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Welcome to another episode of the Small Biz Ahead Podcast. Sign up for the weekly newsletter so you never miss an episode. Do you have a question you’d like Elizabeth and Gene to answer?


Elizabeth: Hi, Gene, how are you today?

Gene: Elizabeth, I’m doing good.

Elizabeth: We’re laughing, because this is the first time we’ve recorded in the same room. Usually we’ve been doing this over Skype, so it’s kind of weird to be right next to each other, but nice.

Gene: Yeah, I know. I see your pets jumping up and down behind you. You’re doing it from you home office. It’s nicer face to face. It’s a really good thing.

Elizabeth: Yes, yes. Usually I have my puppy in the background whining because she’s not on my lap, so it’s really great. We have Gene in Hartford today at The Hartford, who’s the sponsor of our podcast. They’re letting us use their very fancy recording studio for the first time. We’re changing up the format this week a little bit. We asked the Small Biz Ahead community if they could submit some questions for us to answer, and they responded with some really good questions. They really run the gamut across all types of small business industries from sole proprietors to people with a lot of employees. We’re going to jump in after we hear from our sponsor.

QUESTION #1: Do I Need a Business Plan?

Elizabeth: Okay, question one is from Heather in Seattle.

“I’m a first time business owner and wondering if I needs business plan. I feel like taking the time to work on something that I may not end up using is a waste of time. What do you think?”

Elizabeth: I’m going to jump in before Gene.

Gene: Please.

Elizabeth: I think I’m going to say the opposite of what Gene is going to say. Yes, you need a business plan, but you probably don’t need an elaborate one, which actually I think Gene would agree with.

Gene: Right.

Elizabeth: We have a great quick article on this on the Business Owner’s Playbook. Just go to Google and Google “Business Owner’s Playbook business plan”, and that article on writing one should come up. I’ll include a link in the show notes to this. You don’t need a 30 page plan, but I think you can get away with something like two pages, three pages. The reason for that is you’re going to get so many questions when you’re launching a business, and it’s great to just sit down and put down on paper what you’re doing, what your business does, who your target customer or client is, and what you’re going to be delivering to them, and how you’re going to get that information to them. The second reason is I think it really helps with goal setting, especially in the beginning. Now I’m going to let Gene totally disagree with me.

Gene: No, no, no. It’s actually the other way around. I agree with a lot of what you said. I think that business plans, sometimes they get overused and overrated, but I’ll tell you this much, Elizabeth. I do not know a successful business owner or entrepreneur who has not succeeded without a plan. Everybody has a plan, and plans kind of serve two purposes. Number one is they help you try and figure out how to either avoid surprises or how to deal with the unexpected. That’s what plans do. They make you think through these kinds of things, and that’s really important.

The second biggest reason why people really do plans, formal plans is because they do want to show it to somebody else. That’s really helpful if you’re starting up a business. You pitch the idea to a friend, even people that aren’t necessarily giving you money. You still want to bounce ideas off of them. You might want to be looking for a partner, or bringing in an employee or somebody. A lot of people are going to be like, “What’s your plan? What’s your business all about? What’s the market? What’s the idea? What’s your financing? Do you have any kind of projections?” People ask these questions when they want to understand better what you’re doing. Having that kind of thing written down just really gets your thoughts together and makes it good for the external community. I think business plans are really important and good.

It just annoys me sometimes. I meet some business owners that go all crazy with their plans. They’re creating an SEC prospectus, their little shop that’s going to sell coffee, Heather in Seattle, which I guess that’s what people do in Seattle. You don’t have to have this elaborate thing. The only people that are going to make you do something more elaborate and follow is a bank or an investor.

Elizabeth: If you’re getting a loan or you’re looking for startup money.

Gene: If you’re getting financing, people are going to ask you to do that. A couple other thoughts on business plans. If you’re looking to create a business plan, people are like, “Where do I start? What do I do? What kind of advice do I have?” I always like to look at SEC prospectuses when there’s initial public offerings. You can go on the SEC’s-

Elizabeth: Even for a coffee shop.

Gene: Even for a coffee shop, but here’s the reason why. An S1 prospectus is what any company uses when they’re going public. Now I realize Heather, the coffee shop owner, and I don’t even know if she owns her coffee shop or not.

Elizabeth: She didn’t say.

Gene: We’re completely making this up, but okay. Whatever Heather is doing, if she’s looking to put together a plan, if you download any S1 from any company that’s founded an IPO over the past couple years, it just gives you the format of what the SEC is looking for. You can’t get any more authoritative than that for a company that’s actually going to go public, what their projections are, what the risk factors are. An S1 is all the reasons why you should not invest in that company. It’s not a sales document at all. It’s the opposite of that.

Elizabeth: It’s a warning document.

Gene: It’s a warning document. To me, that’s the best plan possible. It’s making you think, your investors think. Here are all the things that I need to make sure I’m thinking about before I even put any money into this or change my life around. That’s the sign of a really good plan. After that, depending on the size of the company and if you’re looking for money from some external source, having just quarterly objectives, like you had mentioned before, putting them on a spreadsheet, updating them every quarter, and then also having something annually, and maybe a couple years out just to kind of keep yourself focused, that’s what I do. I don’t have a detailed plan, per se, but I’ve got objectives.

Elizabeth: We talked about your goal setting plan, I think, two podcasts ago. I will, again, like to that in the show notes so you can go back and see how Gene does it, because it’s very organized, but loose, too.

Gene: It is. It is.

Elizabeth: You don’t get too strict about it. If you were, let’s say, opening a coffee shop in Seattle, what key elements would you have in your business plan, and you wanted to keep it under, let’s say, five pages?

Gene: Right. First of all, it really depends on the audience, Elizabeth. If I was just preparing this for myself, then I would be having specific dollar metrics and some qualitative metrics, that’s how I would be designing that. Saying that if I’ve got a plan in the next 90 days, in the next 180 days, in the next 360 days, these are some of the dollar metrics that I want to have, and a certain number of revenues that I want to have to date, what I expect my expense to be to date, what I want my profitability to be, almost like just to perform a little P,L. That’s why my plan is, but then it’s supported by qualitative metrics, which means in the next 90 days I’m opening up a coffee shop. I want to make sure that I’m offering three brands of coffee, or I’ve signed my lease and have furniture in the place. You know what I mean? Then within the next 180 days, I’ve got certain objectives I want to accomplish. I want to have two employees on board, and I want to make sure that I’m doing two events per month, that kind of thing, to bring people in. That, to me, is a plan, if you’re just doing it internal.

If you’re looking for money from the SBA, Small Business Administration, or a bank, or an investor for a coffee shop, good luck with that, by the way. Banks don’t lend money to coffee shops, unless you’ve got 20 coffee shops. If you’re looking for an outside investor, your plan would have to then consider what the market is, what you expect or how many customers you’re going, what your competition is, what the risk factors are.

Elizabeth: SWOT Analysis.

Gene: SWOT analysis, yeah. All of your weaknesses and strengths.

Elizabeth: For those of you who are looking to get funding, and you are a coffee shop, we do have an article on creative ways to raise funds for your business. You don’t just need to go through banks anymore. There are a lot of ways to raise money for your business that don’t involve using your personal credit card either.

Gene: I’ve actually counted nine ways to raise money for your business that didn’t really even exist 10 years ago, but that’s another topic for another time.

Elizabeth: Yep, we’ll cover that in another podcast. Business plans, we’re going to give them two thumbs up, but you really need to think about your audience. I just love when you’re starting something new, you get so many questions from people, even if it’s just your mom, like, “What kind of coffee are you going to serve? Is it going to be pour-over, organic, wild caught? Are you going to have scones?” All of that stuff.

Gene: That sounds like my mom, actually. She’s all about the food. Doesn’t really care if I’m making money. She just wants to make sure she’s getting fed.

Elizabeth: How can I help? What can I do? I just love to take the time … I don’t do this enough in my own life, but I always think it’s a good idea to just take the time to get stuff down on paper so then you don’t have to every time think up a new answer to this question. You can just say, “You know what? I’ve got it all right here.” Even just for that, even to help organize yourself, it’s good. Then again, if you want to look like a professional to potential partners, to funding sources, you’ve got to have a business plan. I just don’t think people should spend time working up a 30 page business plan.

Gene: The smartest business people I know, they spend their time and their money on things that are going to give them a specific return on investment. If you’re going to write a 30 page business plan, and then two days later stick it away in a drawer, and nobody’s going to read it, then you’re just being dumb. You’re spending your time on stuff that’s not productive. There’s plenty of other stuff you should be doing that will make you money. If you think that a business plan will make you money because it’s either getting your head together, some thoughts, or you’re looking for money from an external source, do the business plan. Regardless, everybody has a plan. It just depends on how formal or informal you want it to be.

Elizabeth: Yeah, and you don’t want to get stuck in the planning process. That’s something I see a lot of, that people have a business idea, and they spend forever planning, but not executing. That’s something I would do if I were starting a business. I would spend way too much planning.

Gene: I also want to also add some clients that I know that do plans, you call it plans, forecasts, projections, be aware that a lot of times companies to this stuff. They break it down to specific things. For example, let’s get back to that coffee shop again. Small example, but if you have to invest 5 or $10,000 maybe in some piece of equipment, some incredible coffee brewer, some maker, you’ve got the opportunity to do something like that, many clients of mine, and they have to make an investment of something, a piece of equipment, a piece of machinery, [inaudible 00:11:19] technology or whatever, they’ll do a little plan just for that. If you’re going to make a 5,000 investment in some big coffee maker or whatever, you really want to sit there and say, “Let me do projections and a plan just for this. Is this going to make me money, this specific thing?”

Elizabeth: When is it going to make me money?

Gene: Correct. “I’m going to put 5,000 down. I’m going to have to put a certain amount of money out every month for the specialty coffee it needs, and the maintenance, and the cleaning, and I’m going to have to spend money to train somebody to use it. That’s all going to cost … Okay, based on that, what’s the market like? What are my risks? Who’s going to be ordering this coffee? What is the demand for this? Will this coffee maker and its own little P,L be making me money over the next three or six months?” There’s nothing wrong with doing a plan that just is involved in a small part of your business. It doesn’t have to be the entire business all at once.

QUESTION #2: Tiny Marketing Budgets

Elizabeth: Good tip. Okay. All right. Okay, question two is from Bill on Long Island. Love the Long Islanders.

Gene: Long Island.

“I run a small dental practice. I’ve never done marketing before, save a listing in the yellow pages, old school. I have a thousand dollars to spend on marketing. Where should I put it? Thank you.”

Elizabeth: This is a great question. I’m sure this is going to really resonate with a lot of small business owners. I don’t know if you can automatically say your dentist needs to be on social media. What do you think, Gene?

Gene: First of all, considering the condition of my teeth, Elizabeth, my dentist has no financial worries whatsoever. I’ve had six root canals. It’s all the Coke that I was drinking as a kid growing up. My mom was like, “Have another drink. Have another drink.”

Gene: Yeah, they said it was fine. It’s funny, Bill from Long Island, you’re a dentist, you’ve got a thousand … Good for you, Bill. You’ve got a thousand dollars to spend on marketing. Here’s my advice for you. Take the thousand dollars. You live in Long Island. Drive to Atlantic City and spend it there, because your return will probably be the same as what your return is by spending the thousand dollars on some marketing. Here’s the reason why. I know I’m kidding around, but I’m actually pretty serious. When people say, “I’ve got a thousand dollars to spend on marketing or whatever,” marketing is not like you put a bet on something, and then you win the lottery or something. The people that succeed in marketing, it’s a long-term investment. It’s just not a one-shot. People have this thing. They’re like, “Oh, I’m going to place an ad for a thousand dollars. Then my door’s going to get knocked down by customers coming through.” When you market, if Bill were saying to us, “Hey, guys. I’ve got a thousand dollars to spend every month on my practice,” that’s a different conversation.

Elizabeth: That’s a huge budget.

Gene: That’s a huge budget. Okay, but maybe he’s just like, “I’ve got $500 to spend every month on my …” Then okay, then you’ve got a little plan. You’ve got 500 bucks to spend. We can talk about some ways, and we will, about what you could do to spend on marketing, but just a thousand dollars and one off, you’re wasting your money if you think you’re going to do something that’s just going to pay yourself off. I would rather him take for free, we talk about marketing ideas or whatever. You’re a dentist. In any professional service that you do, whether you’re a landscaper, you’re a dentist, you’re an architect, people refer service providers. Companies and services like websites like Angie’s List and all that are great, but let’s face it. If you’re looking for a dentist, Elizabeth, you’re probably going to ask. It’s very likely you’re going to ask somebody you know, “Who’s your dentist?” You know what I mean? That’s a very common thing to do for anybody. If you’re looking for somebody to walk your dog, which I hear needs walking in the middle of the night now, you’re [inaudible 00:15:02] going to ask, because it’s a service provider thing.

That thousand dollars, put the money aside for something else. Give the stuff away for free if you’re a service provider. Bill would be better off devoting his time to maybe different charities in the area, giving some services away for silent auction that benefits for a charity. Something where people can … Think about it. With a silent auction, they get a free dental treatment or a free exam or whatever just by contributing, and then goes to the charity. It’s a way that you can not only give back to the community and sort of advertise yourself within the community in a really good way, but then you’re also getting customers to come and see you. Hopefully you do a good job, and they will also refer you. Spending a thousand dollars on anything just one time, I don’t think for a professional service provider it’s going to provide much return at all.

Elizabeth: What about something like Groupon, because I go on Groupon all the time, mostly looking for beer tastings, but not usually looking for a dentist.

Gene: That’s a whole other issue all together. Okay.

Elizabeth: There’s a big craft beer community in Connecticut. Anyway, I see all the time dentists on there, a cleaning for $99, cleaning and x-rays, something like that. What about that?

Gene: I hate it. I absolutely hate it.

Elizabeth: You hate it? Okay.

Gene: Craft beer is one thing. I’m a service provider. I’m going to tell you straight out when customers are coming in to me, and they’re paying our full rates, and they’re good customers, we give them full attention and we’re happy. When I get people coming in … If I were to have somebody, particularly a dentist, God, and they’re waving a coupon or it’s part of a deal or whatever, I just hate it. I think that it’s people that are … I don’t view them as long-term. Some of them maybe turn into a long-term customer, but for a service provider, I just don’t like using those kinds of sites. People from Groupon are going to yell. I just don’t think it’s a professional way to present myself. You’re trying to build value as a service provider. I think just giving away your service as a two for one deal or whatever, what a Groupon looks like, just I think it devalues you.

Getting back to giving stuff away to organizations or charities, it’s just a way of saying, “Hey, look.” You know what I mean? “My services are valuable and important, but I certainly am concerned about this charity and want to give back, you know what I mean?”

Elizabeth: Be involved in the community.

Gene: Be involved in the community.

Elizabeth: It’s also kind of a way to network a little bit without actually having to go out with a stack of business cards.

Gene: It really is. When we talk about networking as well, there’s also … If you belong to certain groups, networking groups or organizations, and to say, “Hey, look. Because I’m so committed to this organization,” or we do such good things, or a Rotary Club member, or a Lion’s Club, whatever, and say, “You know what? For people that belong to this organization, one of the first is I’ll give something away for free, or 50% off or something, just because I want to give it back to the organization. I’m so committed to that.” That sounds better. It’s a better marketing move that retains your professionalism and your respectability. Long answer to a short question, but for a service provider, the deal sites and all that, I’m not so crazy about.

Elizabeth: Okay. If you were Bill on Long Island and you had this thousand dollars, and you were listening, and you said, “Okay, I guess I’m not going to spend that on marketing,” where would you put that money in a dental practice?

Gene: That’s a great question. In a dental practice, there’s really two different things, two big things that you would put your money into. The thousand dollars itself is not a whole lot of money to put into technology. It’s only just a thousand bucks. What I would do is I would put it into my people.

Elizabeth: Great idea.

Gene: For that thousand dollars, is there any training that I could send my people to go to? Or even just I’m going to put it towards a lunch fund, so every other Friday I’m going to bring in a lunch for the people in my office. The better your people are, the better trained that they are, the more that they are committed to your practice and loyal to your practice, the better job they’re going to do. That will please your patients, and that will please all the people that your patients know and will refer to you. I go to my dentist, I’ve gone to the same … I’m 51. I’ve gone to the same dentist since I was 12 years old. Is that nuts?

Elizabeth: Oh my gosh.

Gene: Like I told you, this guy is paid … I know you want to see his house, because his entire … He’s probably built a wing on what I spend at-

Elizabeth: Vacation home.

Gene: Crazy. They are actually in a house, their practice outside of Philadelphia in a suburb. They’ve had, Elizabeth, the same staff there for years. They just treat them really well. They have a super loyal clientele, a really good little practice. I tried to schedule a cleaning, it’s like three months out in advance for-

Elizabeth: Yeah, that’s pretty typical for a really good dentists.

Gene: Crazy. Yeah, really good. They take really good care of their employees. You got a thousand bucks to spend? Again, I’d love to say spend it on some technology, you’re not going to get a whole lot for a thousand bucks, so put it toward your people.

Elizabeth: You know what my dentist recently did, and I definitely got mine through referrals, I actually asked my oral surgeon when I had my wisdom teeth out. I went to her dentist, and now all of my coworkers go to my dentist, because a lot of my coworkers recently moved to the area. They didn’t have anyone. I said, “Go to my dentist,” and they love them. They recently started a reminder service. You get text reminders when you have an appointment. I’m pretty diligent about putting stuff in my calendar, but I don’t always look that far ahead. I’ll get a text about a week ahead saying, “Your appointment is next week.” I feel like that’s got to save them money, because that’s got to save them money in the form of … I might cancel that week … Say, “Oh my gosh,” that I have a conflict, so I’ll cancel that a week ahead. They can then fill that appointment, rather than me just not showing up.

Gene: Agreed. Now a service like that, there are some great cloud-based applications for all service providers, but in the medical field, like dentists, my dentist has the same thing. Again, this is an old school dental practice, but they get it. Same thing. Now if you want to make an appointment, you can make an appointment online.

Elizabeth: I love that.

Gene: You get confirmation online, and then you get the text reminding you. Then you got to respond to confirm the appointment, because you talk about making money, if somebody doesn’t confirm an appointment or they don’t show up, that costs you money. You’re using the technology to have people do that. That’s a good thing. Getting back to the thousand dollars, those kinds of services can run your practice anywhere from 250 bucks to a thousand bucks a month, depending on-

Elizabeth: Wow, okay.

Gene: Well, it just depends on the features and the functionality and all that you want for a good application. It’s a great thing an absolutely should be invested in. I’d love to say take that thousand bucks and maybe a few extra thousand bucks and invest in a technology like that would really help your practice.

Elizabeth: I love for small businesses like that. I look for service providers that have online reminders that you can schedule online, because a lot of offices, especially in big companies, are moving towards a bullpen, an open office feel, because they think that fosters collaboration. Really, it’s just to save on real estate costs.

Gene: You don’t want your coworkers to hear about your root canal or God knows what, right?

Elizabeth: Yeah, I don’t want to call up and say, “I need my roots done.” I want to be able to just go on that website.

Gene: You don’t get your roots done. They look fine, come on.

Elizabeth: No, no. I know. Yeah, I just want to be able to go on a website and make an appointment. The great thing is you make the appointment, you get an email confirmation, I can save it immediately into my Gmail account, and then I get the text the day before asking me to confirm, yes or no. I feel like it probably just cuts down on people … First of all, it makes people … It’s a nice feature to have, because I think it gets clients in the door, because I specifically look for that with hair salons. It cuts down on people cancelling at the last minute, or showing up a half an hour late, “Oh, I didn’t know what time it was.” I feel like that’s a real money saver.

Gene: Those systems are a necessity for any business in 2016. First of all, the whole millennial generation is people from age 18 to 34.

Elizabeth: They don’t like to make phone calls.

Gene: They don’t. This is what they’re growing up to be. I don’t even want to hear, “Well, back in the day, we made phone …” It’s not back in the day anymore. It’s a new generation, and this is what people are doing. They want to either do it from their mobile device, or they want to do it from their desk at work. They don’t want to be bothered. They want to get a text reminder, because people text. This is what people expect. Your return is that you not only are serving that community, so they keep coming back, because you’re making it super easy for them, but remember a lot of these cloud-based systems are accumulating data. You’re asking for them. You can then offer them little discounts for those good customers right online. You can then get data so you can actually market to those people a little bit more, or share that data with partners who might want to market or partner with you on certain things. There’s a lot of advantages for a business to invest in that, but it’s also the biggest thing is that it’s providing an advantage, a convenience for your customers, and that’s just what you want to be doing.

Elizabeth: Yep, and solving a problem. The other great thing they do is I’ll often get an email with a discount if I book between Monday and Thursday.

Gene: Yep. Isn’t that great? Yeah.

Elizabeth: Because that’s when they are not as busy. They want more people in there, and I save 10%, 15%. I think one time I got-

Gene: Surge pricing. It’s surge pricing.

Elizabeth: Exactly.

Gene: I’m going to write about this soon. I’m actually accumulating some data about how every … We read about Uber does with surge pricing, but really smart … Disney just started.

Elizabeth: Oh, really?

Gene: Yeah, now depending on when you go and time of year and time of day, the price to enter the park is different. It’s not just a standard price. People are like, “Oh my God. That’s so anti-American. How can you do that at Disney?” Meanwhile, that’s the most American thing you can do.

Elizabeth: Capitalism.

Gene: It’s pure capitalism. It’s the same thing when you fly. The person sitting next to you might have paid $50 less for their ticket than you because they bought it on a Tuesday, and you bought yours on a Friday. That’s what big companies are doing, but small companies are going to be doing that as well. You just gave a perfect example of that dentist office that’s saying, “If you book an appointment with us in our non-peak times, we’ll give you some time off. We’ll give you some dollars off.” Retail stores will be doing that as well, right?

Elizabeth: Really?

Gene: Yeah, why not?

Elizabeth: Online retail or brick and mortar?

Gene: Both, but I would say let’s talk about just brick and mortar. You go into any coffee shop in the middle of the day, say at like 10 in the morning, you know that their peak times are early in the mornings, people are going to work, and during lunch time. Things really die off between the hours of, say, 9:30 and 11:30. Watch more and more coffee shops or even little restaurants or diners saying, “Listen, come in during this period of time, and we’ll give you a discount on this,” or some other perk.

Elizabeth: Yeah, I think Starbucks does that now with their Treat Rewards.

Gene: They do. They do.

Elizabeth: I broke my Starbucks addiction several years ago, so I’m not as familiar, but I think they do have something where you get a receipt, you can go back in after 3PM.

Gene: Correct. They give it to you certain times of day when they’re less busy that you can redeem it for. It’s good stuff.

Elizabeth: Cool. All right, well Bill, we hope that answers your question.

Gene: What was Bill’s question anyway? I don’t even remember. That’s [inaudible 00:26:16] a thousand dollars that you’ve got to spend for marketing. You’re a dentist. I’m telling you, dude, stick it in your pocket, because unless you’re telling me it’s a thousand bucks a month or a few hundred bucks a month at least, you’re not just going to get some big boost to your business by just spending a thousand dollars somewhere. If you want to know where to spend the money, spend it on your people.

Elizabeth: Spend it on your people. That’s probably …

Gene: It’s the best marketing you can do.

Elizabeth: Yeah. That’s probably how we’re going to answer a lot of questions is investing in your people.

Gene: Yeah, it’s fine. It’s all about people.

Elizabeth: Thanks for joining us today on the Small Biz Ahead podcast.

The views and opinions expressed on this podcast are for informational purposes only and solely those of the podcast’s participants, contributors and guests and do not constitute an endorsement by, or necessarily represent the views of The Hartford or its affiliates