A recent article in the Wall Street Journal by Angus Loten, titled, “For Small Firms, the Check is Not in the Mail” really struck home with us here at Cazbah.  Angus’ article poignantly describes one of the potential downsides of being a supplier or vendor to big companies; the fact that you may not get paid or that you certainly won’t get paid on time.

“About 14% of nearly 5,000 entrepreneurs cited late payments — or customers that didn’t pay at all — as their biggest challenge in 2010, up from just 2% in 2008, according to a study released Wednesday by the Ewing Marion Kauffman Foundation of Kansas City, Mo.”

We hear the horror stories from our small business customers all the time about how they have been abused by their largest customers and their late payment practices. All small businesses have felt the burden of financial instability at the expense of their larger corporate customers at some point. This is a serious issue for all small businesses who depend on their receivables for cash-flow, which is most of them.

According to the National Federation of Independent Business, “in 2011, small businesses waited up to 46 days on average to get paid, six days longer than in 2010 and 10 days longer than 2006.”  This resonates with many of our customers, who are often battling to get paid. Bear in mind that these numbers represent the average, which means that there are late payment situations reflected in these numbers that are much worse.

Charles Broersma, CEO of Cazbah, relates his experience with a large corporation:

“Some big businesses have perfected, and frankly institutionalized, the process of holding out on and late paying their small business vendors.

I recall being invited to attend a Vendor Summit, which was an annual affair put on by a local big business here in Rochester (we’ll refer to them as ‘Company X’), some years ago. I felt privileged to have been invited to such a prestigious occasion. That is, until I got there and realized what it was.

The event kicked off with some fanfare about the bright future and new products that were being developed and the goals of the company and how we all had to pull together as a team, yada, yada. Then, the current CEO of the company, who was a mere Vice President of something or other at the time, got up and basically told a packed auditorium that they (the vendors) were going to lower their prices to ‘Company X’ by 10%, across the board, and that ‘Company X’ was going to extend their payment terms on all invoices to the vendors.

I was in shock. I had never heard of such a thing. I was sitting next to the president of a small manufacturing company that had been serving ‘Company X’ for years. His comment to me was that this was typical behavior. He clearly didn’t like it but, he wasn’t surprised in the least. He said, ‘what are we going to do? If we want the business, you have to put up with this unfair and unethical behavior.’”

It’s important to note that “Company X’ is a profitable, multi-billion dollar annual revenue company. It hardly seems like the type of behavior befitting such a company, to walk all over their small business suppliers.  But, as evidenced here and elsewhere, it happens all the time and is an accepted business practice.

It’s hard enough for any small business to succeed, let alone do so without getting paid! One would assume big businesses would be the most reliable, accepting a corporate responsibility to pay their bills on time. Clearly, this is not the case: “on average, big businesses – those with 1,000 or more employees – paid their bills more than a week past the due date on invoices.” This is the start of a vicious cycle, with small businesses unable to pay their bills on time, and so it goes…

‪We’d like to hear from you about your challenges as a small business.

‪Have you been stung by the big company late payment bug? Are your customers “holding-out” on you, and if so, for how long?

Kind of goes without saying, doesn’t it? I mean, who hasn’t heard how challenging the bank lending picture is for small businesses? We speak daily with small business owners, across the country in a multitude of industries. The story is always the same; banks aren’t lending and they have become extraordinarily conservative with respect to their loan / line approvals.

Worse yet are the numerous stories of banks coming back around to their small business customers to ‘reevaluate or review’ a loan package or line of credit. The banks have been doing this with regularity over the past year and a half primarily because they have economic jitters (and regulators breathing down their necks) and, the unconditional right to do so. Often times, this activity requires extraordinary amounts of work on the part of the business owners (a major distraction) in order to provide the bank with an updated inventory count or some other form of business valuation, to appease them enough to move their company off the hot seat.

Speaking as a small business owner, it’s especially frustrating to see all of this going on, knowing full well the significant contributions that small businesses make to the US Economy in the two leading areas that determine the health of the economy at large; real GDP (gross domestic product) and net new jobs created. According to the SBA, “small businesses create most of the nation’s new jobs, employ about half of the nation’s private sector workforce, and provide half of the nation’s nonfarm, real gross domestic product…”

So here’s the good news, sort of: HR 5297 – Small Business Jobs and Credit Act of 2010. This SBA bill, sponsored by Rep. Barney Frank of Massachusetts, is big news for small businesses. It passed the House but… we’ll get to that it just a moment.

HR 5297 stands to benefit small business in some big ways. First, it provides a 90% loan guarantee via the SBA, giving the banks the security that they need to make a loan. Compared to the normal 75% guarantee, it can mean the difference between getting the loan or not. Second, there are no fees associated with this loan package. This alone can save a small business tens of thousands of dollars! Third, the loan limit has been increase to $5 Million. The bill also allows businesses with up to $15 Million in net worth to qualify. The previous limit was $8.5 Million. In addition, small businesses with existing SBA loans that have balloon payments coming due can refinance their commercial loans through this program.

Now for the bad news: Politics…need I say more? HR 5297 passed the House of Representatives on June 17^th with 241 in favor, 182 opposed and 9 abstaining. A small margin for sure but, it passed. It has since stalled in the Senate due primarily to a Republican filibuster.

This post is not intended to be a political commentary. It’s my hope that our representatives in the Federal Government will have the good sense and the higher calling to put aside their differences and truly act in the best interest of the people by passing this bill.

Monday, September 13^th is the day Senators head back to Washington after their summer recess. Waiting for them, front and center, will be HR 5297. As you can imagine, there is a lot of energy and anticipation surrounding this particular bill. With all of its attributes and the fact that it could be very profitable for the banks, it stands to be a win-win-win. Small businesses win, they get funded. Banks win, they make profitable loans. Government wins, they serve their constituency, create real GDP and jobs.

The SBA lending community (approved banks) has started to come alive recently and, according to several business owners that I have talked to across the country, banks are now reaching out to their small business customers in order to reopen funding discussions. Presumably, this is in anticipation of the passage of HR 5297.

If you have not heard from your banker recently and you are interested in seeking funding through the SBA, you owe it to yourself to put a call in to him or her and find out what they are doing to prepare for the potential passage of HR 5297. More importantly, you should find out what they can do for your small business specifically.

The entire 122 pages of  HR 5297 is available.

I had a discouraging experience a moment ago… I was checking my LinkedIn profile where I have a feed from our company blog – Cazmunity. My discouragement came from the number of days since I last posted. Ouch! It has been way, way too long!

This past year has been a very busy year for us at Cazbah. We actually finished the year ahead of the previous year by about 20% which, in the most severe recession that anyone can remember, is a pretty good thing. We also had our best new customer sales year in our history. It’s clear that more and more specialty small businesses are realizing how important the Internet is to the success of their businesses.

Our customers have continued to reward us with their loyalty as well. The Cazbah business model is predicated on our client’s ultimate success and their willingness to make a voluntary renewal of their business relationship with Cazbah year after year. The exceptional renewal rate and feedback we receive is indicative of our clients’ trust.

The true value of the Cazbah experience is in the personal relationships that our dedicated account managers establish with their clients. As is always the case in a trust-based relationship, our clients confide in us and share their fears, concerns, hopes and dreams for their businesses.

For years now my customers have asked me about video on their websites and how that medium might be used to compliment their products and services sales. Until recently, I have always been a bit cautious because of the time and cost of producing videos versus the benefit received from such a marketing activity.

In the last year we’ve seen a number of tools introduced into the marketplace to increase value while decreasing the amount of time spent producing videos. Social media sites like YouTube and Facebook have made it very easy to upload videos and share them. Additionally, video camera and even cell phone technology have made it much easier to create videos and get them onto the internet for viewing.

Why
So why would you ever want to create a video for your ecommerce web site? You want sales. After all isn’t that why you have a commerce site? Video can give you a real competitive advantage by sharing your knowledge and advice on how to get the most out of the product or service you are selling. This will attract viewers who,if done correctly, can become customers.

How
I like to use a video camera called Flip Video. This inexpensive video recorder is small and easy to use. It creates quality video without a lot of complexity. Most importantly Flip Video has very easy to use software for editing and uploading your videos. Once you have shot your video you need to decide where to upload it. I use YouTube as the hub for my customer’s videos. YouTube allows you to store your videos for free and has a number of tools to allow you to promote them. Once I have uploaded the video to YouTube I can embed that video on my customer’s web site, blog, Facebook, etc.

Results
In the end the reason we do this is because we are creating value. We are showing the world what we know about our products and services so we can build trust and ultimately make more sales. This is precisely what a number of our clients have done. For instance take a look at my customer’s video listed on the Google search page for the term “saniguard spray”. My customer doesn’t just sell Saniguard spray, he creates value by showing how to use it properly. This video has done a lot to increase their sales of the Saniguard spray product line. Lastly I will leave you with a video that took me about an hour and a half to shoot, produce, and upload. I used a Flip Video, uploaded to YouTube and then embedded the video to my customer’s appropriate product web page. The “video value” my customer creates in this video will be sure to increase his sales. How can you increase your “video value”?

read more

(The importance of your differences cannot be overstated.)

The short answer to this question is, you do! If you want to do more business, more effectively on the Internet, then you definitely need a Unique Value Proposition.

The term Unique Value Proposition can be best understood by breaking it down into its parts.

Unique refers to the characteristics of your product or service offering that distinguish you from as many of your competitors as possible. Think about it. What is it about what you do that sets you apart? Take the time to really understand how you are different from your competition. Then, write it down!

Value is the intrinsic worth of your offering to your customers. In other words, it defines what your customers get for their money. If you’re having difficulty with this one, ask your customers to describe how your service or product has helped them. Take this input and translate it into several concise statements.

Webster defines Proposition as; a statement containing only logical constants and having a fixed truth or value. That pretty much sums it up! It is your factual and truthful proposal to your customer. Being able to qualify and quantify your claims is very important and makes your Unique Value Proposition that much stronger!

The Internet is a tremendous resource for gaining a better understanding for the UVP concept. There are numerous examples that you can find online through a search using any search engine, on the terms ‘Unique Value Proposition.’ Using the results of your search as a model, construct your own Unique Value Proposition.

Documenting your Unique Value Proposition and making it easy to understand is very important. As with goals, the elements of your Unique Value Proposition are not real until you have written them down. Once you have done so, place them somewhere that you are sure to see them. Reading them on a regular basis is an excellent test of their accuracy. Ultimately, your customer will determine how well you have captured your Unique Value.

As an aid in this process, ask yourself this question: “What is it about what we do that makes us different (better)?” And, “Why should anybody care?” Combining your honest answer to these two question with some objectivity and customer input will get you far along the path to identifying and documenting your Unique Value Proposition.

Use mind mapping to capture your Unique Value Proposition. Write your product or service features in the center of separate pieces of paper. Once you have documented the features in this way, draw a circle around each one. Then, write the benefits that your customers receive from that feature in smaller circles, surrounding the center. Connect the circles with lines, like spokes in a wheel. When finished, evaluate them all to ensure that they accurately represent your offering. Compile each feature map page into one sentence. Then, combine the sentences into an itemized list or paragraph. Congratulations, you have just created your Unique Value Proposition.

As I mentioned before, your customer will be the ultimate judge of the accuracy of your UVP. Take the time to test your newfound focus by sending it to some of your better, longer term customers to gain their insights. Their input will provide you with the finer points that will allow you to refine and sharpen your Unique Value Proposition even further.

All The Business!

We’ve been at this specialty small business online marketing game for the better part of 10 years now, and we have hundreds of successful specialty small business customers, for whom we generate literally tens of millions of dollars in new revenue from the web…

So here’s what really chaps my set-upon; I would have to say that every customer (to a one) that we’ve gotten (and still have by the way) over the years, has had at least one (if not several) bad experience with another web development company or so-called guru or expert, before we’ve had the pleasure of their business.

In most cases this has cost them tens of thousands of dollars in fees for a mediocre website and whatnot, plus the loss of revenues, i.e., the money they should have made but didn’t. This can easily get into the hundreds of thousands of dollars.

Being completely objective, which is difficult for me to do in this particular case, this is a blessing and a curse:

The Blessing — There are an ever increasing number of hucksters out there putting out an incessant commentary on the virtues (not that they would know virtue if it bit them) of Internet Marketing, in all of its varied forms and functions.

That’s good, because whether they realize it or not, they are advancing the cause, so-to-speak, by raising the awareness of the relatively uninitiated small business owner or entrepreneur for all things Internet. If there is anything we can use more of it’s awareness.

The Curse — These maleficent marketers who shill, bait and switch, sell a pig in a poke, have no concern for the bad faith and jaundice they create in the industry as a whole. I can’t tell you the number of times we hear things like, “You guys are all the same.” Or, “I just talked to a group that does exactly what you do.” Or, “I spent 2o grand with the company who did my website and now they want even more money to fix it. Why should I trust you?”

That statement may seem optimistic considering all the negativity in the traditional media right now. But, it is something I truly believe. First, access to top level employees is high and getting higher. Your business gets to be at the forefront of helping to solve the unemployment dilema.

Next, a lot of your competitors are sitting on their hands waiting for something to happen. If you are out there making something happen, you have a huge advantage. I think Winston Churchill’s statement during WWII sums up our current state pretty well, “This is no time for ease and comfort. It is the time to dare and endure.”

This leads us to the next advantage. Your business is part of the solution. Small business is the back bone of the American economy. Our own President acknowledges this. So, running a well oiled successful small business, in today’s turbulent economy, only sets you up for greater success as the economy moves forward into more rewarding times.

Now, do I think it is going to be easy? Absolutely not! It’s going to take creativity, thought, planning and implementation on a huge level. Your business is going to need to have a rock solid strategy from top to bottom. In today’s business environment, any hole in your business model will quickly lead to a sinking ship.

So what can you do as an entrepreneur to ensure success? First, get a strong business plan. Plans help you set a course for success. They show you were your strong points are and where your challenges are. Next, be willing to make adjustments based on the information you gather that will impact your business plan and create a strategy for implementing your plan. Finally, follow through with the plan. I have seen more small businesses than I care to remember set themselves up for failure based on their lack of follow through. They have a great plan, but never implement it and end up dying off or just winging it. In today’s economy this is truly a recipe for disaster.

Lastly, as Nike likes to say ‘JUST DO IT’. Whatever it takes, do it! Don’t be afraid to ask for help there are a lot of places out there to get help. You can go to the Small Business Administration, the Internet has a ton of information and advice, local business groups, or even other local business owners themselves. Business owners can be the greatest resource because in many cases, they have been there and done that.