The Key to Small Business Contracting Success

“Above all, success in business requires two things: a winning competitive strategy, and superb organizational execution. Distrust is the enemy of both. I submit that while high trust won’t necessarily rescue a poor strategy, low trust will almost always derail a good one.” ~ Stephen M.R. Covey

Abamath Series – This is the 6th in a series of blogposts by Luke Schlangen, Founder of Abamath. (read the 1st , 2nd3rd4th and 5th)

Signature

 

Some Businesses Will Happily Neglect Your Best Interests

Being a small business often leaves you with less negotiating heft. You aren’t anyone’s biggest client. You don’t have a massive legal team. Sometimes the way you’re treated is just terrible, but you do have some control over how much of that treatment you allow.

6 days after we opened our first location, we received a letter that the mall would be undergoing serious construction within the next year. Not once during contracting did the landlord mention the multi-million dollar construction project that they had been planning for over a year. They had completely misled me, and when I asked for more information, they had no comment. We would be required to move some time, but wouldn’t know when.

Obviously that was awful. Fortunately, my friend’s mother had encouraged me to push for 60 days construction notice instead of 24 hours, and for a way out of the contract. So, given the chance to leave early, we did. We officially left on December 31. We timed things correctly. Every business that stayed was given a letter on January 1 saying they had 60 days to move.

Thanks to my contact, we dodged a much more devastating blow, but needing to relocate after just opening is not good for business. Granted, most of our clients stuck with us, and we moved to a nicer place with lower rent, but we got lucky.

The Work Starts Before the Contract is Drafted

I was lucky to have a legal connection like my friend’s mom, but the point isn’t only that you should read the small print (of course you should). At the end of the day, being forced to move 5 months after opening is pretty miserable, even if the contract gives you some protection. That’s not good enough.

The point is that you should work with people and businesses you can trust. Since that initial misstep, I have been working almost exclusively with business partners who have been referred to me by trustworthy people.

Use Your Network

If you have a friend who does business in your area, ask them who they work with. What software do they use for accounting? Who is their insurance agent? They might run a completely different business, but all businesses have some basic needs. Before you move into a new location, ask other tenants what they think of the management. Life is a lot easier when you can stop worrying about having the rug pulled out from under you. This is where that all-important “network” becomes your most valuable asset. Use it.

Trustworthiness might seem subjective and fluffy, but it can save a lot of very real money.

Luke Schlangen is the founder and president of Abamath: A Better Approach to Math

Luke Schlangen, Founder of Abamath
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Are You Wasting Your Ad Dollars?

Abamath Series – This is the fourth in a series of blogposts by Luke Schlangen, Founder of Abamath. (read the 1st , 2nd3rd and 4th)

I hate losing money (you too?). There are few things as frustrating as throwing money at advertising and seeing no impact on your customer base. Here’s the rundown on the first three months advertising my math tutoring startup.

  • Method: Local Newspapers, Google adwords, Facebook Ads
  • Cost: $15,000
  • Timeline: 3 Months
  • New Clients: 1

You read that correctly. I only gained a single new client from the ads. You could argue that we didn’t execute correctly or maybe it wasn’t the right channels. Regardless of why it failed, a small company can’t afford to spend and see no conversions. It was time for a change.

Advertisements aren’t the only way to advertise.

On January 25th, we hosted our first “Abamath Invitational,” a 90-minute math competition for middle school students.  This gave me a great excuse to talk to the schools in the area and spread the word. On the day of the event, 8 potential clients and 5 current clients came to Abamath and had an awesome experience.

  • Method: Math Competition
  • Cost: $500 (including my time, employee time, and the computer)
  • Timeline: 1 Month (including planning)
  • New Clients: 4 and growing (already paid for itself)

Bonus: Kids from the area experienced math insanity, and the winner got a brand new laptop!  I got tons of pictures for our website, and an excuse to build relationships and credibility with local schools. I also had the chance to plug our robotics league.

Everybody wins.

Abamath Competition

Abamath Competition

Give out free high-fives on a street corner, smash a car, sponsor a mission to Mars. Do anything! Companies like Red Bull have mastered event marketing! (anybody heard of Flugtag?) The good news is you don’t need to be Red Bull to pull off an event. This applies to any business, you just need to get creative.

The Bottom Line

Give an advertiser $15,000 and you can get a couple thousand views. Spend $15,000 on a pizza party, and you can get a couple thousand real people in your doors to talk to and interact with on a personal level.

Spend your ad dollars on awesomeness, not on clicks.

Luke Schlangen is the founder and president of Abamath: A Better Approach to Math

Luke Schlangen, Founder of Abamath

Trust Yourself and Keep It Simple

“If you can’t explain it to a six year old, you don’t understand it yourself.” ~Albert Einstein

Simple-Pricing

Abamath Series – This is the fourth in a series of blogposts by Luke Schlangen, Founder of Abamath. (read the 1st , 2nd and 3rd)

Be Careful Who You Listen To

As a new company, you will do anything to get even a single sale. Don’t let that temptation degrade your company.

I started Abamath with the idea that people wanted something better from tutoring. I believed there was more value in tutoring as a gym-style membership. One price, unlimited tutoring. Students can come in whenever they want help, not pre-scheduled times whether they need help or not. What’s not to love?

People had never seen gym-style membership tutoring before. They kept insisting that they wanted an hourly rate like other centers. So finally, I caved. I offered hourly options. How many new customers did that net me? Zero.

Nobody actually wanted that option, they felt entitled to it. The people who suggested it weren’t potential customers, just people who thought that is how a tutoring business should be run.

We offered private tutoring for $49/hour and membership for $199/month. Just having these two products caused a lot of confusion. Did that mean $199/month and then $49/hour on top of that?

Help Customers See Your Value

If you’re still experimenting with price (and who isn’t), here is a fun experiment to run.

When someone tells you to offer something you don’t, ask them, “If we did offer that, would you buy it today?” It’s a simple test to tell the difference between serious customers and those with no intention of buying.

Unless they’re using that option with a competitor or would consider buying it today, they probably aren’t going to pay you for it. Cluttering your communication with confusing pricing destroys the clarity of your key message: your value.

After 3 months of messing with it, I was done. We took the hourly tutoring option off the brochure. When potential customers are considering our service, we offer our one-week free trial membership to see if an Abamath membership is what they want. It always is.

Keep it simple. It’s not easy when you feel potential customers are slipping through your fingers, but you need to trust your value proposition.

Simple and easy aren’t synonyms in business, but complex and difficult definitely are.

Luke Schlangen is the founder and president of Abamath: A Better Approach to Math

Luke Schlangen, Founder of Abamath

How To Make Your Customers Love You

“Your most unhappy customers are your greatest source of learning.” ~Bill Gates

Customer Love

Abamath Series – This is the third in a series of blogposts by Luke Schlangen, Founder of Abamath. (read the 1st and 2nd)

Think about building relationships, not prepping transactions.

Imagine everything you hate about the companies you deal with regularly: the 2-year contract, the hidden fee, jumping through hoops, and we could all keep going. I decided Abamath would do none of this, but we made one mistake:

We put in place a pretty standard practice with free trial periods. We required customers to give us their credit card to sign up for the free trial, then if they didn’t cancel, we would charge them as though they were continuing service. This is pretty standard practice today, and we thought it made sense. What’s the harm?

The harm is three-fold:

  1. You lose potential customers. They’ve played this game before, and they don’t like it. We had a handful of customers halfway through signing up for the free trial, and they simply walked away when asked for a credit card.
  2. You hurt your brand. Think about the times you have had a mysterious fee pop up or you couldn’t return an item or cancel a service because of some stupid policy. The integrity of the brand you are dealing with disintegrates instantly. You feel lied to because you missed a detail.
  3. You create enemies instead of allies. When customers feel like you have taken money from them unfairly, they will come to demand it back. Instead of providing awesome service to your paying clients, you’re spending your time explaining arbitrary company policies to angry ex-customers.

Treat your customers with respect

The solution is easy. Don’t play games.

Creating goodwill and building relationships with potential customers is the correct way to get them coming back and paying happily. Keeping an open door with customers who decide they no longer need your service is important, and getting referrals is essential.

It’s scary going a few months losing money, but you don’t get customer love from cheap tricks. It’s ok to lose the pennies when customers abuse promotions; win the dollars that come with customer loyalty. Those are the dollars that will make your business a success.

Bonus: you don’t spend your time being told how terrible you are.

Luke Schlangen is the founder and president of Abamath: A Better Approach to Math

Luke Schlangen, Founder of Abamath

The Truth Shall Set Your Business Free

“The man who can keep a secret may be wise, but he is not half as wise as the man with no secrets to keep.” ~E.W. Howe

Top Secret

Abamath Series – This is the second in a series of blogposts by Luke Schlangen, Founder of Abamath. (read the 1st)

Secrecy Is a Bad Policy

Abamath is the only tutoring center that uses computers instead of worksheets (yes, it is 2014 and that was a real sentence). Math worksheets are boring for students, and computer games are awesome. It is a significant competitive advantage and I spent the first month running my business scared that someone would steal the idea.

We stuttered whenever people asked what math tutoring software we were using. This hesitation to share our methods with customers was scaring them away. It took a month, but we finally figured it out: When you’re small, your competition doesn’t care about your secrets. They have their own way of doing things, and until you start taking students from them, they don’t want to change.

Honesty Empowers Your Employees

Being honest with customers is crucial, but honesty should really be your default policy. Your employees will always know what to tell customers (the truth). When your customers ask about your pricing, your employees can tell them the truth: paying rent, paying employees and providing a high quality service costs this much.

Don’t forget to be honest with your employees. The whole truth. Not just, “We’re doing this…” but “We’re doing this because…” One silver lining to losing money for the first few months is your employees can see you working your butt off and getting paid a lot less than they are. Sharing the cash flow with my employees has also empowered them to cut costs and improve the business, because they can see the problems. As the business grows, you may want to reevaluate whether to share your multi-billion dollar salary (because obviously you’ll get there in a few years). For now, show them you’re in this together, and your company will benefit.

 

Luke Schlangen is the founder and president of Abamath: A Better Approach to Math

Luke Schlangen, Founder of Abamath

 

Drop Your Ego and Improve Your Ideas

Abamath Series – This is the first in a series of blogposts by Luke Schlangen, Founder of Abamath.

If you are arrogant enough to start a business, your ego is probably over-inflated… like mine. You feel so strongly that your ideas are better than others, that you have decided to go head-to-head with other competing companies.

Naming a Company

When I purchased abamath.com, I was going to call the business “Abamath: Amazingly Better At Math”. I thought it was cute and catchy. I sent the idea to a couple friends and one suggested I name it “A Better Approach to Math.” It seemed more professional, but I really thought my idea was better. Planning to prove myself right, I polled a few other friends on which name they liked better (without telling them which one was mine).  The results were a resounding “No” to my brilliant idea.

I had spent a week trying to figure out the perfect name and my friend topped it with a 10-second suggestion! I thought I was so smart, so clever, but the results showed otherwise.

Discussions at Abamath

Discussions at Abamath

Drop The Ego

We all like to think our ideas are the best, but it’s better for your business to understand that they’re not. You may be the person that started the company, but if you have 2 bright, invested employees, your ideas will only be the best ideas one third of the time (and the odds only shrink as you grow).

It’s hard to let go of your original ideas, but if you want your company to succeed, you have to get good at being wrong.

How To Pick Up Better Ideas

I’m not simply suggesting you allow employees to come to you with their ideas. Force them to criticize your ideas and have them tell you why. Requiring confrontation is the only way to let your employees know you are sincerely looking for feedback, and that you can handle the criticism. It also helps everyone (including you) understand why these decisions are being made.

A genuine critique will invite better ideas.

“Change or die” – It’s a scary mandate, but the good news is that for a small company, flexibility is your edge. Make that your advantage, not your downfall. Recognize great ideas when you see them, and don’t cling to what you thought was best. After all, you can always take credit for recognizing a great idea.

When you think about it, I came up with “better” and “math” so the name is still half-mine, right?

 

Luke Schlangen is the founder and president of Abamath: A Better Approach to Math

Luke Schlangen, Founder of Abamath

Luke Schlangen, Founder of Abamath