Secret of Amish Business Success

Posted on by Alex M. Hochberger, MBA

Roughly half of new businesses in America fail within 5 years, but 95% of Amish Businesses hit the 5 year point.  Despite stereotypes about the Amish and their businesses, the budding ranks of Amish Entrepreneurs combine their strong, traditional work ethic and craftsmanship with modern business practices.

Despite the avoidance of technology in the personal lives of the Amish, Amish owned business to use technology, albeit in often unusual ways, to run modern businesses.  To avoid connections with “the English,” the Amish have historically used generators for power, but now appear to use solar and wind power to avoid using the power grid while still providing modern amenities.  An Amish business owner isn’t going to be using a Blackberry at home to keep on top of their business, but computerized accounting, air conditioned stores, and other parts of modern business will take place.

A strong work ethic, building a business based upon what you know, modesty and politeness as the cornerstones of a service oriented business are lessons for all of us.

Launch a business with Social Media and SEO in 5 Steps

Posted on by Alex M. Hochberger, MBA

So I routinely get asked by friends for advice on how to get a web business launched with no money.  As I politely steer them away from the idea that I should do it for them, I thought that I should work on a basic guide for getting started.

Step 1: Pick a Good Domain Name

A domain name is your address, what you will hand out, and what you will advertise.  Your goals are short, easy to spell, nothing to trip people up, and keyword friendly.  If you are dealing with cars in Florida, and your name is Jake, then CarsByJake.com would be friendly, start with your keyword, and be easy to spell.  FloridaCarsByJake.com would also be good, but JakesFloridaCars.com gets tricky because without the appostrophy, it sounds like your name is Jakes.  Avoid double consonants (two words, one that ends in a letter and the next work begins with it), and definitely do no “merge” it being clever, people will get confused.  I find dot-com extensions better than alternatives, but it may depend on your industry.  It’s been over 10 years since dot-net was the premium TLD and dot-com a negative one, but dot-net still has cachet in technology sectors.

Step 2: Register with Twitter, Facebook, and LinkedIn

You don’t get to play if you aren’t there.  Twitter is important for the ability to move information out there.  Facebook has a tremendous number of users and viral power, and LinkedIn is where the professionals hang out.  While you may not use all these mediums terribly effectively on Day 1, the sooner you open an account, the sooner you are ready to use it.  If you aren’t going to optimize for all platforms, also register with Ping.fm or HelloTXT for content syndication, that will let you move your messages to all platforms at once.  I would recommend picking a URL shortener for social media (I use Bit.ly) and creating an account with stats, this way you can keep your collection of short links and start to see what drives traffic.  For Facebook, you should also setup a Page for your business so people that like your business can Fan your Page, even if they don’t know you personally.

Step 3: Setup the Website and add Content

If you aren’t ready for a serious commitment, using a free CMS system like WordPress.com, or other environment that let’s you publish and bring your own domain name is important.  Make certain that you can export content later if you move.  Despite my historically building my own CMS platforms for SEO reasons, I’ve been finding WordPress.com a great platform for self-publishing, and I can always export to a WordPress.org (self hosted) system later and work from there into whatever I want.  Good content is key to success.  Learning to write 5+ blog posts a week plus updating the core of the site (Pages in WordPress speak, the static content part of any CMS) of information, adding images, etc., is time consuming.

Step 4: Get in the Social Media World and Blogosphere

You need to participate to get involved.  For Facebook, setup the appropriate privacy policies and participate in comments, Wall Posts and pictures.  Wish people well on their birthday, tell them when they put up cute pictures of children/grandchildren, be friends with your friends.  For Twitter, grab TweetDeck, start finding the appropriate Hashtags for your discussions and start sharing information.  With your blog, find bloggers posting questions that you can answer, and either leave a comment (if short), or answer with a link to their entry with software that will ping them with the answer.  Like any form of networking, participate.  Retweet good posts, share your expertise, and build up an online reputation.

Step 5: Using Content and Social Media, Promote your Site which Promotes your Business

This final step is how you pull it all together.  Write good content for your site on the blog, promote it through your new Social Media channels.  The better the content, the more likely you are to get Retweeted or linked to from other blogs.  The more links you get to your site, the better you will do in search engines.  The more you get Retweeted in Twitter, the more likely you are to get Followers.  The more you get mentions and links on Facebook on news feed, the more likely you are to reconnect with friends or come to the attention of customers.  SEO = keywords + good content + links… the more advanced part of SEO, you can get to that later, when you get traction.  If you need to hire an SEO expert, you will already have new customers from your web site plus a great starting point for the SEO who can see your keyword success to get started.  As you add content and social connections, your traffic will build and build, and if your site’s core information is good, you will successfully launch your business.

This is my first draft of this 5 Step Process.  I expect to come back and revise over time.  Comments, suggestions, etc. are all appreciated.  Feel free to Follow me on Twitter and Tweet this Post!

Government Matching Inventors with Manufacturers

Posted on by Alex M. Hochberger, MBA

Three cheers for some smart governmental policy.  Markets do well where there is perfect, or near perfect, information, and limited barriers to entry.  Markets do poorly where there are barriers to entry, particularly if they are information based.  Technology, IT in particularly, has helped shrink businesses by eliminating layers of management because you no longer need a 6:1 reporting ratio because of paper limitation.  Further, Just In Time EVERYTHING, manufacturing, wholesaling, inventory, etc., helps keeps companies lean, just buying things as needed in an open marketplace.

One area where the market failed to make connections was in the manufacturing of products.  Contract manufacturing seemed popular with large companies, but there didn’t ever seem to be options for small businesses.  Strangely, every entrepreneur I know who made a product made it in China, not because of the cost differential (shipping and monitoring eats it up on small lines) but just because they could get it done.

Department of Commerce’s Manufacturing Extension Partnership helped launch Planet Eureka!, the innovation marketplace.  Maybe we’ll be able to get one of my wife’s ideas to market this time around.  Thanks to CNN Money for pointing me in this direction, you can read the artile that I read, “What’s your idea worth?”

Retro Small Business Financing – Customer Funding

Posted on by Alex M. Hochberger, MBA

In a world of complicated finance, the idea of building a business without capital, raising money from your customers seemed expensive and retro.  Although mentioned as an example in every business text book, in reality, entrepreneurs have focused on debt financing or outside investors rather than looking to their customers.

With the credit crunch and housing collapse eliminating many small business loans and home equity loans as a source of business capital, many entrepreneurs are returning to the historic source of capital, their customers.  Money magazine shares the anecdotes of several business owners, owners who have sold stock, pre-sold gift certificates, and otherwise took action to raise capital from their current or potential customers, both raising capital cheaply and increasing customer loyalty.

In some ways, however, this capital is cheap, and in other ways it is very expensive.  The capital is cheap in that it lacks personal guarantees, protecting the downside, and may not have the warrants and other “teeth” that angels and VCs may want.  However, selling $1,500 in gift certificates for $1,000 to raise money is a 50% rate of return and will likely be redeemed within 3 months, potentially charging you a 200% rate of interest.  If that customer would have spent $1,500 with you anyway, that’s real cost in opportunity cost.  To the restaurant owner, if they run at 50% margins, that $1,500 costs them $750, so from a cash flow point of view, the money is cheap.  As most small business owners will remind you, cash is king, and cash flow matters a lot more than the traditional finance metrics, because cash means survival.  The Fortune 500 finance guy is worried about NPV (Net Present Value), but the local coffee shop needs to pay the rent and cover payroll.

As a rule, I open my business bank account with the first check from a customer.  If I invest in the business, it comes later, but by always opening the account with a customer check, it serves as a reminder that you aren’t in business until you have a paying customer.