous results. Try calling customer center of your telephone company and see how long you have to wait before being able to talk to someone. Or go to a mall and study look at the expressions of customer service reps when talking to customers. How come very few of them bother to smile?

So, why is it important to treat customers properly?

It is self-explanatory, but formal studies and anecdotal evidence show that great customer service leads to higher sales. This results not only from repeat customers, but also from new customers who hear about your business through word-of-mouth. This generates perpetual cycle that eventually enables your business to scale new heights. This is how Netflix became a juggernaut in DVD rental and how Zappos.com built a billion dollar shoe business. before selling to Amazon. Customer service is one of the several ways in which small businesses can compete with and beat their larger rivals at their own game.

What does it mean to treat customers as human beings? It involves several aspects all of which relate to basic human need to be recognized and interacted with.

• Greet them by name – Let’s face it. Customers want to go where everybody knows their names. The simplest and cheapest way to flatter someone is to welcome him by properly announcing his name. Just try it. Works every single time!! This is where small businesses have a leg up on their larger rivals. As an owner you have established close relationship with your customers over years.
• Ask about their needs – There are two ways you can sell to customers. You can either push your products to them or you can have customer pull themselves. Pushing your products with hard sell techniques works for once or twice, but eventually it will turn off your customers. A better approach is to spend time in understanding their needs and then providing suggestions. Let customers decide (pull) what will suit their needs based on your suggestions.
• Have a casual talk – I have learned the power of casual talk from my family doctor. Whenever I visit him (which is may be once a year) the first thing he does is talk about my family, my job and other things going on in life. Only after he has spent 5 minutes with this casual talk he asks reason for my visit. How many doctors do you know who work like this? I will never leave him for another doctor. This is the power of casual talk.
• Meet them face-to-face – In this age of phones, emails and video chats it is easy to connect with customers virtually. And it does help when you are short on time. However, as long as humans exist there will be a need for personal, face-to-face meeting. No amount of technology will replace this. Whenever you have an opportunity, make a plan to meet with customers in person even if it is for a short duration.

Growing your business is all about having repeat customers who will help you find new ones through word-of-mouth. Establishing personal connection with them is how you can achieve this goal.

What do you think?

Do you want to start an online retail store, but are always afraid of effort and money required to do so? I have come across a cheap and elegant solution that has the potential to help you with it.  The solution comes from a start-up called Goodsie.  I checked out their web site and was very impressed with its functionality and ease of use. You do not need to have computer programming knowledge to use this software, which is a great relief to many of us who do not have that skill or don’t want to deal with that hassle.

While online retail stores have been around for some time, small business owners have been at a disadvantage against their larger rivals due to their lack of skills and money required to build and run online retailing. You can use Amazon or eBay, but you are likely to be drowned out amongst thousands of businesses who are jockeying for the top position. That is why I strongly believe in having your own online store with a unique identity that you can control. Goodsie lets you do that easily.

Goodsie has number of interesting features provided out of the box and all of them can be used with simple mouse clicks. You are able to design the store without any programming knowledge and customize it to create its own identity. It also enables you integrate with PayPal or Google Checkout with minimal effort. The features that got me most excited are email marketing and sales analytics. These are the areas where large competitors hold big advantage. Small business owners have not been able to leverage these features that are paramount for the success of online retailing. Goodsie has excellent functionality in these areas that small businesses can take advantage of. You can even setup your own Facebook store.

The pricing is very reasonable in my opinion. For a flat $40 per month you get all these functionality. If you are not interested in Email marketing or sales analytics (Not sure why you wouldn’t be) the rate drops to just $15 per month.

I think this is great news for small business owners who always wanted to create online store, but were afraid because of effort and money required. Be sure to check out the video on their web site that showcases all the features in action. Also, visit the example stores created by their customers to get an idea of how it looks in action.

Let me know what you think after you have visited their web site.

What is the best way to get rid of products that are not selling well? You can reduce the price to generate more demand. But there is a way better way to manage it. It is known as scarcity principle and it works by making customers believe that the item will not be available if they wait longer. The technique works because of human psychology that makes people want something more when they are told they cannot have it. Fear of losing out on something can be a powerful motivator.

You don’t have to use this principle to sell only slow moving items. You can incorporate it in the normal marketing practice to increase the sales of regular products. If you look around you will notice that many businesses are already using this principle in various forms. QVC always shows how many items are left when promoting their products on television. The last few items are always sold very quickly. When a sales person tells us that the item is out of stock, but he can probably find it at another store your reaction will always be to order it so as not to miss out from that store too.

There are several approaches you can take to implement this scarcity principle in practice as shown below:

• Give Limited Time Offers – This is probably the most widely used approach. The advertised sales have time limit after which customers have to pay full price. You can even take this one step further and provide an outrageous offer that lasts for very limited time. How about 50% off for only 1 hour!! This can produce more excitement than having a week-long sale. The best part is it can even generate residual sales after the offer has expired.
• Produce in Limited Quantity – Fashion designers use this technique to create buzz for their clothes or fashion accessories. If everyone in the world possesses an item you are looking to buy what’s the point of buying it! It’s only when you can stand out from the crowd by showing a unique item you will want it badly. Small business owners can use the same technique by producing a unique item in limited quantity and selling it at higher price.
• Show Quantities Left – This is a variant on the earlier limited quantity tactic. As mentioned earlier QVC uses this very extensively on television. You can create a signage – physical or digital – that shows that there is only X items left after which there will be no more. You can be sure those remaining items will be snapped up in no time.
• Create Competition amongst Customers – This technique is borrowed from the world of auction. Have you ever seen two bidders fighting for an item in the auction? It’s amazing how the price of the item gets out of hand without any rationale. Auctioneers have mastered this art and you can use the same for your business. If you are a car salesman have two potential customers play against each other to get the highest possible price.
• Emphasize the Loss – Research shows that customer react positively and quickly when they are shown what they will lose by not buying a product rather than what they will gain from buying it. If you are selling mattress tell them how much sleep they will lose by buying an inferior product as opposed to showing the advantage of your products. Is it worth saving $200 and suffer from sleep deprivation for the next 3 years? Of course not!

Have you used scarcity principle using one of these or any other tactics? If so, we would love to hear from you in the comments.