Plan For Customer Reference as Much as Payment

Written by Sean Murphy. Posted in Consulting Business, EDA, skmurphy

JL Gray left a short but thought provoking comment on yesterday’s post  about customer reference, “Negotiate the Level of Reference in Parallel with Price and Others Terms and Conditions.”

Asking for references is something I’ve never felt especially comfortable with (gasp – what if they say no!) but can be crucial in getting your foot in the door with a new client. You’ve done a good job categorizing the types of references and describing how one might go about including the possibility of a reference in an initial contract. It seems like most of the above would work for product companies, but would be more difficult for service companies. Any thoughts on that?
Thanks Sean, JL

I wouldn’t start by asking for a reference, I would ask for feedback on the quality of your services and the business results that you enabled. If it’s positive you then have the basis for asking for a reference. If it’s negative then you have a chance to remedy and ask after they are satisfied.

We do most of our work with early stage software firms. They often have to wrap their technology in a thick protective blanket of services to protect their customers from jagged cuts by the rough edges of tomorrow. So to their early customers a young software firm can look as much like a consulting company as a technology company.

One of the key concerns that early customers have about a new company’s offering is not whether it works–they know “nothing new ever works” from Secrets of Consulting

The first line of defense is accepting that the new system willfail, possibly in several ways. When I find myself thinking, “I must have this change because I can’tafford failures,” then I’m in big trouble. If I can’t afford some failures, a new system won’t help. And neither will an old one.

Nothing new ever works, but there’s always hope that this time will be different.

What’s harder for them to assess is the level of commitment to persevere through the normal challenges of new technology introduction so that they don’t get a dent in their career. One of the ways that they make that assessment is your past performance and the best way to substantiate that is through customer references and testimonials.

I think that the suggestions I made yesterday would be appropriate for consulting to a large firm or a public firm. It’s very reasonable to address up front how you can talk about the engagement and ask them up front for an honest quote, endorsement, testimonial, or joint technical paper as an outcome. Certainly asking for a LinkedIn endorsement after a long engagement is very reasonable.

One other thing to consider is to have another member of your firm do a periodic ‘quality check’ on how the engagement is progressing, certainly at key milestones or deliverables. One reason to use someone else is that sometimes a customer may be more candid with a third party than they will with you directly (it’s also more credible when another member of your firm has a discussion about what is going well and less well as it implies a corporate commitment to customer satisfaction even if there are aspect of your performance that they are not happy with).

We will also do these “customer view” exercises when we are helping a new client build or verify a positioning. We not only interview customers but as many “near misses” or prospects that proceeded some way forward in the sales process and then dropped out as we can. We have uncovered examples of “reference customers” who were unhappy (and shouldn’t have been used as a reference until their issues had been addressed) as well as novel uses for a product, different perspectives on how to talk about a product and what the true benefits were.

I wrote about some aspects of this about a year ago in “Best Feedback From Early Customers is a Story” and built on Peter Cohan‘s formulation of four categories of customer success story (with the applicability to consulting engagements in parentheses).

  • Vision: what were their reasons when they gave you the purchase order (or statement of work).
  • Initial Implementation (perhaps first or second milestone in a consulting engagement) what are the initial benefits and problems they observed.
  • Consumed: what actually got used (what is the impact of your work on the overall project as it progresses)
  • Evolved: how did they ultimately use the solution (when they look back in a final project after action or they start the planning or kickoff  for the next project, how do they plan to use your services).

When you consider the introduction of a new methodology or a new project that is early in your support of a new technology, the reference that a customer can give you is often what will tip the balance for future work: both with that same customer and with other prospects with similar challenges.

An internal project plan that addresses not only how to manage the delivery of quality consulting services but their substantiation by your customer is therefore an important component of your long term business success.

The current economic downturn will only exacerbate technology firms’ risk aversion. This will increase the need for  references to complement your credentials and technical competence as demonstrated by technical papers and professional presentations.

Scott Sambucci on “An Entrepreneur’s Lessons Learned”

Written by Sean Murphy. Posted in Consulting Business, Founder Story, Rules of Thumb, skmurphy

I met Scott Sambucci when I spoke at TVC in July of 2007 in Menlo Park as a part of their “Entering the Entrepreneurial World” seminar. He was kind enough to blog about his take away from the talk in “Definition: Entrepreneurship” where he concluded that even though it was a noun it should be defined as a verb:

“Leveraging resources to get things done” & “Prudent risk-taking.”

Using the Downturn to Launch Your Consulting Career

Written by Sean Murphy. Posted in 4 Finding your Niche, Consulting Business, skmurphy

The last six weeks or so I have encountered a number of folks who have decided to use the downturn to launch their consulting career. Typically they have been encouraged in this by their former employer who has given them a large check a lot of free time. But some have chafed at cubicle life and left without monetary encouragement.

Most are “consulting until they find a full time job.” Or consulting to make a little money until they get their next job. Or they wanted to take it easy for a while because they have been working hard and just consult.

My approach is to be helpful but not encouraging until they have shed a few key but crippling illusions.

  • It’s easy to move between consulting and a full time job
  • It’s easy to establish a practice
  • It’s quickly lucrative

Unless a job is “temp to perm” it’s normally not a useful interview strategy to inquire if you can become full time if you do a good job. If you want a full time job you are better served to focus on finding a job and associating with other job seekers, who have a fundamentally mindset from consulting associations.
It’s a lot of work to establish a new practice. Some consultants are lured into believing that it’s easier than it really is because a friend or former co-worker gives them an opportunity very quickly. This ultimately causes them several problems. They stop prospecting and marketing their services because they are approaching their consulting career in the same way that they approached regular employment. When their assignment ends, unless they convert to perm–and let’s face it if your friend was going to hire you full time they would do that initially instead of hiring you as a consultant, they are back at ground zero.
If you’ve been laid off and believe that you want to consult here are six things you can do that will stand you in good stead.

  1. Cut your personal spending to the bare minimum right away. The vagaries of private practice are such that you will always want a cushion for lean times and you will need to invest in marketing and other practice building activities.
  2. Assume it will take between two and five years to get established. If you are not entrepreneurial (and at least a little crazy) then look for full time work. In a downturn take a job that’s “beneath you” and continue to look for a full time job that you want.
  3. If you do get hired as a consultant don’t the assignment full time unless it’s just two to three weeks and requires full time. Always take a least fours hours a week to look for more clients and continue to observe rule #1 (keep personal spending to a bare minimum). Work assignments at one third or half time so you can find another client and work both in parallel.
  4. Whenever you ask someone else for help, be clear on how you can help them. Go beyond quid pro quo to help folks when you can, even if the immediate payback to you is not clear. But never just take.
  5. Don’t confuse a professional consulting organization with a job search group. Folks in a job search group expect to be a member for perhaps three to six months. Professional consultants expect to be at it for a long time.
  6. Put your free time to good use. Too many folks think because they aren’t getting paid they shouldn’t work at something. Volunteer or offer to help someone else at little or no cost. Make commitments and honor them even if you get busy. Idleness and a loss of structure are extremely corrosive to work habits and a sense of self-worth.

Some related posts:

How To Measure Your Lead Generation Effectiveness

Written by Sean Murphy. Posted in 4 Finding your Niche, 5 Scaling Up Stage, Consulting Business, skmurphy

Many start-up founders believe that the sales process should be this straightforward:

  1. Get the phone to ring (or e-mail inbox or skype or web contact form)
  2. Tell your prospect about your offering
  3. Take the order

Alas it is normally not this simple, especially if you are selling to businesses. We do encounter some startups that are looking for “smarter prospects” who will buy after they explain their offering but the typical business customer has a more complex buying process. At a minimum the prospect needs to understand your offer, to believe you can deliver the benefits that you promise, and to act based on an important if not critical business need.

It will normally take multiple interactions with a prospect to turn them into a customer. For business customers this may take weeks to months. This means that  you will need to keep track of more than one prospect and more than one contact with each of them. Even for those readers blessed with a powerful memory this will require a system and a systematic approach. There are number of software tools available to track contacts/prospects:

Any of these are acceptable provided that you enter a minimum amount of information for every prospect and every contact with them. To be able to determine if a particular lead generation approach is working you will need to track the source of each prospect’s call and whether or not you ultimately won their business. This allows you to reinforce methods that are working with more time and budget, and to adjust or discontinue methods that fail generate calls that lead to revenue.

We believe that you need to be tracking the following:

  • Opportunity (Contact Name, Company, E-Mail, and Phone): If you are selling to a business you may need to group several different contact names under one company or opportunity name.
  • Source (e.g. Person, Event, Ad, URL):  Be sure to track the path that each prospect followed to find you. Ask if it was a referral (if so from whom), a search engine query, an advertisement, a paper or blog post, or a speaking engagement.
  • Status in sales process (e.g. Initial Contact, Percolate, Pitch/Demo, In Evaluation or Benchmark, Quoted/Proposal)
  • Next Action Date:  Always get clarity with a prospect on when you will contact them next, even if they plan to contact you (e.g. “If I don’t hear from you by Wednesday I will call you Monday of the following week). This should be less than six weeks and is normally one or two weeks for an active prospect.
  • Quoted – Proposal Expiration Date. Never put a quote or proposal in front of a prospect without an expiration date. This sets up two natural follow up points: before it’s due and after it’s expired. This also allows you to have a discussion about their decision time frame (e.g. “How long would you like the quote good for?”).
  • Win/Loss: Always follow through and determine if they ultimately selected another vendor and if they did buy, why did they buy.

Startup founders with an engineering background tend to focus much more on the tool, and selecting a tool, and less on the daily follow through needed to track essential information for each contact with every prospect. For most of the firms that we work with, until they are really scaling up, Excel or an on-line spreadsheet will work just fine. If you have less than 100 leads–not suspects but firms that have actually contacted you and demonstrated interest and a business need–just use Excel and bake the update process into your daily practice.

Customer Development for a Consulting Practice in a Downturn

Written by Sean Murphy. Posted in Books, Consulting Business, Customer Development, skmurphy

What follows are some real questions I have answered either face to face or in e-mail over the last 90 days in response to the current downturn in Silicon Valley.

Q: I just completed my first two years of consulting–which were spectacular–after 20+ years of full time work. But long term clients have just dropped me, and after a rather frantic couple months of chasing every lead I could, and exhausting my list, I am facing the imminent need to shut down my operation and go back to getting a job somewhere. What can I do?

A: One book you might read is “Rainmaking” by Ford Harding (an excerpt from page 22, emphasis added)

For your own business you must gain a feel for two variables. The first is the typical gestation period from the time you first make contact with a prospect to the time you actually sign him as a client. Depending upon your business this can range from a couple of months to over a year. The second variable is the typical conversion rate from prospect from client. This may have several subsidiary rates. […]

Understanding them will help you complete the following sentence, which underlies one of the key principles of marketing:

I need x prospects today to have a reasonable assurance that I will have a new client in y months.

Professionals do not often think enough about the implications of this sentence. They become focused on the pursuit of two or three hot prospects, and once these projects are either won or lost, find that they have too few others in the early stages of development to generate the business they will need in the months to come. This is one of the major causes of “porpoising,” the radical and repeated swing from too much work to too little that  so many organizations face. To avoid porpoising you must market and not just sell. To minimize porpoising you will need to generate a continuing flow of new leads.

Q: Is there anything that a professional organization offers in aiding members to get more leads?

A: One of the principles of lead flow is that you have to give to get. Professional communities are not a lead generation service. One of the key points in the “Creating a Consultancy Out of What You Practice” article Theresa referred to in “Two Professional Groups for Consultants” was this one:

Consultants often refer one another to clients they can’t satisfy. “Some get more jobs than they can handle or they get a job that’s not quite right for their expertise,” says Mr. Maclay. They may recommend you to a client, and you should reciprocate when it makes sense, he explains.

As you are out there “frantic..chasing every lead” carry others folks cards and website addresses with you so that even thought it’s not a fit for you it may be a good fit for someone else. I refer business to other consultants frequently. You have to see yourself as part of a larger system or community that will prosper together (or not). See also my “Networking in Silicon Valley” from July of 2007 where I observed:

One of the secrets to navigating Silicon Valley, is that it’s actually a very small place with many connections: some that can take a while to discover are nonetheless quite potent. That being said the single most important thing to avoid is wasting people’s time. Time is more scarce than capital, technology, or knowledge.

Q: I’ve read all the books and really don’t see the merits of all the standard tricks about having a sexy website, publishing a regular newsletter, teaching seminars, etc. I’m sure it’d all help, but it seems like foolish advise for someone starting out. If you don’t have a personal inside referral, or unless the market is so hot and they’re so desperate that they are Googling for you, all the rest is just noise that they’d rather do without.

A: A website, a regular newsletter, seminars are all good ideas for marketing your expertise.  They are not noise. Talk to folks who have been consulting  five or ten years not just two. If you don’t have a website you don’t exist. I apologize if this sounds too judgmental, it’s certainly challenging times, but establishing a consulting practice that can survive a full business cycle is not easy. It may take longer to succeed than you have runway, in which case finding a part time regular job may allow you to ease into it or a full time job may be more of a fit with your nature. Here are some rules of thumb we have tried to follow over the last five years at SKMurphy, Inc.

  1. Once you let one client get to be more than a third of your revenue, certainly if they are more than half, you may have inadvertently let them become your employer because you become afraid to tell them “No.”
  2. As a consultant your job security is your ability to get new work. You need to be continually marketing yourself to avoid “porpoising” or going deep on one or two clients and then going idle until you can find your next big client.
  3. It’s almost always easier to look for new clients when you have existing client work: it increases your confidence and improves your negotiating position.
  4. One good book on consulting is Gerald Weinberg’s “Secrets of Consulting” (he also blogs at http://secretsofconsulting.blogspot.com/ ). He advises that in a week you spend two days doing work, two days marketing yourself, and one day getting better at what you do. If you are working on a product to complement your consulting you might modify that to three days doing work, 1 day marketing yourself, and one day developing your product. As work slacks off divide your time between additional marketing efforts and working on your product.

Update February 19, 2009: Ford Harding E-mailed me a reminder to link to his second addition of Rainmaking, called “Rainmaking Attracting New Clients No Matter What Your Field” which has 40% new material in preference to his older addition of “Rainmaking.” The page/quote cited in this blog post are from his first edition.

Two Professional Groups for Consultants

Written by Theresa Shafer. Posted in Consulting Business

Many mid-career professionals may take advantage of this latest Silicon Valley downturn to launch a consulting practice. Some of them find their way to the Bootstrappers Breakfast, where they are welcome. If they want to establish a consulting practice I encourage them to join organizations like PATCA and WIC as well.

In yesterday’s Wall Street Journal this is great article by Sarah Needleman “Creating a Consultancy Out of What You Practice” that some key things to consider as you are getting started:

  • Expertise + Clients: successful consulting involves more than the ability to do the work, you also have to be able to get clients. This requires an ongoing focus on marketing and selling your services.
  • Run it as a business: have a one page plan of attack (“Guerrilla Marketing for Consultants” by Michael McLaughlin and “Rainmaking” by Ford Harding are two excellent books for guidance on how to do a business and marketing plan for a consulting practice. Understand the tax implications of the various forms a business can take and if you are targeting the Fortune 500 (or Silicon Valley 150) what will be required for your firm to qualify as an approved vendor.
  • Befriend your competitors. It can be a revelation to new consultants that they can both cooperate and compete with other consultants. There is a good quote from Walt Maclay, the president of PATCA, on this:

“Some get more jobs than they can handle or they get a job that’s not quite right for their expertise,” says Mr. Maclay. They may recommend you to a client, and you should reciprocate when it makes sense, he explains. You also may be able to secure referrals by joining a consulting industry trade group. Members often swap job leads with one another through email lists.

I am a member of PATCA and have attended several very educational meetings, the most recent was on payment processors. I have also found Women In Consulting (WIC) to be excellent in this regard. You can get a lot of useful help and information by joining WIC and participating in the mailing lists. Networking can be a way not only to discover new clients but to meet other consultants that you partner with for larger opportunities.

The article closes with this advice on how to spread the word.

Let everyone in your personal and professional network know about your new line of work and that you’re eager for referrals. Attend business events targeted toward executives at firms that could benefit from your services. Go to the events prepared with a 30-second commercial, advises Mr. Maclay. “You need a very good elevator speech, something that will get their attention,” he explains.

A short intro is always appreciated: stress the benefits of what you deliver and couple it with some good diagnostic questions and you can kickoff some serious conversations. In our case I say that we help startups find early customers and early revenue and I ask if they are having trouble pricing their product or looking for smarter prospects.

Update February 19, 2009: Ford Harding E-mailed me a reminder to link to his second addition of Rainmaking, called “Rainmaking Attracting New Clients No Matter What Your Field” which has 40% new material in preference to his older addition of “Rainmaking.”

Strategic Planning for Non-Profits

Written by Sean Murphy. Posted in Consulting Business, skmurphy

I spent the morning helping to facilitate a strategic planning meeting for PATCA. I was asked by Walt Maclay, the current PATCA president, to assist him and the board of directors (and any PATCA members how wanted to take part) in charting a course for 2009.

PATCA is a Silicon Valley institution, a non-profit founded in 1975 specifically to help connect businesses with independent consultants. It’s older, for example, than the Software Development Forum (SDForum started out as the Software Entrepreneur Forum in 1983) and the Silicon Valley Association of Software Entrepreneurs (SVASE) which was founded in 1995. An unlike either of those organizations it’s entirely member supported, it doesn’t rely on corporate sponsorships to fund any of its programs or activities.

A number of experienced and articulate consultants attended and contributed.

Strategic planning covers a multitude of sins, my contribution was to suggest the group review a couple of key questions:

  • Analyzing the budget for the organization, do the priorities implied by where you are spending your money match the priorities of the organization and it’s mission.
  • Is the organization encouraging, fully utilizing, and recognizing the volunteer energy that makes any non-profit successful.
  • What are the key metrics for assessing how well the organization is fulfilling its mission? If this were a business, they would be what Jack Stack might call “the critical numbers.”

I came away impressed with everyone who contributed and in particular how well the finances were managed. Having some exposure to non-profit finances over the years, it’s one area where hard choices can often be postponed to the detriment of an organization’s long term viability.

Not a bad way to spend a Saturday morning.

Using Web 2.0 Technology to Enable Strategic Selling: A Sales Executive Forum

Written by Francis Adanza. Posted in Consulting Business, Events

I have had two interesting conversations with friends who are frustrated with some of the internal deficiencies within their companies. Both of my friends are accountants, but work for different firms and in different departments. However, they are both part of itinerant work forces and have the same problem. While out of the office, they both do not have access to their local area network. The specific pains within the overall problem were that my friends could not access their email while in the field or obtain information about a customer who was not directly their client. Where there is pain, there is opportunity. Although this problem that has been solved 20 years ago, it was interesting that these 100 million dollar firms were still operating under these business conditions.

Thinking back to last months Sales 2.0 Conference, I thought about one of the breakout sessions that I attended, “Using Web 2.0 Technology to Enable Strategic Selling: A Sales Executive Forum.”

Moderator:
Gerhard Gschwandtner, Publisher, Selling Power

Panelist:
Clarence So, Senior VP Marketing, Salesforce.com
Umberto Milletti, CEO & Founder, InsideView
Lisa Caswell, VP Global Sales & Alliances, Aravo

Below are the questions and answers from the panel discussion that I found relevant to addressing the opportunity to solve my friends’ critical business issues.

Question: Please define Sales 2.0.

Umberto: Sales 2.0 means having a more relevant conversation with your customers. It has always been an information problem. I believe that sales people are ultimately information workers that try to match a customer and their needs to a solution. It used to be very difficult to learn about customers. You would get leads without even knowing who is this company and who is this person. With Sales 2.0 it’s drawing lots of information about companies, their people, and making it relevant to your sales force.

Clarence: As a company grows, it not only becomes challenging to manage the business operationally, but also manage the selling process. Sales 2.0 allows companies to automate operational process, sales processes, offer richer customer support, and an overall better customer experience.

Question: How many technology tools do you use today?

Lisa: Technology gives us different ways to collaborate. Sales models have shifted from pushing or pulling to co-creation. Technology allows us to co-create the sale with the customer. Internally, we use several technology tools, but only two for our sales team: Salesforce.com and InsideView. With these tools, we can track the customer relationships, account relationships, and history. Historically, getting everyone on the same page has been a problem. Now, we have common dashboards, reports, and a place to access data to align everybody objectively. This helps us get rid of the anecdotes and use data to drive decisions.

Question: Is a sales more an art or a science?

Lisa: I think the ratio is 85% science and 15% art. If you track the number of phone calls to the leads, to the close rates, and measure what you learn, you take more of a systematic approach than feeling your way through it.

Clarence: I think the ration is 70% science, 30% art. I believe sales is more science because you need metrics to measure your effectiveness. For example, measuring our web presence. We live and die by our website traffic. We drive everyone to the website and measure how many people are bouncing, who is downloading the white papers, how much time people are spending on our site.

In our business model, everybody comes to the website at some point. I know down to the decimal point how many percentage of leads I get inbound through the website. We model how everybody comes in and then try to automate as many as possible. It’s a very substantial operational modeling process that we run. Once you get in through the website we use Salesforce.com and assign the leads.

Gschwandtner: With all the technology that’s out there, we should not forget that the purpose of business is what, to create a customer. How do we create a customer, by helping the customer win. How do we help a customer win? We need to understand. A lot of companies are still arrogant and say I know what our customers need and want. This is height of arrogance and ignorance. We need to know what is on the customer’s dashboard, what metrics they are looking for. If we don’t know what is important to the customer, we have no leverage point for having a conversation.

My thoughts: If everything above is true, then why do my friends have this problem? With all the tools, customer information and resources available, how come someone has not closed a deal with these accounting firms and upgraded their IT infrastructure? How come these firms do not have any team collaboration technologies? Is it because most financial firms have IT departments that assume employees should have access to company applications and data stores only while they are on company premises and connected to an internal local area network? Maybe the partners have not re-thought their business processes in light of what’s now available? Perhaps when the partners were paying their dues on detailed project work many of these technologies were not widely available, and their concept of the work has been shaped by that. These all seem like opportunities for selling. It seems obvious that if you have people in the field, they need access to the firms resources.

3 Tips for Entrepreneurs Planning a Startup

Written by Theresa Shafer. Posted in Consulting Business, Startup CEO: Question of the Day, Startups

How do you plan when you are in a small software startup? Big company planning models are not just overkill, they are not appropriate for small firms. Startups need a lightweight planning and development model to thread the narrows between “just do it” and “let’s study the problem a little longer.”

We use an one-page planning model. The one-page business plan is different from traditional models. It’s an ACTION plan. Traditional models are out of date by the time they are finished! That’s one reason why they don’t work. They are also very general, trying to fit everyone, as a result are never really useful.

But a one-page model is not a vehicle for raising money or soliciting investment – that requires a different approach. This is an operating plan. The important thing here is the process of planning, developing a better understanding of the business and the options available.

  • Define and understand yourself, your competencies, your product, and your customer.
  • Identify your immediate, mid-term, and long term goals as well as an action plan to reach them
  • Clarify and clearly state your business model and path to revenue

Here’s 3 tips to make it usable.

  1. Keep it simple and usable.
  2. Stick to one page.
  3. Use bullets to jot down ideas. It is not about writing volumes.

Our Idea to Revenue workbook has individual worksheets. Each key concept is presented in a tight, one-page question-and-answer format. We also guide you through the process in the Idea to Revenue Workshop.

Getting Feedback on your Work

Written by Theresa Shafer. Posted in Consulting Business, Startups

Getting feedback after engaging with a client or even after an introductory meeting with a prospect is important. A couple of survey tools that we use are iContact and Survey Monkey. They are easy to use and low cost. Survey Monkey has some nice templates. The survey tools are useful when you want to ask the same fixed set of questions of several dozen to several hundred folks at once.

Here are our basic feedback survey questions:

To help us calibrate and improve our engagement model and the quality of our advice, please take a few minutes and answer three questions for us. Looking back on our conversation and e-mail exchange could you outline briefly (can be just one phrase or sentence)

  1. The three most useful concepts or suggestions that you took away from our conversation or subsequent e-mail
  2. The three least useful (or even worthless or counter-productive) concepts or suggestions that you heard in the interaction.
  3. Up to three specific changes that you have made in your strategy or engagement process as a result of our interaction (again can just be a phrase or one sentence).

If we don’t get an answer we will typically have someone who had little or no involvement in the project call and follow up to ask the questions over the phone. Because they had little involvement in the project it’s unlikely that client will be dissatisfied with them personally and more likely to share feedback. In general the combination of a personal e-mail and a personal phone call will get you the most information.

Free Small Business eNewsletter From IRS

Written by Theresa Shafer. Posted in Consulting Business, Startups, Tools for Startups

e-News for Small Businesses is a free electronic mail service designed to provide tax information for small business owners and self-employed individuals. Subscribers receive information about important upcoming tax dates for SB/SE customers, what’s new for small businesses on the IRS Web site, reminders and tips to assist small businesses and self-employed taxpayers with tax compliance issues, IRS News Releases and special IRS announcements that pertain to SB/SE customers.

If you haven’t found an accountant for your business taxes now is the time to get your files in order and interview a few based on other business owner recommendations. If you are based in Silicon Valley and are interested in our advice, talk to Ogden Lilly at Boitano Sargent and Lilly.

The Challenge of Advising Entrepreneurs

Written by Sean Murphy. Posted in Consulting Business, skmurphy, Startups

“The more I heard that I couldn’t make it, the more I was determined to do it. I never liked being told that I’m not good enough to do this or that.” Archie Griffin

Entrepreneurs “need to be a little crazy” if you believe Barry Moltz. They get advice from well meaning friends and family that consists primarily of admonitions to stay on the beaten path: “Don’t quit your day job” or “Stay in school” to recall two, the latter normally a good idea (Bill Gates, Steve Jobs, and Michael Dell are convincing counter-examples but not a representative sample). But those friends are not normally entrepreneurs.

There was a nugget I extracted from Fortune’s November 2006 profile of Larry Sonsini that helps to explain his success in advising strong willed entrepreneurs:

“I don’t take orders well,” says T.J. Rodgers, the founder, chairman and CEO of Cypress Semiconductor. “But taking advice from Larry Sonsini is easy. He’s professorial. He’s nonjudgmental. ‘You can choose to do this, you can choose to do that, and these will be the consequences.'”

It’s a sound approach when working with entrepreneurs: present likely consequences and the reasons why you believe that they will ensue.

Dharmesh Shah was complaining in July of this year that the customer is not always right and that “In most cases, our understanding is much higher than that of our customers.” He is selling to startup and small businesses who can’t figure out whether to accept his firm’s advice. He identifies four concerns that they may have that will prevent them from following his advice:

  1. What’s in it for you?
  2. Do you understand me?
  3. Are you really an expert?
  4. Did the expert make the call?

It’s a good blog post even though his frustration shows through a little too clearly. He offers two choices: you can be a “trusted advisor” (to borrow David Maister‘s phrase) or a “responsive assistant.” He closes with “Have you ever had to tell a customer they were wrong? How did you handle it?”

My answer follows, slightly amended from the comment I left on September 20 on his blog (and with formatting restored).

We offer strategic advice and business development consulting to early stage firms.

As such we fit your model of “trusted adviser” to entrepreneurs. In my experience it’s very difficult to tell an entrepreneur “you are wrong” (and have them listen and change their actions) because they hear this from so many of the folks around them (“get a real job”, “your idea will never work”, “no one else does it that way”,…) that they are no longer sure who to trust. In some instances this is like waving a red flag in front of a bull: we meet entrepreneurs who are more interested in proving someone else wrong (typically from their last company) than in building a company.

We work with them to estimate the likely future impacts of present decisions and understand the likely consequences. I find that a simple plan or decision tree can do more to illuminate the situation for an entrepreneurial team than any amount of telling. It’s normally the question that gets them to think through likely consequences that is more likely to change behavior than statements like “you’re wrong” or “this is a mistake.” Although we still try the other approach from time to time to see if it has started to work.

We also try and follow Russell Ackoff‘s “decision record” approach where we treat decisions as experiments and write down our hypotheses (“guesses” or “informed judgment” depending upon your perspective) about results in advance and then review them against measurable outcomes after enough time has passed.

True expertise means that you should be able to explain:

  • the symptoms you looked at,
  • symptoms you discarded as not germane,
  • the diagnosis you have reached,
  • the differential between the customer’s relevant symptoms and your diagnosis versus other potential diagnoses,
  • the prescription (advice) and how to apply it,
  • and a prognosis or range of likely outcomes.

In some sense it’s less about who’s right and more about developing a shared understanding and shared situational awareness. Trust is built over time through competence, commitment, and care. You have to find a model that let’s you work with a customer in a way that earns their trust.

I think you also have to distinguish between decisions that are values conflicts (e.g. we want you to misrepresent a product or service to the point where you are knowingly committing a fraud) and decisions that are less than optimal, or may not necessarily get good results but are not in conflict with your values.

At the end of the day it’s still their company and it’s distinct from yours.

3 Tips for Choosing a Logo

Written by Theresa Shafer. Posted in Consulting Business, Rules of Thumb, Startups

  1. Text Treatments: text logos are simple, the company name is always right there. Most high tech logos are text treatments, they are clear and simple. With text logos you have instant impact, customers don’t need to decipher anything. Another benefit of text treatments are logo aspect ratio comes naturally with words. They always seem to work whether you are shrinking or stretching them. Examples are Google, IBM, Intel, and eBay.
  2. Icons: symbol logos can be recognized faster, our brains process images quickly than words alone. But they require more  work and $$$ on branding and presence before people have the connection between symbol and company. Examples are Nike‘s swoosh, Apple‘s apple and Linux‘s penguin. Notice these logos have nothing to do with the companies product: they are about being different and being memorable. They are also very simple designs.
  3. Keep it Simple:  like many other types of design, the best logo designs are elegantly simple. They shrink, stretch, or twist without losing their intangible emotional resonance. Color may add to the design, but they still look great in black and white. In fact, most logo designers use grayscales to do the initial design, then move it to color. They have to look good on your business card, on literature, and on your website.

We’ve already blogged about how adding a logo to your business cards and website improves your credibility (and makes you more memorable), we used logoworks  and were very pleased with the results.

Getting More Customers Workshop Offered Sep-9-2007

Written by Sean Murphy. Posted in Consulting Business, Events, skmurphy

We are offering our “Getting More Customers” workshop this fall in collaboration with the Professional and Technical Consultants Association (PATCA). The workshop covers ten proven marketing techniques for growing your business: attendees will select one or two that fit their style and develop a plan to implement them in their business in the next 90 days. As a part of your workshop registration, we will also follow up via e-mail and brief phone calls at two weeks, four weeks, 8 weeks, and 13 weeks to help you track your progress. You will leave with a one page action plan, a workbook, and 90 days of access to a private workspace with the workshop materials to enable you to execute one or two marketing strategies to bring your business more customers.

The techniques covered are appropriate for professional and technical consultants and early stage software firms. This is a real workshop that has about two hours of presentation and two hours of individual and small group exercises. Past workshop attendees have been pleasantly surprised that it wasn’t just a sales pitch for our services but an actual working session where they are able to learn about some proven techniques and then develop a plan to use one or two in their business starting immediately. We also include breakfast and lunch breakout sessions to give attendees a chance to network informally and de-brief on what they have learned.

This will be the third and final time we will offer this workshop in 2007. Our full workshop schedule is here: http://www.skmurphy.com/services/workshops/
Date: Saturday, Sept 8, 2007 8:00 AM – 1:00 PM
Location: Keypoint Credit Union Center, 2805 Bowers Ave., Santa Clara, CA 95051
Cost: $75 PATCA members, $95 non-members, $95 guest of member
Register here

Agenda:

  • 8:00 AM Breakfast & Registration
  • 8:30 AM Workshop begins
  • 12:30 PM Lunch & De-brief

Seating is Limited to 18 so please register in advance

Understand, Believe, and Act

Written by Theresa Shafer. Posted in Books, Consulting Business, Favorites, Startups

The sales process may seem like a simple exchange – you convince a prospect to accept your product or service in exchange for their money. However, there are a number of overlapping processes running to get you to that point.

A few thoughts about one of them: the process that prospects go through to decide if they are going to buy from you. Jerry Weissman has framed this as Understand, Believe, and Act.

First a prospect must understand what you have to offer. This is straightforward when your product is a better, faster, cheaper version. But this is much more difficult when it is an innovative technology. Demos and sales pitches become critical. We joke that “If you are looking for smarter prospects who will understand your offer, then maybe your demo sucks!” Sadly, this is often the case (we have even had to apply it to our pitches from time to time).

Presenting an innovative technology in a way that’s understandable to a prospect is never easy. The language, the problems, and why it is better must be grounded in the prospects world. If you give a prospect a feature list, some will be able to “get it”, but not many. To reach most prospects, you must start from a problem that they know they have, and offer a solution they can understand.

Secondly, prospects must believe that your innovative technology will actually deliver them the benefits you promise. New technology always brings risk. They may risk losing their job–or at least putting a “dent in their career”–if you don’t deliver! The first people who will trust you are folks with whom you already have a prior shared success. They know you can deliver. Usually these people are the source for your early sales. When your first clients say “I used it and it worked” to their friends they give you credibility. Eventually you must get to strangers referring other strangers to buy. Testimonials on your website are critical for prospects believing your claims. Testimonials, like your demo, must be in the language customers use and from people who are credible.

Only after they understand and believe will customers ever act. But they act on their own cycle, whether it’s a certain point in the product development process, a certain time of year, or a phase of the moon. It’s their timing! Your challenge is to make sure they remember your offering when they are looking for it. For this reason you need a method of reminding those people that you have a solution. We call this percolating. This is the function that applications like Salesforce provide: you can set up a sales campaign to remind you to contact everyone who is percolating every 6 weeks or so (or whenever they wanted to hear back from you next). Another method we have seen work well are newsletters. If you can help your prospect and send them something useful every 6 weeks, people will join the mailing list and remember you when they have a problem you can help them solve. Be there when they are ready to act.

Jerry Weissman On Persuasion: Getting From Point A to Point B In Your Presentation

Written by Sean Murphy. Posted in Books, Consulting Business, skmurphy, Startups

I wrote earlier in “Kierkegaard On the Art of Helping Others To Understand” about the need to understand where what Jerry Weissman calls “Point A” is for a prospect. Here is an excerpt from his book “Presenting to Win: The Art of Telling Your Story” (pages 6-7, emphasis in original) on persuasion.

Persuasion: Getting From Point A to Point B

All presentation situations have one element in common.

Whether it’s a formal presentation, speech, sales pitch, seminar, jury summation, or a pep talk, every communication has as its goal to take the audience from where they are at the start of your presentation, which is Point A, and move them to your objective, which is Point B. This dynamic shift is persuasion.

[…]

In psychological terms, Point A is the inert place where your audience starts: uninformed, knowing little about you and your business; dubious, skeptical about your business and ready to question your claims; or in the worst-case scenario, resistant, mentally committed to a position contrary to what you’re asking them to do.

What you are asking them to do is Point B. The precise nature of Point B depends upon the particular persuasive situation you face. To reach Point B, you need to move the uninformed audience to understand, the dubious audience to believe, and the resistant audience to act in a particular way. In fact, understand, believe, and act are not three separate goals, but three stages in reaching a single, cumulative, ultimate goal. After all, the audience will not act as you want them to act if they don’t first understand your story and believe the message it conveys.

“Crucial Marketing Concepts for Consultants” @ PATCA May 10

Written by Sean Murphy. Posted in Consulting Business, Events, skmurphy

I will be presenting a revised and improved version of the “12 Books for the Busy CEO” presentation on Thursday May 10 at 6pm at the PATCA monthly dinner at the Embassy Suites Santa Clara – Silicon Valley on 2885 Lakeside Drive in Santa Clara.

I will cover a dozen books and offer a synthesis of the key marketing concepts (this is not a sequence of twelve book reports) that they offer. I will have an article on crucial marketing concepts that I will give out for attendees. There is good content here for entrepreneurs, whether they are starting out as consultants or embedding their expertise in software or a SaaS offering.

Spend an hour and leave with a summary of key marketing insights and some rules of thumb for successful innovation in Silicon Valley. You may even identify one or two books that you haven’t read that will be worth your time. I will cover a dozen books that form the basis for conventional wisdom on marketing in Silicon Valley. They provide the terms, the metaphors, the parables–in short the language–that successful high technology firms use to develop their plans and monitor their execution. Some of these books are old–most have stood the test of time, which in Valley years is a decade or more–but still provide succinct guidelines for new product introduction and sales.

I want to thank Mark Duncan for helping us turn a set of black and white PowerPoint slides that were primarily text bullets into a colorful and illustration rich article.

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