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A Conversation with Kimberly Stanséll

Author of "BOOTSTRAPPER'S SUCCESS SECRETS: 151 Tactics for Building Your Business on a Shoestring Budget"

Q: What is a bootstrapper?

A: It's a person who starts a business with inadequate capital and manages to build it up relying more on creativity or resourcefulness rather than a checkbook balance. I've interviewed hundreds of bootstrappin' veterans across the country and found that the start-up capital "amount" isn't their common denominator. It's their ability to maneuver successfully through the challenges that working with a little or no money poses. That's what Bootstrapper's Success Secrets is all about--a compilation of tactics that I and others have used to grow around our cashless state.

Q: What are the three most important action steps people should take to begin moving forward with their ideas?

A: Ask yourself three questions:

1.What problem does my product or service solve?

2.Whose problem does it solve?

3.And how do I know that? In other words, what research did you do to come to your answers to questions one and two?

Many people have great ideas but they flounder in the marketplace because there's really no audience for the product/service. You can sidestep this heartache by asking yourself those three questions. How solid and thorough your answers, though, will depend on your research.

The most successful business owners know the most about what they're doing. Research is the foundation for developing the know-how to create and run a thriving business. Chapter two of my book, Bootstrapper's Success Secrets: 151 Tactics for Building Your Business on a Shoestring Budget, is devoted to coaching readers through some low-cost ways to research an idea. A few examples:

Survival Tip #16 -- Make sure your idea has longevity. Digging up some information on trends for the next century can help substantiate your idea. A low-cost strategy: visit your local library and do a database search for articles or books using the keyword "trend" or another word combination based on your own area of interest.

Survival Tip #18 -- Test your idea against the past, present and future. You need to be sure that your idea isn't a recycled version of something that has failed miserably in the marketplace, and if it is, you'll want to evaluate its predecessors so you can determine ways that your "fresh" or "revamped" approach can fare better. Great books to scan are ones that chronicle history (i.e., TimeLife's "This Fabulous Century" series); they'll offer you insights as to how certain events affect people's habits. Also, old telephone books; they'll show you who has gone in or out of business and who is thriving. Major libraries carry both types of books.


Remember: Research can be your weapon against failure.

Q: Share a few examples of how some people have used creativity to bootstrap their businesses.

A: A plastic visor manufacturer convinced a mold-maker to build a $20,000 mold for no money down. He agreed to finance the project through payments of 2-cents for each unit sold. In the unlikely event the product demand was fewer than a million, the company would pay the remainder in bulk. Now that's creative financing!

One of my favorites is the president of Naimah Cosmetics. Working from an illustrated picture of her concept (a niche line aimed at women of color), she secured a tentative commitment from a major Southern California department store. Her challenge was to get the product samples and packaging produced with no upfront money. Her creative solution was to coordinate a consortium of professionals who could benefit from being a part of her ground-floor opportunity.

She persuaded a manufacturer, who was looking to expand his market base, to produce $80,000 worth of samples and wait six months until the department store paid the approved purchase order. A photographer and graphic designer also lent their talents based on an agreement that they would become Naimah Cosmetics' primary suppliers once the company was up and running.

Both of these bootstrappers took the ceiling off their brains which allowed them to imagine unorthodox solutions for their situations.

Q: Besides a severance package and personal belongings, what else do people take with them when they leave the workplace environment?

A: You walk away with influences that affect your mind-set and shape your behavior. Most employee positions are insulated from cash flow issues. You can order and waste supplies, make long-distance calls at will, excessively use express mail, frivolously make photocopies, or spend everything in your management budget without much thought as to whether or not you're making the most cost-effective decisions. Chances are your behavior isn't any different from your co-workers. Bad habits begin to germinate here because you're not being conditioned to think about how much your actions are costing the company. When you strike out on your own those spendthrift habits can kill you. Your survival as a bootstrapper will depend on your ability to distinguish between your needs, wants and absolutes. I coach readers through this critical area in Survival Tip #25.

Q: What approach should people take to successfully secure funding for their business venture?

A: First and foremost be realistic about your funding options. Landing funding for a new startup can be tricky, and if you're overzealous or misinformed, you may find yourself spinning your wheels needlessly. A FREE resource that I recommend in Bootstrapper's Success Secrets is "The Small Business Financial Resource Guide: Sources of Assistance for Small and Growing Businesses" (MasterCard International, 800-821-6176). Combing through this guide will give you a solid overview of what's available, the qualifications, and application process.

Be mindful, though, of the following. One, don't waste your time looking for "FREE" or grant money--it doesn't exist despite what ads and infocommericals say. Two, make sure you understand what a venture capital group is looking for before you even approach one. By and large, venture capital investors are looking to earn back 10 times their investment in less than five years. Three, look for items or assets that you own that can be liquidated and used to finance your idea. You may be sitting on an untapped cash source. Four, incur any debt in moderation. The pressure of mounting bills can be very distracting and dull your business senses.

Q: Why is chasing down free money a waste of time?

A: "Where can I find 'free' money or a grant to start my business" is one of the most frequently asked questions I see posted online. Truth be told, free money is a myth. There are few government agencies, private foundations and organizations who give individuals money to finance a startup. My book research included interviewing Norton Kiritz, president of The Grantsmanship Center in Los Angeles. He explained that the majority of available grant money is really targeted at nonprofit organizations and government agencies. These groups use the money to fund a variety of special projects such as community revitalization, job training or research, with a limited amount of money awarded to individuals for scholarships and financial aid or to fund artistic activities or fellowships. People who respond to junk e-mail, ads, infomercials and books that promise to help you "Rake in $1,000,000 per year by getting free grants" or "Milk Uncle Sam's free business grant programs" are only setting themselves up for heartache. All you'll receive for your money is recycled list information from directories of foundations and grant sources who do not give money for starting businesses.

Q: Why is a business plan so important to the success of a small-business?

A: Many people limit a business plan's value as being a necessary component to securing a loan. Although you will need a business plan to get financing from most funding sources, you can also use it to operate and build a business. So even if you are self-funding your business, you should still invest time into writing a road map for your business, which is the business plan. One of my favorite sources for business plan help is the library reference guide, "Business Plans Handbook: A Compilation of Actual Business Plans Developed by Small Businesses Throughout North America," published by Gale Research. Here you can actually see how a variety of other small-businesses have used their plans as a working document to govern their growth, prepare for opportunities as well as difficulties, and build their businesses on paper first.

Q: Where can people get legitimate, FREE products, services and resources available to entrepreneurs?

A: Freebies are everywhere. Companies spend billions of dollars on samples and giveaways every year. Since big-business suppliers are competing fiercely for the small-business dollar, you can get free office supplies, software, and resource guides to help you in every area of your business. My book includes 39 pages that list over 100 connections for FREE products, services, and resources available for the asking.

Q: Which three freebies from your book do you think are the most useful for someone staring out?

A: Well, it's tough to narrow it down to just three. I would say, though, by category:

Research/idea evaluation assistance: State Data Centers (SDCs)/Business and Industry Data Centers (BIDCs) listed on the Small Business Administration's web page (http://www.sba.gov) or by calling 800-827-5722. These facilities offer information on product and service development and FREE computer access to databases, software, and other resources needed to develop a business and marketing plan.

Setting up shop properly: "Best Sellers," by the Federal Trade Commission, list hundreds of the agency's FREE consumer and business publications. Contact: FTC, Public Reference, Room 130, Washington, DC 20580-0001; web address: http://www.ftc.gov.

Information on the ins/outs of entrepreneurship: "Small Business Success" by Pacific Bell Directory, is an annual 80-page magazine, filled with marketing strategies and small-business management tips. Current and past volumes are available by calling 800-848-8000.

Q: What are the best types of free or low-cost marketing strategies people can implement to build their businesses?

A: Some of the most cost-effective marketing strategies around require more time and energy than money. Here are three that fall in that category:

1. Take advantage of all opportunities to have your business listed for FREE in various directories or databases. For example, if you subscribe to an online service, like America Online, complete your member profile with information about your business. Mine is loaded with information about my consulting firm and plugs my book. The listing has produced dozens of inquires and opportunities. Another example is for newsletter publishers, which many small-businesses produce. Make sure your newsletter is listed in directories such as Gale Research's "Newsletters in Print." The listings are free. Here again, I receive countless inquiries and orders from all such listings year-round.

2. Consider co-op advertising dollars. Cooperative advertising is a cost-sharing arrangement between a manufacturer and a retailer for customers' advertising programs. Co-op opportunities are available in every medium, from yellow pages listings to print ads to radio and TV spots. Track down the "Co-op Source Directory" published by National Register Publishing at your local library to see if there's an opportunity for your business.

3. Create a referral program with an incentive for anyone (don't just limit the program to customers) who leads you to an opportunity that results in a sale. So many businesses have referrals programs but they lack pizzazz! Create catchy and clever flyers, coupon dollars or promotional cards and pass them out. Aggressively and shamelessly recruit people into the program!! Make sure the incentive is worth a person's efforts, such as a discount on future product or services, a donation to a favorite charity, or a gift certificate to a wonderful restaurant, play or concert. What you gain in business or save in sales time will make it worth the cost of the incentive's cost.

Q: What is the quickest way for a business to grow faster and make more money?

A: By providing fabulous customer service! There's a catch to the customer service game that throws a lot of entrepreneurs--you must provide service at a level that's considered great from your customers' point of view. Otherwise, you won't get the maximum benefit from your service efforts. If you look at every qualified customer as a potential partner, then you'll begin to embrace the tasks that are associated with nurturing the relationship. Just like marriages flourish with romance, so do client alliances. You'll only know how to romance a customer by talking and listening to what they say about their needs. So, you begin the process through regular tune-up phone calls, annual customer service surveys, monthly one-question polls, and more. Then you take this information and begin to delight the customers with consistent service, convenience, extra incentives and perks, or a newsletter that's loaded with tips, statistics or resources based on their needs and interests. They will respond by gladly paying you a premium price for your product or service, bragging on your business to others, buying more of your offerings, and most importantly, think twice before leaving your business in the face of a cheaper or tempting offer. You, in turn, will be able to devote more time to serving your most profitable base and spend less time and money on chasing new customers.

Q: What is the biggest mistake people make in dealing with customers that cost them potential sales?

A: They fail to handle price objections with finesse. It's premature to automatically deem people as unqualified customers when they say "Your price is too high." If you understand the meaning of an objection, you can respond with finesse and still get the sale. Very often a price-balker isn't making the right comparisons. For example, a customer who balks at the price of an all-leather shoe over one that doesn't include a leather sole is making an off-base comparison. More leather equals more money. If someone is comparing your product or service to something of lesser degree, it's your job to point out the benefits your offering gives that are worth the difference in price--not view the comment as an irritant. Other tactics for chipping away at price objections include quantifying your offering's benefits in terms of price and minimizing or showing how insignificant a price difference is over the article's lifetime when compared to the extra benefits.

Q: What advice would you offer someone who's currently facing a serious business problem?

A: In Bootstrapper's Success Secrets, Chapter 9, "Coping with Adversity," is designed to help small-businesses cope more effectively with the inevitable highs and lows of running a business.

If you're facing a serious problem, pause for a moment -- avoid the temptation to reach for a Band-Aid cure. Pull out a pad and make some notations that list the events that have created the situation and the consequences you're experiencing, and express how it makes you feel. Once you're clear on what the problem REALLY is you can begin to focus on solutions or places where you can get help. For example, the answer may be to rework/reevaluate strategies for a failing marketing campaign. Or, change the direction your business is going. Or, you may need to downsize one aspect of your business.

The best source of information is other small-business owners. I always encourage people to tap into an online forum for their profession. America Online, for example, has a Business Strategies area with weekly chat sessions for business people to discuss problems and strategies they use to promote and operate their businesses. Hearing what others are doing can provide you with clues on how to address your present dilemma. And when you regularly participate in these forums, you'll subconsciously be building a laundry-list of possible solutions or sources should you be faced with a short- or long-term problem.

Q: What is the best tip in your book and why?

A: It's Survival Tip #87-- Don't confuse a regular customer with a satisfied one. People patronize businesses every day that they're not particularly crazy about. I'm guilty of the practice myself. There are several factors that contribute to this behavior. A person may not be aware of other competition and the level of service that's being delivered elsewhere. Or, a person may have gone through a slew of bad providers and believe the current provider is as good as it gets. Or, it may be too inconvenient for a person to switch or shop around right now for a better situation. Or, a current provider may just be cheaper than the rest and probably will be abandoned when an even lower-cost offer comes along. All business owners should be concerned because a dissatisfied regular customer works against you in subtle ways. The person is unlikely to give you referrals, doesn't buy or try anything extra and will probably dump your business when you least expect it. This tip helps readers scout out any existing dissatisfied folks and offers remedies to get and keep their service program on track.

Q: How can people get access to your Bootstrapper's Success Secrets program?

A: "Bootstrapper's Success Secrets: 151 Tactics for Building Your Business on a Shoestring Budget (Career Press) is available at bookstores and Kinko's copy centers nationwide or can be ordered through my web site: http://www.kimberlystansell.com."

Reprinted with permission. Copyright © 2000 Kimberly Stansell. All Rights Reserved.

About Kimberly Stanséll

Kimberly Stansell is a Los Angeles-based author, entrepreneur and businesswoman. She has a knack for turning her desires into reality with a little or no money and helps others do the same through her columns, Web site and book, "Bootstrapper's Success Secrets: 151 Tactics for Building Your Business on a Shoestring Budget" (Career Press). Kimberly is also the Shoestring Start-Up Expert for Entrepreneur.com and Resources Columnist for the Edward Lowe Report. For more business-building tips and resources, visit her Web site: http://www.kimberlystansell.com.

Tags: Wisdom and Life Skills


 

 

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