As we begin the second half of the year we wanted to take a moment and provide our readers with a view of the economy and our forecasts going forward.There is a lot of economic data being spewed out these days in the media. It is not uncommon for the same data to be reported and interpreted differently by the various media outlets.

Although, there are many varying reports on what is happening in the economy, there are several key indicators that remain the same despite who is reporting the news. We recognize the state of the economy is vitally important to any businessperson actively working and building in a business.

So, in this article we will cut through the clutter and focus on some of the local, national, and international economic issues that matter.

Stock market volatility is the norm and will continue to be the norm

If there is one thing that we can totally count on is the stock market will continue to be a roller coaster of activity. For example, on July 20th, U.S. stocks fell the most in a month, while the euro continued to weaken.

One reason why the stock market and commodity markets dropped was due to Spain stating that the recession will extend into next year. At the same time, Chinese leaders pledged to clamp down on property speculation. These announcements were then interpreted by the market as indicating future worldwide economic weakness that would lead to lower demand.

Then the market began to rise after there was news of potential action by the European Central Bank to buy bonds in an effort to help lower borrowing costs and thereby preserve the Euro. As you can see any news (or rumors), whether or not it is truly significant, can have a massive effect on the direction of the market.

There is a lot more to the European crises than just the recent problems with Greece and Spain. When we look at the totality of the various financial issues involved with the European financial crises it is evident these problems will not be solved anytime soon.

Housing

For the first six months of 2012 housing sector of the economy has been rising. We have seen increases in all areas of the sector including: home sales, and housing starts. According to the Case-Shiller index, home prices showed signs of stabilization in May. In our local area, we are seeing lower inventories which is helping to support housing values. The San Francisco Bay Area has seen a 0.6% increase over same time sales last year.

One reason for decrease in inventory is due to the way many lenders are approaching foreclosures. There still remains a large amount of “shadow inventory” that has not hit the market. These are homes where the borrower is in default, but the lender has not foreclosed on the property. Some estimates claim as much as 4 million properties existing in the “shadow inventory”.

In many cases lenders are seeking short sales instead of forcing the foreclosure because the discount taken to make the sale is a lot less. This is because buyers of foreclosed homes are usually investors looking for a return while buyers in a short sales are more often people wanting to live in the home.

Credit continues to be tight as anyone who has applied for home loan can attest to. This will impact the number of transactions. It is important to remember that transactions lead the market rather than price increases. The more transactions the stronger the housing sector will be and the more it will contribute to GDP.

The key to improvement in the housing market will ultimately come down to jobs. For example, recent reports coming from parts of North Dakota are showing a demand for housing that can’t be met. Prices are also on the rise. Homes that were selling for $80,000 only a few years ago are now selling for $320,000. The reason? All the new jobs being formed due to the increased oil production in the Bakken Formation.

Nationally unemployment continues to hover around 8.2% according to most government reports with the real unemployment rising to 14.9%. These levels of unemployment are effecting all aspects of our economy and this is the main indicator to keep an eye on.

Consumer Confidence

In July, the Conference Board published the consumer confidence index which came in at 65.9 compared to 62.7 in June. On the surface this would be a positive trend. However, this reading is still historically anemic and demonstrates that consumers are still not confident or willing to spend.

This conclusion is also backed by a report from the Commerce Department showing personal income gained 0.5% in June when compared to the previous month. Nevertheless, annual growth in personal income was only 3.5% in June compared to 5.1% a year earlier.

Overall our nation’s gross domestic product grew at an annual rate of 1.5% between April and June of this year. It is expected that GDP growth will rise to about 2.0% annual rate in the second part of the year.

The Drain of Consumer Debt

One of the biggest drains to economic growth is the amount of debt and the cost of servicing that debt. This is especially true when we look at the amount of American consumer debt that is currently hovering around $13.8 trillion. Student loans appear to be one of the largest drains on young Americans and a reason why they are pulling back on spending.

What this all means for the small business owner

The economy will not be rebounding as quickly as had been previously forecasted. There are a lot of challenges both domestically with our unemployment, and internationally with sovereign debt problems, that will continue to weigh heavily on the economy.

That being said, there are always opportunities for businesses among this economic malaise.

One bright spot is the emerging global middle class of consumers who are expected to have as much as $56 trillion a year in spending power. This means opportunity in providing everything from goods and services to increases in tourism. We can only imagine what new business models will develop as a result of this new development.

As I have discussed in previous articles, some of today’s most successful companies were started during economic downturns including: Federal Express, General Electric, Microsoft, and many others.

Businesses who win here will dominate their markets in the future and be recognized as a pillar of industry. Yet, this is not to say it will be easy. Sure, it may take a lot longer to find a qualified client or customer, but they are there. Yes, it may take various marketing methods and new approaches to attract customers than ever before, but it can be done.

What is evident is that making it in this economy requires strategic thinking and a willingness to try new things. Continuing to do the same things over and over again will not get anyone the same results, it will get them less results. The good news is that the necessary information to accomplish this is readily available more than any other time in history. It is only a matter of looking for it and then implementing it.

In the end, it is not going to be the economy that will dictate the success or failure of any enterprise, but rather the resourcefulness and tenacity of the business person.

This is a brief glance of the materials and information all members of Bay Area Mastermind receive each and every month. Bay Area Mastermind provides the tools and resources along with the support and accountability that makes a difference to any business. You are cordially invited to Test Drive a meeting and get the tools that your business needs to succeed.

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With all the new technological advances in customer acquisition it is easy for any business owner to jump from one marketing tacit to another in hopes of finding the silver bullet.   You know the silver bullet,  it is the elusive magical tacit that will produce all

the business leads easily and effortlessly.   Every business owner has heard of the “new” service or software that brings in more customers than the business can handle.  Every Business owner has also received either: emails, phone calls, or mail, telling us how this one method of obtaining clients will give us all the leads we ever wanted.

First of all, there is no silver bullet that will solve all the marketing needs of a business.  Secondly, a marketing tacit usually will have a limited result.  If the marketing tactic does produce some results they will not last unless they are part of an overall marketing strategy.

A marketing strategy on the other hand is first and foremost about meeting the needs of the target market in the best way possible for maximum profit.  This means that in order to develop a marketing strategy it is important to first know who the target market is.  Then it is important to know what their needs are specifically.

Let’s take a look at a recent scenario that is the result of changing demographics, and see how two different restaurants had different results from the same tactic.

An area where businesses are struggling to determine who they serve is the latest “no children allowed” policies of some restaurants, airlines, movie theaters, and even resorts.

For example, Malaysia airlines have now banded children in their first class cabin area and several resorts in Fiji are advertising relaxing kid free vacations.  These organizations have decided to cater to people who don’t have children at the expense of those customers who do have children.

So what was the result of these changes?

At first blush the results have been a mix bag.  Take for example one Brooklyn restaurant Union Hall, who tried to impose a ban on strollers.  They ended up getting such a pushed back from patrons they quickly removed the ban.  However, when McDain’s, a restaurant outside Pittsburg imposed a ban on kids it received thousands of supportive emails and business went up 20%!

So what does this mean?

It is the age old answer, it depends, and there is no, one size fits all answer.  The first thing to take into consideration is a complete understanding of where the profit of the business is being derived from.  In the case of the two restaurants mentioned above it is obvious that each restaurant is servicing a different client base.

A major mistake made by many business owners is to blindly adopt a marketing tactic simply because it is being implemented for the competition or another similar business.  Examples of this are: running an ad in the same place and style as the competition, offering similar discounts and coupons just because your competition has done it, offering the same products/services just because everyone else seems to be doing that.

Whether these strategies will work or not depends on the preferences of the target market and how these offerings serve their needs.

Before launching into a new marketing strategy or tacit a business should survey their customers and determine what the needs and wants are of that group.  It is not uncommon for the respondents to share ideas that were never thought of before, opening up new possibilities, and saving the business money.

Next, it is extremely important to test the strategy on a small segment to see how customers respond to the new concept.  It is only by testing that the right strategy can be found.  Without testing a business is just taking chances and hoping that the strategy will work.  This is a sure fire way to end up wasting time and money.

As a business matures and defines itself in the mind of its customers, it becomes easier to understand the needs of the customer.  Nevertheless, it is still necessary from time to time to take the temperature of the customer base and make sure that they are still being serviced the way they want to be serviced.

At Bay Area Mastermind our members benefit from the latest marketing test results taken from real world business examples.  During meetings, members learn what has worked and what has not worked in various marketing campaigns as well as how to employ the winning strategies in their business.  Why not take a test drive today, and discover for yourself the power behind Bay Area Mastermind.

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To get this week off to a great start, We wanted  wanted to share with you two videos that help put things in the right perspective.  Sometimes it just helps all of us to be inspired by the courage and strength of others.

Being in business for ourselves can be a lonely journey.  It is easy to sometimes feel overwhelmed and frustrated.  But, then there are thoughts and experiences that can transform our thinking and inspire us to our own greatness.

The first video is as true for the various aspects of business as it is for sports:

The next video displays the power of reframing our lots in life.  This story is the best example of not allowing circumstances to dictate what we will and will not do.

Remember, you are invited to test drive one of our mastermind group meetings.  From all of us here at Bay Area Mastermind, we wish you continued success in all your endeavors.

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In this article I wanted to discuss the valuable concept of follow-up and why it is not working in many businesses today.

Recently, I had the opportunity to attend a professional services conference during which I left my contact information at many vendor booths.  Three weeks later only two of the many vendors I stopped to talk to at the show actually contacted me by phone or email to follow up.  Most business owners and salespeople alike would agree that following up on leads does provide a positive return on investment when done properly.   Yet, this important facet of the sales process is either ignored or done wrong most of the time.

Here we will look at a few steps that any business can do in order to maximize the success of a good follow up program.

The Hard Costs of  Obtaining a Lead

When we look at the cost of obtaining a lead these days it is no wonder that there is a lot of pressure by business owners to make sure each lead is developed into a customer.  These leads can come from an assortment of sources including: trade shows, contest submissions, online inquires, white papers, webinars, e-books, and other marketing methods. All these various methods of obtaining a lead cost the business money.  However, when done correctly a good lead generation program is not a cost to the business, but rather a valuable asset.  Imagine how easy it would be to sell your business by showing the prospective buyer how easy and systematically leads are generated and converted into customers.  It is like having a perpetual money machine.

Timing is Critical

There are various research studies that have shown the shelf life of a lead.  All these studies agree that the interest of a lead is highest within the first 48 hours of being introduced to the product/service.  After this time, the prospect becomes cold and any rapport or interest that was built is lost. I have often joked around with sales organizations by mentioning that our leads don’t just sit around waiting for us to call them. You would agree, that in most cases the lead is off to the next thing as soon as they clicked the mouse or entered their information.

Why Don’t These Leads Remember?

Our society is suffering from over stimulation and multitasking.  We have all witnessed this phenomenon all around us people: connected to their cell phones, texting insidiously, connecting on Facebook and other social media, all at the same time.  In fact, the new internet TV systems being developed are designed to allow viewers the opportunity to watch a TV show and interact with content on the internet all at the same time.  So, seeing how many things are fighting for our audience’s attention, it is no wonder they will quickly forget what they saw or signed up for.

This means our businesses need to promptly respond to the inquiries of our leads. The longer any business waits to call back or respond to an inquiry by a prospect the less chance there is of turning them into a customer.  In order for this to work there has to be a system in place to meet the immediate need of the prospect. It is then evident that we can’t just rely on following up to close these leads.

Quality of the Leads

Equally important is the quality of the leads that are being developed.  In order to maximize the investment of time and resources in selling, it is important to focus our resources on qualified leads. First, a business should study the leads currently being developed.  Is the marketing program bringing in the type of lead that has the highest possibility of being converted to a customer?  Sure, this question appears to be simple, but it happens to be most overlooked step in many organizations.  However, the typical business determines the effectiveness of their lead generation simply based on the quantity of leads they are receiving.  The problem with this approach is they may be wasting time and resources trying to convert leads who will never buy.

Recently, I had the opportunity to review a client’s online lead generation program.  They were literally receiving over a hundred leads a day from people from all over the world.  The problem is that they were a local business with no chance of serving anyone outside a 50 mile radius.  So, the vast majority of these leads had little or no chance of becoming customers for the business.   This is an example of a marketing campaign not tailored specifically to attract only leads appropriate for the business.

The Staff Frustration

Then there is the indelible frustration and reluctance created by staff assigned to work these unqualified leads.  Nobody ever wants to make calls on leads that have little or no interest in buying.   Even worse is when a call is made and the only thing the lead wanted was the free offering.

In order to avoid these situations it is important to develop a lead generation program that attracts qualified leads and then weighs the interest of the prospect.  In this type of program, prospects are segregated based on their level of interest.  Those that are ready to buy are funneled quickly so that they can buy.  Those leads that are not ready to buy, or are just “looking” can be nurtured over a longer period of time.

A system like this can be easily automated using services such as Infussionsoft and others.  Conversely, it is possible to develop a more manual driven system for low volume businesses.  The point is not leaving anything to chance and instead managing the leads

When a business puts into place a properly designed lead generation and follow up sequence, they benefit in so many way.   The salespeople or staff doing the follow up will be more successful in converting the leads.  This will keep them motivated to actually do the follow up since it will be more of a positive experience for them.  As a business owner, you will benefit by having an asset that you can rely on to increase your revenues and decrease employee costs.   Your prospects will be better served and this will lead to increase referrals and positive reviews.

At Bay Area Mastermind we always work with our members to improve conversions and increase profits.  Check out our test drive on this page.

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One of the biggest hurdles for any business is to differentiate their product and services despite the similarities of other offerings in the market. Many times, businesses think the best way to do this is to build a better product or service.

Truth be told, the quality of the product and a high level of service should be a given. Gone are the old days when a business would simply state, “lowest prices and best service” as their unique selling propositions.

Today, clients and customers alike are looking for value in what is being offered. Without a good quality product/service and reliable, friendly service there is no reason to be in business.

So, here is the rub. How do we then stand out and attract prospects to our product/service. The answer is that we must be creative and be willing to take our message to new heights.

Now, Mercedes Benz has decided to enter the fuel cell car market with their version in Germany.

How are they going to get the German population to take notice of their new F-Cell hydrogen fuel cell powered vehicle? They are not the first to enter this market and there are already several other competitors in the arena.

Marketing Lesson

We all know they are not going to say they are the low price leader. Instead, Mercedes’ decides to show how the F-Cell hydrogen fuel cell powered car would be invisible to the environment, producing only water vapor and heat for emissions.

How do they do this? By being very creative and making the car invisible (See Pictures- You can click on the image to enlarge).

The technique to make the vehicle invisible is ingenious and possible when creative minds work together.

This demonstration through the streets of Stuttgart Germany have grabbed the consumer’s curiosity. Many times this is all that is needed to begin a discussion and win a customer.

For a limited time you can follow this link to watch the video demonstrating the Mercedes campaign. Perhaps this may spur some creativity in all of us to take our message to new heights.

At Bay Area Mastermind we are always encouraging our members to stand out by being creative in their approach to their marketing and advertising. Each meeting is full of ideas and strategies from the world’s best practices. Try out a Bay Area Mastermind Meeting and take your business to the next level.

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Every business owner has faced the same frustrating situation, feeling stuck. I’m talking about not seeing how to get through a tough business problem.

No matter how much you keep working at it the problem will not go away. For some business owners getting stuck is frightening. Let’s take a look at what can be done.

1. Stop working on the problem
This goes against the natural tendency to just keep at it until we figure it out. However the important thing to remember is that there is a point where we reach diminishing returns.

In other words, there is a point where we put more effort into the problem and get even less out for our efforts. Many times we will end up retracing the same old thought patters and only getting irritated.

The best thing to do is to just stop and walk away from the problem. There is research that shows we are more apt to figure out a solution to our problem when we are relaxed and actually involved in some form of recreational activity.

Exercising is a great way to relive the stress, and it provides a rush of oxygen into your brain. So, even going for a walk and getting some sunlight will improve your mood and your physiology. This in turn may unlock your mind in the process.

When all else fails get some sleep. Remember the old adage that told us to “sleep on it”. This holds true today for many things. Our subconscious mind will approach the problem in our sleep, and perhaps provide a workable solution.

2. Talk it out with a colleague
Mental chatter does not help us in anyway. However, being able to articulate the problem to someone else may just help you re-frame the problem from an angle you didn’t previously see.
Many times we end up answering our own questions as we begin to tell someone else about the nature of our problem.

This is when having a network or contacts you can run things by is critical to your success.

3. Get Some Help or Advice
When seeking advice it is important to discuss a range of approaches and ideas you have looked at. A professional consultant or coach may then bring a fresh perspective to your situation. Ideally, you would want a brainstorming session to expose a variety of possibilities.

Anyone who is in business understands at times it can be the loneliest place on earth to own your own business. Having the opportunity to talk with like minded individuals in your own company is very difficult or even impossible.

This is where being part of a professionally facilitated mastermind group can make all the difference in the world. Members of Bay Area Mastermind belong to a trusted group of like minded entrepreneurs and business owners who they can bounce ideas off. When you are a member of Bay Area Mastermind you will have the access to sound business advice and resources.

You will not have to worry about feeling frustrated trying to solve a business problem by yourself. So why not take a moment and check out all the various mastermind formats available to you by going to www.BayAreaMastermind.com

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In this post we will examine some of the most common red flags that can cause a business owner to be picked for an audit.

1. Not Reporting Income: This is obvious, but needs to be addressed. At times business owners forget the IRS receives copies of all 1099s and W-2s you receive. So, not only do you want to report all income earned, make sure to correct any incorrect 1099’s that you may receive.

2. A Large Change in Income: The service keeps records of all of your previous tax data. This means a red flag will occur when there’s a big change from the previous year. This is usually a problem when a business has shown a large loss when in previous years it had large profits.

3. Higher Than Average Deductions: The algorithms compare your returns against other tax payers in your area and the type of business. It does look for large meal and entertainment deductions that are out of the ordinary. Make sure that you can back up your deductions with good documentation such as: the amount, the place, the people attending, the business purpose and the nature of the discussion or meeting.

4. Home Office Deductions: The deduction is legitimate as long as you follow the rules closely. When done correctly you are able to deduct a percentage of your rent/mortgage, property taxes, utilities, phone bills, insurance, and others. You can find information on how to properly take this deduction by going to http://www.irs.gov/newsroom/article/0,,id=163079,00.html

5. Large Charitable Contributions: This is one area where having receipts or letters from the charitable organization can save you a lot of pain. Make sure to file form 8283 for donations over $500.00

These are just some of the red flags to keep an eye out. Of course, you should always consult with a tax professional about these items and any other tax related information as your circumstance may be different.

When you consider growing your business, look to Bay Area Mastermind for strategies and techniques. Take a Test Drive and see what a professionally facilitated mastermind meeting is like. Call Bay Area Mastermind at 888-485-8122 for more information.

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Last week J.C. Penny announced it would be changing the way that it will price its merchandise. No longer will the company be offering sale prices. Instead the retailer will be slashing all prices by 40% and keeping them there.

Previously, the company would hold hundreds of sales every year, and their customers began to wait for the sales before buying. The sagging numbers suggested that perhaps customers were not coming back at all.

The Challenge
In this weak economy consumers have shown they are willing to spend, but only if they find value. So, now J.C. Penny will have to get their customers to believe the prices offered everyday do provide good value without the sale tag.

What Does Behavioral Economics Have To Say About This Idea?
In this blog we have often looked at the work of Dan Ariely, behavioral economists and author of Predictably Irrational to gain some insights into these situations.
People Have trouble judging value

Behavioral economists have demonstrated that people have trouble judging the value of any given item. Therefore, consumers use “framing” as a reference point in determining if something has value or not.

We have all witnessed this behavior ourselves. When we see a washer that was $800 marked down to $400, it appears to be a great deal. However, if that same washer was priced at $400 initially, we would be less compelled to buy it.

To test this theory out, Dan Ariely and fellow behavioral economists asked MBA students to write down the last two digits of their social security numbers. Then the students were asked to bid on a number of items, including a bottle of wine. Students with the highest numbers bid 200 to 350 percent more than students with the lowest numbers.

The Lesson for Your Business
Our customers have difficulty establishing value on their own. They need a reference point in order to determine value. Without a reference point customers may be waiting for a “sale” to help them open their wallets and purses.

Many businesses have difficulty with pricing their services and products. There are a host of things that go into determining the best price. In the case of J.C. Penny they are combining this price reduction along with the introduction of new merchandise, new logo, and a new celebrity spokesperson (Ellen DeGeneres).

In their case management is combining various variables at the same time. This may make it difficult to fully understand which treatment had the biggest effect. However, given the sagging numbers this may be the only approach they can take.

Pricing issues are just one of the many items members of Bay Area Mastermind have the opportunity to discuss and develop at our meetings. Every member is provided with the latest research and strategies to grow the profit in their business in any economy. Why not take a test drive and see for yourself how your business can thrive from a professionally facilitated Mastermind Group.

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The last couple of weeks has been full of a lot of disheartening news.   At the top of the list has been economic worries and strife around the world.

It is easy to lose sight of what we are all trying to accomplish in our lives whether it be financial, family, health, or spiritual.

Yet, despite it all there is a strength inside all of us that can never be extinguished unless we allow it.

Here is a quick video that demonstrates true courage:

 

Finally, let me leave you with a wonderful perspective:

In dwelling, live close to the ground. In thinking, keep to the simple. In conflict, be fair and generous. In governing, don’t try to control. In work, do what you enjoy. In family life, be completely present.”

–Lao Tzu,
Chinese philosopher

Now more than ever it is important for every business owner to surround themselves with like minded positive people.  A mastermind is the best way for most business owners to get the support and inspiration to build their business and stay on track.  If you are not a part of a mastermind consider taking a look at Bay Area Mastermind and take you and your business to that next level.

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In our last post we began to talk about the importance of social media for the business owner.  According to some reports, Facebook currently has more than 750 million users.  

Half of these users are on Facebook at least several times a day.  This is one reason that 75% of advertisers are planning to increase their media buying on this platform this year.

Given these trends business owners should consider looking into harnessing the power of Facebook for their business. So, as fast as Facebook is growing they are also making many changes to their platform.  Here is a quick look  at what is going on with the recent changes to Facebook.

In the previous months Facebook has:

• Removed the Tabs from Pages

• Pages have been redesigned to be cleaner and less cluttered

• Users now have more control over their news feeds

• You can now get an email when anyone comments on your pages

• The static FBML has now been phased out and Ifrrame apps are in

• Businesses can now offer deal to people checking in on a Mobil devise

• You can now make Skype calls from Facebook

Although all this exciting , not all that Facebook is doing is going to be a benefit your business. For example, now users can Masquerade as a page.  What this means is,  if a user can masquerade as a page, one of your competitors can leave a comment on your pages promoting their page to your users. So now business owners will need to keep an eye out for this possible trespassing.

From what we have covered here  it is easy to see Facebook is doing everything it can to become a one stop resource for everyone’s communication needs.

So, this means small business owners who have a Facebook presence may want to review their strategies and layout to maximize the new power of Facebook.

At Bay Area Mastermind we are committed to keeping our members up to speed with any changes that occur in order to help them maximize their profits and avoid any pitfalls.  Bay Area Mastermind not only informs their members, we show them how to make the necessary changes.

Check back here often as we will share new insights from both online and offline sources to give you the edge in business.

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