The test of a good salesman is
The toughest part in sales often is getting in the door.
How to get an appointment with a prospect is a
frequent question by business students and new business owners, says Bob
Reiss, author of Low Risk, High Reward.
Reiss says the buyer finally called him back.
With all the conflict and animosity that seems to exist between distributors and suppliers, we sometimes tend to forget that we're all in this business together. Here's a back-to-basics approach to supplier/distributor relations by a business veteran who's been involved in more than a dozen successful start-ups.
Almost every company,
whether product-or service-oriented, is dependent on suppliers. Many
people seem to get this supplier issue wrong. They feel that because
they write the order, they're in the dominant position and can act in
unkind and unfair ways toward their suppliers.
How Suppliers Affect Your Business
Let's briefly look at all the ways suppliers can impact your company:
Partnering For Profits
the benefits your supplier can deliver to you, it's important that you
be open with them. Include them in some of your strategy meetings,
invite them to break bread, visit their offices, invite them to meetings
with your people - including company wide ones or office parties or
picnics. In other words, work hard on building a good relationship with
Protecting Your Firm
As you grow,
you may find that it's not prudent to rely on one supplier. If that
supplier has a strike or a fire, you don't want to be in a position
where you'd be shut down, too. So develop a second or multiple
suppliers, and don't be embarrassed to tell your key supplier that
you're doing so. They will appreciate your honesty. If they're savvy,
they'll also know you need backup suppliers on key products or services
if you are to raise money, The lenders are sure to ask this question.
How to Be a Valued Customer
assume, of course, that you're a customer that somebody out there wants.
Don't take this for granted! In order to be a valued customer to your
suppliers, here are a few good things you should do:
Provide adequate lead times. Try to give suppliers as much lead time as possible on your orders. Unless there's a good competitive reason not to, share with them your honest projections of your needs, and then keep them abreast of any significant changes in that estimation. In developing your lead times, try to be knowledgeable about your suppliers' production methods and needs.
your good suppliers aware of what's going on in your company. Tell them
about changes in key personnel, new products, special promotions, new
markets and so on. Many times, you'll find that good suppliers can be
helpful to you in developing new business.
EVER THE ENTREPRENEUR
EVER THE ENTREPRENEUR, one author helps market his own book.
Robert S. Reiss, 69 years old, of Boca Raton, Fla., has founded 14 small companies in his career -- mostly to sell novelty products. By becoming expert at risk reduction -- which is often counterintuitive to entrepreneurs -- he has also become a regular guest speaker at the Harvard and Columbia business schools. Now he has authored "Low Risk, High Reward," a guide to starting and expanding small businesses "with minimal risk."
Though published last month under the well-known Free Press imprint of Viacom Inc.'s Simon & Schuster unit, the book runs the obvious risk of being just one more title in an all-too-crowded market. But Mr. Reiss -- unlike most authors -- aims to increase the odds of success by assuming a big role himself in marketing the book.
Indeed, he says he bought 2,000 copies himself (of about 14,000 printed) -- more than were ordered by any single retail chain or distributor. Now he is trying to resell the copies in channels outside the book trade, such as banks, insurance companies and mail-order catalogs for general merchandise.
To get a price break from the publisher, Mr. Reiss assumed more risk than stores and distributors do: He gave up the right to return copies. (He says the potential reward is worth the risk.)
The author says he told his publisher: "You have to learn new forms of distribution. I'll be the guinea pig. You'll learn from me."
From the Business Advisor-Wells Fargo
Getting the first order is good, and filling those orders is good. But getting the reorder--that's the real beginning of your business.
Success Times 14
One successful business of your own does not make you an entrepreneurial genius, says Bob Reiss. The Boca Raton, Fla.-based entrepreneur has been involved in 14 start-ups in his 40-year career, including a pencil company, a national sales rep company, three game companies (remember "The TV Guide Trivia Game?"), a consulting company, a personalization company and a watch company.
Reiss's book, Low Risk, High Reward: Starting and Growing Your Business with Minimal Risk, addresses methods for identifying, managing and reducing risks in virtually every facet of business and outlines the attributes, or personal qualities, he feels most successful entrepreneurs possess. The number one attribute is passion for their work. "Every other attribute is learnable," Reiss says, "passion is innate."
Seize the Opportunity
Reiss is the perfect example of a serial entrepreneur identifying opportunity and jumping into action. When the famed Rubik's Cube was taking America by storm, Reiss noticed that manuals on how to solve the puzzle were not available in stores that sold the product. Ever the opportunist, he contacted the publisher of the manual, asked to purchase them on a guaranteed sales basis in bulk quantity, and then distributed them to retailers across the country. Reiss sold more manuals than expected, and everyone enjoyed a healthy profit.
Do Your Homework
However, Reiss knows the difference between a genuine opportunity and wishful thinking. Falling in love with your idea--or product--can blind you to the reality of the marketplace, according to Reiss. Even though entrepreneurs and small business owners may not have the means to do market research, "you have to study your market--you just have to," he says. "Is there even a market? Many people I ask don't know the answer to that question, and that's why they fail."
Reiss currently spends time traveling and speaking to enterprising and energetic young entrepreneurs at various colleges and universities around the country. One lesson he always mentions applies to reliable market knowledge. "I always tell them that getting the first order is good, and filling out those orders is good," he says. "But getting the reorder--that's the real beginning of your business."
up? Banks probably won't take a risk
Q: I have been completing
loan applications, writing and reviewing a business plan, and pondering financial pro formas in
an effort to acquire funds to start my own business. Obviously it would be great if I
had an angel investor or a rich relative. Start-up businesses are not, evidently, an exciting pursuit
of most banks. Good credit and some collateral mayor may not make it for me.
A: You're on the right track.
Tap into your own money. This is a good idea because outside investors will be reluctant to lay their money on the line if you haven't put up your own, Reiss says. Do you own a home? You might be able to obtain a low-cost home equity loan to use for your business.
The most inexpensive route you can go, but be careful: you could put your friendship or family relationship in jeopardy if the business isn't successful. Make sure friends and family members can afford to lose the money they invested in your venture and understand the risk.
Reiss says not to plan on
banks until you've developed a successful company. With start-ups, the
Small Business Administration won't back a loan unless the principal
comes up with at least 20 to 30 percent of the required capital, Reiss
As long as you keep up with the minimum payments --or preferably can pay more -- you can develop a good credit record for your business. That will help you secure a more formal line of credit later, Reiss says.
Not an option for start-up
money, but can be a good source as your business operation grows. These
are companies that give cash advances against your receivables. Reiss
says for companies like his that have been light on assets and heavy on
receivables and inventory, factors have been the way to go.
An angel is just what you
need. This is a wealthy individual who provides capital in return for a
piece of the company. "it very hard; you've got to network,"
Reiss says. He suggests making a presentation in front of groups like
the Gold Coast Venture Capital Club in Boca Raton.
Way to Grow Your Business
Most businesses make a simple mistake in the growth phase: they expand before establishing profitability.
"They spend their
money on fancy new showrooms, or cars or more employees," says Bob
Reiss, the author of the new book, Low Risk, High Reward: Starting and
Growing a Business with Minimal Risk (The Free Press) with Jeffrey L.
Cruikshank. "People tend to lose sight of the object of being in
business, which is to make a profit." Reiss believes businesses are
too often evaluated on sales figures alone. But if they're not
profitable, they will eventually run out of cash and "that's what
causes most business failures," he says.
Start-Up Expert Bob Reiss
The guts, the glory, the risks. It's all there in the world of entrepreneurship. The trick is to figure out if you're ready to handle not only the thrills and chills of starting up, but the long-term challenges of keeping one step ahead of your customers' needs.
In Low Risk, High Reward: Starting and Growing Your Business with Minimal Risk (Free Press, $27.50), author Bob Reiss, along with co-author Jeffrey L. Cruikshank, methodically explains what you need to start a business, from entrepreneurial traits and numeracy (dollars-and-cents sense) to managing risk and getting your first order. We've asked Reiss, who's also the founder of his own company, R&R Recreational Products in Englewood Cliffs, New Jersey, to share some of the knowledge he's gleaned from his real-world entrepreneurial experiences.
Entrepreneur.com: What are some key attributes of a successful entrepreneur?
Bob Reiss: The first one is passion. Of all the attributes, this is the only one I don't believe you can teach. Everything else is learnable; passion is innate. If you don't have a really strong passion for your idea, don't go ahead because you're gonna have to put way too much work into this thing and it'll feel like work. If you have passion, it doesn't seem like work. It's fun.
I think another attribute is curiosity. Curious people are much more creative. Asking questions really triggers innovation, and as you know, not only in small business, but even in large corporations, innovation is key.
Another interesting attribute is a high energy level. I interviewed about 27 entrepreneurs for this book, and almost everybody had very high energy levels and they all seemed to work out. I always thought I was crazy because every time I traveled in the early days before hotels had health clubs, I'd run around the parking lot at night, and people would look at me like I was a little bit crazy. But I'm convinced now that the better shape you're in, the better your mind works. You need less sleep. And particularly in a small business, you're the key person and you have to take care of that engine.
I think flexibility goes without saying. You have to be flexible because things change so fast, and in the new Internet economy, that's even truer. The only caution I have with flexibility is you want to be flexible, but you do not want to be flexible with your core values. Whatever your true beliefs and your mission are, you don't want to deviate from that.
It's good to have a little bit of an ego as long as it's under control because that will give you the self-confidence you need. You have to be mentally tough because you're going to have lots of setbacks. When you get a setback, you got to come right back and do better.
One of the things I'm big on is integrity, and you've got to start that from day one in your business. People love to do business with and will help people they trust. In the book, I list 35 ways you can build trust, just to give people an idea. Listen to people you deal with. People trust you more if you listen to them. You want to admit mistakes right away. Another thing I'm big on is paying your bills on time. Like a maniac, pay your bills on time and suppliers will take care of you. Don't steal people's ideas. Never BS. If you don't know anything, tell them you don't know anything. These are the little things that will build trust over time.
Entrepreneur.com: Why is creativity so important for an entrepreneur?
Reiss: You're going to have to innovate if you're starting a new company. A lot of people think the word "creativity" has to do with being naturally good at art and design. You need to be just as creative in every phase of the business. You have to be creative at raising money. [You have to decide] what your product is going to be. After all, none of us really ever reinvent the wheel. We're [just] coming up with new ideas and trying to do something a little different. We have to differentiate ourselves from the other person to get started.
To have an organization that's creative, you have to work at it. One of the things you don't want do is to hire [people who are similar to you,] which we tend to do. You want to hire people who are different than you because you want to have people speak freely. You have to be able to listen to what you think are hair-brained ideas because sometimes there's a good one. And you want to encourage all the people you buy from to give you their ideas.
Many people say they have an open-door policy. Yeah, but the doors are always closed and most employees don't believe you have an open door. So you've got to work and convince them you're open to all their ideas because their ideas can create all kinds of new products and ways to do business that are profitable.
Entrepreneur.com: In your book, you dispute the idea that a business idea has to be totally original.
Reiss: That's a myth that stops a lot of people who really want to be in business and are probably very qualified. They think they have to have this brilliant new idea. It's really hard to do. Look at it like a Scrabble game. You're playing Scrabble and you have a five-letter word that you got credit for. All I do is add one letter to it, which changes the meaning of the word, and I get credit for all the work you did also. It's the same thing in business. Come up with something a little different. Take an existing idea and sell it to a new channel that no one ever thought of before. So you need to look at different ways but you don't need earth-shattering ideas to get started because you could wait a long time for that.
Entrepreneur.com: You say that knowledge, confidence and experience can mitigate risk. What else can mitigate risk?
Reiss: There are two kinds of risk. One is risk to the business and the other is risk to your personal ego, which is mainly risk of rejection, and a lot of people confuse the two. I'm not so concerned about the risk of rejection. Many people will not go ahead because they're afraid their idea will get turned down or someone will say it's stupid. Those kinds of risks are really opportunities to learn.
[The risks I'm more concerned with] are those that can damage and hurt the whole business. And when you look at those risks, it's kind of like beauty: It's in the eye of the beholder. Two people look at the same exact situation. One person sees calamity, and one person sees a great opportunity to make a lot of money. And the difference is one person has the experience and knowledge base. They understand the business, see how things can happen and can solve the problem.
The other way to reduce risk is to think of ways [to lessen the amount] of money your original plan called for. For example, let's look at a lot of the expenses you probably put in your initial business plan: I'm gonna hire salespeople. Why hire a sales force to start in a small business? Why not use sales reps? You don't have to pay them the salary or benefits. You pay them strictly commission based on production. If they have no sales, you have no expense. Instead of buying a fax machine and other office equipment, why not lease it in the beginning? Instead of going national with a new idea, why not test it in a small locale? Work out the kinks before you put all your money in it.
Entrepreneur.com: For someone past the start-up stage, what are things to take into account for planning the future of the company?
Reiss: I'd like to see two titles in the company: vice president of today and vice president of tomorrow. The problem is that small-business owners can't afford that, so the same person is wearing two hats. While you're putting out fires and trying to survive, you [also] have to think about tomorrow and that's a difficult thing. But you do have to plan for tomorrow or it's gonna come up at you unexpectedly. You're gonna need new product.
You've got to work hard at getting out of your day-to-day environment where you're dealing with all these immediate problems. Get away for a weekend. Talk to other entrepreneurs. Try to go to trade association meetings. I like to go to other trade associations. I like to go to department and chain stores and shop areas of business I'm not in to see how they package here, how they do things there. Go to the apparel area and see what the colors are. What are the next colors for this fall? Try to make contacts with people who can tell you that. See what other people are doing. One of the best ways to plan for tomorrow is to sit down with your customers and say, "What do you see as your problems [in the future]?" Or, "If I had a magic wand, what kind of product would you like?" And you get a lot of stuff that way. And that's what you have to do when you're small and you can't afford to hire research teams to do expensive surveys.
If you're selling a product in stores, go into the store and talk to the clerks who sell. Go in at 10:30 in the morning when it's not crowded, and they will give you so much information about your product, about the customer, about your competition. And they just love to talk, but nobody ever asks them.
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Risk, High Reward
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