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by George Wiley
According to the State of California, there are over 18,350 businesses operating in the South Bay Beach Cities. Hopeful entrepreneurs who see a glimmer at the end of the rainbow are starting new businesses all the time. But for too many, that pot of gold, like the rainbow itself, turns out to be a mirage.
Close to eight out of ten new businesses fail. Though each case is unique, most new business ventures fail due of a lack of foresight, says Liz Harsch of Tailor-Made Advertising.
In her job, she wears many hats. On any given day she might be a market consultant, an advertising director, a media planner, a small business consultant, a service bundler, a proposal writer or a budget reviewer. But no matter what she's doing, Harsch spends her time watching businesses flourish or fade. She has to be constantly alert for the reasons why. Her livelihood, and the livelihood of her clients, depends on it.
"By nature the business owner is a maverick," Harsch says. "The odds are not in her or his favor. That's why I love them. They are people of character. You've got to love their perseverance and their adamancy. I know people who've started three or four businesses before they hit. There are a lot of business owners who don't own their own home. You've got to put it all out there."
On the other hand, Harsch quickly self-corrects. She warns against starting a business without sufficient capital. "That's the kiss of death-but it happens all the time," she says. You have to be able to afford not to cut corners. "When you compromise, that's when you lose," she says.
Harsch's plan for a successful business has nine general phases:
Step one - Identify the demand for your product or business.
Once you have an idea for a potential business, you must make sure there is a demand for your product or service.
"Don't just start a business to be a business owner," says Harsch. "Know there is a demand first, and that your product or service can compete with others filling that same need."
Harsch advises beginning with a well-thought-out and well-researched business plan. That doesn't mean just having a cool product you want to sell, Hawaiian shirts for example, then finding a store front, putting the shirts on a rack and waiting for the customers to come in. It means doing the homework before you ever buy that first shirt or shell out the rent for big plate-glass windows on a street that you like.
''They think of a product, and then everything is about it and them," Harsch says of most fledgling business owners. "But remember, it's not about you-it's about the customer. And remember, people don't sell products, they sell benefits." You have to have done your homework about the benefit to your customers that you have in mind. That's why Harsch advises taking a long, hard look at other businesses in your own or a similar category before beginning. Study their shops, their merchandising and store layout in the same way that a real estate agent would study neighborhood comparables when planning to put a home on the market.
"Look at your own market," Harsch stresses. "If you start a new business, you must define your consumer. Don't try to please everyone. Pick a target group and satisfy them. Go with your strength, then expand."
Step two - Focus groups or market research.
A focus group means putting your service or product on trial with would-be buyers. Many companies will arrange to hold focus groups, for a fee. If you can't afford someone else to do a focus group for you, do your own, with people who match your market demographics.
A word of caution - remain absolutely unbiased. Harsch uses the example of trying to sell a chip clip, a clamp used to close bags of opened potato chips so they don't go stale. "Remember, the product is not the product itself, it's the benefit of the product ," Harsch says. "Don't say, 'How do you like my chip clip?' That's biased. People won't want to offend you. Say, 'Have you ever seen one of these things?' Give them other examples like a paper clip, a baggie and a clip chip and let them tell you the benefits."
Even established businesses need to redo their focus groups from time to time, Harsch says. One less expensive alternative is to use your sales force as a focus group collector. Question your sales force closely. What sorts of reactions are they getting to the product? Try to keep constantly in touch with your market. "I have one client," says Harsch, "that we believe their market is aging and dying. That makes their database unreliable for future sales. So we advised buying a mailing list of younger individuals with similar incomes, interests and demographics as a prospective client list."
Harsch advises a thorough business self-analysis at least every three years, down to the level of taking an ax to anything costing money that you don't absolutely need. Harsch also says business owners should always keep in mind that they might want to sell their business at some point. Keeping a business in saleable condition and building image and goodwill is another perspective from which to run a stronger business.
Step three - Marketing. Define your target consumer.
This is Harsch's area of expertise. First, she advises clearly identifying what segment of the population you're marketing your product towards. Are they young, old, male, female, cat owners, dog owners, parents with children?
"You've got to be specific," she says. "You can't go after it all. When you try to go after it all, that's when you lose your core market." So before you begin advertising or promoting, think through in great detail who it is you're trying to reach with your promotion. Don't become a jack of all trades but master of none.
Step four - Define your ad budget.
If you own a business, you have an advertising budget, says Harsch, even if you don't know what it costs. It's important that you figure out how much you're spending. Do this by adding up your newspaper and other media advertising costs. Add in yellow page listing figures, as well as printing costs for business cards and letterhead stationary. Signage should be added in too. So should any public relations expense or special promotion outlay, even the cost of your Chamber of Commerce membership. Harsch warns against developing a media budget blindly or piecemeal. "I know companies who have incrementally grown to paying $100,000 per year for yellow page advertising. They may think of it as part of the phone bill. But almost every small business has some sort of ad in the yellow pages. You've got to learn what percentage of your business follows from each advertising source. You have to constantly evaluate that effectiveness."
Once you know what you're spending for advertising and how effective each expenditure is, you'll be able to judge which are the best alternatives for your business, Harsch adds.
Step five - Media planning.
When you've figured out your ad budget and identified your market, look for the advertising vehicles that will reach the market. Then choose ad vehicles that you can afford to repeat in. That could be your community newspaper, your local cable operator or even your own signs and banners. For contractors, construction site signage is extremely effective, says Harsch.
A hot ad vehicle at the moment is direct mail, because virtually any mailing list you can dream up, single female dog owners with incomes above $100,000 for example, can be purchased. Virtually all magazines sell subscriber lists. Stores sell customer lists. In this age of information, it's out there. One caution, says Harsch, find a reputable mailing list company, not one that uses the phone book.
"Direct mail has been an enormous success," says Harsch . "You could go down to a single carrier route or a specified neighborhood. Birds of a feather do tend to live in the same neighborhoods and have similar needs."
Cable TV advertising can be effective, Harsch says, but she warns that you have to buy a lot of spots to reach your target audience. Viewers have so many choices that it's tough to predict who's watching what unless you can afford blanket coverage so that your ad is played widely, and that can be expensive.
On the readership side, the same might be said of buying umbrella coverage in the giant metropolitan daily newspapers, although when it comes to cost per thousand readers, the giants are far less costly than their humble community cousins, says Harsch.
With newspaper or print advertising the rules are the same as with any other ad vehicle, know your market before buying. "If you know the L.A. Weekly is not going to reach your client, then I don't care how much you get the ad for, it's not going to work for you," says Harsch. "Your job is to figure out which vehicle will reach your buyers."
For most clients Harsch advises a media mix.
Step six - Tips for improving the effectiveness of your advertising efforts.
Harsch stresses that it's vital to look for ways to get the value-added 'buys' that should be part of any ad campaign. Don't be afraid to ask advertising sales representatives to give you added value exposure.
Harsch says one sure way to get added value is to design for yourself or have someone else design for you a logo. Logos are a simple mark or sign that identifies the advertiser's business for the viewer/reader. One way print advertisers can be particularly effective is by helping their clients develop a logo. They quickly become marketing signets that the customer sees and remembers. A well thought out, well-designed logo is worth a lot, says Harsch.
"If I were a print advertising sales rep, I'd try to get inside the business owner's head and think what I could do for them in the way of a logo," says Harsch. "I might try to work out a deal like 'If you buy an ad nine times, my publisher will throw in a logo.'"
A radio station recently did that with great success, Harsch adds. "They said 'Spend $25,000 in radio promotion and we'll provide a jingle.' That's a radio logo. It was a great deal, everybody won." Once you have a logo or jingle, warns Harsch, don't let anyone mess with it. Ad sellers will try to bend logos to fit spaces or change them for other reasons, she says. "Don't allow it. Your logo is your child." Ads with products should change, but the logo should stay the same in each round of advertising.
Step seven - Creating a clear ad with a clear message.
Does advertising really work? This is a question that many business owners ask skeptically after they've laid out the bucks and stood in an empty store, waiting for customers who've seen their ad to come in. "I smile when people say 'I ran this ad and it didn't work,'" says Harsch. "Sometimes those advertisers didn't figure out what they were trying to say. Sometimes they probably tried to say it all at the same time. They forget that the basic rule is to show the product or the benefit."
Making an ad too busy by trying to throw in every aspect of your business will turn off readers or viewers, says Harsch. They get lost in a forest of words or flood of images. But sometimes, if you're trying to play up a connection with several national brands as a reassurance to your customers that these national brand merchandisers have chosen you as a retail outlet, ads should be busy or visually intense. It all depends on the individual business and the goal of that business owner, Harsch adds.
In addition, advertisements must run consistently. Running an ad only one time won't accomplish much for you. "I never invest in a publication or media less than three times," Harsch says. "You start with the information you need to see in ad A, then ad B you see it again, and then the third time you try to drive the point home. By then the reader or viewer should have become familiar with you."
Step eight - Isolating high-profit products.
Harsch says ad budgets should be used differently by different business owners. For a retailer with a small budget, seasonal advertising may be the answer. Advertisers also have to know which items in the store make the most profit, and then play those items up in advertising. Many retailers, says Harsch, are acutely aware of their bottom line profits, but they haven't gone through the books to see which products they handle make them the most profit. So when they advertise, they split exposure equally among products. This is a common and an easily corrected mistake, Harsch says. Do the math to know which items earn the most money for you.
Harsch agrees with many small retailers that for them it makes sense to advertise more during slow times and perhaps not at all when business is booming. But she disagrees with business owners who say they don't need to advertise because they're always too busy. "The busy plumber should still advertise," she says. "I would never tell a customer I can't take you on, I'd share my customer with an associate. The smart plumber has back-up. When you're motivated to grow, you advertise. Otherwise, people wonder. If you're smart, you advertise at least four times per year, and you continue farming your customer and your potential customer lists throughout. Expand or die, that's the nature of a living business."
Step nine - Bundling up.
Bundling up has nothing to do with the weather. It's one of the newer techniques advertisers are using to share the expenses of advertising.
For her clients, Harsch is constantly on the lookout for an advertising bargain. She tells ad reps, "If you have a page come up empty, call me - if you have a remnant page, call me." She also tries to be innovative. Bundling, a technique where a single ad is shared by more than one advertiser, is one such innovation.
Harsch uses the example of a recent candidate for the Hermosa Beach city council who bundled an ad for a coffee he was holding to meet voters with exposure for a new laundromat/eatery. Do your laundry, have a free cup of coffee and meet the candidate. The candidate lost, but the advertising was innovative.
Another example of bundling is the recent use of the Energizer Bunny to promote a Red Cross funding drive. Bundling, partnerships, advertising alliances, these are relatively new ways advertisers are using to get exposure and hold down costs. "Most small businesses don't think like that, but by such partnerships you get business you never would have had before," Harsch says. "I tell ad reps, 'If I can get you two of my clients-I want a four-color discount and premium placement.'"
Harsch warns business owners not to let emotion sway them into advertising. "There's a lot of competition for your advertising dollar," she says. "If you just listen to the next salesperson who walks in the door, you're really throwing money away. You've got to develop a commitment and know what your goals are."
With her own business, Tailor-Made Advertising, Harsch tries to practice what she preaches. She has a list of around 400 target clients, mid-sized retailers with significant ad budgets, whom her company telemarkets, mails to or otherwise keeps in touch with. She doesn't try for the small retailer because her consultant's fee of $85 per hour is usually more than they can afford.
"It's tough to take creative charge when you're worried about the client's solvency," she says. For her roster of ongoing clients, Harsch tries to "act like their in-house advertising department" by working out an ad strategy, designing, placing and overseeing both ads and advertising budgets. She is continually brokering deals and looking for bargains. "I definitely save my clients my fee in ad costs," she says, "definitely."
"We can provide a quality advertising service right here in Hermosa Beach," Harsch says.
She smiles and relaxes at the end of a long interview. "When you run a series of ads for a client and the customers come in," she says, "that's where the strokes come from in this business."ER