Location

I received my Zappos.com shoe order today, 24 hours after I placed the order. Wonder how they did it? Location.

Although their corporate headquarters is in Las Vegas, their distribution center and warehouse is located in Kentucky – right smack in the middle of the United States. Zappos.com can have their products reach their customers quicker through strategically leveraging the convenience of also being located next to the UPS Worldwide hub.

Yes, even in the age of e-commerce and Internet businesses, location still matters.

Exceeding Expectations

The greatest way to create a loyal customer base is to exceed expectations. I ordered some shoes through Zappos.com today, with the shoes expected to be shipped within 4-5 business days. A few hours later, I received an email that my order had been processed and would be shipped today priority at no extra charge, saying:

Please note that this is being done at no additional cost to you. It is
simply our way of saying thank you for being our customer.

As a customer, I felt valued.

Perhaps they planned on shipping it out today all along…but the way that it is portrayed makes you feel like you are receiving something additional. It can be a lesson to us all on how to ‘package’ our services to exceed our customer expectations.

On a side note, my husband used to be an auditor at the bank and Zappos.com was one of his clients. He had to go out and audit the inventory so that they could obtain the necessary financing. The company was amazing then, but has come a long way. Last month, Amazon bought Zappos for about $880 million.

Now that is an idea!

An idea is only worth something if (1) you can protect it and (2) you can exploit it. If you are looking for a laugh, check out the totallyabsurd.com website. There are plenty of ideas that are being legally protected, although the feasibility of being able to exploit these ideas remains to be seen….

A Cry-no-more strap on pacifier:

A head-napkin (to help hunters remain camouflaged)":

 

Insect balls (to keep the insects away while you are outside):

 

Totally Absurd Inventions & Patents, America's Goofiest Patents

Are you feeling stuck? Exit strategies

Whenever I teach an entrepreneurship class, I typically end up spending at least one day talking about exit strategies.

There is a good outline and video offered by PBS Small Business School that outlines the following options for exiting your business:

1. Walk away

2. Give it away

3. Sell to someone close to you

4. Sell to someone like you

5. Sell to the highest bidder

6. Sell to your employees

7. Sell through a direct public offering

8. Sell into the private equity capital market

I have always found the first option of “walk away” the hardest to believe, but yet it is also the most frequent option taken by entrepreneurs. My guess is that for many of these entrepreneurs, their business is their job and highly dependent upon them. So, if they leave, so does their business.

The rest of the options involve passing along the business to someone else, typically and hopefully for a fee/profit. However, the whole crux of these options is that your business needs to be able to be passed along. This is harder said than done.

I recently was assessing the real estate and property management business that my husband and I started. Even if we wanted to exit, we are not quite at a point where we are able to sell it. Why? For starters, we have been rapidly growing over the past few years. Thus, processes are continuously being revamped, including our accounting procedures. This makes it more difficult to look back at the historical financials and have it understandable. We also have a complex assortment of legal entities. We need to figure out the best and appropriate way to manage the transactions between the entities and also have some historical financials that make sense. If someone were to purchase the company, some of the job/roles are dependent upon us and not easily transferable. For example, my husband has a buying network that he has built over the years. Not anyone can simply buy the business and take his place.

We have been making progress though, with the end goal in mind of being able to sell the business someday or at least delegating the tasks with less involvement on our part. We have begun to outline and document procedures, even those my husband partakes in. This is perhaps the most important task because even if we do not sell the business, it allows us to delegate the tasks and not be at a total loss should an employee leave. We are transitioning to an industry standard software for managing our real estate, with the intent of being able to better analyze the business. We are hiring good quality people and writing up their job descriptions.

And while I feel sort of stuck right now in that we do not even have the option of exiting our business…in due time we will be there.

More E Reading Recommendations

BusinessWeek recently put out a list of reading recommendations for entrepreneurs. I like this list because they also include podcasts for those of you who prefer that option. I firmly believe that education is so important – it is those entrepreneurs that are humble and want to keep learning from others that are going go succeed, especially in this economy.

Summer Reading (and Listening) for Entrepreneurs - BusinessWeek

Entrepreneur Oasis

Here is a new resource for all those wanna-be entrepreneurs, existing entrepreneurs, and educators. It will take a while for this web resource to reach its full potential, but it definitely has promise as an up and coming website.

Time to buy?

Entrepreneurship involves discovering and exploiting opportunities. In many cases, this involves the start-up of a new business entity. However, entrepreneurship can also involve acquiring a business. In the current economic times, many businesses are being put to the test, and in some cases, not doing so well. This can equate to a great opportunity for someone to come in and take over an existing business with a fresh perspective, strategy and resources.

A recent question posted to BusinessWeek addresses how to buy a struggling company. The key takeaways…Many businesses are available at bargain prices, but be cautious – do your due diligence!!!

One way to identify struggling business is through a certified business broker. However, another more fruitful option is via word-of-mouth (use your networks!). One last suggestion is to be creative --- for instance, you could offer to come on board for free in exchange for a share of the ownership. Or, you could offer to purchase a failing division of the business (not the business in entirety). Don’t be afraid to approach a business owner, but do be respectful as there are many emotions that are associated with running a successful and failing business.

Link for full article: How to Buy a Struggling Company - BusinessWeek

Libraries: An invaluable tool for entrepreneurs

When is the last time you have gone to the library?

As an entrepreneur, or a wanna-be entrepreneur, libraries represent an invaluable tool that I fully endorse. Here are just a few reasons why:

• Quiet place to think and fully concentrate on your business plan
• Free access to computers, programs and the Internet
• Free access to a wealth of knowledge via the librarians (really, they are geniuses that can help you find out nearly ANY piece of information that you need)
• Free access to journals and other documents (that can otherwise be quite costly) that can help provide much needed insight into your market and industry
• If your library doesn’t have the documents you need, they can usually access them from another library for you
• From home, you can still usually access many of the electronic tools
• From home, you can also typically submit a research question/request to the librarian that they’ll work on for you

As this week is deemed National Library Week, I encourage you to reconsider what your local library can do for you today!

Recession Strategies: Cut costs or increase sales?

A recent article published by Scott Latham in the Journal of Small Business Management examined how firms react to a recession. Their study of 137 software firms during the previous economic downturn in 2001-2003 suggests that start-up firms are more apt to focus on increasing sales and other revenue-generating strategies to make it through the touch times. However, larger firms tend to instead focus on cost reductions.

I find this pretty interesting as when I look around at what is happening right now – I am continuously hearing about all the layoffs at the large corporations and yet, many of the smaller businesses are frantically trying to get a bigger piece of the pie in order to make it through.

So, it seems to be an accurate depiction of what is happening in the real world. However, the real question, though, is ‘should it be happening?’ For instance, should small businesses be focusing solely on revenue-generating strategies? Should large businesses solely be cutting costs?

Thinking Entrepreneurially...in a social way

I recently read that the Salvation Army had increased their Red Kettle donations by 10% in 2008, DESPITE the fact that the retailers suffered one of their worst years. How were they able to do this? By thinking and acting entrepreneurially.

The increased donations were the result of (a) increased partnership with Wal-Mart and the NHL, (2) using 'cashless kettle' that accepted credit card donations and (3) a text messaging service that allowed contributions via telephone bills. What neat ideas! These are three creative ways in which the Salvation Army thought 'outside of the box' in order to increase their revenue. 

It is my hope that the many non-profits as well as for-profits are able to maneuver their way through this difficult time economically by doing the same.

Competing with the Big Box Retailers: Yes, it is possible

Today on the radio, I listened to a talk-radio host make the arguments that entrepreneurs are unable to compete with the big box stores such as Wal-Mart. This is nothing new -- as I hear this argument frequently. This always intrigues me -- as I see Wal-Mart as a positive.

First, Wal-Mart (like any other big business) was started by an entrepreneur and we can learn a lot from Mr. Walton.

Second, Wal-Mart offers consumers convenience and lower prices through their economies of scale. Yes, this benefit also applies to all the people living in small town America where Wal-Mart is supposedly ousting all the existing small businesses. I know I appreciate this.

Third, Wal-Mart makes the market more efficient. Sure, many small businesses go under that are no longer able to offer any competitive advantage. But, the real entrepreneurs will simply respond to this change and find a new way to compete.

And, yes, it is easier than you think to compete with Wal-Mart. You just need to think strategically, and think either a low price OR a premium product niche! Here are some examples:

Diapers.com -- They specialize in diapers and other baby products. They match the prices for diapers with the big box retailers and even offer free shipping on orders over $49. They are able to do this by focusing on a niche and not having to spend the big bucks on a retail outlet.

Whole Foods -- Although they offer grocery items just like the Super Wal-Mart, they are able to compete and bring in customers by focusing in on more organic and specialty items.

Reading Recommendations

I am very much an advocate of learning, no matter what the age and no matter where you are in your career. Of course, we all have limited time and the question then becomes -- what should we be reading?

Jack Covert and Todd Sattersten have recently put "The 100 Best" book where they highlight what they feel are the best 100 books to read whether you are a CEO or just entering the business arena. What I like about their book is the classification of books by subject area. For example, here are the books that they feel are notable under the topical area of entrepreneurship:

The Art of the Start by Guy Kawasaki
The E-Myth Revisited by Michael E. Gerber
The Republic of Tea ** by Mel Ziegler, Patricia Ziegler, and Bill Rosenzweig
The Partnership Charter by David Gage
Growing a Business by Paul Hawken
Guerrilla Marketing by Jay Conrad Levinson
The Monk and the Riddle Randy Komisar with Kent Lineback

Happy reading!

Youth Entrepreneurship - the key to economic recovery?

At the World Economic Forum in Switzerland, a panel argued that are key to economic recovery relies on incorporating the teaching of entrepreneurship into the K-12 education system. Pretty interesting huh? I guess starting out young has its benefits.

http://blogs.wsj.com/independentstreet/2009/02/17/teaching-entrepreneurship-in-grade-schools/

Layoffs, Layoffs, Layoffs: The Implications?

In January 2009, there were over 1,300 layoff stories reported by the Layoff Daily. Pretty scary, huh? It makes me wonder what the implications are for entrepreneurs.

There are likely going to be some entrepreneurs that find their way into this category -- meaning that they simply are not strong enough to survive in this economy and/or the ability of their customer base to purchase their product/service is dissipating.

Other entrepreneurs will survive and perhaps even thrive in this economy. There are certain sectors or niches that do well in a down economy (think about Walmart) and others that are effective at changing to meet the demand/needs.

Yet, interestingly enough, there are still others that will become entrepreneurs BECAUSE of the economy. Yes, these are those individuals that are in the stories of the Layoff Daily and will turn to entrepreneurship because they don't have any other option or because it is something they have considered for a while, but now have the push to take.