Aaron Hoos

I recently wrote an article called

Solutions to Small Business Problems: Value

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Wow! The Wacky Barber is doing it right. He has a small barber shop in London… and how do you compete with other barbers when everyone has basically the same price and service? (Get a quick overview of the business here or check out their MySpace page).

This guy’s got the answer. Several answers, in fact.

• In-your-face marketing with weird window displays and a megaphone he shouts from, “carnie-style”.
• He offers a chilled beer during haircuts.
• He has some clever attention-getting brochures.
• He has a dartboard which you can throw to try and win a free haircut.

Check out the Reuters newscast, which is what drew my attention to this business:

If I were to make any recommendations to the owner, this is what I’d suggest to him:

1. You just got some international attention. Now use it! Leverage the heck out of it. Start blogging (your MySpace page isn’t doing the job!), create online videos, get some video testimonials, work on a book.
2. Collaborate with a microbrewery to brand your own beer. A nice pale ale with a really zany “attitude”, for example, might do well.
3. You might consider selling your beer on its own (although this might conflict with liquor laws so that might not be a good idea) but you might also consider other specials in which people can pay a little extra for a (shave, trim, shoeshine, tie-ironing, whatever) and get two bottles: one for in shop and one to go.
4. Franchise your model! Barber shops are notoriously and painfully boring. Yours isn’t.

Most entrepreneurs are I know are fueled by their ideas and dreams. How many among us have lay awake at night with a great idea that seems to be the best thing since sliced bread? The later into the night it gets, the better the idea becomes! We get up, we map out the idea on our whiteboards, we pace our homeoffice doing thumbnail calculations – usually trying to figure out how we can keep up with the demands of the hordes of people who will be clamoring to buy our product or service.

I’ve done it. Several times. C’mon, admit it! You have, too. Fortunately, in the light of day, 80% of those ideas are revised and/or dropped. We wake up in the morning and wonder “what was I thinking? No one would buy that!” or we might rejig the idea to make it more viable (with the realistic notion that there may not be hordes clamoring for it).

But some ideas from those crazy nights do make it. And CueCat is one of them.

I’d heard of CueCat before but never gave it much thought. But recently, my wife and I (who are avid book collectors) got a membership on LibraryThing and have been documenting our collection of books. LibraryThing recommends CueCat for fast inputting and, although I didn’t get one, I looked into it a bit more.

What is CueCat? CueCat is basically a barcode scanner that plugs into the computer. Consumers can scan various barcodes (UPC, ISBN, and some others) and the code will access the product page on the company’s website. That’s the “Cue” part of CueCat. The “Cat” part seems little more random: the CueCat is in the shape of a stylized cat.

Business strategy
CueCat’s to-market business strategy was interesting. They sent out a bazillion of these things for free to targeted users in the hopes that these users would plug them in, use them, and rave about them to their friends. Fair enough. Now here are the problems, as I see them:

First, CueCat’s value is largely unknown. Most consumers I know don’t want to scan their household junk to see the product page on the company’s website. There didn’t seem to be a point to it. This unclear purpose of CueCat is referenced by Jeff Salkowski of the Chicago Tribune who said, “You have to wonder about a business plan based on the notion that people want to interact with a soda can.”

Second, the cat-shape seems random. It could have been Cue-anything and as long as it was in that shape, they could call it that: CueDog, CueTiger, CueCumber. Now, making it a cat at least gives them a little differentiation but there is no tie-in to the product’s purpose.

Third, the targeted distribution was costly (+ $1,000,000 estimated). It seems like they are taking Gillette’s cheap blades/high profit handles model… but leaving out the high profit handles. And, it turned out to hurt them in the end: They tried to legally enforce proprietary code but people in the tech community quickly figured out how to “declaw” the cat (as it was called) for personal use.

Applying the Business Diamond Framework
When applying the Business Diamond Framework to CueCat, the problems become clear: They seem to have a decent Leadership Function Diamond. With 200 employees, their Support Function Diamond seems a little bloated (but what do I know?). Their Value-Add Function Diamond wasn’t clearly creating or providing value. Their To-Market Function Diamond was basically putting CueCat into envelopes and adding a stamp, but there was no clear, viable monetization strategy.

If I were to work on this, here’s what I would have done:

1. Forget the cat shape. It’s weird and it’s not really something that you’d proudly display. In most cases, I suspect you’d say something like: Hey, I got this cool scanner even though it’s in a cat shape. Just make it look cool.
2. If you want to stick to barcodes, that’s fine, but make the interactivity far more useful: Don’t send users to a website’s product page. Instead, create a CueCat page where users can buy more products (i.e., through Amazon, eBay or whatever; and it should list available products and make the list sortable by various aspects), rate products, give testimonials, show health information, show hacks, list recipes, and add products to their own page (in a way that’s similar to what I’m doing with LibraryThing).
3. Open source, open source, open source.
4. Consider sending bar code stickers for free and sending the CueCat for a mailing fee, and making money on various types of retailer-sponsored marketing or affiliate fees from purchases.
5. Assure users about security. This wasn’t done very well in the original CueCat and users were conscious of the threat to privacy.
6. Consider niching the product: Have a tie-in with grocery stores so people can use CueCat at home to create a grocery list that syncs with available coupons and estimates how much groceries will cost before they even go to the store. (And some stores might even have the groceries packaged by the time you get there). Or, tie it in with a weightloss company and set up CueCat for dieters who want to scan barcodes of the stuff they eat to have it automatically journal their diet and keep track of calories, carbs, etc.

Will the cat come bacK?
It could. But we live in a very different world today. It would need to be way smaller, sleeker, more portable, open source, and able to read way more than UPCs. And it would need to be supported by an iPhone App.

I’ve worked with a lot of business owners. In that time I’ve seen a lot of the same mistakes being made again and again. This is a list of the most common…

1. Same-as business plan. Business owners look at other successful businesses and clone their business model, hoping for the same riches that others have achieved. This rarely works. First to market is a competitive advantage. Those who come after need to find their own unique take to make themselves different.
2. Trading coherence for SEO. Search engine optimization should ultimately be about generating web traffic. Unfortunately, many entrepreneurs try to cut corners by hiring low-cost writers who can achieve 5% keyword density (which is often nearly unreadable by humans). They might get search engine optimization but they don’t get human buyer optimization.
3. Competing on price. When a business owner surveys the competitive landscape and decides that they can beat their competition simply by charging less, they are setting themselves up for failure. Low-paying clients rarely come with lower expectations. These entrepreneurs have to work hard to achieve realistic levels of success.
4. Failing to find the planning sweet-spot. Entrepreneurs need to plan. Those who don’t are destined to fail. But there is such a thing as too much planning and entrepreneurs need to avoid that, too. Somewhere in the middle is exactly where you want to be. If you’re the type to plan, it’s probably less than you want; if you hate planning, it will still be some extra work.
5. Selling without value. I’ve seen countless business owners who post something online then sit back and wait for the checks to roll in (and scratch their heads in wonder when the money doesn’t flood their bank account). Too often, the reason is a lack of value. This is either a lack of expressed value (the product or service is valuable but not presented as such) or it is a real lack of value (the product or service is simply not worth buying). Business owners need to overwhelm their prospects with value and they will never have trouble selling.
6. Forgetting to focus on cashflow. Cashflow is a huge and under-appreciated aspect of running a business. There are lots of entrepreneurs who work towards big homerun-sized deals but those deals will rarely sustain the business. Instead, smaller consistent wins will ensure longevity.
7. Taking profits. When business owners start a company, they dream of the profits… but 100% of the profits should never be extracted from the company. Instead, some of the money needs to be put back into the business — perhaps through R&D or investing in better systems or staff.

Seth Godin encouraged us to push through The Dip.

Jim Collins talked about using the “hedgehog concept” to create a breakthrough in Good to Great.

Malcolm Gladwell called it “The Tipping Point“.

It’s that moment when your business transforms from “just another business” into “THE business”.  It’s the moment when your company straps on a rocket pack and zooms into the stratosphere while every other business is left behind.

How can businesses achieve that? What makes the difference? I think about this a lot and work with clients who are driving toward it.

So, what ARE the ways that businesses can get there? Well, I don’t think it’s a magic formula — “Do these 5 things and you’ll get it” — because there are plenty of factors involved. But it seems to me that if a small business owner/entrepreneur is going to explode his or her business, the following things need to happen:

1. Deliver clear value: Make people feel that they can’t live without your products or services. This is a branding, selling, vision-casting, and value-chain effort!
2. Focus on your sales funnel: Avoid getting caught up in the myriad of marketing opportunities and business models available. Find a few things you do well (a few lead generating things, a few prospect qualification things, a few selling things, etc.) and just do them over and over and over and over and over! Create a way to capture more people and lock them in to a relationship with you.
3. Invest in excellence: Identify the mediocre elements of your business and get rid of them. Spend (wisely) to improve, automate, and scale. In my business this includes a toll-free number, an assistant, and supporting applications.
4. Stop doing it all yourself: Get someone to help you with your business. Seriously. Hire an assistant. (This was something I knew I needed for a while but kept putting off. My friend Heather Villa of IAC Professionals finally pushed me to do it and the impact on my business has made me regret not doing it sooner).
5. Work today for tomorrow: In the early years of business, you’re often working today for today — just trying to generate near-term revenue. But at some point you need to start building business “investments” for tomorrow. Passive income, automatic revenue streams, etc. Michael E Gerber (the E-Myth guy) called this “working on your business instead of working in your business.
6. Plan, plan, plan, plan, plan: Plan your year, your quarter, your month, your week, your day. Have an exit strategy on every project and on your business. I’m talking about business plans, marketing plans, workflow plans, publishing plans, and plans for every project and customer.
7. Take risks: Try new things, collaborate and partner, create initiatives. Some stuff will fail and that’s okay; you’ll still learn from it and it all builds towards a brighter future. Eventually, you will hit on a winner.
8. Act: Planning and thinking and strategizing are good. Reading and researching and talking to a mentor are good. But at some point, these need to be acted on. “Analysis paralysis” is an epidemic among SMBs.