Entrepreneur solutions 25 small business challenges

SOLUTIONS PLAYBOOK Top 25 Small-Business Challenges CONTENTS GETTING STARTED Challenge 1: Deciding When to Ditch the Steady Job Challenge 2: Finding the Time to Write a Business Plan Challenge 3: Sharpening Your Elevator Pitch­—And Your Business Plan Challenge 4: Choosing Between an Incubator and an Accelerator Challenge 5: Quitting Work for the Day When You’re the Boss BRANDING/MARKETING 10 Challenge 6: Marketing a Product or Service That’s Ahead of its Time 11 Challenge 7: Making Social Media Tactical 12 Challenge 8: Deciding Whether to Embrace Mobile 13 Challenge 9: Calculating the Value of Media Placements 14 MONEY MATTERS 15 Challenge 10: Securing a Line of Credit 16 Challenge 11: Working with Investors 17 Challenge 12: Using Debt Financing to Build a Business 18 Challenge 13: Making the Most of Crowdfunding 19 Challenge 14: Deciding When to Start and Stop Fundraising 20 CONTENTS MANAGEMENT 21 Challenge 15: Protecting Intellectual Property 22 Challenge 16: Tackling Legal Paperwork 23 Challenge 17: Deciding Whether to Outsource IT 24 Challenge 18: Building a Product as You Build an Organization 25 STAFFING 26 Challenge 19: Choosing to Hire Employees or Contractors 27 Challenge 20: Competing for Top Talent Without Paying Top Dollar 28 Challenge 21: Creating a Culture of Excellence 29 Challenge 22: Building an Organization That People Are Excited to Join 30 Challenge 23: Weighing the Telecommuting/Team Building Tradeoffs 31 CLIENT RELATIONS 32 Challenge 24: Raising Prices Without Alienating Clients 33 Challenge 25: Sizing Up What to Invest in Client Face-Time 34 GETTING STARTED Challenge 1: Deciding When to Ditch the Steady Job Challenge 2: Finding the Time to Write a Business Plan Challenge 3: Sharpening Your Elevator Pitch­—And Your Business Plan Challenge 4: Choosing Between an Incubator and an Accelerator Challenge 5: Quitting Work for the Day When You’re the Boss GETTING STARTED | CHALLENGE 1: Deciding When to Ditch the Steady Job To some extent, leaving a steady job (and steady paychecks) for the life of an entrepreneur is a leap of faith Though you intend to make your startup succeed, nothing is certain Like any leap of faith, the process takes patience, confidence and a positive attitude It also requires a good idea of how you plan to manage expenses and support yourself (or your family) until the new gig takes off That last question often proves to be the hardest to ask and answer If you’ve got money in the bank or a spouse who’s still working, you probably are covered If you recently won a jackpot in Vegas, you probably are good If none of these scenarios is real for you, you need a bulletproof strategy for leveraging debt and investor money long enough to sustain the company and your own personal finances, too We’re not going to lie: This process can be hairy at times It also can be rife with uncertainty “You need to weigh whether the freedom of successfully working for yourself outweighs the short-term instability or anxiety [you might have],” he says The flipside of these question marks is, of course, the possibility of a smash hit Yes, your current job may be steady, cushy and familiar But when your startup succeeds, when you’re the one at the helm of a multimillion-dollar business, it isn’t going to matter where you were before the current project All that will matter is what you have accomplished SOLUTION: Besides getting yourself mentally ready for this adventure, consider thinking about what you need to have in place to prevent unnecessary hardship for yourself and your family Travis Ness, co-founder of Renton, Wash.-based design agency Crossroads Creative, suggests that every foray into entrepreneurship should be prefaced with some serious self-reflection in which business leaders ask themselves exactly what they’re comfortable handling on the road to independence GETTING STARTED | CHALLENGE 2: Finding the Time to Write a Business Plan We’ve all heard legends about entrepreneurs writing the crux of their business plans on cocktail napkins at local watering holes (See Related: Five Businesses Born at a Bar) While the backdrops and the implements may differ in real life, the spontaneity usually doesn’t Once you have that critical idea, however, business plans take lots of time and painstaking effort Some entrepreneurs have tackled the process solo That was the case for Amy Norman and Stella Ma, co-founders of Little Passports, an educational products company based in San Francisco The duo wrote the bulk of their plan while working for other companies, according to Norman So they churned out most of the document on laptop computers at their respective kitchen tables, on weekends and after everyone in their families had gone to sleep the Internet, record pertinent information about similar sports businesses, and imbue the document with context “His involvement was bringing the industry expertise,” says Platt, whose company has 30 locations nationwide and is based in Los Angeles “We knew that if we wanted to this [plan] the right way, we wouldn’t have time to tackle that ourselves.” Even with the additional help, Platt says the plan ultimately took about 1,500 hours to complete SOLUTION: However you approach writing your business plan, be prepared to put just about anything on hold to it right “You find time to write it whenever you can,” says Norman, looking back “Whatever it takes.” Other entrepreneurs, such as Jeff Platt, CEO and cofounder of the Sky Zone indoor entertainment venues, have brought in help When Platt and his father, his co-founder, realized that their business plan needed to incorporate a hefty amount of market research, the duo hired a consultant to scour GETTING STARTED | CHALLENGE 3: Sharpening Your Elevator Pitch—And Your Business Plan Think of an elevator pitch as your executive summary It’s the quick-and-dirty version of exactly what you want potential investors (and maybe even customers) to know about the business you’re trying to build O’Leary thinks most entrepreneurs spend so much time harping on the business itself that they ignore the need to explain and enumerate their qualifications to make that business come to life With this in mind, it’s critically important to draw upon components of the elevator pitch to inform and round out a formal business plan “At some point along the way, you need to answer the whole question of ‘Why you?’ ” he notes “You need to give people a very obvious reason to trust that you are the right person to run this business over time.” Chris O’Leary wrote the book Elevator Pitch Essentials (The Limb Press, 2008) He says a well-honed elevator pitch should provide a business plan with a one-sentence summary of what the business does, followed by statements that explain » What the business does differently » How it adds value for customers » How it will make money » How it can scale over time To this end, O’Leary adds that developing a solid elevator pitch usually prompts entrepreneurs to start thinking about sales and marketing campaigns SOLUTION: Try out the above exercise in brevity It can not only lead to a sharper and more credible business plan, but also pave the way for overall business success “The point of an elevator pitch is to get conversations started about your company,” says O’Leary, who is in St Louis “While the elevator pitch provides quick hits on a number of topics, the business plan should be designed to go more in-depth.” Credibility is another key part of an elevator pitch that belongs in a business plan GETTING STARTED | CHALLENGE 4: Choosing Between an Incubator and an Accelerator Both incubator and accelerator models are designed to help entrepreneurs bring ideas to market But depending on what kind of help you want—and at what stage your company sits currently—one choice may make more sense for you As the name suggests, incubators are more nurturing environments, complete with advice from industry experts, structured introductions to potential funders and longer-term trajectories for idea development Accelerators, on the other hand, offer quick pushes to help companies get over final hurdles and deliver their products to market Some popular accelerators include Y Combinator and TechStars Some popular incubators include Idealab and YouWeb “Accelerators are set up to bring companies to market, while incubators offer entrepreneurs more room to fail,” explains Peter Relan, CEO and co-founder of YouWeb, which has California incubation locations “We make investments in entrepreneurs,[accelerators] make investments in business plans.” (See Related Article: Meet the Entrepreneurs Behind the Booming Business of Games.) Another difference between the two is that incubators generally offer more resources to Carnegie Mellon University Perks included unlimited use of critical instrumentation that ultimately saved the firm about $500,000 “To build a high-tech company, you have to be able to analyze and characterize your chemicals,” McCarthy explains “We could have invested the money on our own, but as part of the incubator we were able to use the school’s stuff and save our money for other things.” In exchange for all of this help, incubators and accelerators alike usually require entrepreneurs to fork over a certain amount of equity (In the case of ATRP, the university’s Technology Transfer Office holds a stake in the firm.) Some might think these additional fees are exorbitant Others say they are small prices to pay for a chance to hit it big SOLUTION: Consider whether you need a nurturing environment to better form a business idea­—or a place that will boost you to the next level If you require the former, you likely will be more successful going with the incubator If you need the latter, an accelerator might be better Patrick McCarthy experienced this first-hand when he co-founded ATRP Solutions, a specialty polymer company based in Pittsburgh McCarthy and his colleagues took the company through the Mellon Institute, an incubator tied GETTING STARTED | CHALLENGE 5: Quitting Work for the Day When You’re the Boss It’s dangerously easy for entrepreneurs to view their jobs as never-ending So much to do! So little time! With seemingly infinite demands, you might be tempted to work on your startup nonstop And while this strategy usually works for the first 72 hours, it almost always leads to burnout pretty quickly after that Naturally, the key to managing your startup and your life is finding out how the two fit together “You need to put up boundaries,” says Cali Yost, CEO and founder of Work+Life Fit, a Madison, N.J.-based leadership-consulting firm “Take deliberate action in the areas that sustain your health, personal relationships, career networks, job skills and life maintenance, or they won’t happen.” In describing the ultimate goal, Yost is careful not to use the word “balance,” because she says, “A 50-50 split between work and life is never going to happen.” Instead, she notes, entrepreneurs must realize that the interplay between work and life is a constant ebb and flow interminable days Mehta says the work was invigorating But after a while, he started to see it have an impact his relationships with friends and family “Sooner or later, I realized something was missing,” he remembers Applying structure to his days reversed this trend Currently, Mehta splits his days at lunch He handles all phone calls before the break, and all meetings after Another strategy, as simple as it might seem, is making lists No matter how diligent you are, working until you’ve crossed off five items from your list is a great way to quantify your efforts It’s also a good method to get stuff done SOLUTION: As exciting as it is to start a company, adopt some rules for yourself to prevent it from consuming your entire life Figure out what works best for you Jigar Mehta, director of operations at Matter, a fledgling media accelerator based in San Francisco, experienced this first-hand in 2012 When Mehta joined the company, it was in major bootstrap mode, and most of the executives logged GETTING STARTED | BRANDING/ MARKETING Challenge 6: Marketing a Product or Service That’s Ahead of its Time Challenge 7: Making Social Media Tactical Challenge 8: Deciding Whether to Embrace Mobile Challenge 9: Calculating the Value of Media Placements BRANDING/MARKETING | 10 MANAGEMENT Challenge 15: Protecting Intellectual Property Challenge 16: Tackling Legal Paperwork Challenge 17: Deciding Whether to Outsource IT Challenge 18: Building a Product as You Build an Organization MANAGEMENT | 21 CHALLENGE 15: Protecting Intellectual Property Technically speaking, there are three main ways to protect intellectual property (IP) in today’s business environment: trademarks, copyrights and patents in front of the European Union parliament on IP and has written extensively about the subject over the past few years The first two are important but not overwhelmingly so Common law in most states affords entrepreneurs a certain degree of trademark and copyright protection just from using their brands (Entrepreneurs, though, cannot recoup money beyond damages under case law.) Masnick offers an alternative approach to protecting IP: building something successful Patents, on the other hand, can be critical especially in industries where products are based on proprietary research Patents legally protect you from competitors swooping in and stealing ideas In order to get a patent, you must register specific ideas with the U.S Patent Office The process is tedious, involves many hours of lawyer time and can often stretch out over four or five years, says Mike Masnick, CEO and founder of Floor64, a Sunnyvale, Calif.-based media and consulting company “Entrepreneurs need to ask themselves if the protection offered by patents is worth all of the time and money you need to protect them,” says Masnick, who has presented His advice: Even if you’re not protecting IP under the law, being first or being best in the market is often the best protection entrepreneurs have against copycats “If you offer the best solution in the marketplace, even if someone copies you, people will recognize that you led the way and follow you for that,” he says “In this way, the business world operates no differently from the way individuals Leaders, not followers, are the ones who drive everything.” SOLUTION: If you lack the time and money to apply for patents, as most startups do, your best protection against IP theft is to stay ahead of the competition MANAGEMENT | 22 CHALLENGE 16: Tackling Legal Paperwork Depending on whom you ask, there are literally dozens of legal documents that entrepreneurs should line up before they jump head-first into a new venture Some, however, are more important than others First, it’s critical to consult a lawyer about properly documenting the business’s formation This process involves choosing an optimal corporate entity, then forming and registering that entity It also requires drafting an operating agreement and constitutional documents to clarify the structure, function and operation of the venture Next, lawyers can help startups protect intellectual property with customized licensing and technology transfer agreements for third parties and vendors It’s also necessary to have an airtight nondisclosure agreement to ensure protection when disclosing ideas to angel investors, venture capital funds, employees—and even programmers and vendors Then, of course, there’s the issue of equity structure Sai Pidatala, a corporate-law attorney in Washington, D.C., notes that companies usually need lawyers to draft vesting clauses to ensure that company stock is vested only after a certain amount of time or after certain benchmarks “This ensures that a founder doesn’t leave immediately— and can’t retain ownership in a company for which he is no longer toiling,” Pidatala says If you think you can’t afford all of this legal work, think again The law firm Orrick offers a set of templates for startups to follow to tackle some of these forms on their own (Though, it’s generally a good idea to retain the services of an attorney to make sure the forms are filled out properly.) What’s more, a number of business law firms, including Orrick and Gunderson Dettmer, are open to compensation models through which startups can postpone payment for up to one year SOLUTION: Time and money may be tight, but skip your getting your legal documents in order only at your own risk MANAGEMENT | 23 CHALLENGE 17: Deciding Whether to Outsource IT Fighting simply to survive, many startup owners find it daunting to manage hardware, software and other aspects of information technology Sure, small companies can tackle these issues in-house, but finding the right person for the job can be both time-consuming and expensive, especially in competitive markets such as Silicon Valley For this reason, entrepreneurs may want to outsource their IT needs We’re not talking here about farming work overseas Instead, we’re talking about hiring a technology services company to come in and manage certain aspects of a startup’s computing environment Depending on the business segment—and the size of the company itself— this approach generally is less expensive than hiring a dedicated IT pro The strategy usually works best for companies with less than 50 employees, says Bill Cox, president of Sonoma Computer Products, a Santa Rosa, Calif.-based ITconsulting company When a company surpasses 50 workers, the scenario typically requires too much desktop support Cox also notes that most outsourcing arrangements deliver a broader range of expertise than in-house hires “Startups may rely on an in-house programmer or engineer to manage their network part time while also juggling the skills they were actually hired for,” he says “Outside firms often have multiple engineers on staff to supply experienced support across a range of IT skills: server management, networking equipment, mobile device integration and things like this.” Of course there are exceptions to this approach If a business uses specialized equipment to interface with the network, or employs unique applications, or operates in high-security computing environments, “insourcing” might be a better option long-term Whichever option you select, remember this: It’s easier to move from in-house to outsourced, than the other way around SOLUTION: Most business owners may want to consider hiring a technology-services company once they meet the 50-employee mark MANAGEMENT | 24 CHALLENGE 18: Building a Product as You Build an Organization Even the most skilled entrepreneurs can juggle only a finite number of responsibilities at one time That’s why the ability to delegate is critical when grappling with the Herculean tasks of building a product and organization simultaneously Put differently, you need to know what you’re bad at “Maybe you’re technically excellent but you’re not a marketer, or [you’re] a showman and a visionary but commercially lacking Maybe your product marketing instincts are great, but your people management skills aren’t that strong,” says Dave Slutzkin, founding CEO of San Francisco-based website-auction service Flippa.com “You need to know yourself honestly so you can best shape the organization to fill the gaps,” Slutzkin says The way Slutzkin sees it, a product always is shaped by the organization that creates it “You need to get the right balance across the team,” Slutzkin says “This balance is the key to everything.” There’s one responsibility that entrepreneurs never should delegate when starting out: product quality Because every product your organization puts out will bear your name, it’s important that you single-handedly make sure quality stays consistent throughout the process Ultimately, you can delegate quality control to the team— but only after your company has leveraged product success to establish a reputation Until then, consider it one of your most critical tasks—both for the company’s immediate success and for continued success down the road SOLUTION: The overall goal here is use organization-building to create a better product—as well as a better entrepreneur So if you’ve hired 15 developers but no user experts, you’re going to end up with something technically genius that users dislike On the other hand, if you’ve got a strong designer but weak developers, you’ll end up with a pretty product that fails to work consistently MANAGEMENT | 25 STAFFING Challenge 19: Choosing to Hire Employees or Contractors Challenge 20: Competing for Top Talent Without Paying Top Dollar Challenge 21: Creating a Culture of Excellence Challenge 22: Building an Organization That People Are Excited to Join Challenge 23: Weighing the Telecommuting/Team Building Tradeoffs STAFFING | 26 CHALLENGE 19: Choosing to Hire Employees or Contractors Building a business of independent contractors—aka “1099s,” after the IRS form you send them—certainly has its benefits The 1099 tax form reports the amount paid for services to noncorporate independent contractors For starters, hiring these workers translates into lower overhead, since freelancers don’t require office space, benefit packages or other perks associated with fulltime employment Employers who hire these workers also aren’t required to withhold income taxes, Medicare and Social Security on the workers’ behalf—realities that translate into operational savings across the board When it comes to 1099s, they’re even are more scalable: You hire more of them during a high tide of work and hire fewer of them when business is slow But there are downsides to hiring these types of workers, too Kevin Hartz, CEO and co-founder of San Francisco-based event-promotion service Eventbrite, says that many entrepreneurs are looking to develop a corporate culture at their startups, and this culture starts with employees who are invested emotionally and financially in the company’s success “To 1099 people means you don’t value them as owners and partners in the business You just seem them as hired guns,” he says “You 1099 a service provider like a consulting shop, not the team members you want to work hard for you and help you build the next great thing.” Another downside to independent contractors is that they put their own interests above those of the company as a whole It’s their very nature Finally, of course, there’s the risk of misclassification in the eyes of the IRS Ward Ozaeta, president and CEO at San Diego-based Degrees Realty Capital, suspects companies could be on the hook if they erroneously label independent contractors as employees The contractor might seek unemployment insurance after his or her contract ends This would open up the company to scrutiny from the tax court, including “unnecessary investigations, tax audits and even lawsuits,” Ozaeta said SOLUTION: The bottom line is: when opting to staff your startup, choose wisely STAFFING | 27 CHALLENGE 20: Competing for Top Talent Without Paying Top Dollar Dollar-for-dollar, there’s almost no way small startups can compete with huge companies for talent in the nation’s hottest job markets Finally, a number of startups across the U.S have been known to sweeten job offers with peripheral perks that larger companies simply can’t match For this reason, it’s important to supplement competitive salaries with a host of other perks For instance, crowdsourcing design service 99designs in San Francisco gives most employees the opportunity to spend time in the company’s Australia office Employees receive four weeks of vacation time annually as opposed to the standard going rate of two Stock compensation usually is a huge part of these packages, giving employees more and more equity in the company the longer they work It’s an additional nonmonetary benefit that can truly provide one-of-a-kind opportunities for employees “If you go to a smaller company you’re much more likely to be working on a critical product or key campaign,” says Andy Kurtzig, CEO and founder of San Franciscobased online professional-services company Pearl.com “Knowing that you’re really making a huge impact on your employer and its ability to be successful makes it fun to come to work every day.” Many smaller companies also compete against the big boys for talent by offering flexibility “We are trying to keep parity between the perks for our Australian and European employees and the perks for our employees here,” says CEO Patrick Llewellyn “Add these perks to a good salary, fun culture, and coffee and beer in the office at all times, and this is a pretty great place to work.” SOLUTION: Consider stock compensation, flexible schedules and work environments and unique perks as you try to hire hard-tosecure talent Kurtzig notes that one of the senior execs at Pearl.com is a single mom with two young children and says the company has worked with her to create a flexible schedule in which she drives in early and leaves early enough to skip most of the evening traffic and be home in time for dinner STAFFING | 28 CHALLENGE 21: Creating a Culture of Excellence It’s one thing for your business to be successful It’s entirely different to approach day-to-day operations with a culture of excellence In the former scenario, satisfaction is achieved through profitability and growth In the latter one, satisfaction is more of an elusive ideal, something you (and your employees) are chasing inexorably Laura DePasquale knows all about the commitment required to achieve excellence She’s one of only 18 female master sommeliers in North America She’s vice president and general manager for the Florida division of Stacole Fine Wines a wine wholesaler and importer that’s part of Ashland, Virginia-based The Vintner Group DePasquale spent the better part of a decade studying to become an expert in her craft Over the years she has tried to instill in employees an appreciation for the work “I’m never satisfied,” DePasquale says She notes that after every big project, “it’s important to have a postmortem to discuss what we did well and what the opportunities for improvement are which includes the goal setting, direction and execution of the project.” They even make an effort to educate customers “By providing the highest level of wine education, we ultimately shine a spotlight on the excellence of our wine and spirits portfolio,” DePasquale says In general, other strategies for creating a culture of excellence include regular powwows to share best practices, intermittent performance exams, regular job reviews (with suggestions for the future) and clear career trajectories so employees have promotions for which to strive Amid all of this intense focus, it’s also a good idea to institutionalize levity Group retreats, free meals and seasonal parties help employees stay motivated They also guarantee fun SOLUTION: Consider asking yourself how driven you are with your business, and whether you are promoting a culture of excellence What’s more, DePasquale notes that she and her team continue to push education, requiring all salespeople to bone up on fine wines and wine regions of opportunity STAFFING | 29 CHALLENGE 22: Building an Organization That People Are Excited to Join Great places to work are built on a triumvirate of challenging work, generous benefits and day-to-day relationships that employees experience while on the job Assuming that the all-hands-on-deck approach to work at a startup is inherently challenging, this means entrepreneurs must focus on the latter two if they wish to create an organization that people are excited to join Engineering extraordinary programs is relatively straightforward Anything that goes beyond the baseline in a company’s home market will stand out While most startups don’t have money for free meal programs like those at Google, they might be able to afford one free meal a week, or similar perks such as good coffee and free beer Stellar benefit packages also go above and beyond the current norms Medical, dental and vision coverage is standard Additional days off and on-site childcare are an obvious upgrade Arguably the toughest of these tasks involves fostering fulfilling day-to-day relationships “Short communication channels that enable issues to be addressed quickly are a must,” she says “The less bureaucratic an organization is, the more excited people are to work there.” Of course there are other ways to create an organization people are excited to join Curran notes that a pleasant visual workspace is important, since employees spend anywhere from eight to 12 hours working each day Another key factor is salary While employees may prioritize non-monetary benefits as important reasons for taking a new job, competitive compensation is important from a practical perspective, and should not be overlooked SOLUTION: Consider asking yourself whether your own business is a place you would want to work at—even if you didn’t own it—and improve the workplace perks and communication environment accordingly Such a “perk” pertains to employees feeling that they are being treated fairly and that they own responsibility at work, says Barbara Curran, chief financial officer at Seattle-based online furniture retailer Curran Online STAFFING | 30 CHALLENGE 23: Weighing the Telecommuting/Team Building Tradeoffs There’s no question that a work force of remote workers translates into lower overhead for the mother ship the place could become a bugaboo when it’s time to crunch numbers Nearly a third of roughly 7.4 million businesses across the U.S already allow telecommuting, according to the nonprofit Connected Nation And a study sponsored by online meetings company Citrix Online suggests nearly half of the jobs in the U.S could be suitable for full-time or part-time telecommuting Jay Levy, a founding partner of New York-based Zelkova Ventures, says acquiring companies typically want acquisition targets to have employees in one place because it makes it easier to absorb them Still, just because working remotely is an economical option in general doesn’t mean it’s a strategy worth implementing across the board For startups, the challenges with this approach are twofold First, having workers spread across disparate work sites can impact creativity in a bad way While technologies such as Google Hangout and Skype have helped bridge these gaps, there’s no substitute for the creativity that emerges spontaneously from face-to-face brainstorming sessions and other physical get-togethers (Some allege that body language is a big part of that creativity, and this kind of nonverbal communication is lost when peering through a webcam.) “Some firms won’t a deal until all of the employees for the acquisition company are centralized,” says Levy, who also co-founded a Napa, Calif.-based startup named Uproot Wine Levy adds that perhaps the best approach is a hybrid, with a bulk of workers in a headquarters location and a handful of contractors who work remotely and come in for meetings from time to time “Above all else,” he notes, “flexibility is key.” SOLUTION: While telecommuting has advantages, it also makes sense to have many of your workers operating out of the same location at least some of the time Second, if you’re looking to build a company that is viable for acquisition, having workers spread all over STAFFING | 31 CLIENT RELATIONS Challenge 24: Raising Prices Without Alienating Clients Challenge 25: Sizing Up What to Invest in Client Face-Time CLIENT RELATIONS | 32 CHALLENGE 24: Raising Prices Without Alienating Clients There’s no way to sugarcoat it: Raising rates is one of the biggest challenges for a business owner You don’t want to cut off the proverbial hand that’s feeding you At the same time, you need to maintain a positive cash flow and grow for the future “That’s a key part of delivery—no surprises,” says Morse For Mark Morse, CEO of Minneapolis-based branding agency Morsekode, the best strategy is to communicate about impending changes, and be as transparent as possible “As there is a need to elevate prices, you go to key customers and let them know,” he says Some companies this with regular newsletters that subtly (and sometimes not so subtly) explain the overhead and processes that drive the retail price of products and services Others utilize social media to let customers know why the company is growing, how the company is doing it, and what rate increases truly mean for them Transparency could mean explaining to the client that health premiums are creating heavy cost pressures Or maybe the price of video equipment the company uses is going up “So many people forget that financial discussions are normal part of a relationship,” Morse says Customers don’t have to be happy about price bump-ups They just have to accept them Openness and honesty can make this process easier for everyone involved Another strategy for communicating with clients about pricing is to show them what’s “under the hood” of current pricing structure at every step of the way SOLUTION: One of the ways that Morse communicates with his customers is by inviting them to individual and independent quarterly review sessions During these meetings, Morse and his colleagues share information about everything from new technologies and new hires to potential price increases on the horizon Morsekode usually gives clients ample warning about these price hikes, if for no other reason than to make sure they’re in the know CLIENT RELATIONS | 33 CHALLENGE 25: Sizing Up What to Invest in Client Face-Time Face-to-face meetings aren’t mission-critical, but they certainly can make a big difference in client relations Just ask Heather Stouffer, founder of Alexandria, Va.based organic-foods company Mom Made Foods Stouffer once flew 10 hours round trip to have eight minutes in front of a prospective client the very same client who agreed to sign with Mom Made because she trusted them “I think [success is] just about really being sincere, trying to be yourself and telling your story,” she says “Storytelling in person is really important We are passionate and sincere [about our story] and we [tell] it best when we are face-to-face.” According to Stouffer, in-person meetings are even more important early in the relationship with a new client Because your clients have no experience working with you, she says, the face-to-face becomes an important part of making those clients comfortable “Even though you’re selling a product, they’re really buying you,” Stouffer says The key is to choose your client meetings wisely When deciding, always weigh the potential monetary and nonmonetary expenses of engineering a face-to-face visit with the potential monetary and non-monetary rewards On those occasions when you figure it isn’t important to meet clients in person, embrace technology-driven options such as videoconferencing, Google Hangouts and Skype “Anything that makes the experience more personal is going to end up benefiting you in the end,” says Jay Levy, a founding partner of New York-based Zelkova Ventures “Convenience is important, but business relationships are still about personal connections.” SOLUTION: Figure out a way to get at least some kind of face-toface interaction with clients, especially when you’re just starting to work with them Of course in-person get-togethers aren’t always practical Especially when money is tight, investing hundreds of dollars for every eight minute meeting isn’t sustainable over time CLIENT RELATIONS | 34 M att Villano is a freelance writer and editor in Healdsburg, Calif He is a regular contributor to Entrepreneur, and has covered startups and entrepreneurship for The New York Times, TIME and CIO He also covers a variety of other topics, including travel, parenting, education and— seriously— gambling He can be found on his personal website, Whalehead.com, and on Twitter @mattvillano GETTING STARTED | 35 ... Time to Write a Business Plan We’ve all heard legends about entrepreneurs writing the crux of their business plans on cocktail napkins at local watering holes (See Related: Five Businesses Born... (and maybe even customers) to know about the business you’re trying to build O’Leary thinks most entrepreneurs spend so much time harping on the business itself that they ignore the need to explain... investments in entrepreneurs,[accelerators] make investments in business plans.” (See Related Article: Meet the Entrepreneurs Behind the Booming Business of Games.) Another difference between the two