Dr. NAICS and Your Classification

I get asked all the time by entrepreneurs who need help determining their NAICS classification. Without doubt, it can be hard to figure out how to classify your new business. What is NAICS, you ask (if you already know this, skip the definition)?

The North American Industry Classification System (NAICS, pronounced Nakes) was developed as the standard for use by Federal statistical agencies in classifying business establishments for the collection, analysis, and publication of statistical data related to the business economy of the U.S. NAICS was developed under the auspices of the Office of Management and Budget (OMB), and adopted in 1997 to replace the old Standard Industrial Classification (SIC) system. It was also developed in cooperation with the statistical agencies of Canada and Mexico to establish a 3-country standard that allows for a high level of comparability in business statistics among the three countries. -- official Census Bureau NAICS website

Why should you care? Because if you know how your business is classified, you can use the classification to find other same-classified businesses through a source like ReferenceUSA, and compare your business to others. You'll remember this from our class.

If you have trouble figuring out your NAICS classification, and you've really, really tried, then send an email to Dr. NAICS at naics@census.gov. They ask you to please include your telephone number in your email message in case they need to call you for more information.

Pricing: Oh The Woes

Little scares entrepreneurs as much as pricing. We all know that if a prospect eagerly becomes a new client with little questions that we may have just given away the farm. When a prospect doesn't call back after being told the price - and this not on the first or second meeting - we've probably charged too much.

I just read an amusing and informative article on Fast Company about pricing. The article is geared to big business, but there are always lessons even if you're a one-person shop.

Another blog post over on Fast Company by Alison Yama talks about pricing in a depression, and her approach is very relevant to small businesses. In fact, I shared her article in my class on pricing and distribution for entrepreneurs at the Renaissance Entrepreneurship Center.

I found this nifty tool that will calculate your gross profit margin at Bankrate.com

Enjoy!

SBA Report: Women-Led Businesses Contributing $3.6 trillion

While this is a self-serving press release from Aetna, the information is pulled from data from the U.S. Small Business Association. Go entrepreneurs!!

Here's the text from the Aetna press release ----

Women Led Businesses Continue To Fuel Growth In A Tough Economy

Aetna unveils new resource to help women entrepreneurs manage the health of their business, well-being of their employees

October 06, 2009 — According to the Small Business Administration, there are 9.1 million women owned businesses in the U.S., employing 27.5 million people and contributing $3.6 trillion to the economy. Aetna a leading provider of health care solutions to small businesses, understands the unique needs of this growing business segment and in response has developed a robust resource to help women business owners manage the health of their business, the well-being of their employees and their personal life. The website, www.aetnawomenatwork.com, features pertinent information, videos, events, education courses, and more, to help women balance their often dual roles as business and family caregivers and decision-makers.

“Female leadership of companies is changing how businesses are organized, managed and insured,” said Mary Claire Bonner, head of Local and Regional Business, a combined organization that includes Aetna Small and Middle Market Business. “Our work with women-led companies has taught us that the idea of communities – places where different people come together to share interests, goals, and values – is central to their success. This is how we have developed the benefit plans and tools needed to serve the health and well-being of companies led by women.”

The site content is built around three core areas: Healthy Business, Healthy Family, Healthy Life – three themes that resonate with women business leaders regardless of their industry.

Healthy Business
This section is designed to help women business leaders manage the health of their business and the well-being of the people who help make it succeed with links to:

* Aetna’s Small Group portfolio
* Online tools and resources such as Aetna Navigator®, Aetna’s easy-to-use, self-service member website
* Wellness information for the workplace

Healthy Family
When families share the value of health, the benefits are experienced by everyone—parents, children, colleagues, and employers. This section of the site is designed to help people get engaged in their health with the tools and information they need to make smart, healthy decisions, including:

* How health benefits can help save money
* Screening tests every family should consider
* Creating Personal Health Records for everyone in your family

Healthy Life
Aetna promotes health at every phase and stage of life —from guiding people through using their health plans, to promoting healthy eating tips and finding time for fitness. This area of the site offers information intended to improve the lives of women business owners, the lives of their employees, and their families, including:

* How to find doctors in your area
* How to get more from your insurance coverage
* How to plan for retirement

“We understand the unique challenges facing women led businesses, and small businesses in general,” said Bonner. “Aetnawomenatwork.com is another tangible example of our commitment to developing health and wellness solutions that deliver real value to this business segment.”

Source: Aetna

The Worldwide World

Are you a small business making a difference in the world as part of the way you do business? On eBay, lots of sellers donate a portion of their proceeds to a local or international cause. If you are a business that does something like this, no matter how small or large, I'd like to hear from you.

In the meantime, why not take this Global IQ Test, from President Bill Clinton's foundation?

Pricing and Positioning: Starbucks Introduces Instant Coffee

One issue that new(ish) entrepreneurs face is how to position their products based on price. Starbucks, long known for bringing America upscale coffee prices is today introducing Via, an instant coffee. A 3-pack is $2.95 or $9.95 for a 12-pack - that is 98 cents a cup or 83 cents a cup. Read the article or watch what consumers have to say about their first taste or watch (video below) CEO Howard Schultz talk about Starbuck's down-market move. Will this move by Starbucks be successful? As a very small business, could an entrepreneur have the same success with this sort of mixed message? How would you go about discovering whether your customers want a less expensive product?

International Houseware Association Tradeshow

Entrepreneurs who have taken one of my marketing classes know that I am a big believer in going to tradeshows. You don't need to have a booth to gather invaluable market research.

The International Houseware Association runs the International Home + Housewares Show in the Spring. If you cannot make these tradeshows, sometimes you'll get lucky: an attendee, like a Gourmet Retailer journalist, will write about the trends she/he discovered. In March 2009, Gourmet Retailer published an article that identified the following trends: Living in Our Kitchens, The Wellness Kitchen & Cooking for Fun, Living Within Our Means, and The Green Kitchen. If you're in the food business, these trends are worth checking out.

If you know your industry tradeshow is taking place, be extra-vigilant in visiting related websites, and searching for press releases.

Competition for Business Capital

Entrepreneurs know: capital is tight right now, and banks have made it tough to get credit.

Have you thought about capital competitions?

Take advantage of this upcoming opportunity to pitch your business idea at The Perfect Pitch Entrepreneur & Investor Conference. Heavy-hitting venture capitalists will be in the audience, headlined by Sir Richard Branson (Virgin founder and overall cool dude). Submissions are due September 8th. Someone's going to get the money; why not you?

In addition to pitching for money, The Perfect Pitch is a day-long conference for entrepreneurs taking place October 26th in Marina Del Rey, CA.

Market Research for Designers: Color Palettes

If you make clothing, handbags, or other accessories, you know you've got to keep up with the hot new colors. You can download a PDF swatchbook from Pantone, called Pantone Fashion Color Report Fall 2009. It's late to be looking at colors for 2009, but it's also free, and if you're still building your line or accessories, it's perfect.

Pantone also publishes the PANTONE VIEW Colour Planner, which is $750. But take a look at their press release: they don't include swatches, but it does discuss the eight palettes for use in women’s wear, menswear, and active wear. palettes

Who's Using Twitter?

Want to do a little market research on who's using twitter? A nifty new tool to use is Buzzom, which makes it easy to find people by by searching the bios of twitterers. You can then decide who you want to follow, and you can do that right from Buzzom too. You need to have a twitter account, so sign up first, then go flit around.

Two Market Research Tips

(Note: My next several posts are really for the entrepreneurs I instruct at the Renaissance Entrepreneurship Center. But I decided to write them here as a way to make them easily available to past students too. If you're not a Ren. Center member, you are welcome too!)

There are several resources that will help make your market research easier. I will be adding more over the next few days, so be sure to check back. Also, if you have any questions, please ask them in a comment; there are probably at least a few more in the class that also have questions. I'll post my response here.

Many entrepreneurs have a budget of $0 when it comes to market research. So my suggestions here are for free or almost free tips and tools that will help you.

(1) Surveys

One of the best tools you can use for primary research is online surveys. Try one of these three:

• Survey Monkey


• Zoomerang


• Vizu

Survey Monkey has a guide on creating strong online surveys, so I would encourage you to consider using them. I've used Survey Monkey for both small and mid-size organizations; there's a good chance it will handle what you need.

In an ideal world, you would distribute your survey to your entire target market. But to keep it simple, yet still get meaningful responses, you can start with your friends and family, and ask them to send the link to anyone they think would be interested in your product or service.

You want your survey invitation to look very professional. Sending it out via a service like Constant Contact means that it will look professional. But more importantly, you'll be able to track who actually opened your email.


(2) Tradeshows
Another great primary research source is a tradeshow. I can't emphasize how much information you can get walking up and down the aisles of your industry's tradeshow. Information dangles everywhere, ready to be plucked and consumed. You can find a tradeshow on TSNN by searching their immense database.

Generations Using Social Media

eMarketer's newsletter has very useful numbers on who's using social media. You might be surprised to discover that every single generation over the age of 13 - including the WWII generation - is represented.
Here's the table from eMarketer:


Go forth and find your target market.

reference article: How the Old, the Young and Everyone in Between Uses Social Networks

Top Social Media Sites

If you need a few ideas beyond Facebook and MySpace, take a look at this post by David Wilson on research from eMarketer.

The OTHER Social Media Sites

I taught the first class of the four-week Start your Own Business class at the Ren. Center. Great class, really looking forward to seeing how everyone develops their business ideas.

Next week we'll be talking about how to find where your customers hang out. One area I want to bring up is that there are lots of social media sites BEYOND Facebook.

For example, I like to cook every now and again. Foodbuzz is a social media site focusing on - yep - foodies. I cruised on over to that site when I'm in creative cooking mode. Another site I just heard about is Tip'd, "a community for financial news, ideas, and tips." I'll be checking that out too.

These sites don't have the same overall traffic as Facebook or MySpace. But what they do have is users highly interested in food or finance. If that's your market, that's where you want to be, above being on general social media sites. They also provide an inexpensive, powerful way to increase your understanding of your customers.

Go find your social media sites. Then let us know where you like to hang out.

Reducing Start-Up Costs

CNN has a cool article, Air Force vet turns to dogs for cash. Lori Lawrence wrote a very detailed business plan. Originally, she thought she needed $147,000 to open. But in the end, she reduced her start-up costs to $35,000, with help from the Small Business Administration.

Entrepreneurs who want to start a business, especially one which requires capital investment like a storefront or specialized equipment, sometimes think they need a lot more cash than they may really be able to get by with. If Lori Lawrence had continued to think that she needed $147,000, she would've had to walk away from her dream.

One of my students from a few years back (i.e., before the economy recessed) wanted to start a bakery in San Francisco. Originally, she needed a whole wad of cash - five zeros worth. But her lack of access to capital forced her to re-think. Through careful consideration, she realized that she could purchase much of her equipment used. In addition, she realized that she could actually *outsource* part of her manufacturing needs, by carefully finding the right vendor who shared her values in food preparation.

So take a look: are your start-up costs too high? If so, can you be creative in reducing your costs? How? If you've got a good idea, share it - someone else may be able to use it too!

Learn More From Your Client in 15 Minutes A Day

One of the consistent issues I hear from clients is that they don't like to do research. They have bad visions of being in high school and having to write that book report. "Yuck," they say.

So I've been thinking about this problem for awhile. With good market research, I've seen how it is so much easier for my clients to:

• decide what product or service to sell (!)
• describe their product/service;
• price their product/service;
• design a marketing plan that doesn't waste time or money by being in the wrong place at the wrong time; and
• SELL their product/service

So, what can you accomplish in 15 minutes?

• read your Google alerts
• visit your trade association website
• view a video on survey design fundamentals (this is really only 10 minutes!)
• create a mini survey for your best customers
• call one ongoing customer and check in with them
• call one ongoing customer and ask them the questions from your survey
• create a free survey on survey monkey or zoomerang and send it out to your email list

Got some more ideas?

Pay What You Think It's Worth

I've been hearing about a few restaurants here and there that are fighting dangerously slow sales by letting their customers pay what they think their meal is worth. It turns out that for some this works. One success case is the gastropub at the Hilton in San Francisco.

They ran the promotion for a week, and discovered that diners, 600 of them, actually paid $1 more than the cost of the tab if prices were set. And yes, they still tipped.

Only two walked out without paying a penny.

Of course, this idea is not new. If you're working on a business plan or new product offering, this might be a great way to discover what your customers want to pay.

Revenue, Anyone?

In the marketing classes I teach, I always emphasize that an undeniable goal of an entrepreneur - no matter what - is about making revenue, 'cause without revenue, they'll be out of business.

That doesn't mean they can't have other goals. My company, for example, supports a social venture in Kenya called Uplift Business Alliance. In fact, we're looking for business-minded volunteers who would like to go to Nairobi, Kenya for a week in January 2010 to work with Kenyan entrepreneurs. Leave a comment if you're interested and we'll get in touch.

So I found a recent email invite from Guy Kawasaki to attend Revenue Bootcamp, "a conference for entrepreneurs to energize their strategies for generating revenue," intriguing.

Here's who's speaking:

• Chris Anderson, the author of "The Long Tail" and editor of Wired Magazine, talk about "The Future of Pricing"

• Mike Moritz, general partner at Sequoia Capital and Google board member, talk about the outlook for high tech startups

• Paul Graham, founder of Y Combinator, talk about helping entrepreneurs start their companies

• Eighteen other authors, experts, and entrepreneurs talk about what it takes to win new customers, increase sales to your current customers, and expand your revenues in today's economy

Guy, the founder of Garage Technology Ventures, will also speak, of course. Check it out ... maybe I'll see you there.

Recession Strategies for Small Businesses

Brad Sugars wrote an article over on entrepreneur.com a year ago. But his 6 ideas are still very relevant. I particularly like giving your customers something to talk about (idea #2) and using sites like elance.com and guru.com to find smart folks to help you grow (idea #4). If you've been in my classes at Renaissance Entrepreneurship Center, then you've heard all of this already.

CompUSA: The Smell Lingers ...

If every there was a reason to provide great customer service, the lingering anger customers feel toward the now defunct CompUSA should give you pause. In the last week - I cannot tell you why -- two different people have talked disparagingly about their terrible experience shopping a the stores. Russell Shaw's post, "CompUSA is Closing for Good. Good" says it all.

Lululemon: Learning thru Downward Dog

I like to use stories that illustrate the techniques I teach at the Renaissance Entrepreneurship Center. Fast Company published an article about Lululemon. One particular bit was great for highlighting the importance of getting out from behind your computer when you're doing research for a business start-up:

As much as a year before it opens in a new market, it sends missionaries to attend every yoga and exercise class they can find, sniffing out and befriending the most influential instructors.

That kind of research allows Lululemon to really understand its partners - yoga instructors - who then help them understand what the company's core local customers - yoga students - want in yoga gear.

Yelp: Tools for Business Owners

Yelp is helping business owners provide better customer service. A new suite of tools allows you to to: send a message customers who have reviewed their business; see how many have viewed the page of their businesses; update information like when they are open; and get instant alerts when their business is reviewed - key to instantly joining the conversation about your business.

There's also a business owner's guide that is very useful.

Although the rants on Yelp get almost all of the press, according to Yelp, 85% of the posts are neutral to great (3 stars and up, as of Sept. 2008).

Scream and Shout

The voice of the consumer rings loud on Yelp, and it strikes fear in many consumer-facing businesses. Many beginning entrepreneurs ask what they can do to control what customers say on Yelp.

But you can't.

If you make a mistake, own up to it. If you didn't (but someone thinks you did), explain your side respectfully and show you're always open to making your customer's experience better. Whatever you say, no matter how loud the screams directed at your business, don't shout back.