Nearly half of all small businesses fail within the first 5 years. Mix that daunting stat with the pressures of operating amid a seemingly never-ending pandemic, and for a lot of business owners, keeping your doors open feels even more difficult.
So, at Playbook 2020, we asked 3 CEOs who have “been there” and are currently “doing that” how they plan to keep their companies afloat this year. And they shared their best tips for persevering, profiting, and even unlocking growth right now.
👉 Get today’s biggest plays in small business! Join us live for Playbook 2021 on September 30 to hear how Shaquille O’Neal, Gary Vee, and more scaled from 10 to 100 (and beyond). Register for free.
Make sure you have a great offering
This may sound obvious, but a faulty offering is the breaking point for a lot of businesses. Without a great product or service to stand on, there’s not much else you can do to grow your business.
Melanie Travis is the CEO of Andie, a swimwear line made for women by women. Without travel this past year, demand for swimwear sank.
“I really thought this was going to be the year we went out of business. But we ended up coming out stronger and more profitable than ever,” Melanie told us.
That’s because Andie is one of the few swimwear lines that actually takes into account what women want from swimwear: for the suit to be fashionable, comfortable, and provide reliable coverage. Meaning, they created a product that women actually needed and enjoy.
And its customers know that. So while they might not have been buying as many swimsuits as usual, they were getting the ones they needed from Andie.
So, right now, look at your product or service. And ask, am I delivering a quality solution to something people actually need? If not, you might want to rethink your offering. Because there might be no demand there.
If yes, it’s time to build demand and pour gas on the fire (AKA invest in marketing).
~ Melanie Travis, CEO at Andie
You can pay all the money in the world [trying to convince customers] to buy a product they don’t want, or that’s bad. But it won’t get you anywhere.
Embrace your role as a marketer
Jesse Horwitz is the cofounder of Hubble, a contact lens subscription service. He says most founders hand off marketing to someone else because it feels like a headache or wastes a lot of time.
But whatever the reason, Jesse strongly believes not being involved in your company’s marketing is a big mistake.
“You have to make yourself knowledgeable about marketing because it’s where your money goes,” Jesse explained.
For him, a business owner’s job is to track dollars invested and ensure the return is more than what they put in. After all, that’s how you stay profitable.
So bare minimum, all your company’s leaders should understand at a high level what is happening in marketing. This includes what the department spent, what they spent it on, what they got in return, and how they’re tracking the ROI.
But if you have no idea what’s going on in your marketing, you could lose money instead. And worst of all, you might not even know it’s happening.
Be agile always
Part of having a hand in marketing means knowing how your company is adapting its strategy based on the market.
According to Anthony Svirskis, CEO at TRIBE, a platform for connecting content creators with brands, the most successful brands are the most agile ones. Meaning, they’re the ones that can look at what’s happening and meet consumers where they’re at first.
“[Digital marketing] is where the attention is. But it’s not just about attention,” Anthony explained. “More traditional marketers are starting to realize they can’t buy media 3 months in advance. And they certainly can’t create content [that far out] because the world keeps changing.”
When marketing departments try to over plan, they end up underperforming. Because the results tend to be out of touch and irrelevant (like showing group gatherings during a lockdown).
When your marketing content doesn’t reflect your customer’s current situation, it doesn’t work. And it can even turn customers off to your brand.
Instead, Anthony suggests being nimble. Meaning, feel free to set the broad strokes a few months out. But wait until the last possible moment to set the details. That way, you can create content that empathizes and relates to your customers.
~ Anthony Svirskis, CEO at TRIBE
[The new landscape] drove the marketing industry to become more authentic and more raw – rather than being polished.
Listen and respond to customers
For Andie, everything they do has been based on customer feedback since Day 1. And Melanie attributes that feedback loop to why they have such a great product.
“All of the design ideas for new products and development originated from the customer. Not from someone whose job is to dictate what the next great new style is,” she said.
As the team has grown, Andie has even created an entire team 100% dedicated to gathering customer insights.
“We call them our fit experts. And they have a really robust feedback loop to share what customers like, what they don’t like, and what ideas they’re getting.”
This informs all design decisions to ensure the product is always getting better. For example, the company uses it to adjust fit, switch fabrics, and even create entirely new designs thanks to vocal customers.
Jesse added that direct response marketing- like a social media ad or email – is also great for gathering feedback. Because when prompted, customers will tell you exactly what they want. That way, you don’t have to guess!
~ Jesse Horwitz – Co-Founder & Co-CEO at Hubble
[Direct response marketing] is similar to old-school customer insight groups. But now, you can just check out the comment feed on the ad, and people will tell you what they want.
Test your conversion rates
If your product is on the market, you’ve probably already nailed down a price. But Melanie suggests playing with that amount to see what converts more customers.
For example, at Andie, their suits started at $125. But after offering a $30 discount, their volume increased dramatically. And this unlocked new opportunities to further increase production.
“[Increasing volume] enabled us to take our manufacturing overseas and then reduce our COGs,” she explained. “So, now, we have massive margins – and we [have more room] to play with our pricing.”
But Anthony also noted the flipside. “There’s a general rule that if no one’s complaining about the price, you’re probably too cheap.”
Consider sliding your prices up or down. Then, see how it affects conversion rates, revenue, and volume. You might find that sliding the number slightly in either direction offers advantages.
Make sure you don’t run out of money
While this one seems obvious, it’s really a question of funding. Specifically, do you need to raise it?
These days, bootstrapping a business is more popular than raising money these days, according to Jesse. But that doesn’t mean that funding is losing pace. In 2020 alone, roughly $800B of funding was raised.
And while most companies choose one or the other, for some companies – like Andie – it actually makes sense to do both.
Melanie told us, “I bootstrapped [Andie] to see some legs to the business, struck a strategic partnership with a major manufacturer, and then went out to raise money.”
And because she had already proven that the business could make money and build the necessary partnerships, Andie raised seed money in no time. And they continued to grow, becoming one of 5 venture-backed e-commerce companies that said they sell women’s swimwear.
“If I had gone out before [giving my business legs], I probably wouldn’t have a business right now. I’d still be pounding the pavement.”
But even if you’re not going to secure a major partnership before raising funding, it pays to go in prepared (literally).
“You certainly want to get your shit together,” Anthony added. “Have your paperwork, your admin, all your legal, and your IP ready. That way, it’s as easy as possible for investors [to invest in you].”
Anthony stresses that preparation is critical because it enables a quick close. If you take months to go through due diligence, it could challenge the deal.
Choose your partners wisely
On that same note, if your business decides to take on investors – or any partner really – it’s critical to pick the right ones. Otherwise, you might find yourself working with people who don’t align with your company.
But choosing who to do business with isn’t always easy. And unfortunately, there’s no way to guarantee you’re putting your trust in the right party.
Even so, Anthony says you’ll know without a doubt when you’ve found that right partner. That’s because you’ll feel it in your gut.
“If you’re comfortable [going into business with this person], then it’s a great thing,” Anthony explained. “If you feel uncomfortable about it, then it’s not a good thing.” And you want to listen to that feeling.
Because when it comes to keeping your doors open, it’s about making the best decision for your business. And what works for some other company or makes sense on paper might be totally wrong for you. So, when in doubt, invest in your product and go with your gut.