Tag Archives: startups

Aaron’s Answers: Should I buy an existing business, buy a franchise, or start my own business?

By Aaron Hoos on April 26, 2013 in Business

There are a lot of choices to make when starting up a new venture. One of the things that entrepreneurs have to decide is whether or not they should buy an existing business, buy a franchise, or start their own business. Each one offers advantages and disadvantages that must be weighed.

BUYING AN EXISTING BUSINESS

Buying an existing business is one that has already started; one that has been marketing, selling, and earning revenue from a client-base. It might be in various stages of start-up — perhaps a relatively new company that the founder is selling, or perhaps a well-established company from which the founder is looking to retire and move on.

I think you’re looking for two types of businesses: Either, you’re looking for an established clientele, positive word of mouth, a strong supply chain, good processes, and strong financials that you can buy, walk in on day one, and continue earning profit; or, you’re looking for a business that is currently struggling but has potential to grow.

Compared to the other two options (buying a franchise or starting your own business), you’ll need a comparatively large amount of money up-front to get into this business because it’s established already. But the advantage is, you can potentially start earning an income almost right away (depending on the stage of the business and whether or not the previous owner was active and successful in the business prior to your buying it). Expect to pay more for a healthy company that has existing cash flow.

BUYING A FRANCHISE

Buying a franchise is when you buy a brand and marketing system from a company for a business that hasn’t yet started. This is a nice hybrid model between buying an existing business and starting your own. The business may not be started up yet but you are shortcutting the process with an established and recognized brand, and a business system already in place.

You’re looking for a company that has a strong, positive presence on a larger scale (i.e. in the national market) but has not saturated your marketplace. Look for a franchise that provides support and education and all of the marketing tools you need. Perhaps compare several franchises within the same industry to identify the best one for you.

Expect to pay a franchise fee for the right to use the brand and the business system, and expect to put in time to grow your business. Depending on the franchise, the up-front fee and the ongoing fee could be small or large. If you have some money and some time, but you want a slightly faster start with an established brand, this might be a good option for you.

STARTING YOUR OWN BUSINESS

Starting your own business is the third option. It’s when you create a brand from scratch and build your own business model and products or services.

You really are starting from zero and building it up from there. Not surprisingly, it can take longer to do but many entrepreneurs prefer it because they have the most control over the process plus it generally has a lower “cost” to start.

There are costs, including financial costs, but most of the costs are likely going to be your time. And it might take a while before you establish your brand and start earning money. This is an advantage for people who want to start a business part time while they are working. But be prepared to spend a lot of time! The fail rate is potentially higher with these types of businesses because they can take a while to get off the ground and there is a lower-perceived cost to start them.

SO WHICH ONE IS RIGHT FOR YOU?

The short answer is: It partly depends on how quickly you want to earn money, and it partly depends on how much money and time you have available. (There are other considerations but these are the big ones, in my opinion). If you want to earn money as quickly as possible, buy an existing business; if you have time, start your own business. If you have more money than time, buy an existing business; if you have more time than money, start your own business.

Starting a business when it’s hard to start a business

By Aaron Hoos on February 7, 2013 in Business

I was recently contacted by a friend of mine who is interested in starting a business. She is dabbling in the business now — on a VERY part time basis — and wants to get serious. So we talked about what that looked like and how to get there.

She described for me what her aspiration was and then she shared her frustration at having made a few attempts at starting a business but struggling to even get off of “Step 1″.

After a long conversation, I realized that there were two things holding her back. I shared both of these things with her and I hope that she took them to heart… but time will tell.

SOME CHALLENGES ARE EXTERNAL

When you’re starting a business, there are many things you need to know before you start. (Some businesses you can start with very little capital and preliminary work but other businesses require a bit more). The more complicated and regulated your target industry is, the more work is needed to start.

My friend who wanted to start her business is starting it up in a relatively regulated industry and she was running into roadblocks left and right. Unfortunately, these roadblocks were deflating her confidence in her ability to move forward.

I gave her a few ideas about how to overcome this part of the problem of starting a business. I’m sharing those same ideas here with you because I think they’re good for everyone:

  1. Before you start the business, become an expert on the business! List all of your questions and actively seek out the answers. Expect to list even more questions as you go but work hard to answer each and every question.
  2. Talk to successful entrepreneurs in the same industry. This isn’t always easy to do because some people who will become direct competitors won’t want to help you but if you move out of your immediate area of business, you’ll find more people who are willing to help. Interview them. Shadow them. Volunteer to help them.
  3. Many industries have at least one governing body/advocacy organization/association — something that acts as a clearinghouse of information. Regulated industries often have more than one place. Take the time to get to know this organization and mine their resource library.

There will be plenty of external challenges as you start a business and most of them can be overcome with education. Heck, even the external challenges that SEEM like they can’t be overcome with education can still be overcome with education! In my friend’s case, she was having trouble raising money to buy some of the start-up equipment. In this case she needs to get educated about how to raise capital, borrow money, understand finances, find investors, etc.

SOME CHALLENGES ARE INTERNAL

As I talked with my friend about her business goals and what she had done so far to work toward achieving those goals, it became apparent that there were several times she started working on some aspect of her business and then suddenly stopped because of a perceived obstacle. However, her description of each obstacle indicated that it was usually a very minor point that could be overcome with some education, creativity, or tenacity. She listed obstacle after obstacle and I kept pointing out ways that they could be overcome. (Granted, it’s probably a lot easier for me to see the solution, since I’m slightly removed from the problem and I’ve overcome some of those same issues in my own business already). Frankly, I think she was just overwhelmed by many small perceived obstacles so that collectively they sounded big… it’s so easy for that to happen!

For those internal challenges, I think education can overcome it a bit but I really think it’s important to talk it out with other people. You might not always find solutions to the challenges you face (and I didn’t solve every problem that my friend faced!) but another perspective can sure help when things seem insurmountable.

There are many obstacles to starting and growing a business. That’s just the way it is. (Hey, if it were easy, everyone would do it, right?). But obstacles don’t necessarily make it impossible to succeed. You just have to push harder and find a way.

As my conversation wrapped up with my friend, I told her that either she would find a way to make her business goal goal come true or she would have to admit that it wasn’t that important to her at all. That’s a harsh truth but it is the truth nonetheless.

The top 9 lessons I wish I knew when I started my business

By Aaron Hoos on April 26, 2011 in Business

If I could get into my DeLorean and travel back in time to when I first started my business, here is what I would have told myself:

Lesson 1: Narrow your target market

Don’t try to do everything for everyone. You’ll end up doing a bunch of stuff you don’t enjoy doing and you’ll get stuck on a treadmill of having to learn new stuff for every client. Focus on a core of similar clients and you won’t have to start from scratch each time.

Lesson 2: Invest early

A free blog and email address work fine at the very beginning. Those services are a great way to get started easily. But free stuff has its limits and you’ll spend a ton of time back-filling to correct problems when those services break.

Lesson 3: Invest in the right things

You don’t need all those business cards if you’re going to focus on non-local/online clients. You invested in some really valuable information and systems but it happened later than it should have. Build your knowledge-base first.

Lesson 4: Take time off

Starting and growing a business takes time and effort. But too much time and effort will burn you out. Striking a balance between work and non-work will be toughest challenge you will face. Schedule both and stick to it.

Lesson 5: Trust your instincts

You know ahead of time when a customer is about to screw you or when you should pull the trigger on an idea. Those instincts may be hard to quantify but they are correct 99% of the time. Trust them. Follow them.

Lesson 6: Prepare for success

You’ll be more successful faster than you realize. But that success will hurt: You’ll be overwhelmed with work and your end-of-year tax bill will be higher than expected. Success is great but it comes at a price if you’re not ready for it.

Lesson 7: Differentiate early

Think very carefully about your point of difference and highlight it in everything you do. Take a week off and think about your point of difference full-time. The revenue you miss from that week will be more than made up for in the months and years to come as you outpace your competition.

Lesson 8: Persist

You’ll drop some projects or ideas or services or customers because there wasn’t a lot of movement there. However, a little persistence can make a big difference. It’s hard to know which ones to stick with and which ones to drop, but try sticking a little more than dropping.

Lesson 9: Create a simple sales funnel and work it like a rented mule

Keep it simple at first. Employ one or two easy-to-do marketing and sales tactics for each stage of your sales funnel and hammer home those things every day. Every single day. You can scale up later, you can get more complicated later, but a simple, consistent sales funnel at the beginning will win.

Internet marketing BS: 8 internet marketing lies that new entrepreneurs believe

By Aaron Hoos on April 14, 2011 in Business

Since 2000, I’ve worked with countless new entrepreneurs to help them get their businesses started and online. In spite of the years, the lies that entrepreneurs are told about internet marketing remain basically unchanged.

Here are 9 of them:

LIE #1: KEYWORD RANKING IS CRITICAL

When people believe this, they pour a lot of time, money, and effort into keywords, and many even use lesser-value techniques (like keyword-stuffed articles written by software) or even blackhat techniques.

Truth: Keyword ranking is only important if it fits into your strategy. If you want people to find you through the search engines, keyword ranking is important. But there are plenty of other ways to get traffic online that are just as effective, just as profitable, and don’t require keywords. To name a few: AdWords, freelancing or outsourcing sites, social media, and content marketing. Domination in any of those areas can drive loads of targeted traffic to your site without ever having to consider keywords.

LIE #2: CONTENT MARKETING IS THE MOST AFFORDABLE TYPE OF MARKETING

When people believe this, they visit a site like Guru or Elance, ask for projects like “500 words of content for $1. Articles must contain 4% keyword density. English as a first language is not important because these are written for search engine ranking”. With a meager budget, they hire unqualified writers to jam out barely legible content. They get exactly what they paid for: Words that are nearly worthless. It fills the web, wastes everyone’s time, and doesn’t contribute to their bottom line.

Truth: The affordability of any marketing is relative to its effectiveness in compelling a sale. New entrepreneurs make the mistake of looking at their budget and the basic cost of a single “unit” of marketing (like an article or a pay-per-click ad, for example). What they don’t consider is the cost of a single “unit” of marketing relative to its role in closing a deal. Given the choice between a $25 marketing technique and a $100 marketing technique, the new entrepreneur takes the $25 one. However, a closer look at all the information reveals that the $25 marketing technique results in $50 of business while the $100 marketing technique results in $2,500 in business. In a situation like that, doesn’t it make much more sense to spend slightly more?

LIE #3: SOCIAL MEDIA IS THE NEW MARKETING METHOD

When people believe this, they treat social media like other marketing and they outsource it. They create corporate standards around it and review every outgoing message (i.e., tweet, Facebook status, Quora answer, etc.) before it goes live… essentially deflating its effectiveness.

Truth: Social media is about engaging with people. Social media is a place where humans share and listen. The results can still be positive and profitable to your business, and in that way, social media is related to marketing… but social media is about engagement. It’s about being real. It’s about open dialogue. It’s about responding. For that reason, it gets messy. It’s imperfect. The companies that are most successful at social media are the ones that put aside the corporate-speak and have real people engaging with the real people in their target market. (Read an answer I gave to the question: “What social networks are you using?”).

LIE #4: ANY ATTENTION IS GOOD

When people believe this, they do silly things. Marketing becomes a series of publicity stunts that may or may not have anything to do with the business.

Truth: It’s not about attention. It’s about moving people forward in your sales funnel. Publicity stunts can be fun, attention-getting ways to promote your business. But they don’t sell goods. (Sure there might be a blip, but it’s not sustainable). Your marketing plan should include more than “Step 1: Dress up as a human fly and scale a building. Step 2: Repeat as necessary.” Instead, high quality marketing should move people step-by-step through your sales funnel toward a sales. And yeah, if you want to do something zany once in a while, that’s cool and can help your business, but it is not a marketing plan (unless you’re Lindsay Lohan).

LIE #5: THE MORE TWITTER FOLLOWERS AND FACEBOOK FANS I HAVE, THE BETTER

When people believe this, then end up with a big list of Twitter followers and Facebook fans, but no one who will take action and buy. (And then they scratch their heads and wonder why no one is buying from them). This is because the number of people who are actually potential buyers is MUCH smaller and this group feeling lost amongst the tweets and Facebook postings that are meant to attract more followers or fans.

Truth: A targeted followerbase/fanbase requires less work and is more profitable. When you clearly define who you are and what you stand for, and your other marketing efforts are consistent with that, you’ll build up a followerbase/fanbase that is almost entirely made up of your target market… people who will actually move through your sales funnel and buy from you! (Read about why I just reduced the number of people I follow on Twitter).

LIE #6: THE FIRST THING I NEED TO DO IS BUILD A LIST. THEN THE MONEY COMES AFTER THAT

When people believe this, they start list-building too early. Then they quickly discover that there is a significant cost to list-building and their small (albeit growing) list isn’t profitable enough yet to sustain the effort.

Truth: A list is important, but be prepared for the effort. I don’t mean to suggest that the list itself is the lie. A list of prospects who want to hear more from you is very important. However, setting up a list on day one when you have little or no traffic, and burning through all of your “A” material in the first six months of ezines will set you up to fail very quickly. I would advise waiting, even just a few weeks or months. Make sure that the other aspects of your business are operational; make sure that you are marketing your business; and make sure that you have lots of ideas for ezines (and probably a good number of those ezines written!)

LIE #7: I NEED TO HAVE A BLOG/ARTICLE/PRESS RELEASE/WHATEVER. BECAUSE I DON’T, I’M LESS SUCCESSFUL

People who believe this work very, very hard and spend a lot of money and time trying to do it all. Every time a new social media site comes out (which is like everyday, it seems), they’re on it. And if success eludes these people, there is a feeling that they are missing the ONE key that will totally unlock a Niagara Falls of buyers.

Truth: Achieving excellence in a few well-chosen channels will consistently outperform ubiquity. An unfocused “shotgun” approach to internet marketing reduces the impact of every effort. Rather than whispering across hundreds of sites, focus instead on a few sites (sites where your target market is hanging out!) and build a voice and an audience. (Read about what I think is the entrepreneur’s REAL silver bullet).

LIE #8: THE MORE SUCCESSFUL I AM AT INTERNET MARKETING, THE MORE SUCCESSFUL MY BUSINESS WILL BE

When people believe this, business success is eclipsed by internet marketing success. Cash flow becomes a mildly annoying byproduct of big traffic.

Truth: You’re in business to earn a profit. Period. That might take a while, so until you get there, you’re in business to generate revenue. Period. Everything else you do (from marketing to sales to administration to inventory to mopping the floors before you go home for the night) is meant to push people forward in the sales funnel. Success at internet marketing is great — and should be a goal. But it is only a means to an end. Internet marketing is only meant to fill your sales funnel full of people so they buy from you.

Read about a business owner who kicking ass at internet marketing. He’s been in business for only 1 year and has achieved so much in that time because he knows how to focus on the right things!

Just read: ‘How to Rebrand a 10-Year-Old Company in Six Weeks’ at MarketingProfs

By Aaron Hoos on April 10, 2011 in Business

There’s something thrilling about participating in the branding process early in a business’ life. It feels so big, so permanent. I’ve been privileged to participate in numerous branding efforts, and each one was fun and nerve-wracking at the same time. (“What if we totally miss the mark?” is always in the back of everyone’s mind).

Rebranding is no less challenging. I’ve enjoyed working with several companies that are undergoing a rebranding (most of the time it was to upgrade or refresh their brand and get it in line with where their business is today).

There are some great resources out there for branding a company but there are far fewer resources out there for rebranding. If you are thinking about rebranding your business, this is a really useful article on MarketingProfs about a company that rebranded in a ridiculously short period of time.

Brand Management – How to Rebrand a 10-Year-Old Company in Six Weeks : MarketingProfs Article.

Check it out. I think you’ll find it to be a helpful article even if you aren’t going through a branding or rebranding process. The branding pillars they offer are helpful to anyone looking to strengthen their brand.

7 tips for starting a monetized blog

By Aaron Hoos on April 6, 2011 in Business

A friend of mine wants to start blogging — specifically to become an affiliate marketer — and he asked for some tips to successful (monetized) blogging. I started writing an email to him and then realized that I answer this question for people quite frequently so I’m posting the answer here and I’ll link to it whenever I’m asked. (#lazy)

Here’s a list of my top tips for becoming a successful monetized blogger (in no particular order):

  1. Pick a niche. If you want to monetize your blog, choose a target market and write for them. It’s okay to weave in other topics (I primarily write about sales funnels and related topics, but I’m also an amateur economist and write occasionally about the economy, which is probably interesting only to me). And it’s okay to share some of your own personal life (I’m sure your kid’s first words are fascinating to every imaginable niche) but try to keep the majority of your posts relevant to your niche. And it *almost* goes without saying that your affiliate offerings should be related to your niche.

  2. Add value. If you want people to come to your site, give them a reason. If they can get the same information anywhere else there’s not much reason to read your blog. Add value and have a point of difference compared to your competition. (Oh, which reminds me, you’ll probably want to do some competitive research at some point — get a feel for what other people are doing in the same space and figure out why you’re unique).

  3. Add value first. I get that you want to monetize your blog. But add value first. Don’t stuff your blog so full of “monetizationness” that the good content is hard to find because there are too many shimmery, flashy ads. It’s like the seedy side of downtown: There might be a cool little bar, but it’s hard to find because there are so many skanky bars and hotel signs offering rooms for rent by the quarter-hour. Post good content. Make it central. Then integrate your ads and affiliates. Once you’ve build up some credibility as a quality blogger, you can integrate blogs that are specifically about an affiliate product. But it shouldn’t be your first blog post and it shouldn’t be the only thing you blog about. (“That hilarious story about my puppy driving my car reminds me of this fabulous network marketing opportunity that you’ll want to get in on the ground floor right now!”)

  4. Be business-minded. Treat your blog like a business. Take it seriously. Be customer-service oriented. Be fair. Offer value. Think strategically. Most importantly, keep focused on why you’re doing this and remember that your up-front time writing good content is an investment into a payoff that will happen later. I say that because you’ll grow tired of blogging in a few months. You might even give it up for a while. And then you’ll write a post that says “I haven’t updated in a while”. Check out this blog post (from waaaay back in the day) about some ideas for a variety of different kinds of blog posts to write. So it’s important that you always keep reminding yourself why you’re doing it. Oh, and this might be helpful: Here are some ideas to monetize your content if you ever want to move beyond affiliates.

  5. Write for the long-haul. Monetizing a blog is a long-term effort so don’t start rubbing sun tan lotion on yourself just yet. You can eventually enjoy a drunken week on the beach while your bank account rings like a cash register, but it won’t happen tomorrow.

  6. Plan the hell out of your subject matter. I’ve seen want-to-be bloggers with dollar signs in their eyes burn out in a week. They write a bunch of stuff — maybe material for a week or two — then stare blankly at their monitor. It feels like writer’s block but it’s not. It’s horrible planning. Whenever I work with a client to help them develop a sales funnel that includes blogging, I typically create at least 3 months of blog post topics. For myself, I usually have a year’s worth of blog topics on paper, I prefer to have 1-3 months of blog posts scheduled (i.e., I know what I’m going to post 1-3 months in advance) and I try to have 1-4 weeks of blog posts pre-written. Of course, if I need to move them around, I can, but I want a rolling batch of pre-written work. You’ll be amazed at how fast you go through them if you don’t! (How do I know that? I’m writing this the night before I want to publish it… #failtofollowmyownadvice).

  7. It’s a sales funnel. It shouldn’t surprise you that I’m mentioning this. Your awesome blog that is stuffed with high-value content and insanely compelling affiliate links will earn you a big fat $0.00 if you don’t get people to visit your site. There isn’t a magical genie that tells people to go to your site. (Well, there is, and his name is Guy Kawasaki but you have to leave more than a measely quarter under your pillow for him to send people to your site). So market your site like crazy: Twitter, articles, press releases, guest blogs. At some point, you might even want to experiment with advertising (like Google AdWords).

There are other things you can do, too: Build a list and send out emails. That’s big, but I think that’s “step 2″. Step 1 should be: Just get your blog up and running and follow these tips to get started.

Oh, and while I’m dishing out free advice like a late-night buffet, here’s another blog post that you might find useful: “The Entrepreneur’s Silver Bullet“.

3 kinds of entrepreneurs: Which one are you?

By Aaron Hoos on March 3, 2011 in Business

Throughout history, humankind has followed the same cycle again and again: Explorers discover a place, settlers follow, and builders develop that location. People live there for a long time. The the place becomes built up, even to the point of becoming in-grown. Land becomes a premium. Organization and structure reign (and can even oppress). Then, new horizons are spotted and the cycle repeats.

This was the case when humans journeyed out of the cradle of civilization. It was the case as people spread across the continents and the oceans. And it’s the case today as we reach for the stars.

The same thing happens in business with three kinds of entrepreneurs: The explorers create innovative new opportunities, the settlers follow, and then builders arrive later and develop.

  • The first wave of entrepreneurs are the explorers who are trying completely new things. They’re creating new spaces. They’re discovering. Think: Ebay, Paypal, Yahoo, Google, Twitter, Facebook… and don’t miss the important lesson that there are other search engines and other social media that were there first but didn’t make this list. And I’m only using a marketing example here, but this explorer/settler/builder model is true in every industry.
  • The people we call “early adopters” are actually setters — the second wave of entrepreneurs who see the opportunity explored and know that more people are coming. Think: People who cashed in early on Ebay or sold Google AdWords services. Or, think of Chris Brogan’s position in Twitter or Mari Smith’s position in Facebook. (And again, don’t miss the important lesson that there are other entrepreneurs who tried to settle and didn’t.
  • The final wave of entrepreneurs are the builders. They may not do really innovative things but they create systems and structures and franchises so that many others can inhabit these spaces.

What kind of entrepreneur are you? Knowing this changes everything and prompts a number of question: How does it impact the work you do? Where should you invest your time and money? Who should you partner with? How does it influence how you define “success”?

SO WHAT’S NEXT?
If you’re an explorer, you need to be searching for the parts of the map that say “here be dragons.” Consider where are the frontiers are — overall and in your industry — and push them.

If you’re a settler, you need to be thinking about the frontiers, too, but you also need to keep your eye on the explorers. You need to think about how you can get in early.

If you’re a builder, you need to watch the headlines and see what’s coming up on the public’s radar. Get in as early as you can and create franchisable systems.

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