Matthew Roszak's Entrepreneur Blog

The online trend of businesses offering a daily deal or coupon is quickly shutting down. A recent poll showed that the majority of people are feeling a sense of fatigue from having to sift through sites or emails to find daily changing coupons. Recently, Facebook and Yelp announced that they will be eliminating and scaling back its services respectively. The largest purveyors of this trend will continue, like Groupon, but it would behoove most businesses to abandon this model. That goes double for smaller companies or ones that are just starting because it seems this once fashionable trend has become tiresome and ineffective.

By Tomio Geron

Just a few days after Facebook said it was shutting down its daily deals service, Yelp is scaling back its daily deals service.

About 15 sales people in Yelp’s daily deals business are being re-assigned, Bloomberg reported Monday. On Friday, Facebook said that it was closing its own daily deals service after four months.

The moves raise increasing questions about the proliferation of daily deals websites. Groupon, which has filed for an IPO, and LivingSocial are the leaders in the space. But dozens and dozens of other sites have popped up offering similar deals. And other existing companies such as OpenTable, daily newspapers and travel websites have jumped into the fray.

The result is daily deal fatigue. About 52% of people surveyed in an Experian Hitwise report said they were overwhelmed by all the deal emails they get. From the peak week in June, overall traffic to daily deal sites was down 25%, according to the report. Traffic to Groupon was down nearly 50%, while traffic to LivingSocial was up 27%. This report does not include mobile or app traffic.

Yelp launched the deals service last year and expanded to 20 cities this year. Yelp will apparently continue to offer some discount services for merchants. Yelp told PaidContent: “Email-distributed deals (including Mobile Deals) will continue to remain an important part of Yelp’s product offering to help small business owners’ attract new customers, along with local search and display advertising, and deals business owners can self-serve post on their Yelp profile pages.”

For Groupon and LivingSocial, how do they keep people buying deals, or even opening emails in the long-term? And for others in the space that don’t have the scale of these two companies, the questions are tougher. If Facebook and Yelp can’t make it work, how can these smaller competitors?

Read more here 

By preparing for obstacles such as low cash reserves, high customer acquisition costs, and burnout, your business can improve it’s chance of surviving

Starting a new company or business is always a daunting task, especially given the disheartening statistics on the amount of start-up failures that occur soon after starting. However, if a business can prepare for the worst situations and have a plan ready to go if and when those situations arise it can quickly lead to a stable and prospering company. The article below details ten most challenging obstacles a company can face along with possible solutions to these problems.

By Karen E. Klein

In your experience, what are the 10 most challenging things a business faces in its first through fifth years? —C.J.G., Baltimore

Interesting question. We posed it to small business sources from startup entrepreneurs, to marketing experts, to tax specialists. Here is a compilation of their thoughts, with five challenges for startups and five for growing enterprises:

1. Getting and vetting a business idea. ”I always wanted to start a business, but it’s hard to find a problem that is worth the time and effort to solve,” says David Greenberg, a New York attorney and chief executive of Updater.com, an online service for managing postal mail. The light bulb moment happened when he moved and found automated change-of-address processes lacking. “Since millions of people move each year and no good solution existed, I felt I had discovered a problem worth solving,” he says. Your idea should be somehow different than your competitor’s idea, says Bruce Freeman, co-author of Birthing the Elephant. ”If you’re not bigger, better, faster, or delivering a better bang for the buck, it’s not worth doing.” Once you get a great idea, prove your concept, including prototyping, market research, and focus groups. “Don’t write a business plan in your basement, or you’ll have to rewrite it over and over again. Go out and test your idea, talk to your family and friends, and then your target market,” says Dan Nathanson, an entrepreneurship lecturer at the UCLA Anderson School of Business.

2. Focusing and persevering. ”It is hard to maintain confidence that your concept will succeed. You will second-guess yourself more than once, but if you really believe in it, you will push ahead,” says Kristy Lewis, founder of Quinn Popcorn, a natural microwave-popcorn product that’s being launched this summer. “Be prepared to sacrifice time, energy, and mental capacity—you’ll never be as prepared as you think you are,” she says. Startup entrepreneurs usually have great vision but must limit themselves to the practical. Rather than go in a dozen different directions, focus on one or two things your company can do well from the outset, then expand as you build trust with customers and partners. Take the time to study the industry you’re entering; Greenberg spent 15 months researching full time. Taking an entrepreneurial training course can also go a long way toward building your confidence, says Roberto Barragan, president and CEO of the Valley Economic Development Center in Los Angeles. The more you understand how businesses run, especially on a financial level, the better chance you’ll succeed.

3. Raising capital. Most startups are self-funded, bootstrapped through the founders’ savings or credit, or through private investment. “You’ve got to get to know local independent bankers who can lead you to angel investors,” says Jeff Williams, founder and CEO of Bizstarters, a Chicago business startup consultancy. “After searching in four cities, we got an outside investment 11 years ago through a referral from a small neighborhood bank.” You may have to get creative to keep your company afloat: Lewis has used the Kickstarter site to raise cash.

4. Managing cash flow. Undercapitalized, underplanned startups can be derailed quickly by unanticipated expenses, says Robert O. Ball III, CEO of OfficeArrow, an Atlanta business that runs an online community for entrepreneurs. He lists the cost of customer acquisition, paying retail for supplies until you can qualify for vendor discounts, and fluctuating revenue as the biggest cash flow challenges for startups. “In the early days, when you don’t have built-up reserves, it doesn’t take much of a swing on the revenue or expense side to put you in a bind,” Ball says. Put accounting software in place to help you manage cash flow or bring in a bookkeeper to help.

Read the full article here

In today’s age of ubiquitous social media getting information about a job candidate is easier than ever. It is also useful to use different social media sites to attempt to groom, interview, and recruit potential employees. But, every rose has a thorn because if a candidate is left with a sour feeling about the company, its hiring process, or anything at all the very same ease of access social media sites can be used to slander your company with ease. It is for this reason that is important to be respectful and civil while seeking potential recruits. Making sure that the candidate who didn’t get the job be just as satisfied with the experience as the one who did is of primary importance to keeping your company’s name out of bad publicity.

by Mikal E. Belicove

When your company uses social media channels to both source and screen new talent, you must consider that your applicants can turn right around and use those same channels to your disadvantage. In other words, if you screw up the interview process or treat job seekers with disregard or disrespect, you could find yourself the target of a rash of unwanted publicity.

For this reason, it’s most important to capture and promote good feedback from candidates who apply for a job with your company, says Lisa Chartier, U.S. head of resourcing communications for Alexander Mann Solutions, a provider of recruitment process outsourcing solutions. Her firm just publishedCandidates, Consumers and Your Global Brand, a white paper looking at the impact of the job candidate’s experience on consumer perceptions of businesses and brands.

If a job candidate is treated poorly during the interview process, your company risks alienating a customer — a potential evangelist of your product or service. The AMS white paper claims such ill-treated job candidates are more than willing to share their tale of woe online, and, as we know, social networking enables them to do so quickly, reaching a large number of people with the click of a button.

Specifically, the report says that 77 percent of job seekers are likely to tell people either within their profession or friends (or both) if they have a negative experience when applying for a job. And 52 percent say a bad interview would likely influence their buying decisions from that organization in the future. Only 10 percent of job applicants say such an unpleasant experience would not affect their opinion of the company.

The best-of-all-worlds solution, of course, is to make sure applicants leave the hiring process with their heads held high to ensure continued loyalty or, at the very least, apathy toward your company and brand.

Chartier says organizations need to remember that positive feedback doesn’t travel far on its own, so it’s important to capture and promote good feedback from job candidates. For example, you could post quantitative data on the careers page of your website from candidate feedback surveys, developing statistics like “95 percent of job candidates say the application process was positive and constructive.”

You should also coddle your applicants. “Email the ones who aren’t hired and tell them the position has been filled by someone who fits the role perfectly — and then tell them why,” says Chartier. She suggests letting them know what areas you’d like to see them improve, which gives the unsuccessful applicant a feeling that they’re still connected to your organization and that you really were paying attention during the interview process.

And if you’ve narrowed the field down to two or three candidates, send the losing applicants sample products, a thank you note, and an invitation to stay in touch for future opportunities.

Read more here 

There are all sorts of information to sustain small businesses all over the internet. It seems most articles are written with the idea that you already are in the middle of running your own business. But, what about all those people out there who are just looking to get started? It can be a daunting task to figure out all at once how to go about creating a business, and a successful one at that. Below are 10 tips from a young entrepreneur from the point of view of starting your very first business venture.

By Scott Gerber

I write Entrepreneur.com ‘s Young Entrepreneur column because I believe there are far too few resources directly addressing the nonacademic trials and tribulations young entrepreneurs face along their journey. Whenever possible, I encourage up-and-comers and established entrepreneurs to mentor the next generation of dream-seekers; for it is this insight and insider education that will provide the foundation for the entrepreneurs of tomorrow. With that, here are 10 pieces of advice that I wish someone had given to me before I launched my first venture.

1. Focus. Focus. Focus.
   Many first-time entrepreneurs feel the need to jump at every “opportunity” they come across. Opportunities are often wolves in sheep’s clothing. Avoid getting side-tracked. Juggling multiple ventures will spread you thin and limit both your effectiveness and productivity. Do one thing perfectly, not 10 things poorly. If you feel the need to jump onto another project, that might mean something about your original concept.
2. Know what you do. Do what you know.
   Don’t start a business simply because it seems sexy or boasts large hypothetical profit margins and returns. Do what you love. Businesses built around your strengths and talents will have a greater chance of success. It’s not only important to create a profitable business, it’s also important that you’re happy managing and growing it day in and day out. If your heart isn’t in it, you will not be successful.
3. Say it in 30 seconds or don’t say it at all.
   From a chance encounter with an investor to a curious customer, always be ready to pitch your business. State your mission, service and goals in a clear and concise manner. Fit the pitch to the person. Less is always more.
4. Know what you know, what you don’t know and who knows what you don’t.
   No one knows everything, so don’t come off as a know-it-all. Surround yourself with advisors and mentors who will nurture you to become a better leader and businessman. Find successful, knowledgeable individuals with whom you share common interests and mutual business goals that see value in working with you for the long-term.
5. Act like a startup.
   Forget about fancy offices, fast cars and fat expense accounts. Your wallet is your company’s life-blood. Practice and perfect the art of being frugal. Watch every dollar and triple-check every expense. Maintain a low overhead and manage your cash flow effectively.
6. Learn under fire.
   No business book or business plan can predict the future or fully prepare you to become a successful entrepreneur. There is no such thing as the perfect plan. There is no perfect road or one less traveled. Never jump right into a new business without any thought or planning, but don’t spend months or years waiting to execute. You will become a well-rounded entrepreneur when tested under fire. The most important thing you can do is learn from your mistakes–and never make the same mistake twice.
7. No one will give you money.
   There, I said it. No one will invest in you. If you need large sums of capital to launch your venture, go back to the drawing board. Find a starting point instead of an end point. Scale down pricey plans and grandiose expenditures. Simplify the idea until it’s manageable as an early stage venture. Find ways to prove your business model on a shoestring budget. Demonstrate your worth before seeking investment. If your concept is successful, your chances of raising capital from investors will dramatically improve.
8. Be healthy.
   No, I’m not your mother. However, I promise that you will be much more productive when you take better care of yourself. Entrepreneurship is a lifestyle, not a 9-to-5 profession. Working to the point of exhaustion will burn you out and make you less productive. Don’t make excuses. Eat right, exercise and find time for yourself.
9. Don’t fall victim to your own B.S.
   Don’t talk the talk unless you can walk the walk. Impress with action not conversation. Endorse your business enthusiastically, yet tastefully. Avoid exaggerating truths and touting far reaching goals as certainties. In short, put up or shut up.
10. Know when to call it quits.
    Contrary to popular belief, a smart captain does not go down with the ship. Don’t go on a fool’s errand for the sake of ego. Know when it’s time to walk away. If your idea doesn’t pan out, reflect on what went wrong and the mistakes that were made. Assess what you would have done differently. Determine how you will utilize these hard-learned lessons to better yourself and your future entrepreneurial endeavors. Failure is inevitable, but a true entrepreneur will prevail over adversity.

Read more http://www.entrepreneur.com/startingabusiness/youngentrepreneurscolumnistscottgerber/article203254.html

Discounts and coupons can be a great way to bring in potential new customers, but there are also some downsides to this common practice that aren’t necessarily readily apparent. Sometimes, having these discounts can make the customer focus solely on price, which may not always be a motivating factor for your business, and may jeopardize the integrity of your products. Below is an article detailing the potential pitfalls of discounting merchandise improperly, and also includes some tips on how to effectively limit the coupons you do use.

By Dan Kennedy and Jason Marrs

Why sales and discounts can cause damage and how to offer breaks without devaluing your products.

If you’re the type of person who shops only sale prices, think about this: Would you want you as a customer in your own business?

When I was growing up, my entrepreneurial family wasn’t motivated by sales. I was taught to not get excited about sale prices because nine times out of 10, you can always buy the item for that price. This has been a good lesson: Sale prices are often nothing more that statements of what you should really be paying for something.

And that is the downside to discounts: They can destroy price integrity with blinding speed. On the other hand, they can bring a stampede of buyers through the door faster than just about anything else.

That’s why business owners should have an uneasy relationship with discounts. They can be a destructive force, yet an effective way to drive sales. Most business owners use discounts too casually, thoughtlessly and often because they like the positive effects and do not fully understand the negative effects.

Consider: Is price your only competitive advantage? The thing to keep in mind is that offering discounts is a form of selling on price. When you offer a discount, you are taking the focus from the value you provide and placing it squarely on your price. There is no way to escape that.

To maintain higher prices, you have to instead be adept at selling value. Discounts erode your ability to do that. Any reduction in prices can damage your price integrity. Later, getting the same customer to stop thinking about price and re-focus on value can prove difficult.

Not only that, studies show that discounts actually reduce the effectiveness of whatever is being discounted. In a buyer’s mind, the discounted offering literally does not perform as well as it did at full price. That sounds impossible, but double-blind studies using prescription drugs and over-the-counter health products, cosmetics and other products have shown this to be true.

A study conducted by a group of resort properties matched their most glowing comment cards to guests paying full price or nearly full price. The most critical comment cards came from guests who had knowingly bought at deeply discounted rates. Part of the explanation for that may be that the discounted rates drew a different type of customer. But it also suggests that, in the same way people told they were taking a more expensive drug expected and received better outcomes, guests paying substantially higher rates expected a better experience and molded their assessment to their expectation.

Ironically, discounts can also lead to dissatisfaction in your clientele. Discounts can lead your clients to ask themselves why your price can be discounted. They look at the price they have been paying, and then look at the discount and smell a rat. They wonder why they can’t get that price some other time. If they recently paid full price for a product that is now on sale, they may feel cheated.

This is why it’s imperative that you always give a good reason for a discount and that your rules are solid. Unless you plan to compete on price continuously, you can’t have predictable sales or flexible terms. If there’s a sale, it must be for a specific reason with specific rules.

There are upsides to offering discounts. They can be a great way to modify behavior. Volume discounts are an example of this. They make sense in the buyer’s mind. We are trained to expect that the more we buy, the cheaper things will get. So customers are generally not skeptical or resentful if you give this type of discount.

Other good reasons to discount include:

• Prepay discounts. Prepay will help to keep your accounts receivable current.
• Bundled deals. These discounts can help you increase your transaction size.
• Seasonal sales. Businesses with seasonal slumps can disclose that as reason for discounts at a specific time of year with few negative ramifications.

A good reason for a discount can mitigate damage to overall price integrity, reputation and relationship with regular customers, and can create the kind of behavior you want from customers, such as buying now, not later; during off-season; and in bigger quantities.

As for using discounts to bring new customers through the door, have one product or service that’s designed to be the one thing you use to drive traffic, whether periodically or perpetually. This way, you isolate the damage discounting will do to your price integrity. You can then, if you wish, preserve full, fixed pricing for all other products and services.