A few weeks ago, I opened up my RSS reader of choice (NetNewsWire, actually) to quickly scan the titles of the new posts available and mark the rest as “read” immediately. Total time spent: 5 minutes. Total value gained: 0. I needed to find a better way to filter my feeds or risk contuining this daily charade.

There’s no doubt that RSS (and Twitter) have become essential to the online experience, we’re all getting busier and the amount of information we get bombarded with increases (exponentially?) on a daily basis. What we really need is a tool to help us manage the increasing amount of information we’re dealing with so we can get some of our precious time back.

The existing market for RSS readers and Twitter clients is huge, however there’s not much out there that actually tries to save you some time. In fact, I haven’t found a single client that can single-handedly reduce my Twitter & RSS overload. I want to change all that with something that is simple to use, fun to use and makes life easy again. That’s why I created Philtro.

So, what does it do?

Philtro lets you rate articles and tweets so you can find the most interesting, relevant posts first. It’s like a spam filter for your RSS & Twitter subscriptions. Philtro helps you sort through hundreds of posts to find the ones you want to read. Just signup, add your Twitter account and/or RSS feeds and start rating your stuff. Philtro takes care of the rest.

Just under two weeks ago, I launched a private beta version of Philtro and starting receiving great feedback from the early testers. (Thanks everyone!) I’ve been rolling out bugfixes and improving Philtro on a daily basis but it’s time to start spreading the word. If you or anyone else you know is overwhelmed by their RSS or Twitter feeds, signup for the Philtro beta!

If you want to help improve Philtro or just make me feel good about myself, here’s how you can help:

1. Sign up for Philtro. (Yes, it’s completely free.)
2. Send me some feedback via email or Twitter.
3. Spread the word: tweet, blog, or send a link to your favorite journalist about Philtro.

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The wealth of data is so great — you might learn, for instance, that customers in Toronto typically spend three minutes on your site, use Firefox and have a 7% conversion rate — that many entrepreneurs find it overwhelming. If you were to look at every piece of data in your Google Analytics account, you’d go crazy. Well, you’re in luck — here are five tips for understanding your website’s analytics (read: make more money):

1. Who’s looking at your site anyway?

A look at your traffic sources can help you measure the mix of traffic arriving at your website and see the effect of marketing activities, both online and off. Normally, the biggest chunk of a site’s traffic comes from search engines, followed by roughly equal streams of traffic from referring websites and from direct traffic — that is, people who type in a Web address. If your numbers to look like this, it could be reflection of where you’re actually getting noticed the most. (e.g. If direct visits are up and you recently invested in a full page spread in the NYT, there may be a correlation there — use better tracking codes in the future so you can measure this properly.)

If you’re a business and your graphs look spiky, that’s not a good thing — your goal is build long term traffic. I’m not telling you to ignore StumbleUpon, Twitter or any of the other social media tools out there, just make sure that you keep a close eye on your daily conversion rate. If you’re using Google Analytics, setup the Goals feature immediately and you’ll have instant access to your conversion rates.

2. Are visitors finding what they want?

Pay attention to the average number of page views for your site. Most people may think that higher page view counts are better — but that only holds true at big entertainment sites, such as YouTube and MySpace, where clicks directly translate into more ad revenue.

If you’re running an online retail store or your general company website and the average page views seem high, things get a little trickier. In most of these cases, you’ll find that the site bounce rate is also high (relative to avg. page views) which can sometimes indicate that people simply aren’t finding what they’re looking for.

In general, focus your efforts on improving your daily conversion rates by A/B testing to determine which pages result in higher conversion counts. This is dirt simple — use Google’s Website Optimizer for free. It takes 5 minutes (seriously! read this: how to pick A/B test candidates) to setup a test page, insert the code and kick off the test. Depending on how much traffic you have, you’ll be able to generate reports on how your new page compares to the old one.

3. Keep an eye on your bounce rates.

A bounce rate in the 20-30 percent range is pretty good. Though, most unoptimized websites will have bounce rates that top 50 percent — certainly not good. Spend some time figuring out what your users are looking for and give it to them. Use a free service like Crazy Egg for a super-easy way to visualize what users are clicking on and make more of whatever it is.

If you’re using Google Analytics, keep a close eye on your bounce rate by traffic source. In my experience, this one report can help you make the biggest improvements. For example, if your search traffic is more likely to bounce than direct or referring traffic, you should start digging into the search terms that visitors are using to find your site — it’s likely that the page they’re getting dropped on to doesn’t match up with what they were searching for.

If you can bring your bounce rates down while simultaneously maintaining (or, better yet, increasing) your conversion rates, you’ll make a ton of money.

4. Track your goals!

I already told you to setup the goals feature — if you haven’t, go back and re-read #1. The Goal Funnel tracks customers during the sales process and gives you the ability to determine where they dropped off — this is the rate of abandonment and you should keep a super-close eye on it if you’re really trying to get users to sign up or buy something on your website.

Use the info you learn here to improve the individual steps your visitors take to complete a goal on your website. It’s easy and you’ll probably smack yourself for not doing this one thing earlier. A friend of mine did this on his website (selling tax services, of all things) and he made an extra $10,000 in the following month simply by reducing his rate of abandonment. Easy money.

5. People don’t have to know your name — get over it.

It’s so funny to watch people searching for the name of their own company on Google, Yahoo or whatever other search engines are out there. If you’re one of those people, listen to me: STOP. The people that search for your company’s name to find you are not the people you need to worry about! Be concerned about all the people searching for the stuff you sell that never find you.

If you sell shoes, then people should be able to find you when they look up the specific shoes they want. After all, no one (that I know) cares whether they buy their shoes from Sports Authority or Foot Locker — they just want to know who has the damn things so they can go get them.

Conclusion

Simply having a website doesn’t cut it anymore — set aside an hour a week to review your key metrics and setup some tests for the following week. That’s really all there is to it. You don’t need fancy reports or custom-made analytics! Stay focused on conversion rates and goal funnels — you’ll make a killing out there.

So, the above is a pretty basic list — what tips do you have?

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First things first, running a “brick & mortar” business is much, much harder than anyone initially thinks. When I first took over my family’s construction company, I thought it was going to be a piece of cake. I mean, how hard can it be to build a retaining wall or get a few customers to sign some deals? By the end of the first day, my life sucked. Reality had set in — I had problems: an employee who decided to get drunk on a job-site and a customer who wasn’t happy (and that’s an understatement).

So, in no particular order, here are my top tips for running your own small business:

• Make sure you have plenty of money. Cash flow is the life blood of your company. Unfortunately, I’ve seen far too many first timers make the mistake of spending their cash before they had it in their bank account. (One of my favorite books on finance for first timers: The McGraw-Hill 36-Hour Course In Finance for Non-Financial Managers)
• Remember who’s boss. When I first started running the business, the field staff was telling me how to run the business. They’d say, “I’m not working on weekends!” or “You need to pay me overtime for weekend work.” I was inexperienced and I let people tell me what to do — the tail was wagging the dog.
• Staff with care. Hire for people skills, you can train the rest. You want people that aren’t just looking for a paycheck, they have to want to be there. Give me someone that can effectively talk to people, I’ll teach them how to build a patio.
• Don’t be afraid to fire people. It takes a lot to make a business run smoothly. In the first year or two, don’t be surprised to see 300%-400% employee turnover. By your third year, you’ll figure things out and turnover will drop to 10%. If someone isn’t working out, let them go — it’s better to be short-staffed than to give bad service.

That’s pretty much all there is to it. When in doubt, just remember that being successful is really about doing a few simple things right and learning from the mistakes you make along the way.

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Unfortunately, it isn’t quite that simple.

The economy is in shambles, real estate valuations are tanking and most “brick & mortar” business models depend on unpredictable things like weather and fuel prices — add all that up and you’ve got a recipe for tight margins and bankers that are unlikely to lend to you. No big deal though, keep reading to get my best advice for first time buyers — though not easy, it is possible to make a good deal on a business, even in today’s market.

KNOW THE LOCAL CONDITIONS

You don’t need me to tell you that the real estate market is — how should I put this — shitty. The same thing that happened in subprime home lending happened in the commercial property sector, the property values were (and, in some cases, still are) inflated. Take a brief look at BizBuySell and you’ll notice that a ton of businesses are for sale. As someone who has been checking the site regularly for months, I can tell you that the number of listings on there have steadily increased over the past few months.

You can spend $15 million to buy a chain of pizza shops in the DC Metro area or $400,000 for an equivalent business in rural southwestern Virginia. The key is to understand that virtually every sale is happening at a steep discount from the list price, just as in the housing market. There’s plenty of inventory and lots of time to shop around for the right fit. In one case, I called up a car wash listed for sale at $5 million — the current owner dropped the price to $1.7 million on the first phone call. (If you know of a better way to save $3.3 million in 15 minutes, I’d love to hear it.)

The best strategy for a first-time investor is to buy a business in a familiar geographic area and be wary. Have a realistic understanding of the business’ competitors, challenges and potential. If the seller’s (or your) business plan calls for substantial improvements or, more commonly, raising the current prices, make sure the business is still appropriate for the area. (e.g. Don’t buy a car wash 30 miles outside a big city, build the most luxurious customer waiting area and expect customers to come running.) Most importantly, make sure that your business plan makes sense even if you’re not getting as many customers as the current owner is.

One more thing: More isn’t always better. An attached retail store, gas station or anything else along those lines is just an added complexity that the first time buyer should avoid like the plague. You’ll probably pay higher property taxes, more insurance and have the headache of dealing with more than you can probably handle the first time around. (It’s common practice in gas stations and laundromats to have other businesses sub-leased inside the main property — if you encounter this, run the other way. A good example of this: laundromats that sub-lease space inside the building to a tailor.)

JUMP THE FINANCING HURDLE

First things first: there is no such thing as 100% financing in the commercial world — plan on putting in at least 20% down on most deals. Taking today’s credit markets into consideration, first time buyers should be ready for bankers to ask for up to 50% down payments on some deals. Yes, it sucks, but it does two things:

1. If your business plan turns out to be too aggressive (i.e., you’re not as successful as you anticipated), having the additional equity gives you a smaller debt service payment while you work out the issues.
2. Lenders are more likely to give you the loan because you’ve got more of a stake in the business.

Fight the urge to borrow more than you need, even if the lender wants to give it to you. (Yes, this happens more often than you would think.) Start conservative — you can always re-do the marketing materials or buy more advertising later. The key here is to simply get into the business first and get a handle on what you’re actually working with. You don’t want to put yourself in the position where you spend $25,000 on some huge improvement but you’re still underwater in terms of revenue.

Rule of thumb: Always, always, always keep the seller’s skin in the game by asking them to privately finance some portion of the deal. Of course you’ll want a lawyer or accountant to review the terms of the deal, but you’ll thank me later if you find out that the previous owner “massaged” some of the revenue or expense numbers. Believe me, this happens much more than you think. (A friend of mine bought a service company in the DC area a few months ago. Three months after taking over the business from the previous owner, she realized that the revenues were nowhere near what the previous owner had disclosed. Luckily, the previous owner had financed 20% of the deal — when my friend had her lawyer contact the previous owner to understand why the revenues weren’t adding up, the guy simply offered to “forget” about the 20% loan he had made to my friend.) Owner financing helps keep the seller’s skin in the game — don’t forget that.

FIND THE HIDDEN COSTS

The business plan is only a small part of the ownership equation. If you’ve never been in business, you need to educate yourself about the things that can and do go wrong. If brick and mortar businesses were really as simple as most people think, more people would be doing it. Keep your eyes wide open.

The most common hidden costs are dependent on the type of business, but here are some examples:

• Golf courses are heavily dependent on weather. Get a few consecutive rainy days, common in the Northeast, and you’ve got a cash flow problem.
• Car washes need some pricey maintenance every few years. If the previous owner “can’t find” the maintenance records, you should run away screaming.
• Laundromats suffer from vandalism more often than you would think. The previous owner should have invested in a video surveillance system or, alternatively, should provide you with a list of equipment that had to be repaired/replaced in the last 12 months.
• Lawn care businesses need fertilizers and other chemicals that are oil-based — you’re at the mercy of oil prices. Good luck to you.

From my own experience, I’ll tell you that the most stressful times you’ll face are going to be related to hidden costs. Spend the time up-front to discover the hidden costs of any business you’re looking to get into — you’ll never be prepared for 100% of them, but it’s your responsibility to discover anything that the previous owner might be hiding.

PUSH THOSE ADD-ONS

Most first time buyers buy a bar or some other business because they got caught up in the romance of it and forgot to pay attention to the fundamentals. Never forget that, as a private business, your business’ goal is to make money.

In addition to the heavy lifting that comes with managing any business — agonizing over profit-and-loss statements, meeting a payroll, and deciding how much to spend on improvements — understand that running a brick & mortar business is more than just about your primary product or service. I’d say that 99% of businesses out there have a secondary product or service that can contribute a huge amount of revenue to the top line — if you own a golf course, you should be pushing food and beverages. (After all, what kind of golfer says “Oh, I’ll just grab a beer at home once I finish off these 9 holes.”)

Most first time buyers don’t have a problem identifying the business’ secondary products and services — but they do underestimate the time and hassle involved with getting the liquor licenses or negotiating contracts with distributors.

DO YOUR RESEARCH. AND THEN SOME.

If you remember nothing else from this post, understand that you’ll never finish doing your research. The absolute best way to make a better deal is to know what you’re getting yourself into. Here’s how I do it:

1. Go to BizBuySell and do a search for the type of business you’re interested in.
2. Contact 10 of the brokers and sign their non-disclosures.
3. Read the sales documents and compare the business’ financials.
4. Pat yourself on the back — you just learned more than most people and you spent nothing.

Be patient, do this 3 times (yeah, you need to look at ~30 deals) and you’ll be in a great place to pick up a business of your own. Once you’ve looked at the financials of a few businesses, you’ll start to see some patterns emerge and you’ll avoid getting suckered into some shady deals.

Update: Here’s my next post on how to actually run a small business.

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• The Importance of Useable Ideas
• Singles and Doubles: Using metrics to grow your business

The Milgram Experiment

The Milgram experiment was a series of social psychology experiments which measured the willingness of study participants to obey an authority figure who instructed them to perform acts that conflicted with their personal conscience. In Milgram’s own words:

I set up a simple experiment at Yale University to test how much pain an ordinary citizen would inflict on another person simply because he was ordered to by an experimental scientist. Stark authority was pitted against the subjects’ [participants'] strongest moral imperatives against hurting others, and, with the subjects’ [participants'] ears ringing with the screams of the victims, authority won more often than not. The extreme willingness of adults to go to almost any lengths on the command of an authority constitutes the chief finding of the study and the fact most urgently demanding explanation.

The results: 65% of participants administered the final 450-volt shock to another person — simply because an authority figure told them to do it.

Milgram says it’s our deep-seated sense of duty to authority. We’re trained from childhood to respect authority, and the obedience that comes with it stays with us throughout our lives, even when we feel something may not be quite right.

Dress the part

Our deference to authority is driven mostly by perception. That’s why a lab coat, police officer’s uniform or $4,000 bespoke suit alone can facilitate influence over or control of others. We even act differently toward other people depending on our perception of their authority level, sometimes even adopting their mannerisms and speech patterns.

Everything else being equal, context matters more than actual content. In other words, if a person is perceived as an authority figure, what they say is taken at face value and accepted as fact more readily. It helps someone bypass otherwise common objections. Building authority is therefore crucial to building a business, especially if you are selling services or knowledge products.

Next time you’re heading into an important meeting or simply trying to make new friends, take a minute to look in the mirror — what are your clothes actually saying about you?

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That’s interesting because they used to run pre-Christmas ads for their “December to Remember” events featuring a loving spouse giving his or her significant other a new Lexus wrapped in a big red bow.

Even Hyundai’s doing it — in their most recent ad, they noted that the new Genesis sedan ($33K) has the same sound system as a Rolls-Royce Phantom ($300K+). “If you’d rather have money than a hood ornament,” goes the ad, the Genesis may “look even better than a Rolls-Royce.” Nice.

At the end of the day, the ‘I-buy-it-because-I-can” mentality is dead. No one wants to look like the idiot who bought something because it’s expensive anymore. If you’re selling to this market, you should be focusing on practicality, value and durability.

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Focus on hitting singles and doubles. Home runs don’t happen every day or even every decade.

Everyone knows Tiger Woods is the greatest golfer ever and most people attribute that success to something vague and intangible, like talent or sheer luck. But, did you know that Tiger works out every day, runs for miles and wins less than 50% of the time? Did you also know that he started golfing when he was 3 years old?

Tiger learned to swing the club consistently — he had to learn to connect with the ball and make it go where he wanted before he could win any tournaments. These were his “singles and doubles.”

The things your business does on a day-to-day basis are your singles and doubles. Use metrics to incrementally improve them.

I don’t blame people for ignoring metrics — it’s only natural to push this stuff to the end of your task list when you’ve got a million other things to do. A few years ago, I did the same thing.

It’s easy to get overwhelmed by the numbers, but the key to successfully taking your business to the next level is understanding how to prioritize the metrics that directly impact your success. At the end of the day, you only need to build the metrics that enable you to grow your offering, whether it’s a product or service, by hitting a number of singles and doubles.

Two types of business metrics

1. Operational Metrics. These reflect the things that your business cares about on a day-to-day basis. Inventory, cash flow, net new customer counts, etc. You alone are the expert at your business, take a minute to write down the numbers that are important to you.
2. Investigative Metrics. These are the numbers that you’re curious about. Which product/service do most of my customers buy? Where do my customers typically come from? You get the idea.

Metrics: Where to start

When it comes to metrics within the context of the small business, the general rule of thumb is that you only measure what you intend to improve upon. So, ask yourself some of these questions:

1. What are your current goals for the business?
2. What assumptions are you making?
3. What key metrics will help you track the progress towards the business’ goals?

For most of you, the best place to start is by setting up your operational metrics. This gives you a handle on where your business is on a day-to-day basis and, more importantly, helps you start hitting singles and doubles.

Breaking News: No one can create the perfect plan to get ahead.

If I could tell you the specific steps you need to take in order to get ahead and promise that you could succeed 100% of the time, you’d love me. But, I can’t. The specific road map to successfully (and consistently) grow your business just doesn’t exist. You can’t predict the future; otherwise, psychics would be billionaires.

So what can you actually control?

Your odds.

Most people succeed because they hit “singles and doubles.” These people understand that this is the single best way to make your odds of success better — you can’t hit a home run without first learning how to hit the ball in the first place.

Rather than looking for the next idea that’s going to make them an overnight success, the best entrepreneurs spend their time improving the fundamentals of their business using metrics. By learning how to consistently hit these singles and doubles, these entrepreneurs set themselves up to knock a home run out of the park.

The bottom line

Don’t waste your time or money by searching for home runs. Use the right business metrics to focus your efforts on your business’ singles and doubles — this will inevitably improve your odds of knocking one out of the park.

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The fact of the matter is that if you never actually get started, you’ll never actually finish. Whoa–I bet you’ve never heard this one before.

Don’t waste time making things perfect — follow best practices and move on. As a rule of thumb, it’s better to do something, anything, rather than sitting around and waiting longer. Follow best practices, then move on.

Build momentum by accumulating small successes. That first thing you do - from start to finish - serves as a model for you to do subsequent things. From there, repetition breeds ease:

Do one new thing, do millions more.

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As you’ve built your business, you’ve put a lot of effort into building a brand. You have a logo, a website, and a business card establishing who you are and what you do. But there is one thing more important than your brand: your reputation. With a poor reputation, putting more work into your brand just isn’t worth the time.

Warren Buffett understands the importance of a good reputation — and how difficult it is to overcome a poor past. When Buffett wants to add another company to Berkshire Hathaway’s portfolio, he’ll ignore those options with bad reputations even as he looks at companies with cash-flow problems and members of weak industries. Says Buffett,

When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is usually the reputation of the business that remains intact.

He has every confidence that he can deal with any other problem in a business, but even Warren Buffett doesn’t feel up to repairing a poor reputation.

Build An Amazing Reputation

We know that a poor reputation is not something we want. But how can we build a reputation that really helps our businesses (and our personal brands)?

Many companies build their reputation by ‘underpromising and overdelivering.’ They want to give the image that they’ve gone a step beyond for their clients while really just performing at their normal level. As far as reputations go, this sort of average performance isn’t bad: businesses that succeed in underpromising and overdelivering certainly won’t scare off prospective clients. But they also won’t have a great reputation.

To get a great reputation, your business needs to go beyond average. You need to promise great things and deliver. Go back to Warren Buffett for a moment: everyone wants stock in Berkshire Hathaway because of his reputation of making money for his investors. He got that reputation by demonstrating, time and again, that he could get the great returns he promised. You don’t have to get Buffett’s return to build a great reputation, but you do need his ability to follow through.

On one level, building a good reputation is easier than building your brand. You don’t need to print out fliers or distribute business cards to let people know about your abilities; your clients will do it for you. You do need to make sure that your clients have a few good things to contribute to your reputation, though. At the most basic level, your customer has to be satisfied. Your product must be problem-free or your service must be completed on time. But you should take customer satisfaction to the next level. Go beyond their expectations and provide a product with an extra bell or whistle.

As your business grows, your brand will change. Your logo may go for a redesign and your website may get an upgrade. But the reputation you have today will still be affecting your business. In ten years, your customers will still remember you — if you go beyond their expectations.

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Peter Drucker once said, “What gets measured, gets managed.” Let that sink in for a minute.

The problem with most small businesses these days is that they don’t actually know whether they’re actually successful or simply lucky to be surviving.

“But Paul,” you might say, “my store/website/lemonade-stand received 2,200 visitors last month and it generated 35 sales.” My response: “Great! So, was last month a successful one for you?” And then, I get nothing but a blank stare. (Seriously, I have a conversation like this at least once a week these days.)

Look, everyone knows that selling more stuff can usually mean that your business is doing just fine. But, the key is to define a clear, measurable goal.

“Sell more stuff” is not a goal. “Sell 30 widgets and 50 hubcaps every week” is much, much better.

As a rule of thumb, always start with your goal. You can’t create a good plan until you know your objective. So, be crystal clear on exactly what you intend to achieve. (Use this template to track your goals.)

Then, measure compulsively. Seriously, you’ve got no excuse — spreadsheets, Google Analytics or the 872,345 other tools out there will all do the job for you. Besides the usual operational stats, other useful metrics might be CPO (“Cost-Per-Order,” which includes advertising, fulfillment and expected returns, chargebacks, and bad debt), ad allowable (the maximum you can spend on an advertisement and expect breakeven), and projected lifetime value (LV) given return rates and reorder %.

In the end, just remember that you’ve got to start thinking about how to systematically build the business that you’ve started. Setting goals and measuring progress towards them is the smartest way to get there without wasting a ton of time and energy along the way.

Need some expert help to sort out the right goals or get some sort analytics package in place? Let me know.

• Screw hand-wavy strategies, focus on being sticky
• Singles and Doubles: Using metrics to grow your business
• Website Metrics 101: Conversion Rates
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• How to pick an accountant for yourself (or your business)

Based on a number of websites I’ve visited this week, it’s clear to me that many of you are leaving a ton of money on the table. (Warning: Shield your eyes, you’re about to see some of my fantastic ghetto artistic skills.)

Most companies spend some amount of time figuring out how to make a visitor buy something from their site. In some cases, they’ll even spend tons of money on some overpriced contractor to actually make this happen. When they actually launch the site, the sales process looks a little something like this:

Visitors somehow end up on the company website and, if you’re lucky, they’ll buy something. Yep, it’s pretty weak. But then again, it’s the first iteration of the site — hopefully you’ll learn something from the the data you’re collecting via Google Analytics or other free services. (If you haven’t already, check out 14 free tools to understand your visitors.)

Soon thereafter, you realize you can setup RSS feeds, newsletters and integrate your content with Facebook, LinkedIn, Twitter… you get the idea. The site naturally moves to its second evolution:

Getting better. You’re keeping visitors engaged and, as long as you’re providing them with valuable information, they’ll hopefully come back to the site later on and actually buy something from you. For most companies, this is probably as advanced as their sales processes are going to get.

Though, the few insanely smart businesses out there instantly recognize that there’s a huge gap in the sales loop and realize that they’re leaving a ton of money on the table. The key is to understand that when customers buy something from you, they’re voting with their wallets. They clearly like something about what you have to offer and, chances are, they’re likely to buy from you again. So, why not take advantage of it? Ideally, your new flow would look like this:

The point here is to keep your customers engaged in what you’re doing. They’re already loyal to you, you might as well take advantage of that and keep talking to them. The simplest way to do this is to make sure they’re subscribed to your newsletters, RSS feeds or whatever else you think is good. Better yet, segment your lists so that customers are on a totally separate list — this lets you send them different materials or even give them exclusive special offers that regular visitors never even see.

First things first: Clear off 15 minutes today, grab a pen & paper and start making flowcharts that show how you interact with your customers. Chances are, there’s at least one thing you could be doing better.

If you’re feeling especially lazy (or would rather get some expert help), let me know.

• Website Metrics 101: Conversion Rates
• Screw hand-wavy strategies, focus on being sticky
• My First Job: What I Learned Making Pizzas
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Most small businesses are already focusing on aggressively cutting costs by streamlining their current business processes and focusing on cash flow as if their life depended on it. That’s great, but it seems to me that one big thing might be getting overlooked:

Buy or Bury the Competition.

If you’re cutting costs across your business and you’ve done a decent job of keeping your employees focused on the right things, you’re probably in a good position to take advantage of the one big benefit of the economic downturn: the opportunity to hurt or, better yet, destroy the competition.

Two tactics that might be useful as you start going after your competition:

1. Steal their customers. The competition is probably hurting for cash, but you’re probably in a better position to extend some decent credit lines to customers that you may never have been able to reach before.
2. Steal their employees. If you’re doing well, start talking about it. Your competition’s employees are probably getting concerned about their job security — use this to your advantage and get some great talent that you might not have ordinarily had access to.

Look, there’s no doubt that you’ve got to get on the defensive in times like this. Just don’t forget that there are some benefits to going on the offensive while everyone else is weak. In the words of Jack Welch,

There’s little downside to an overaggressive response to economic turmoil. The risk lies in wishful thinking and timidity.

Rather than focusing on your own survival, think about how you can take advantage of the fire sale.

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I decided to stop by a local shopping mall the other day. It was still early in the day, probably around 11am, the store was nearly empty and there was just one employee on duty. As I was looking around, I noticed that this employee was on his cell phone the whole time and based on what I could hear, he was applying for another job elsewhere.

If you can relate to the employee, that’s great — I’ll be the first to encourage you to always be on the lookout for better opportunities. For those of you that are employers, read on:

Great leaders understand that historical success tends to produce stable and inwardly focused organizations, and these outfits, in turn, reinforce a feeling of contentment with the status quo. Later failures to produce short-term results or to adapt to change can produce a great deal of activity—but this is often unproductive activity driven by anxiety about one’s own future (not the organization’s future) or by anger at others.

The key to constant growth, success or whatever else you want is to maintain the sense of urgency. Or, in plain english, just keep hustling. When in doubt, it’s far better to be violently executing something than to sit around navel-gazing for hours or days.

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Working 90% to 95% of the time is not working. When my company’s services fail to deliver, we don’t get paid—and our customers get angry. When a technology product doesn’t do what it’s supposed to do all the time, we’re stuck. Unfortunately, the technology my company buys fails way too much. But like everything else that makes me angry, I just deal with it. And so can you.

Something you should know:

1. Technology sucks. Once you begin to depend on it, you’re confined by it’s inherent limitations.
2. It won’t make you successful. That is, not unless you completely understand how it will help your business.

What Great Businesses Do

Have you noticed that so many successful companies are “behind” on tech’s latest trends? It’s because successful businesses relentlessly focus on creating incredible value for the world. They know that once you begin worshipping technology, you switch focus from providing value and then continue going downhill from there.

The Key: Exploit tech only when you know precisely how it can help accelerate your ability to get ahead.

“So, how do you exploit technology?”

Two steps:

1. First, embrace low-tech. Spreadsheets can single-handedly kick the asses of pretty much any of the latest gadgets out there.
   
2. Then, grow outward stubbornly. Improve your systems as you go. You will know you’ve outgrown your current systems when you understand precisely how to increase your efficiency.

And dont forget: Since the beginning of time (and up until a few years ago), most businesses didn’t need completely custom technology solutions. They used paper, spreadsheets, whiteboards… you get the idea.

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Unfortunately, most people have absolutely no idea how to determine whether they actually get any real value out of having a website. Let’s fix that today: read on for a crash course in measuring your website’s success.

What’s a Conversion Point?

Whenever a visitor to your website makes a choice, a conversion point exists that generates two metrics:

1. Cost of Conversion. For the sake of this article, we’ll skip over this particular metric — just realize that it exists and is an important metric to keep track of when you decide to start paying to generate traffic (via online and offline methods).
2. Rate of Conversion.

The key is to identify your business’ significant conversion points which, if chosen most often by visitors, will lead to the achievement of your goals. (More on this in future posts.)

Conversion Rate

Google’s dictionary defines a conversion rate as “the number of visitors who took a desired action divided by the total number of visitors in a given time period (typically, per month).”

Formula: Desired Action / Total Visitors = Conversion Rate

For example, if 1,000 unique visitors were driven to your website from a search engine and 10 of those visitors signed up for your newsletter, then your newsletter conversion rate would be 1.0%. (As a rule of thumb, you should be shooting for a conversion rate of at least 2%.)

In general, a conversion rate is calculated whenever a desired action occurs by a visitor to your website. The most crucial conversion rates are those directly associated with the achievement of your business’ goals.

Examples include:

• A visitor types in their email address and clicks “submit” to join your newsletter.
• A visitor subscribes to your blog via RSS or email.
• A visitor clicks their browser’s “back” button to leave your website.
• A visitor buys your product.

The most important metric: Sales Conversion Rate

For most businesses, sales are the lifeblood of the company. Without them, nothing else really matters anyways.

Formula: # of Sales / Total Visitors = Sales Conversion Rate

For example, if the 1,000 unique visitors generated 20 sales, then your sales conversion rate is 2%.

So, what does this really mean?

Rather than simply putting up your website and blindly waiting for customers, you should be constantly tracking your conversion rates. (Tip: Google Analytics is a free, easy way to automate the tracking and reporting.)

As a rule of thumb, you should constantly aim for a conversion rate of around 2% (or higher). Anything lower, it’s time to start testing new ideas to raise this number. If you’re already at 2%, it’s time to dig a bit deeper into the newsletter, RSS and other conversion rates and see where things can be improved further.

Spend your the vast majority of your time increasing conversion rates — this is the most effective use of your time. Simplify your decision making: If you’re working on something that isn’t improving your conversion rates, stop and move on to the next thing.

Image Credit: batega

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Call it what you want: customer loyalty, customer retention or anything else under the sun. Stickiness transforms the average business from a transaction-based model to a more lasting, mutually beneficial one in which companies improve their own revenues and margins by maintaining a win-win relationship with the customer. It may sound like yet another hand-wavy strategy, but it’s really not — let’s run through a few tactical ideas:

• You’ve probably got a website. So, why’s it so hard to subscribe to RSS feeds or newsletters? I may not be ready to buy anything today but sign me up for one of your lists and keep me updated with tips that are relevant to me. Do this right and it’ll be obvious that your product can solve my needs, I’ll buy it when I’m ready.
• You probably sell a product. So, why don’t I hear from you after I’ve bought anything? If I’ve bought from you once, it’s reasonable to assume that I might be interested in buying from you again — talk to me! Stop being a product focused business and become a product-and-long-term-service business. Guarantee the benefits of your product to me over the long run and do stuff to help me get those benefits.
• Your competitors probably sell something similar to you. So, go the extra mile and solve a particular problem for me in a unique way. The Trunk Club sells clothes, just like most other clothiers, but they actually do most of the work for me.

Look, we’re not talking about rocket science here — in fact, you’ve probably heard tons of advice on how to build your business. The problem is that many entrepreneurs either do too much of the wrong thing or, worse, sit around as they figure out what to do next.

The key is to focus on doing something, anything, to actually build the business — for most people, improving the stickiness is the most effective place to focus your efforts.

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The lesson: Building your business creates the brand. The unconscious process of forming your brand comes out of unrelenting passion, not unending spin.

Ever heard of Starbucks? Contrary to what you may have heard or thought, Starbucks never sought to create a brand. Instead, the company passionately sought to create appreciation for a better tasting cup of coffee. It was, in fact, as basic as that.

Starbucks was too busy sourcing and roasting the highest-quality coffee beans to think about branding. Starbucks was too busy educating customers on how and why they should appreciate a stronger, bolder, more flavorful cup of coffee to think about branding. Starbucks was too busy creating a comforting and welcoming place for people to exhale than to think about branding.

Last week, I met Ryan Moede with Viget Labs (a web strategy firm based just outside of Washington, DC). He told me that before they accept a particular client, the Viget team asks themselves if they’d ever become employees of the client company. Unless the answer is yes, they won’t proceed. Rather than taking just any work that comes their way, they’re relentlessly focused on building their business with the right clients — the branding inevitably follows.

So, the first thing to do is to start ignoring all the “professionals” out there that advise you to spend hundreds, or even thousands, of dollars on “creating” a brand for your company. Instead, focus your efforts on being the best at what you do — the brand will follow.

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I met with him for a second time earlier this week and peppered him with some more questions before we discovered the problem: He shied away from picking a particular niche because he thought it would limit his profit margins or customer counts. He’s not alone — unfortunately, I see this far too often.

Here’s the thing though — why be a small fish in a ginormous pond? It’s far smarter to be the big-ass fish in the tiny little pond. Less is more.

Mark Vadon, Blue Nile’s co-founder, was quoted in a recent BusinessWeek article:

I want to be the best in the world at one thing. I don’t want to be half-assed at a lot of things.

Most businesses suck when they try to do too many things — cut down the number of things you do and your margins shoot through the roof. Every small business that I’ve consulted has told me that once they narrowed their focus to a specific niche, their sales skyrocketed.

In fact, when my own construction company decided to stop actively looking for commercial work, our residential sales skyrocketed. Once we focused on the few things we did better than anyone else, everything got better — more clients, more money and, most importantly, less stress.

How do you define your niche? To start, determine one thing that you do better than anyone else. Not sure? Ask people who know you well. I bet they can come up with at least one thing that makes you a rock star. If you need more help, Geekpreneur has some tips on ways to find your niche and I recently included a few more tips here: the importance of being the best at what you do.

By narrowing your focus, you’ll start to be seen as the expert in your industry. Which instills confidence in your customers and brings even more people to your door. Doesn’t get much better than that.

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It’s no secret that most people have a hard time talking about money — just look at how many bloggers write about ways to ask for raises at work or save $100 on your next purchase. Sure, it’s great if people use the advice but most people won’t, so why keep beating the proverbial dead horse?

The point is not to avoid asking for the discount but to know exactly what to do when that tactic fails.

The art of asking for more

Next time you’re negotiating, try asking for more. I use this tactic when buying cars, dealing with vendors or bargaining with street merchants and it works every time — despite what you might believe, most businesses would much rather give you something more than reduce the price. When your request gets shot down, don’t walk away pissed off — ask for something more: get them to throw in something else. (Tip: If you’re buying a car, you can usually get floor mats and your first few service visits absolutely free — ask for them after you think you’ve gotten the price as low as you can go.)

What businesses are thinking

At a 10% discount, a typical firm would need to sell 50% more units to keep the same profit on the bottom-line. Costs also increase in the “discount” game, so companies can literally discount themselves out of business. Instead of cutting cash out of the deal, they’d rather add value to whatever you’re buying — this “value added” proposition means they can “give away” something that won’t come out their profits. Done right, it adda to the customer’s experience and that’s the key to getting that customer back.

Oh, and one more thing

Use this tip when you’re negotiating your next pay raise. If the conversation gets bogged down before you get to the number you want, start asking for other perks instead — extra vacation days, telecommuting perks or educational reimbursements. It’s all fair game.

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What’s the point of having an accountant, can’t I just use software and advice from the internet?

After doing my own taxes through college, I’ve realized that most of the off-the-shelf software out there will get you pretty good results. In fact, most average accountants won’t do much better than the software you’re probably using — if you’re happy doing your own taxes and can take the time to research the latest tax laws, you’re a better person than I. Good luck to you.

For the rest of us, we’re pretty busy and we understand that leaving stuff like this to the right professionals can be the best decision you can make. Besides, you go to a doctor when you’re sick and you go to the lawyers when you get sued, why not go to a good accountant when you need to worry about taxes?

Taxes and the shades of gray

Take a look at a typical tax return and you’ll soon realize that there are thousands of ways to interpret the tax rules. It’s pretty clear that filing taxes can be more of an art than science.

Average accountants will take a conservative approach by default. In my experience, only one accountant I know mentioned deductions from retirement accounts or luxury vehicle purchases. (Incidentally, he’s been my accountant for years now.) Note: If you’re getting nervous at the very thought of bending tax rules to your advantage, you probably ought to stop reading immediately — this post isn’t for you. For the rest of you, what you need is a bulldog accountant that has creative ideas on how to bend tax rules to your advantage.

Sure, bending the rules might seem shady but the point is that bending the tax laws is beyond the comfort zone of most people, including me. That’s why you need to find an aggressive accountant to do the work for you (and sign his name at the bottom of the return) — aggressive, while staying safely within generally accepted accounting principles, of course.

Fishing for Accountants

The key to finding great people is to ask the best people around you for their contacts — this works especially well if you know a number of successful entrepreneurs. Even if they can’t give you the contact information for the person they use, they’ll surely have some dirt on the accountants to stay away from.

If this doesn’t work for you, the next best option is to simply start combing through the phone book and interviewing. Sure, this will suck up a lot of your time but desperate times call for desperate measures.

Loaded Questions: The Art of Interviewing Accountants

Interviewing accountants is pretty straightforward but you need to understand that they will charge you for their time. Don’t start setting up in-person interviews until you’ve whittled the list down to the top 1-2 that you like.

Keep it simple, your goal for the interviews is to understand two primary things:

1. Do you get along with the accountant? You two are going to have a number of personal conversations over the next couple of years, make sure your personalities match. My rule of thumb: I won’t do business with you unless I can see myself drinking with you.
2. On a scale of 1-10 (with 10 being the most aggressive), how conservative/aggressive is this accountant? Ask specific questions about your current financial situation — use real numbers. Better yet, bring in an old tax return and ask the accountant what they would do differently. You’re looking for creativity — is he asking good questions about what you might be able to deduct? When you ask about something the accountant disagrees with or warns against doing to save taxes, make sure his explanation makes sense.
3. Be the bullshit detector: ask questions that you already know the answer to. (This is a big one, don’t forget to do this!) I usually ask about the deductibility of new vehicle purchases under my business entity. I’m not looking for him to agree with me 100%, I just want to gauge his response against my knowledge on the issue.
   

Get yourself the right accountant today and you won’t be repeating this process for years at a time. Better yet, you’ll save yourself tons of time and money in the long run — and you’ll have a trusted partner to bounce ideas off of down the road. Oh, and one more thing: the really good accountants just happen to know everyone — I’ve been able to get leads for future clients, early access to business owners looking to sell out and references for lawyers, doctors or anyone else I might need for my own plans.

What else do I need to tell you? Stop wasting time, dump your crappy accountants and start getting ahead.

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What “the next level” actually is varies depending on who you talk to but the good news is many of the factors that block reaching it are surprisingly the same. In almost every case I’ve seen, the elements that had fueled your earlier growth have run out or been forgotten. You hit a wall.

There are no “magic bullets”

You need three things to keep your momentum going:

1. A system geared up for the next level. Take a good, hard look at yourself today — are there manual processes or other tasks that can be automated, delegated or even ditched altogether? From Chapter 8 of 4HWW: Refine rules and processes before adding people. Using people to leverage a refined process multiplies production; using people as a solution to a poor process multiplies problems.
2. Clear, specific and measurable goals. You need to put your goals in writing and systematically review your actions to make sure you’re heading in the right direction. (Download this worksheet to help you define your goals and track your progress: [download id="2" format="<a class="downloadlink" href="{url}" title="{version,"Version ",""} downloaded {hits} times" >{title}</a>"])
3. Relentless execution. Getting ahead doesn’t happen by accident — it takes hard work to get there. Accept this fact and simply move on.

Combine these three things and you’ve got everything you need to keep moving to the next level. Just remember, getting ahead is a marathon not a sprint.

Image Credit: JOE M500

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Here are three tips for cutting your costs immediately:

• Ditch the underused gadgets. Knowing exactly what you have is the first step — classify things by how often you use them. It doesn’t have to be complicated, simply look for anything that you don’t use on a daily basis. Some examples of this would be old cellphones, DSLR cameras that you don’t use every day, old computer monitors, extra laptops, unused printers and scanners. Sell or donate these immediately.
• Manual processes are your enemy. Filing receipts, paying bills, checking voicemails — there’s no limit to the number of administrative tasks we have to deal with every day. If you haven’t already, get yourself a virtual assistant and start offloading tasks. Why do something yourself when you can have someone else do it for you, usually for less than $15/hour. (Check out the Ultimate Virtual Assistant Guide for more details.)
• Avoid overpriced (and unnecessary) contracts. First, take a look at your cell phone bill — you’re likely to have many unused features on there that are eating you up. I call my cell phone company at least once a year and ask them to review my past statements to see if it makes sense to modify my contract in some way. Most times, a small adjustment to the minutes or SMS credits on the account will save me at least $20/month. For the rest of your contracts, use the A La Carte method to save yourself some money or simply renogitiate your contracts — there’s no harm in simply asking for a discount.

So, take a few minutes to try these out for yourself — the people I’ve talked to have saved at least a few hundred dollars per month and freed up hours of wasted time each week. All it takes is a few simple things to make it happen.

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Yep, now my secret’s out but I’m not worried. I’ll continue using it because most people don’t want to be known as the person that bothers people on vacation.

Learn to take advantage of a distraction-free day and work like your hair is on fire.

Do nothing except finish the project. Hey, you could have been on vacation, so it’s okay to neglect everything else, to put your email on vacation autorespond and your phone on voice mail and to beg off on the sleepy weekly all-hands meeting and to avoid the interactions with those that might say no…

And then finish it. Finish the website or the manuscript or business plan or the suite of tools. No, this isn’t a great week to do outreach or make a pitch. That’s not the goal. It’s to finish that project that’s been stuck too long. Finish it or cancel it.

The key to using this strategy effectively is to make sure you don’t overuse it and ensure that the right people know what you’re actually doing with your time. At the very least, make sure that your boss and/or your clients know exactly what you’re up to.

Now go enjoy a full day of productivity and don’t forget to take an actual day off from time to time.

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Bill came in. I thought about how strange it was that he had two legs, two arms, one head, etc. - almost exactly like a regular human being.

So, maybe Bill isn’t the right person to compare ourselves against but the point is that the people around you need to easily recognize that you are a real person, just like them.

When I was first starting out, I pretty much ignored returning emails and phone calls under the impression that I was simply “too busy” for it. Then one day I realized that people had stopped coming to me when opportunity knocked, and it hit me: I had to make myself more accessible if I wanted to get ahead.

“So, how do I become more accessible?”

First, make sure you give people multiple ways to get in touch with you. If you’re reading this, you probably have a cell phone, email account, Facebook profile and a Twitter account. Use them.

Then, make sure you actually reply like a human. It’s that simple.

Well, not really, but it’s a start. Here are some extra tips for you:

• Visibility creates opportunities. People will never know how great you are unless they know you exist. Use blogs, Facebook, and your voicemail greeting to start getting your personal brand out there. (You did rethink your personal brand, didn’t you?)
• Be reachable. Let’s be honest, you probably have an account on nearly every Web 2.0 site out there. OK, maybe not every one but you probably do have an email, Facebook, MySpace, Twitter, or FriendFeed account. Just use them.
• Show your face. You can’t get ahead by sitting behind your computer all day. Get out there and start meeting people. You know the saying - a picture is worth a thousand words. Start putting a face to the name by actually meeting the people you interact with online.
• Respond promptly. Most people are on deadlines. The more quickly you can follow up when someone contacts you, the more likely they will return the favor. If you have the time, respond to messages right away.

We’re all busy. Some days it seems like you’ve got neverending phone calls to return and emails to answer, but it’s time to stop making excuses.

I wake up at 6am every morning to catch up on email because I know that the people I’m replying to are still in bed — they can’t possibly reply back to me immediately with a one-liner. Stick to your schedule and keep the lines of communication open, the results will be well worth it.

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In my experience, some of my most productive moments occur when I take a break and waste a little time.

Just remember that there’s a fine line between using your downtime effectively and stealing time or resources from your employer, family or friends. First and foremost, if you’re getting paid to do a job, that work needs to be your top priority. Don’t forget about your family either.

With that being said, there are some ways to use your legitimate downtime to focus on getting ahead.

1. Exercise: This is the best way to spend your down time. A good workout gets your mind off of things and gets your body in shape at the same time. Try to get into a routine of working out at least 2-3 times a week for 30 minutes — it’s easier than you think and you’ll probably gain some new perspectives on yourself in the process.
2. Change your environment: A change in scenery is well worth the effort. It can be as simple as heading over to a new coffee shop or taking a weekend getaway. Putting yourself into new situations tends to give you a new perspective on things.
3. Read a book: There’s nothing like holding a book in your hands and flipping through the pages. Pick up a book from time to time and get a new perspective on things. I’ve been picking up books from the Personal MBA’s recommended reading list and running through them on the weekends.
4. Go offline: This can be as effective as you want it to be. Some people simply turn off their laptop while others ditch technology for the weekend and go cold turkey. Personally, I’ll grab my notebook & trusty pen and head off to a local coffee shop. Using a nice pen and paper is much more relaxing than you might think — seeing your thoughts on paper tends to help you see them from a totally different perspective.
5. Take a Nap: This is a tough one — I’ve found it hard to not feel guilty for taking a nap in the middle of the day. Despite what you may think, your body needs rest from time to time. Don’t feel bad for taking a 15 minute nap on the couch. You’ll bounce back with more energy than you think.

So, continue screwing off — just make it worthwhile in the process. If you’ve got any other ideas on how to effectively waste time, I’d love to hear about them in the comments!

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