We recently caught up with Jim Koch, founder and CEO of Sam Adams Beer. Jim spoke at the US Chamber & Latino Coalition’s Small Business Summit in D.C., and aside from his story of persistence, I knew I liked this guy when he busted out a beer and downed it during his speech.
As it turns out, Jim left for college believing that for the first time in 150 years he would be the first of the Koch’s to turn his back on beer. After college and graduate school Jim began a promising career in management consulting. Even though he followed that path for several years, he always kept an eye on the beer business.
In 1984, he started brewing an old family beer recipe in his kitchen. Before long he was packing samples in a suitcase and going from bar to bar, trying to get people to taste his lager.
Only one year later, the beer was re-introduced as Samuel Adams Boston Lager, at the re-creation of the first battle of the American Revolution on Patriot’s Day. Three months later, it was voted “Best Beer in America” at the Great American Beer Festival, in which 93 national and regional beers competed. The publicity that followed helped the Boston Beer Company’s sales grow to 7,393,000 liters (63,000 barrels) by 1989. The beer was first put on tap at Doyle’s Cafe in Jamaica Plain.
Today, the idea born in that kitchen has approximately 840 employees in its Boston, Cincinnati and Breinigsville, PA breweries combined. It is also the largest craft brewery in the U.S.A.
The lesson? If you’re going to follow your passion go all out. Think big. And when you get a NO, believe a yes is just around the corner.
Helena Yli-Renko, an assistant professor of clinical entrepreneurship at USC’s Marshall School of Business, was working on her Ph.D in Finland in the late 1990’s when she began to observe a novel trend among Finnish telecommunications start-ups: rather than seeking out multiple customers to grow their companies, the companies all seemed to be clamoring to strike deals with Nokia, an industry leader. At the same time, the young companies were apprehensive about their growth strategies: “They were worried about putting all their eggs in one basket,” she says.
And rightfully so. Why put it all on the line for one big client—no matter how big they are?
Over the next six years, Yli-Renko set out to determine if those fears were justified. With Dr. Ramkumar Janakiraman, a management professor at Texas A&M, Yli-Renko surveyed 180 young firms operating in business-to-business, and asked: How does dependence on a key customer impact the firm’s customer growth?
Defying conventional wisdom, the researchers found that young companies that rely on one or two big clients were more successful than companies that didn’t. In her words, “What we found was that key customer dependence actually had a positive effect on the firm’s customer growth.”
Following are the factors that help young companies scale with just a couple of clients—and how your firm can leverage them for growth.
Who your clients are matters. If your one key customer is someone like Apple or GM—industry leaders that are well-recognized and well-respected—you’re going to get positive reputation effects from that relationship.
“That instantly creates legitimacy for that young firm,” says Yli-Renko. “Other firms may says, ‘If GM uses these guys, we can too.'”
Good clients act as great referrers—and your evangelists. By focusing on a single client relationship, Devesh Dwivedi, founder of a Web development company in New Jersey, has grown his business.
“They would hire us for every project they had, but the reason I use the word “evangelist” is because they personally introduced me to each one of their business contacts,” says Dwivedi.
The client also became a mentor to Dwivedi, helping him strategize on new product offerings, and how to best position his company.
Yli-Renko says this type of ‘evangelism’ was pervasive among her study. Going to an industry trade show, for example, with a client like GM will open doors for future connections. “It’s about building personal networks,” she says.
Find the perfect balance. Denise O’Berry, a small business consultant based in Tampa, Florida, says the company should look at their bottom line to determine if they’re too dependent: If more than 50 percent of the company’s revenue comes from one client, it’s time to move on to new prospects.
“The sexiness of the steady client has quite an allure to it, especially for start-up companies,” she says. “But they need to divide their time between making clients happy, and not totally stop trying to do customer acquisition, mainly because of the risks. They need to have a process in place for business development in addition to satisfying their current clients.”
Know when to expand. Eventually, even if your company does rely on one or two big clients, you’ll want to expand.
According to Russ Lombardo, president of Cary, North Carolina-based PEAK Sales consulting, “When it gets to the point where a customer says ‘I want a demo,’ and you have to say, ‘Sorry, we’ll have to schedule it two weeks from now.’ That’s when you know you need more resources—or fewer leads.”
Yli-Renko concluded; “The basic idea in the research is that if you can sell as much to one large customer as you can sell to 10 smaller customers, you’re going to be more efficient,” she says. “You’re also going to free up marketing dollars and management time that will then enable you to pursue other customers and grow your firm.”
From a previous post by Eric Markowitz, via Inc, who reports on start-ups, entrepreneurs, and issues that affect small businesses. Previously, he worked at Vanity Fair. He lives in New York City. @EricMarkowitz
From a post by Yanik Silver of Young Entrepreneur Council, published September 27, 2012
5 ways to turn yourself into an authentic connector who is valuable to anyone’s network:
1. Don’t hog the spotlight. Connectors understand the necessity of creating value for others. If you want to be in the middle of the action, you must seek ways to enhance the lives of those surrounding you. The best connectors I know are extremely generous with introductions where they make sense. One of my favorite questions is, “What are you most excited about right now?” From that answer, I know who I can hook that person up with.
2. Be valuable. People value connectors for what they provide in terms of interaction and resource. In some cases, it’s because they create a space to bring together an elite group. And the person who is that “hub” is remembered when business deals are coming together. After all, how did these people get to the table in the first place? I’m always getting notes back or hearing from attendees of my seminar about deals they’ve created. Sometimes, they give me credit when I didn’t directly introduce them.
3. Be calendar-worthy. Everyone already has too much on their plates and their calendars, so why should they attend or be part of something you create? Anyone can start meetup groups, dinner meetings, or curated events, but it takes some creative energy to make the event worth attending. Once you have people’s attention, you can stop networking and truly start connecting.
4. Let loose. This connectivity needs to be genuine and fun—I may or may not have been known to don a green Speedo or dress up as a circus ringleader on occasion. However, that might not work for everyone. The appeal is in the authenticity of the fun, so it’s important to find your natural personality and allow it come through in your dealings.
5. Play mediator. I work with many entrepreneurs with type A personalities, so there’s inevitably some jockeying for top positions. When facilitating at a session, there’s a fine line between guaranteeing that everyone offers input and knowing when someone needs to be dialed down. If a situation requires you to step up, it’s best to start with humor and work toward a more direct approach when “calling someone out.” If one of the members takes too long with the microphone, I might hit a gong or shoot the person with a Nerf gun. He gets the point, and the crowd gets a laugh.
For a list of networking events, check out our calendar at: www.conex360.com
One late evening at my previous job, I received a call from the U.S. State Department saying they’d like our organization (the Latin Business Association) to share our insights into the U.S. Hispanic business market at the U.N. in New York City. Yes, I too thought it was a prank call. It wasn’t! And so I lost sleep for weeks thinking about what I’d say to Secretary Collin Powell who’d be attending the event.
I still think of those 15 minutes of fame at the U.N. as a highlight in my life. But it was only a few years later that I found myself hiking the Inca Trails, minutes from getting my first glimpse of Machu Picchu – perhaps lack of oxygen or lack of sleep – but I had a profound and nagging question in my head: when I’m gone, what will I be remembered for? Continue reading
The U.S. Small Business Administration (SBA) will host a series of four web chats during the month of October – National Women’s Small Business Month – for women considering launching their own business.
Each week, the SBA web chats will feature prominent subject experts who will guide participants on best practices for putting together business plans, navigating challenges of entering competitive markets and establishing the foundation for a successful, profitable and long-lasting company.
On Oct. 4, at 3PM participants can join “Starting & Growing Your Business” with Erin Andrew, of SBA’s Office of Entrepreneurial Development. Participants can play an observer’s role from the comfort of their computers, and also post questions beforehand.
With the increasing access to new technologies, resources, and ideas, business opportunities are flourishing for Latino entrepreneurs now more than ever.
As part of the Business Track at this year’s #LATISM Conference in Houston, I have the distinct honor of sharing tactics, case studies, marketplace best practices and culturally relevant approaches for supporting social enterprises — the do-good-to-do-well business owners.
Having spent many years developing entrepreneurial programs for a business lobbying organization, and now as CEO of CONEXION, which virtually manages Hispanic Chambers of Commerce throughout California, New York, and D.C., I am eager to share and exchange knowledge that moves our community forward.
Super excited and ready to pow-wow in Houston with my LATISM family.
For details on the conference or to register, visit: http://conference.latism.org/.