Podcast Episodes

Are you planning on selling your business but don’t know where to start? Just ask Emmet Apolinario, President of the International Resource Group. Having transitioned into becoming a business broker after navigating the pitfalls of selling his own business, Emmet offers insights on how to evaluate your business to spare you from the same mistakes he made.

“Selling a business is not like selling real estate. It's not going to sell tomorrow.” says Emmet, “[...] preparing and planning is very important.”

Learn how you can increase your business value, who you may need on your team, and when you could be selling your business.

In this episode you’ll hear:

(01:41) Why and when you could be selling your business

(02:40) Challenges that might make your business difficult to sell

(03:26) Who you might need on your team to sell your business

(04:36) How to figure out what your business is worth

(06:27) How to increase your business’ value

Key takeaways:

1 -  Before you decide to sell your business, Emmet says you need to have a good reason to sell it, otherwise you might end up regretting it – like Emmet did with his first business.

2 - The best time to sell your business is when it’s doing really well. But even if your business is doing great, there’s a few things you need to watch out for that might make it difficult to sell like being cash based, not having an online presence, and being solely dependent on the owner aka you.

3 - The right team is key. Make sure you’re surrounded by the right advisor, attorney, accountant and business broker. Emmet says it’s important to do due diligence in your search when you’re building your team because they might make or break a sale.

4 - Figure out how much your business is worth. There’s a few documents that can help figure that out: Three year’s worth of tax returns, three years profit and loss, and a balance sheet of the business.

5 - If you want to increase your business’ worth, you mght want to be mindful of how you file your tax returns, and have an operations manual. Emmet says that having non-compete, non-solicitation, and non-circumvention agreements with your employees – which he called the “three nons” – could help make your business a lot more attractive to buyers.

00:00:02

Emmet Apolinario: You're putting a lot of things at risk. I remind the business brokers that when buyers are buying businesses, they're buying air. It's not something that someone could collateralize, go to the bank and say, “I have a piece of property, could you loan in it ?” You're going into risk to doing that. So preparing an exit plan when you're just starting a business is not a bad thing to do.

00:00:22

Andrea Marquez: If you're considering selling your business, whether that's now or in the future, you might be wondering where to start and what the process looks like, what documents will you need and how do you determine and improve the value of your business?

I'm Andrea Marquez, and This is Small Business, a podcast brought to you by Amazon. Today we'll be talking about how to sell your business with Emmet Apolinario, President of the International Resource Group, a company that helps businesses develop and exercise exit strategies.

00:00:52

Emmet Apolinario: I came to this journey of being a business broker out of running a business. I purchased a business in the '90s. It grew and then decided to sell it. And so I made all the mistakes in selling a business. You get busy running a business. I had 57 employees, 25 subcontractors, and we were in the software technology space and you're immersed in doing the day-to-day things of running the business, and then you decide to sell the business without any preparation. I didn't do my due diligence as far as who might be qualified to sell the business.

00:01:26

Andrea Marquez: So Emmet decided that he wanted to help other business owners avoid the mistakes he made when he sold his business, and now he has 20 years of experience being a business broker. Emmet says that the first thing you should do if you're trying to sell your business is figure out why you want to sell it.

00:01:41

Emmet Apolinario: They need to do a self-discovery. Do they really have a good reason of why they should be selling the business? I was barely 40 when I considered selling the business, and really I did not have a good reason to do so. In some cases, I regretted selling the business at that time. But I would say really determine what are the drivers for you to consider selling the business.

00:02:03

Andrea Marquez: Once you figure that out, then you need to determine if it's the right time to sell your business.

00:02:09

Emmet Apolinario: So you time the market, you time yourself if it's the right time to sell the business. I would say a smart business owners should know about themselves is the best times to sell a business is when the business is doing great.

00:02:22

Andrea Marquez: But even if your business is doing great, there are other factors that might make it a little more difficult to sell.

00:02:28

Emmet Apolinario: Businesses that are cash basis, retail businesses, there are brick and mortar that have not taken advantage of the online presence or e-commerce, I would say, will not be as attractive. Also, businesses that are solely dependent on the owner would have some challenges in selling a business. We just recently sold an IT support business that's been in the market since 2019. It's very profitable, but the challenge of that business is the owner is the only employee.

00:03:00

Andrea Marquez: But even with these challenges, you might still be able to sell your business if you have the right team, and that leads us to our next point.

00:03:07

Emmet Apolinario: You want to make sure you are surrounded by the right advisors, the right attorneys, the right accountants, and the right business broker. So going back with my own experience in hiring a business broker and selling my company, I would say doing a due diligence on the person that's going to be working with you is very important. Verify your background. Especially today, I didn't have the tools that I used today to verify someone's identity, education, LinkedIn did not exist back in 2000.  

Today you have a good amount of resources. And the thing that I find very interesting because I do take over listings from other business brokers, it's just not a match. So find out if you are talking to the right person that will represent your business well.

00:03:52

Andrea Marquez: So we've gone through the process of understanding how to evaluate if you should be selling your business. We've talked about partnering with the right people to do it. Now, you have to figure out what your business is worth.

00:04:03

Emmet Apolinario: We provide what we call an opinion of sale value, and that's looking at the market, looking at the regional, your local market of what certain businesses sell for. So one of the things I tell a business owner, the most tangible aspect of selling a business are your financials. That's the basis that we start with. I know people like to talk about their intellectual capital, their products, their services, but it all boils down to financials.  

We do collect three years worth of tax returns, the previous three years, profit and loss, and something that most business owners do not pay attention to but it is important is a balance sheet of the business. That's a scorecard of how well your business have done or how well it has not done for previous years.

00:04:48

Andrea Marquez: And if your business is getting less than a certain amount in annual sales, you might not need an audit.

00:04:54

Emmet Apolinario: So if a buyer is interested with a business, they make an offer. And then now we go through the due diligence phase. And if it's being financed through a bank, we will be going to a due diligence phase. It would be nice, but there's three forms of financial reporting we'd like to have is what we call compiled, reviewed, and audited. Obviously, the best is audited, but it is expensive, cost prohibitive to have that type of reporting.

00:05:21

Andrea Marquez: If you want to get a mini crash course on auditing, we have a whole episode dedicated to it. It's episode 52 of This is Small Business. Let's say you took a look at your financials and you didn't really like what you saw. Here's a few things to keep an eye on to make sure your business is valuable when you do decide to sell it.

00:05:38

Emmet Apolinario: I would say one of the biggest mistakes that business owners do is when they're trying to mitigate taxes, it's affecting the quality of the financials that they produce. So that's one major advice that I tell business owners is be mindful of how you file your tax returns. Not having an operations manual makes it challenging to sell a business. And I tell business owners, I call them the three nones. It's the non-compete, non- solicitation and non-circumvention. If you have those type of agreements with your employees, with your customers, with your vendors, your business is a lot more attractive out there.  

When you're selling a house, you always want to improve on your house to be sellable. In the business you always want to take a look at what could I do to make my business valuable? What could I do to make my business be relevant for the next five years? I like to use the word relevant is because with market conditions and economic changes, a business owner knows their business well and they should know what changes might come to affect the value of their business.

00:06:44

Andrea Marquez: And remember that selling your business might take some time.

00:06:49

Emmet Apolinario: Planning is important. So I have business owners, like I have one yesterday that came in, 25 year business but they're tired and they want to sell within the next six months. So I would say give yourself time to plan. Talk to right advisors, a good advisor will tell them what they need to do to prepare to sell the business. But selling a business is not like selling real estate, it's not going to sell tomorrow. I mean, you might get lucky and find a buyer within three months, these are not large corporations. But preparing and planning is very important.

00:07:23

Andrea Marquez: That was Emmet Apolinario, President of the International Resource Group. Being prepared and planning ahead is good advice for anything you do in your business. We covered a lot in this episode. If you missed anything, don't worry. We've taken notes for you. You can find them at www. smallbusiness. amazon/ podcasts. If you liked what you heard don't forget to subscribe and tell your friends about us by sending them a link to this episode, and we would love to know what you think.  

So please, please, please leave us a review on Apple Podcasts, it's easier to do it through your phone or send us an email at thisismallbusiness@ amazon. com with your thoughts. If you're an aspiring entrepreneur or maybe you already have your small business up and running and you're ready for the next step, a super valuable resource that can help you is the Amazon Small Business Academy. Take the free self-assessment on the Amazon Small Business Academy site at www. smallbusiness. amazon.  

That's it for this episode of This is Small Business, brought to you by Amazon. Until next time, I'm your host, Andrea Marquez, Hasta luego , and thanks for listening. This is Small Business is brought to you by Amazon with technical and story production by JAR Audio.

Considering buying a business? Whether it's your first venture or you’re trying to expand your business, it can be a game-changer. Just ask Brian Shields, an Acquisition Entrepreneur who knows what it takes to successfully buy a business. “Try to look at at least a hundred deals to help dial yourself in so you know what kind of risk you're willing to take, what kind of business plan you really feel comfortable with, what kind of industries you feel like make sense,” Brian says, “because once you get those under your belt, then you'll feel a little bit more sophisticated when the time really comes.”

We’ll dive into the essentials: from why you should consider buying a business to breaking down all the thorough due diligence and financing options so you can find the right business that works for you!

In this episode you’ll hear:

(00:35) How Brian bought his first business

(2:42) Why buying a business could be right for you

(5:06) Research and analysis (aka due diligence) that needs to get done before you buy a business

(6:39) Where you can find businesses to buy

(8:01) Brain breaks down what the due diligence process looks like by using a coffee shop as an example

(11:00) Three ways you can pay for the business you want to buy(

13:50) Andrea and Brian go over three points you should focus on when you’re trying to find a business to buy

Key takeaways:

1 - You might consider buying a business for two reasons. If it’s your first venture into entrepreneurship, buying a business can serve as a shortcut and reduce the challenges of starting from scratch. For existing business owners, acquiring a business can help you grow.

2 - Before buying a business, thorough due diligence is crucial. Brian compares the research and analysis of the business you want to buy to inspecting a property before purchase. He says you should examine the business’ financials, reputation, team, processes, and seek assistance from consultants, accountants, or lawyers.

3 - You can do a search fund to find businesses to buy or reach out to your network to see if anyone you know might be selling their business. If you don’t have a huge network of business owners, listen to episode 46 of This is Small Business for advice on how you can expand your network!

4 - You can pay for your business in three ways: raising capital from friends and family, getting a loan from the seller, or getting the seller to roll over equity. Negotiation is key so buying a business from someone you know might make it a lot easier.

5 -  Make sure that there’s a business owner and business fit. This means that the business you buy should fit into your lifestyle or else like Brian – you might end up selling your vending machine business because you hate driving.

6 - Be honest with yourself about what your impact on the business will be. Just because the numbers look good doesn’t mean you’ll be able to handle the business if it’s not a good fit.

7 - Don’t do it alone. Brian emphasized the importance of having a business partner to bounce ideas off of.

8 - Practice makes proficient. Brian says that you should look at at least 100 deals to know what exactly you want out of a business.

00:00:01

Brian Shields: I think that the best business investments, frankly, are looked at from that lens where you can go through all the checkmarks of return on investment, but you also consider the human impact of that and find the right balance between the two because that'll give you long-term success. And when you have a long-term successful business, whether it's today, five years from now or 50 years from now, it'll be worth something to sell and a lot of people will benefit from it.

00:00:29

Andrea Marquez: Hi, I'm Andrea Marquez, and This is Small Business brought to you by Amazon. Today, we're exploring the ins and outs of buying a business. We'll talk about where to find businesses and how to choose the right one for you with Brian Shields, an acquisition entrepreneur.

00:00:45

Brian Shields: Which is a multi-syllable way of saying, I like to buy businesses and continue to improve and operate them into the next generation.

00:00:54

Andrea Marquez: He's been doing that on and off for around 20 years now. But before buying his first business, Brian worked in private equity.

00:01:01

Brian Shields: So I was at a fund in New York where we professionally acquired businesses, tried to figure out how to make them run better and ideally sell them in five years. I liked that. I was doing all the investment stuff, but I realized I didn't actually know how we made money. How do businesses make money? So I went to work at one of the portfolio companies to run a division for a while, and I never looked back.

00:01:24

Andrea Marquez: So Brian decided to buy his first business, which was five vending machines. He eventually sold it off, but he learned a lot from that experience.

00:01:35

Brian Shields: It taught me that there is some translation between institutional finance and valuing businesses, to a certain extent. It also taught me that where that part of it ends, humanity begins, right? The reason I won that business in the acquisition bid was the seller and I were just cool. We were able to vibe.

00:01:54

Andrea Marquez: Brian also realized that you need to have business owner and business fit when you're looking at what business to buy.

00:02:01

Brian Shields: And that was something I didn't totally appreciate. Just to tell you something about myself, I don't love driving. I actually very actively hate driving. But what this business required was that I drive to all the different locations and fill up the snacks and get the money and stuff like that. Well, I got tired of that pretty quickly. And so, luckily that kind of a business was easy to sell, so I was able to get my money back and put it with someone who could be a better steward of it than me.

00:02:26

Andrea Marquez: We'll dig into these lessons in a bit. But first, let's go over why you might consider buying a business.

00:02:32

Brian Shields: The way I like to think about buying a business is it should help you shortcut to something, right? And so, for people who are buying a business, typically the conversation is, I want to be an entrepreneur, but I don't want to do a startup.

00:02:46

Andrea Marquez: That's one way of looking at it. But if you're an existing business owner ...

00:02:50

Brian Shields: You're looking to either grow quickly or get something that helps augment the offering you have today. So you become a very different business very quickly by making a selective decision on which business to acquire. So I tend to find that those are kind of the pathways people find going down that road. And the thing I always caution people about is change. Change is always hard for people, both the buyer and the team that's coming from the other business. And this is something that I experienced with Hill & Co, the company that I acquired more recently. We acquired that from a retiring entrepreneur who had started it and ran it for 30 years and built it into a really meaningful business. And the previous owners in lead up to their retirement kind of just put off a lot of things that they could have done to make the lives of the clients and the team easier.

00:03:37

Andrea Marquez: And when Brian stepped in and talked about all the changes he was going to implement ...

00:03:42

Brian Shields: Some people were like, “Hooray.” And then some people were like, “The sky's falling.” I'm like going crazy. And that's natural, right? If you just think about any time you have experienced change in your life, whether it's moving cities or jobs, or in this case potentially business leaders, you feel some kind of anxiety around it.  

So if you can be empathetic with the team, you can manage the relationship and that transition effectively. But it does take a high amount of EQ and a lot of great communication to make sure that goes well. So that's one thing that I always caution people like, it's not just flipping a switch. It's not like you're buying a property and all of a sudden you get the keys and the doors are open and you can do whatever with the property. There are real humans and real people behind the business, behind the P& L that you need to be thoughtful and gracious towards as you make that transition.

00:04:31

Andrea Marquez: Okay, let's take a few steps back and go to the beginning of what you need to do when you've decided that you want to buy a business. First, you need to do your due diligence.

00:04:41

Brian Shields: That's just like the research and the analysis of the business you're buying. So I like to explain this in terms of buying a piece of property. So most people would like to walk the property when they have a chance, see pictures, get the inspections done to make sure they understand that the foundation is solid, does the roof need to be replaced, et cetera. So those are things that you naturally consider when you're buying a property.  

So is true for buying a business. You want to kick all the tires possible. And that means the financials, that means their reputation, that means their team, that means their processes. There are people that assist buyers with diligence, whether those are consultants, they're accountants, lawyers that kind of help poke around for these things.

00:05:25

Andrea Marquez: And you also need to ask yourself one very important question.

00:05:30

Brian Shields: Where is that business relative to what you intend to do with it? So if it's like, “Hey, I think that we should be completely remote,” you need to understand is this business hybrid or is it in the office, right? And then have a plan for how you're going to transition to remote. As I mentioned earlier, change is scary for people.

00:05:47

Andrea Marquez: And the way Brian finds the best deals and opportunities is by tapping into his network.

00:05:53

Brian Shields: So in a perfect world, and this is more so speaking to existing business owners, right? If you're thinking about growing through acquisition, you probably know your competitors in some frenemy, friendly way.  

And so, you probably have a sense that Jill runs a really tight ship. Jim, not so much. Jill is about to go through a divorce and maybe needs some capital and liquidity. Jim is running his business into the ground and is about to go bankrupt. And you can have a sense of what things you would need to get done, but also that creates the opportunity for you to come in and say, “Hey, let's find a way to partner,” and give you what's really important for you in your life as a business owner, but then take care of the business you've built.

00:06:33

Andrea Marquez: If you don't have a huge network of business owners, you can learn how to build your network by listening to episode 46 of this Small Business. We cover a lot in that episode, like how to prepare for and make the most out of networking events. Brian also says that there's more traditional ways of finding a business to buy, like doing a search fund.

00:06:53

Brian Shields: You will go on databases, you will talk to business brokers, you will send mail to a bunch of people in specific industries, and those are things that people should do too if you're thinking about being programmatic about this.

00:07:06

Andrea Marquez: Now, let's break down what that due diligence process could look like.

00:07:10

Brian Shields: So typically what you want to do is understand the way the business runs from the minute a client or a customer comes in to the minute cash hits your account.

00:07:20

Andrea Marquez: Let's say you decided to buy a coffee shop. Let's see what that would look like.

00:07:24

Brian Shields: You have to understand where the beans come from. How do they roast them? Where is the staff coming from? What are they paid? How do they get people in the door? How frequently? What are the seasonalities? Are things busy in the cold months and not so busy in the warm months? Or do different products sell in different parts of the year? Then you need to understand pricing. What are we charging for a cup of coffee? What are we charging for cold brew? How does that compare to other businesses in that geographic area? Do we have the opportunity to increase prices, et cetera? And then thinking about the building and the marketing, and do we want to expand? What's your growth plan? Do you want to keep just one location if you're buying it? Do you want to replicate this location? Do you want to sell the coffee as a branded item in grocery stores?

And then as you start to paint all of that picture, it will lead you to things you need to understand. For example, if those coffee beans are coming from one single vendor, you want to kick the tires on that agreement to make sure that you understand, “Hey, there's some protection for me, the new buyer, so that if I step into this, they won't change the pricing on me all of a sudden,” which is a real risk. You want to have a sense for if the lease on the property that you have the coffee shop in, will they keep the rent the same or is the term coming up a month after you buy it and will market rent then go up 20%? This is a real story that happened to me with one business. As you start to have these intuitive conversations with yourself about how does this business work, it will lead you to things you need to kick the tires on.

Now, do you need to know how to kick the tires on everything? No. Look, have foundation inspectors, roof inspectors, mold inspectors, appraisers with a property, and they're the same with buying a business. So hire an accountant, have them kick the tires with you. You want them to run what's called a quality of earnings report. It will cost money, so do it sparingly. But it is incredibly important because especially coming out of PPP time, there are a lot of people that are trying to pass off that loan and other things as revenue and hide things.  

So you just want to have somebody else kick the tires to make sure it's right. Get your lawyer to look at the agreements, have discussions with investors and lenders to see what they would ask. And really, just don't make these decisions in a bubble. That's really, really important and I can't stress that enough. The best decisions I've ever made, the best analyses I've ever run, were always in partnership with someone else.

00:09:39

Andrea Marquez: This was very helpful as a breakdown and a lot of questions you need to be asking yourself and others. And then, once you've done your due diligence on the business you want to buy, now you have to figure out how to pay for it. Thankfully, there's a few things you can do to fund your new business.

00:09:54

Brian Shields: You can raise private capital from friends and family and say, “Hey, I'm going to buy this business. I'm putting together a loan. It's whatever, a million bucks. I'm going to pay 10% on it and I'll pay you back in five years.” So these are all things that are possible. What are some nuances in this space?

00:10:09

Andrea Marquez: And in some cases, Brian says that the seller might give you a loan.

00:10:12

Brian Shields: So it's what's called seller financing, which exists to a certain extent when you're buying a property, but it's really, really prevalent buying a business. So let's say I'm buying a $ 100 business. I have $ 30 in cash. Maybe I get another $ 50 from the bank through an SBA loan or a commercial loan or whatever, but then I still need another 20, right? So a lot of cases you'll say, “Hey, seller, because this is a non-traditional asset, the bank's willing to lend this much, and I want you to feel like you're getting full value. Could you finance the rest of it and I'll pay you back from the cash flow of the business over time?” And so for them, they would do it because they get a cash payment now of the 80, that's the $ 30 plus the $ 50, and then the 20 would be on the come.

00:10:55

Andrea Marquez: You can also get the seller to roll over equity.

00:10:58

Brian Shields: Which means instead of them financing 20 and giving you a loan, they just say, “Cool, I will keep 20% ownership in the business. I'm selling you 80. You're in control, but I've sold it to you now.”

00:11:08

Andrea Marquez: So a lot is about negotiations, and that's why buying a business from someone you know is usually a good place to start, because ...

00:11:16

Brian Shields: The more the seller trusts you, the more they can be willing to be flexible.

00:11:21

Andrea Marquez: And once you buy a business, there's a few things you need to keep in mind.

00:11:24

Brian Shields: When you're in charge, people look to you as your word is gospel. And so, that might mean that if you're thinking out loud about something, people might take that as directive to act. That's an easy one. A more nuanced one might be like, I know for me sometimes I might be frustrated about something or I might give someone criticism, but not in an energetic way. I just might be like, “Hey, man, next time, let's do it this way.” But because I'm the boss or the business owner, they're like, “Ah, I'm going to get fired tomorrow.” So you have to be clear about how you wield power.

00:11:56

Andrea Marquez: And it also helps if you're aware of the responsibilities you now have, especially towards your employees.

00:12:01

Brian Shields: They have desires, dreams, passions, and ultimately you are a huge part of them feeling secure in pursuing those things and contributing that energy to this business. So keeping yourself sane and stable is really important because you have to make decisions that impact those people.

00:12:17

Andrea Marquez: Okay, we covered a lot. So let's circle back on some of the lessons learned that Brian pointed out. One, make sure there's a business owner and business fit.

00:12:28

Brian Shields: As an example, I looked at buying this photography business four or five years ago. I loved it. It was super high profit. It was super cool. The majority of the business, the revenue came in a six-month period of the year. So I was like, “Cool, we can buy this and get most of the work done in part of the year and it pays for the rest of the year. And I can chill.” However, it would require me to be on during the holidays, and I would have to miss family dinners and maybe family events, and that just didn't align with my values, so I couldn't do it. I tried very hard to figure it out, but I couldn't do it.

00:12:55

Andrea Marquez: Two, be honest with yourself about what your unfair advantage and potential impact can be with the business.

00:13:01

Brian Shields: You need to be clear with yourself about what you can do and what you're willing to tolerate in that context. People talk themselves into things all the time because the numbers look good.

00:13:10

Andrea Marquez: Three, consider doing this with a partner.

00:13:13

Brian Shields: Don't do it alone. My partner on my last business acquisition and I worked so well together. The man saved me from just insanity. Just having somebody else to talk to, to bounce ideas off of, to make better decisions with was incredibly helpful.

00:13:29

Andrea Marquez: And if you're still feeling a little nervous about going out there and finding a business to buy ...

00:13:35

Brian Shields: Try to look at least a hundred deals to help dial yourself in, so you know what kind of risk you're willing to take, what kind of business plan you really feel comfortable with, what kind of industries you feel like makes sense. Because once you get those under your belt, then you'll feel a little bit more sophisticated when the time really comes. It's like practice before you play, right? And that practice will make you proficient. That's what I tell my daughter. So get out there and practice.

00:14:00

Andrea Marquez: I love that, practice makes proficient. So just go out there and start your search. That was a lot of very helpful information. If you didn't get the chance to write down everything, don't worry we've taken notes for you. You can find them at smallbusiness. amazon/ podcasts.  

That's it for this episode of This Is Small Business brought to you by Amazon. If you liked what you heard, make sure to subscribe and tell your friends about us by sending them a link to this episode. And if you have any thoughts or other topics you'd like me to cover, let us know by leaving us a review on Apple Podcasts. It's easier to do it through your phone or send us an email at thisismallbusiness@ amazon. com.  

Until next time, This is Small Business. I'm your host, Andrea Marquez. Hasta luego , and thanks for listening.  

This is Small Business is brought to you by Amazon with technical and story production by JAR Audio.

Expanding your business and drawing in more customers may seem overwhelming, but it doesn’t have to be! Just ask Amy Porterfield, New York Times bestselling author of Two Weeks Notice and Host of The Online Marketing Made Easy Podcast, who managed to increase her sales in only a year.

“The people who need you will find you, even if you put a stake in the ground.” Amy says. “If your message resonates with them, but doesn't fit perfectly, that's okay. If they like what you're saying and they find value, they will find you.”

Learn how you can replicate Amy’s growth by managing your mindset, creating a customer avatar, and growing your email list. In this episode you’ll hear:

(00:45) How Amy started her business

(03:02) How negative thoughts can impede growth

(05:57) How to build your customer avatar

(08:11) How content creation helped Amy grow

(09:27) How to grow your email list

(12:16) Common mistakes that might affect your growth

Key takeaways:

1 - Manage your mindset. Amy says that you need to consume inspiring stories and lessons and try your best to avoid negative thoughts.

2 - Define your target audience by crafting a customer avatar. This avatar might represent your past self or someone entirely different. If it's the latter, you'll need to talk to your customers to understand what they expect from you.

3 - Don’t be afraid to get specific with your customer avatar. The people who need you will find you.

4 - Generate original content tailored to your brand. According to Amy, this will establish you and your brand as a reliable source and will attract a larger audience to your business. We go into a lot more detail and touch on how to create content on social media on episode 45 of This is Small Business.

5- Create an email list. Amy says that having an email list means having ownership of your subscribers.

6 - You need to be intentional about growing your email list. Amy suggests having a pre-launch strategy and offering freebies to your subscribers. We dig into how to start and grow your email list on episode 56 of This is Small Business with Amy’s best friend Jenna Kutcher!

7 -  Get laser-focused on your message and keep it clear and consistent. It's easy for entrepreneurs to spread themselves thin, but Amy says that the most successful people stick to a few things and nail them consistently.

00:00:01

Amy Porterfield: 80% of being an entrepreneur, like the success of being an entrepreneur is your mindset. 20% is the mechanics. So I quickly learned how to manage my mind because this is going to be a big part of that. So I had to work on myself, but also important is I had to change the strategies. When I first launched that course, I made $267, I had no email list. And I really believe to this day that if you want a thriving online business, you have to be intentional about growing an email list.

00:00:35

Andrea Marquez: I'm Andrea Marquez, and This is Small Business, a podcast brought to you by Amazon. Today we'll figure out how you can grow your business and find new customers with Amy Porterfield, a New York Times bestselling author and the host of the Online Marketing Made Easy Podcast.

00:00:50

Amy Porterfield: So I often say I am an ex-corporate girl turned accidental entrepreneur. About 15 years ago, I left my last corporate job with Tony Robbins and I was the Director of Content Development for many years with Tony, but I got this desire to want to be my own boss, call my own shots, and so I took a very big risk and went out on my own.

00:01:13

Andrea Marquez: Amy ended up building an online business where she teaches people how to take their knowledge and skill set and turn that into a profitable digital course. And what actually pushed Amy to venture into entrepreneurship was a meeting that Tony Robbins held 17 years ago.

00:01:30

Amy Porterfield: Tony had called in a bunch of internet marketers into the San Diego headquarters to talk about their online businesses. Tony was getting more into the online space, and so he brought in these guys and they sat around this big oak table and I was called in to take notes. So I sat at a little side table to take notes at this really important meeting to learn how these guys were making money online. And so Tony went around and he said, “Tell me about your businesses.”

00:01:56

Andrea Marquez: Everyone in that room had a different niche, but they all had digital courses or memberships and they were all doing business online.

00:02:04

Amy Porterfield: I think I took the worst notes of my life that day because when they went around, they all talked about freedom. Freedom to call the shots, to make as much money as they want, to impact lives the way they want to, to be as creative as they wanted to. And I thought, “I don't even know what these guys are doing or how they're doing it, but I want in.” And so that was that first moment that I thought, “I've got to figure this out.”

00:02:26

Andrea Marquez: And then a year after that meeting, Amy went out on her own. In 2011, she launched her first digital course but it didn't really do well.

00:02:37

Amy Porterfield: I made a whopping $ 267 and then I cried for an entire week because I made it mean in my head, “I'm not cut out to be an entrepreneur. I don't know what I'm doing. Who am I to be doing this? I need to go grovel back for my nine to five job. I've made a mess of this.”

00:02:52

Andrea Marquez: She wallowed in these feelings until her husband was like ...

00:02:56

Amy Porterfield: “You need to get it together because this isn't going to work.”

00:02:59

Andrea Marquez: And then a year later.

00:03:02

Amy Porterfield: I made $30, 000 in a very short period of time with my own digital course.

00:03:07

Andrea Marquez: So how did Amy manage to grow her business in the span of a year? First, she had to manage her mindset.

00:03:15

Amy Porterfield: Now, some people might be rolling their eyes. They're like, “Yeah, give us the strategies, Amy. We know that mindset's important.” But really do we understand how much it plays a part in terms of believing in yourself, fueling your brain every day with inspiring stories and lessons of inspiration to keep you moving forward? I believe the first thought that entered my mind, which was, “You're not cut out to do this, you're a failure.” Now I'm really clear that I cannot believe everything I think, at least not the first thought. So it took me a while to kind of get my head in the game and realize, “Wait a second, I've got to mind my mindset here and be very careful what I think and what I feel, or this is never going to work.”

00:03:54

Andrea Marquez: I love that we're starting out with this. It's such an important aspect of being an entrepreneur and because it can sound very fluffy to some, it's often overlooked. Now Amy has a lot of support to help her manage her mindset. She has a therapist, a business coach, a health and wellness coach, and loads of friends in the industry.

00:04:14

Amy Porterfield: That's a lot of people in my corner. And the reason for that is because I know it's a very dangerous and lonely place inside my mind. I could go to the most wildest places. I could wake up one morning and things don't work in my business, and I could tell myself, “This is a mess. This is falling apart.” It's a really scary place in my mind sometimes. So to have the right support around me is everything.

00:04:37

Andrea Marquez: But 15 years ago when Amy was first starting her business, she didn't have the money to spend on a wellness coach or a business coach. Instead, she relied on free resources to get the support she needed.

00:04:48

Amy Porterfield: I got it all through podcasts and blogs and getting into mastermind groups with other people so that I could surround myself with people that will inspire me and also support me. So I think there's no badge of honor in doing this alone. So if you are just a lone wolf and you just want to build your business online and don't get support or help from anyone, it's going to be a rough road. We need that support in order to make sure that we keep moving forward when it gets tough.

00:05:15

Andrea Marquez: So managing your mindset by staying inspired and surrounding yourself with people that support you can help you grow. But Amy also had to adjust her strategies.

00:05:23

Amy Porterfield: When I first launched that course and made $ 267, I had no email list. It was a really small email list, and I never emailed them. And I really believe to this day that if you want a thriving online business, you have to be intentional about growing an email list. Social media is not enough and social media is fickle. The way you've been doing business on social media could literally change overnight. We saw this years ago when we were all using Facebook for our businesses, it was working great, and then you had to pay to play and everything changed. So I will never again put all my eggs in one basket and only rely on social media.

00:05:59

Andrea Marquez: We'll get into how to grow your email list in a minute. But first, you need to figure out who you're trying to serve.

00:06:06

Amy Porterfield: One of the easiest ways is to first ask yourself, “Am I my customer avatar just like 10 years ago or 5 years ago?” Here's what I mean. I serve mainly women, but there's a lot of men in my audience as well, but women who want to leave behind the nine to five and start making their own money and becoming their own boss.

I was that woman in a cubicle 15 years ago, not making as much money as I wanted, not wanting a boss but I had one, and really struggling to climb the corporate ladder. I know how she feels, I know her pain, her struggles, her self-doubts, her dreams, her wants. I get her because I was her. And sometimes that's the easiest place to start. If you could be your avatar just a few years ago, you'll really understand how to put together your marketing message because you lived their lives, you understand them.

00:06:53

Andrea Marquez: If you've never been your customer avatar, Amy says that you need to start talking to them.

00:06:58

Amy Porterfield: So I encourage my students to get on a Zoom call, ask someone for 15, 20 minutes, ask them the questions.  “What are you struggling with? What have you tried? What do you need? Where do you look online to get the solution?” Start learning from them because that's going to help immensely.

00:07:14

Andrea Marquez: And if you're struggling with figuring out who your avatar is because you don't want to exclude potential customers ...

00:07:20

Amy Porterfield: The people who need you will find you, even if you put a stake in the ground. If your message resonates with them but doesn't fit perfectly, that's okay. If they like what you're saying and they find value, they will find you. So I have a lot of men in my audience. I have a lot of people who already quit their nine to five job, but they find something of value in my messaging, and so they come into my programs. So don't be scared to put that stake in the ground. I promise you it's going to help you get known and seen in a very noisy online world.

00:07:49

Andrea Marquez: So to figure out who you're trying to serve, Amy says that you need to create a customer avatar. You can do this by looking at your past experiences if your old self is your avatar, or by talking to the people you want to reach. And don't be scared of being specific. You won't exclude any potential customers that don't look like your avatar. If they need your services, they'll find you. Another thing that helped Amy grow and gain new customers was content creation.

00:08:16

Amy Porterfield: At the time, it was a blog and then it moved into a podcast. But I really believe that if you create your own original content every week, rain or shine, you become a go-to source. People rely on you. They know you. They want to be in your orbit. Without that weekly original content, you just get lost in the sea of noise online and on social. So I started to create my own content every week, and that changed everything for me as well. And I just want to speak to the people that are listening, they're like, “Amy, I don't want to do TikTok videos. I don't want to do silly dances online. I don't want to do all the trending lip-syncing and all of that. None of that is for me.” That is fine because it's not really for me either. I'll play around with it once in a while, but I kind of hate it.

And so I try to find the trends or what's working that would speak to me and feel good to me because social media is a big part of growing a business, whether you're a personal brand or a company brand, you need it. I think you need an email list a lot more than you need social, but social will help you grow that email list.

00:09:14

Andrea Marquez: We have a whole episode dedicated to content creation and how to leverage social media to grow your business. It's episode 45 of This is Small Business, so if you want to learn more, go ahead and check it out. We mentioned earlier that growing a business is easier if you have an email list. But how do you get people to sign up for your email list? The first thing Amy says you should do is be intentional about growing it.

00:09:39

Amy Porterfield: So that means every single week you're thinking about how am I getting more people on my email list and how am I nurturing them? So remember when I said I have a podcast that comes out every single week, rain or shine? The way I nurture the people already on my email list is when I have a new podcast episode, I email them and I say, “Hey, I've got something new for you today. Here's why you're going to love it. Go take a listen.” So my weekly original content, it supports the audience I already have and then attracts a new audience because the podcast networks will push it out to new people.

00:10:11

Andrea Marquez: Another strategy that Amy says is often overlooked and can help you grow your email list is having a prelaunch strategy.

00:10:19

Amy Porterfield: Let's say you know that you're going to launch a new product on June 1st. So May 1st, I would spend an entire month, 30 days of priming the pump. Now, what does that look like? Well, I'm not talking about the product I'm going to sell. I might hint at it, but I'm talking around it, topics that relate to the product I'm going to sell. I have freebies related to the product I'm going to sell.  

So for example, if I sell a program of how to create and launch a digital course, one of my freebies might be a quiz, How To Know If You're Ready To Add A Digital Course To Your Business. People sign up for the quiz, they take it, they give me their name and email to get the results. So that might be a quiz I do in my prelaunch period.

Or I might have a PDF, How To Choose The Perfect Course Topic When You're Ready To Create Your Course. So now I'm getting, I'm thinking, “What might I create if I ever created a course?” I'm not talking about the fact I'm going to sell something soon. I'm not leading up to it in that way. I'm just giving great amazing free value for an entire month. I'm using it to grow my email list because these are the people I'm going to market it to, but I'm also giving immense value. I'm showing up live on video. I might do some extra podcasts that month, but the month of May will be my prelaunch 30-day runway.

So there's this golden question you can ask yourself during that prelaunch period, and it's, “What does my audience need to believe, understand, be aware of, or just change their mindset around before they're ever ready to buy from me?” So what does my audience need to be aware of, understand, believe before they're ever ready to buy? And you're going to give them that content to have a new understanding, a new idea, a new clarity during the prelaunch period. So when you're ready to sell, they're ready to buy.

00:12:05

Andrea Marquez: That sounds like such a simple yet effective way to get more people to sign up to your email list. We've talked a lot about what you should be doing to attract more customers. So now let's get into some common mistakes that might hinder your growth.

00:12:18

Amy Porterfield: One of them is trying to do too many things, too many offers, too many messages where people are very confused what they need to come to you for in order to get the results they're looking for. So I think that's one thing, honing in on your message and getting clear, this is what I offer and what I'm all about.  

I think another thing is that a lot of business owners, because we're trying to do so much and wear so many hats, we lack consistency. I was absolutely guilty of this for many, many years. I'll do a podcast today and then I won't have another one for three more weeks. I try this new social media thing and say, “I'm going to do it all month.” I do it for a week. It's very normal and human to not be consistent with these things. But I look at the winners, I pay attention to who's winning in this online business game. If they have physical products or online products, it doesn't matter. The people that are winning are consistent with what they're doing, and they do very little, but they do it really well. So I think if you become a person who identifies, I am a consistent person, changes everything.

00:13:20

Andrea Marquez: So staying consistent can be tough when you're doing many things on your own, but that's when evaluating what type of help you need comes into play, and honing in on your messaging is also key to keep customers coming back. I learned so much from talking to Amy.  

If you didn't have a chance to write everything down, don't worry. We've taken notes for you. You can find them at www. smallbusiness. amazon/ podcasts. And if you liked the episode, don't forget to leave us a review like this one from Fernieboy234 who said, “Love this podcast, part of my weekly listen and exciting to hear different types of businesses and how they're succeeding. I like that it's not just interviews all the time.” Thank you, Fernieboy234. I'm glad that This is Small Business is part of your week. I'd love to know what you think. So please leave us a review on Apple Podcasts. It's easier to do it through your phone or send us an email at thisissmallbusiness@ amazon. com with your thoughts.

That's it for this episode of This Is Small Business brought to you by Amazon. Make sure to subscribe and tell your friends about us by sending them a link to this episode. Until next time, I'm your host, Andrea Marquez. Hasta luego and thanks for listening.  

This is Small Business is brought to you by Amazon with technical and story production by JAR Audio.

Want to build a loyal following of people who are excited to buy what you're selling? Stop spending your valuable time on the wrong marketing channels, and prioritize an email list. So says Jenna Kutcher, a digital marketing expert and host of The Goal Digger Podcast. After attracting thousands of followers on social, but seeing so few convert to customers, Jenna learned about the power of owning an email list - and she hasn't looked back! It's the number one ways she drives sales in her business.

You'll learn how to start a list, where to find your first subscribers, and how to grow and maintain a list.  Plus, the surprising benefits of an email list - beyond the high ROI.

(06:40) Where to find your first subscribers

(07:25) How to use your email list to test out new business ideas

(09:40) The TWO things you need to focus on as an entrepreneur

(11:00) Tacticts Jenna uses to drive followers from social and the podcast to her list

(14:30) How to make time for your email list

(15:50) Don't make these two mistakes with your email list!

(18:00) Convinced? Here's how to start your listLearn how to go from zero subscribers to an engaged list that lasts. Sign up for Jenna's FREE Email Building Master Class at jennkutcher.com/list. It only happens once a year - don't miss out!

Key Takeaways:

1. When Jenna started her list, she created a free downloadable PDF called "Five Ways To Grow Your Instagram Following". It wasn't pretty, but it did the job. She created a little signup form to gather emails in exchange for the PDF. She shared it on her own socials, but also in Facebook groups she was a part of and Pinterest.

2. How to use your email list to test out new business ideas: Jenna offers different freebies in exchange for peoples emails. If she gets a lot of sign ups, she knows the offer is exciting enough that people are willing to give up something of value in exchange (their email address). Using that information, she might turn that idea into another product.

3. The TWO things you need to focus on as an entrepreneur: Your first priority has to be growing your email list. The second is to use any other efforts you put forward to grow your list. Her number one measure of success for, say, a social campaign is how effective it is at growing her email list.

4. In The Goal Digger Podcast, Jenna shares value ads from her email list and lets them know how they can sign up.

5. Her email list is the number one way Jenna drives sales. "Social media is meant to be the handshake. Email is where you sell." People are on social to be distracted, educated, entertained. People are more ready to buy when they're in their email.

6. The average entrepreneur spends hours in their inbox. Add a bit of strategy and, instead of going one-to-one, you can go one-to-many. This will give you insights into what people want so that it's easier to sell, and it creates a group of people who are excited to buy when you're ready to sell.

7. Don't make these two mistakes with your email list! 1. Don't bury your email sign up on your website. 2. Don't send out an email only when you want to sell. If you serve your audience and show up regardless whether you have something to sell, they'll be ready to buy when you have something to sell.

8. Where should you begin? First, think of two different offers that would be valuable to your listeners in exchange for their email. By providing two different offers, you get insight into what your audience wants from you. This can stop you from going too far down the wrong path. Second, use your existing channels, such as your podcast or socials, to talk about the valuable freebies available on your email list.

9. Learn how to go from zero subscribers to an engaged list that lasts. Sign up for Jenna's FREE Email Building Master Class at jennkutcher.com/list. It only happens once a year - don't miss out!

00:00:02

Andrea Marquez: I've been hearing a lot about the power of an email list or a newsletter and how much that can contribute to your growth and success as a business owner. It helps you reach people that want to hear from you and you get to own your audience, something that you can't have by just using social media. But how do you start an email list and how do you maintain it and push out content consistently? And beyond just owning your audience, what other benefits come from it?  

To answer these questions, I'll be talking to Jenna Kutcher, the host of one of the most popular marketing podcasts, and also one of my favorites, The Gold Digger.

00:00:41

Jenna Kutcher: One of the things that I'm obsessed with when it comes to being an entrepreneur is looking at the return on investment, with the main investment being our time.  

I have two young kids, I don't have a ton of extra time, and so anytime that I'm spending in my business, I want to make sure that it's worth it, that it drives real results, that I can have the receipts to back it up. And so when you think about an email list and serving it, is a lot easier than you're making it out to be because instead of screaming to the masses like you are on social media, you are reaching out to the people who have already exchanged something valuable to them to get something valuable from you.  

These are the people that have literally raised their hand and said, “I want more of what you've got”. And so you are speaking to the people who are already curious and invested in what you've created. And so it is an entirely different conversation than the one that you're trying to have or the one that you're trying to use to sell that is likely falling flat.

00:01:33

Andrea Marquez: Jenna figured out how powerful an email list can be early on in her career, and she'll be sharing all the steps she took to build her list so you can be just as successful. I'm Andrea Marquez, and This is Small Business, a podcast brought to you by Amazon. Today we'll talk about how you can build your email list even if you think you don't have time for it, because an email list can be a lot more rewarding than you think.

00:02:01

Jenna Kutcher: For every email subscriber you have on your email list it should equate to one extra dollar of revenue per month if you are serving that subscriber. And so imagine if you even had 250 people on your email list what that could equate to in terms of results for you. Food for thought, because adding one more follower to your social media following doesn't actually reap a lot of results. And so where is your energy going? Where's your focus going? This is exactly why email list building is our number one priority.

00:02:31

Andrea Marquez: We'll be giving you loads of actionable steps that you can use to grow your email list. But first, let's hear how Jenna realized she needed an email list.

00:02:41

Jenna Kutcher: So it's an embarrassing story. For my career trajectory I started off as a wedding photographer, fully self-taught, used my camera to get out of my 9-to-5.

00:02:52

Andrea Marquez: Jenna's business was growing and doing well, but eventually she felt burnt out.

00:02:57

Jenna Kutcher: I'm sure there are some people listening where you hit this place of burnout, you maybe achieved this level of success, and yet you are so burnt to a crisp that you can't imagine doing the same thing for years from now, that's where I was at. And so I had hit six figures, I was so grateful for that goal, but when I reached it I felt empty and I knew something had to change.

00:03:17

Andrea Marquez: Jenna realized that she was a lot happier when she was making less, so she decided to book half the number of weddings the following year.

00:03:25

Jenna Kutcher: I cut back my salary in half, but the one thing that I got back was my time. And when I got back my time, I started getting curious about other areas of business, other ways of running businesses.

00:03:38

Andrea Marquez: And that curiosity led Jenna to hire her first business coach.

00:03:45

Jenna Kutcher: And on the first coaching call, I show up, I am so proud of myself, I had 10, 000 followers on Instagram. I thought he was going to be so excited. And we get on the call and he asks me, he says, “How big is your list?” And I legitimately thought he was talking about my to-do list, and I was like, “Well, I'm writing blogs, I'm posting to Facebook, I'm creating content for Instagram. My list is long”. And he was like, “No, no, no. How big is your email list?” And I was like, “Well, I have a following on social media…”

And all this sudden he's like, “No, an email list is an asset that you own”.  

And that day he pointed me to a podcast about email list building, and I felt this feeling deep in my gut of I was already doing all the things I couldn't imagine adding on one more thing, but it clicked for me that I was building my business on space I didn't own space, space I couldn't control. Social media, I had no control over that.  

And so that was a day that I started growing my email list, and that was many, many years ago. And so I am so grateful that he wasn't duped by what I was doing on social and challenged me to think a little bit bigger because that started the whole email list building journey that I've been on ever since.

00:04:56

Andrea Marquez: At the time, Jenna was starting to pivot into other areas of business, so there were a few barriers she had to overcome before she started building her email list.

00:05:06

Jenna Kutcher: I was trying to figure out who am I even serving? What do I say to them, and how do I get them to sign up? What does this all look like? I was also really afraid of the tech. It is amazing that I know how to plug in my microphone and turn my camera on these days because I am not that comfortable with tech. And I think that's a limiting mindset belief, but also just something that is a reality. I could write and speak all day, but when I go to link up softwares, I start to panic. And so tech really scared me.

And the last thing was is that when I was thinking about time, let me be honest, that social media felt sexy to me, right? It's a number that people can see. It's this badge of honor, so to speak. Growing an email list is kind of unsexy. No one is actually peeking under the hood to see how many subscribers you have. And so I really had to let my ego die in a way to focus on why this mattered and where I was going to get that time from, which ultimately was coming from social media.

00:06:03

Andrea Marquez: I love that you said mindset because our next episode is with Amy Porterfield and she's like my best friend.

00:06:11

Jenna Kutcher: Oh really?

00:06:12

Andrea Marquez: She's literally my best friend in the whole world. Well look at that, we didn't do that on purpose listeners. But you brought up two points that we really dig into in episode 57 with Amy, how to figure out who you're serving and how to manage your mindset and the importance of staying positive. So I'm wondering, once you figured out who you were serving, what was the first thing you did?

00:06:41

Jenna Kutcher: I created this freebie and it was like five ways to grow your Instagram following, and it was a downloadable PDF. I don't even think I knew how to make things pretty at the time. I'm pretty sure I made it in Microsoft Word and exported it as a PDF. And so I just had a little sign-up form and I absolutely did leverage the audience that I had, but I was also savvy enough to go to other audiences. So Facebook groups that I was a part of, I started sharing about my freebie there. I later on learned the power of Pinterest. That is a huge way that we grow our email list, and it doesn't necessarily matter how many followers you have on Pinterest. And so I always start with who's already there, but expand out and think about how you can reach other people. And that's exactly what we've done in our list building process.

00:07:27

Andrea Marquez: Jenna was also dipping her toes into the education space and was using her freebies to test out different ideas before she created a program about it.

00:07:35

Jenna Kutcher: One thing I think people don't realize is that starting an email list and creating different freebies is the perfect low risk sampling ground to see what people actually find valuable. A lot of people create an offer because maybe once they did a poll on Instagram or they asked five of their friends, “Hey, would you actually buy this thing?” And people said “Yes”. And then when they went to collect their credit card information, everybody balked and backed out. And so starting your email list and thinking through this value exchange, it allows for people to really put some stake in the game and give you something of value in exchange to get what you've created.  

So over my career, we have used different freebies and PDFs and ideas as a testing ground to say, does this have legs? Will people actually find this valuable, or is this just an idea that lives in my head that shouldn't go any further than that? And so I think that a lot of people get intimidated by email list building, but the truth is it's a beautiful place to experiment and to really get your audience to take action with you. Action beyond just liking and commenting on social media.

00:08:39

Andrea Marquez: That's such a creative way of using an email list. You get to see the demand on the products or services you want to offer your customers, and it gives you the opportunity to pivot before you invest too much time or money into your idea. And an email list also gives you the opportunity to sell your products or services without sounding too salesy.

00:09:03

Jenna Kutcher: I think that one of the biggest problems that entrepreneurs face is one, they hate selling, right? I've never really met a lot of people that raise their hand and they're like, “I love to sell my thing”. This gives you an opportunity to serve people before you ever go to sell to them. And I think this is so important. If you're going to get somebody results for free, they are going to be far more likely to pay you for whatever it is that you have to sell.

00:09:29

Andrea Marquez: If we've managed to convince you that you need to start and grow an email list, you might be getting overwhelmed at the idea of maintaining it and creating content consistently, especially if you're already doing the same for your social media. But...

00:09:43

Jenna Kutcher: I'm going to let you guys in on a secret. So I believe that there are only two things you have to focus on as an entrepreneur in order to drive results. Two things. I think we get so caught up in the million things that we could do. The first priority has to be growing your email list. The email list is an asset that you own, it's something you can control, it is virtually algorithm-proof. The second thing that you need to focus on is any other efforts that you are putting forth in your business, the goal of those efforts should be to grow your email list. That's it.  

So the goal of my podcast is to convert listeners into email subscribers. The goal of my Instagram is to get people off of Instagram onto my email list. The goal of Pinterest is to show my pins to get people to land on my website and opt in for my email list.  

Every effort that I put forth on the internet, and I have a complex system, all of those efforts, the number one goal and the number one way we measure success is not on those platforms themselves, but in how effective they are at getting people off of those platforms and into a place that we own and can control, which is our email list.

00:10:48

Andrea Marquez: So you might want to completely distill your marketing efforts into two things. One, prioritize growing your email list and serving your audience there. And two, the goal and objective of other content you produce should be to grow your email list.

00:11:04

Jenna Kutcher: Whenever we work on an episode, we are always thinking, do we have some sort of value offer that is a logical next step for our listener? Because here's the thing, real marketing has no dead ends.  

Real true marketing always has the next invitation. Now, not everyone's going to RSVP yes to that invitation, but you have to keep putting it out there. You never want to end any piece of content, whether it's a blog post, a podcast episode, anything, with somebody asking themselves, “Okay, great. But now what?” You always want to extend that invite.  

And so even yesterday I was recording an episode for The Gold Digger podcast, and inside of that episode there were multiple mentions of different ways that people could sign up for my email list through value ads that made entire sense based on the topic that I was teaching on. And so you can either start with that email list building thing as the goal and the objective of that episode, or you can incorporate it organically into the content.  

Either way, we can't even access who our listeners are, so we can't be in touch with them to let them know what we have going on. And so if we don't actually try to get people off of the platforms, we're doing them a disservice because we're not actually able to reach out to them when we have important information to communicate.

00:12:20

Andrea Marquez: So Jenna, we've talked about having freebies to get people to sign up for your email list, but what actually goes into the emails you send out?

00:12:29

Jenna Kutcher: I lead with the idea of the jab, jab, jab, right hook of serve, serve, serve, serve, and then sell. And honestly, I don't even like using the word sell. It's more like an invitation for an offer. And so when we look at what we're sending out in a month, we're sending people additional resources, we're pointing to the podcast, we're sending just straight up encouragement with no links. We're letting people in behind the scenes. We're sharing about exclusive offers. It's just this rhythm that we've created, this life force in our business.  

My email list is the number one way that I drive sales and results in my business. If somebody told me everything's going to disappear tomorrow but you get to choose one thing, it would be my email list. It has been said in the marketing world, if you want to double your business, just double your email list.

And I have seen that to be true time and time again. The same is not true for social media. I love social media. I work so hard on social media, but I am not as confident that I could even make a sale on social media because social media is not built for us to sell. We're all seeing that right now with the algorithm and people are running their heads into the wall of why is this not working? Social media is meant to be the handshake. Email is meant to be where you sell. When people go into their inboxes, they are much more poised for purchase than when they're on social media.

People are on social media to be distracted, to be entertained, to be educated. They're not there thinking, I'm going to pull up my wallet. And so it's just so interesting to me because people are getting so frustrated with the systems and the platforms they're on, but they're not actually pausing to ask themselves, what is the intent of this and how do I play the game well so that the system works? And I think that's where people get frustrated.  

And so my email list is the hands down number one way we drive results, and I think people are missing out on this opportunity to do the same. Again, you're reaching people who are already interested and curious in what you're selling versus trying to convince the masses who are probably not even hearing you.

00:14:30

Andrea Marquez: But what if as a small business owner, I don't have time to write an email every week.

00:14:38

Jenna Kutcher: I'm going to ask you a question. Are you writing emails every day?

00:14:42

Andrea Marquez: I certainly am, yes.

00:14:44

Jenna Kutcher: Okay. So what would it look like if you were able to write one email and reach a bunch of people? I think the average entrepreneur spends hours in their inbox every single week, hours. So what would it look like to add a tiny bit of strategy to work you're already doing? And instead of going one-to-one, you're able to go one-to-many. It's actually not that much work. This is actually going to save you so much time because you are going to learn how to anticipate people's questions before they can ask them.  

You're going to learn to serve them before you can ever go to sell to them. And you're going to get insights and information into what people actually want so that your offers actually sell. It's actually not that hard. And one of the things that I really love to teach is what would it look like if you sat down and just mapped out the next month of whatever that is?  

So whether it's one email a week or one email a month, I'd argue that it's going to take you one to two hours. You're already spending that time going back and forth with one people when you could actually make something that reaches more than one person with a goal and an intent and an ability to drive a real result.

00:15:53

Andrea Marquez: But there's two mistakes that you might want to look out for when you're starting an email list.

00:15:57

Jenna Kutcher: The number one mistake that people make when they go to start an email list is they bury a little thing at the very bottom of their website that says, “Join my newsletter”. Who wants to join a newsletter these days? I already get so many emails in my inbox, I don't need another one if I don't know what value you're providing me. And so growing an email list is actually way easier than you're making it out to be because you just need to find something that your audience will think is valuable, valuable enough for them to exchange your email address for.

00:16:26

Andrea Marquez: And the second mistake is only using your email list when you're trying to sell something.

00:16:32

Jenna Kutcher: And I've seen this happen in so many entrepreneurs lives, where all of a sudden they haven't posted in two months and now they're on and they're talking about this thing that they've got to sell. And so I think that the mistake that I made in the past and that other people tend to make is that they forget the power of serving.  

Even yesterday, we sent out an email and it was just about encouraging. I have been in seasons of burnout and I was just talking about it to my audience and letting people in. And there's so much power in allowing somebody to say, “Me too, I'm not alone. Oh my gosh”. And it connects you. And so when you create a rhythm around your marketing, you'll be showing up regardless of if you have something to sell. And you'll be serving people so that when you go to sell, you have this list that is ready to be launched to.

And I think that it shifts, again, that feeling of selling, selling now becomes a service because these people are like, what is the next step? The next step is to invest in whatever that is, whether it's a product, service or an offer. And so when you're serving so well, people are ready and excited for what it is that you're launching. And so I think that a lot of times we as business owners we're like, “I've got nothing to say on the everyday life front”, and then all of a sudden we're like, “I've got something to sell”. And we miss this opportunity to serve and connect in the middle.

00:17:53

Andrea Marquez: Hearing you speak about all of this, I feel like we should use This is Small Business as a case study. If I want to give my listeners more resources and stay connected between episodes and also reach people who don't listen to podcasts, where would you recommend I begin if I want to start an email list?

00:18:12

Jenna Kutcher: So the first thing I would do is think of two different offers that you think would be interesting for your listeners. So kind of look at what some of your top episodes have been or what questions you get asked the most. Now, the reason why I would do two different offers is that you're going to get insight into what people think is more valuable. There are so many data points in email marketing that can help guide the direction forward.  

So here's a quick story. When we were trying to grow our family, my husband had a deep desire to be a stay-at-home dad. And in between him leaving a career and being a stay-at-home dad, he started a health coaching business. And before he even had a website or a business name, I knew the power of email list building. And so I said, “We're going to start growing your list before you have anything to sell before you even know what you're called”.

And so in his health coaching business, we created two freebies. One was stay at home workouts that you can do with no equipment. So it was like five, 10 minute workouts you can do from home. And the other one was our exact grocery list and meal prep menu for the week. And he totally was going to build an entire business around stay at home workouts because he had saw as an entrepreneur how hard it was for me to get movement in.  

And he was gung ho on this whole business idea. We released these two different freebies and leveraged the small audience that he had at the time, and we saw that the meal prep and the grocery shopping list 10x'd the at home workouts. It saved us from going too far down the wrong path for a business and really helped his branding, his copy, speak to people that wanted it.  

So I would encourage anyone listening to have two different opt-ins that are slightly different in nature so that you can actually start to get insight and data into what people think is interesting enough to exchange your email address for.

00:20:02

Andrea Marquez: And how would I use the podcast to grow the email list?

00:20:05

Jenna Kutcher: I would make sure that even in the intro of your podcast, you could say, “Hey, we've created this free productivity calendar. Go get your copy. This has been amazing for our listeners. Here's why we put it together”. At the end of the episode, say the same thing. When you're recording content, if there's a way to integrate it in, if you're talking about your calendar, plug it again.  

Then on the next episode, you could do something totally different like the five tools we can't live without at This is Small Business and have that. You can start to get that insight and information. To reach people that are not podcast listeners. One, you can reach them with the podcast in different ways. So you could do little clips on social media and talk about it. And then again, push to that freebie. It's actually not that complicated and it'll give you so much insight, again, into your die hard audience who want to go the next step for you.

00:20:58

Andrea Marquez: So it's A/ B testing what I'm hearing. So what we're doing at the beginning based on the content that has already performed well with our listeners?

00:21:07

Jenna Kutcher: And you could do that. And if somebody's listening and they're like, I don't even have content, I can't see what's performed. Take two different ideas you have. Most entrepreneurs have no shortage of ideas, we have a bajillion ideas. Start with one and then see if you can add in a second and promote them both the same amount, however you're promoting it, wherever you are. If you're on Facebook and you have 100 friends on there, promote it there, see what people are curious about. But again, that insight is going to guide you forward. And in the meantime, you're growing your list.

00:21:36

Andrea Marquez: Now let's take a look at how you can apply all this information and grow your email list if you're a product based business.

00:21:43

Jenna Kutcher: You want to create resources that paint your product as the hero. So let's say you have a closet organization system. You could do five ways to give you the closet of your dreams and your product can be positioned in that resource as the hero so that people are like, “Oh my gosh, add to cart”. They're creating value around the topic that their product is a solution for. So there are so many ways to do it, and again it's not selly or spammy, you are literally giving the invitation for the next step for those who are ready to join you on it.  

And I think that there are so many different ways to speak to people so that you're not focused on the features of your product itself, but you're more focused on the end result. What does the consumer truly want? Maybe they want to feel more peaceful, maybe they want to feel beautiful, maybe they want to feel calm.

And so when you think of it in this way, it totally takes out this desire to be like, here are the five product features that people might not even know why they should care about those features, and it helps connect them to their true desired end results while giving them value, again for free, and then kind of being this breadcrumb on the path to purchase of like, “Oh, wow, they actually have a solution for this. I might not be ready to buy it now, but when I get that email two months from now and I'm in a different position as a purchaser, I'm ready to pull the trigger”.  

So it just changes the relationship. And also you learn a different way to speak to your consumers where you're not so feature focused and you're more focused on what is the true result that they want when they buy my product. And I think that shifts the conversation immensely.

00:23:20

Andrea Marquez: Jenna has given us loads of helpful information on why and how to grow your email list. So it sounds like the time to start your email list is now.

00:23:31

Jenna Kutcher: So once I figured it out and I was like, “Wait, this isn't as complicated and scary as it made it out to be”. I didn't want to gatekeep this information. And I think that this is so powerful because we are living in a time where we are building our dreams on rented space. Social media is rented space. And so if you want to build a true asset in your business, I truly believe it has to be an email list.  

So I have a free training, it's called From zero Subscribers and zero Strategy through an engaged email list that lasts. And inside this training, I'm going to walk you through what do you say, how do you start, how do you say it, how does it get delivered? All of the steps that you need to really understand the what and the why behind email marketing.

I'm so excited. I host these trainings live one time per year and it's coming right up. So if you go to jennakutcher. com/ list, that's jennakutcher. com/ list, you can save your seat for this training. I am so excited to lead thousands of entrepreneurs through this because I have seen the power and the actual growth, and again, my email list is the number one way that I drive sales and results, and we have the receipts to prove it. And so I want to help people unlock that potential so that their precious time that they're spending in their business is going to a place that is actually tied to tangible results.

00:24:48

Andrea Marquez: If you're getting a little stressed at the idea of starting an email list or readjusting your marketing strategy, here's what Jenna has to say.

00:24:55

Jenna Kutcher: I know we use the word small business, but I just want to remind your listeners that what they're doing is anything but small. I think that it is so easy to look at people even like me who are a decade in the making and just think we blinked and this came about and it happened, but I want to remind you that the same frustrations and the same mistakes you're making and the same questions you're asking yourself, we've all been there before. And so I just want to encourage you, I just have felt so much lately.  

The entrepreneurs are the people that are changing the world and we're changing the world for our children. We're changing the world for the people who get to experience what we're creating. We're changing our beliefs in ourself and what's possible.  

And so while we might use the word small in front of your business, no matter where you're at on the journey, I just want to remind you that what you're doing is actually really big and brave and bold. I don't want you to ever forget that. Because I think that there's so much power in what we're doing, and I think we're creating this ripple effect that we often forget about. And so I just want your listeners to know that I'm cheering them on.

00:26:07

Andrea Marquez: Beautifully said Jenna. I'm glad we're ending with that because we can all use a little encouragement every now and then. Jenna did a great job of breaking down how to start and grow your email list.  

If you didn't catch all of Jenna's advice, don't worry we've taken notes for you. You can find them at smallbusiness. amazon. com/ podcasts. Reach out to us at thisismallbusiness.amazon. com to tell us what you're up to or what topics you want us to cover. And let me know what you think of the episode by leaving a review on Apple Podcasts, it's easier if you do it through your phone. And if you liked what you heard, I hope you'll share us with anyone else who needs to hear this.  

That's it for today's episode of This is Small Business, brought to you by Amazon. Until next week, I'm your host, Andrea Marquez. Hasta luego, and thanks for listening.  

This is Small Business is brought to you by Amazon with technical and story production by Jar Audio.

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Ready to make a difference with your business but don’t know where to start? Just ask Thomas Ling, founder of Kin+Kind, who combined his passion for the environment and love of animals to create eco-friendly pet products. Thomas breaks down what makes a business sustainable, the importance of transparency and authenticity, and how you can start a business that does good in the world.

“It's important that we are running the kind of company that we want to see out in the world.” Thomas says.

Learn what it takes to be a clean business, and the benefits that come with it.In this episode you’ll hear:

(01:09) Kin+Kind’s story.

(02:56) How Kin + Kind brings transparency and authenticity into their products.

(04:11) What are clean ingredients?

(06:34) Being a clean company is about more than using good ingredients, it’s also about how you treat your employees.

(07:25) What is greenwashing?

(09:15) How to start a sustainable business.

(10:50) The benefits of having a clean business.

Key takeaways:

1 - Starting a business that has a positive impact means being transparent and authentic.  And there’s a few ways you could do that. Thomas makes sure to use the common and scientific name of the ingredients they use, get’s third-party certifications so their customers know what’s in their products, and uses responsibly sourced ingredients.

2 - Building a clean business isn’t just about ingredients; it’s also about how you treat your workers.

3 - Using high-quality ingredients can be pricey. Thomas advises new businesses to be prepared to roll your products out at a loss and focus on a small group of customers that share your values. It's going to take a lot of experimentation. So, start small and do a proof of concept, then once you see that there’s a market out there that wants what you’re selling – that’s when you might be profitable.

4 - Even though it costs a lot to start a clean business, it's worth it. Thomas says when your business is based on good values, your customers stick with you, even when times are tough. Kin+Kind kept going during the pandemic because their customers knew they cared about their pets and the environment just as much as they did.

00:00:01

Thomas Ling: So we're not just making a product because I came from a very, very unrelated space, and the switch was to do something I was passionate about and something I cared about and trying to do something that had an impact. And it's weird. How do pet products have an impact? But in the way that we interact with our products and our employees and our community is how I feel I'm having an impact and doing and putting into the world something that represents the value systems that I have.

00:00:27

Andrea Marquez: To celebrate Asian-Pacific American Heritage Month, we're highlighting an Asian and Pacific Islander-owned small business that's taking care of your furry friends while doing some good in the world.

Hi, I'm Andrea Marquez, and this is Small Business, the podcast brought to you by Amazon. Today we'll be digging into clean ingredients and sustainability with Thomas Ling, the owner of Kin+ Kind, a manufacturer and retailer of pet grooming and wellness that's on a mission to clean up pet care. Starting Kin+ Kind wasn't always part of Thomas's plan.

00:01:05

Thomas Ling: I went to Harvard Law School and I practiced for about a decade and I enjoyed being a lawyer. I liked doing law, but I didn't feel passionate about the type of clients that I was servicing. It wasn't moving me towards having an impact on the world.

00:01:18

Andrea Marquez: Tom has spent a lot of time doing pro bono work, and he still continues to do that on the side, but pets and the environment have always had a special place in his heart.

00:01:28

Thomas Ling: I grew up working in pet stores. There's a cute pet store down the corner that I would hang out, and finally they said, “Do you want to get paid?” I was like, “Yeah, that'd be great.” And I just had a ton of pets in my home. So I had rabbits, I had birds, I had fish, I had dogs. Just always surrounded by animals, but dogs and cats, I've always really ... Think they're part of your family.

00:01:47

Andrea Marquez: His sister Janine, who helped co-found Kin+ Kind shared his obsession with pets, and she ended up opening a pet store.

00:01:55

Thomas Ling: We actually worked at pet stores together, and so it was kind of a space that I was familiar with. She's passionate about all these things and seemed interesting and exciting. It allowed me to bring the idea of being passionate about environmental issues and trying to make a product that brought those environmental issues into the pet space. Just seemed kind of a good fit.

00:02:15

Andrea Marquez: But Janine eventually ended up leaving Kin+ Kind to start her own company.

00:02:19

Thomas Ling: And so she's like, “Thomas, your sustainability is nothing. Hold my beer.” So she went and made a company that doesn't use plastic.

00:02:29

Andrea Marquez: So this passion to help the environment and have a bigger impact clearly runs in the family. And one of the main ways that Kin+ Kind tries to do this is by bringing transparency and authenticity to their products.

00:02:41

Thomas Ling: That means using natural ingredients that are certified by the United States Department of Agricultural Inspectors under the USDA Organic Program or the USDA Bio-based program. Plus that means we make everything ourselves here in the United States.  

We're using the highest regulatory standards so that we're able to be good to our team while we're being good to the world. And the last thing that we used as kind of our pillar of transparency and authenticity is that we have made everything specifically for pets. So we had our own veterinarian and our own plant scientists pull these things together themselves to make sure that we have ingredients that are dealing with pets in a holistic, natural way that's effective and safe and good for the environment.

00:03:27

Andrea Marquez: There's a lot of responsibility behind your brand. Am I hearing a dog collar?

00:03:33

Thomas Ling: That is.

00:03:33

Andrea Marquez: That is.

00:03:35

Thomas Ling: Yes.

00:03:35

Andrea Marquez: I love that. That's so cute and super fitting for this conversation. So, Thomas, can you explain to me what clean ingredients are?

00:03:45

Thomas Ling: So that's about using things that are both responsible and transparent to the consumer, and that's really missing in the pet space. So in the pet space, there's a lot of greenwashing, there's a lot of omission because it's not that tightly regulated from a labeling perspective. So they're not required to put everything that's in their bottle into their labels. So step one is, Hey, what's in that bottle? Because pet parents are rightly concerned because they want what's best for their pets and feel very passionately about certain ingredients that are natural, that are responsibly sourced, and you need that level of clarity.

00:04:21

Andrea Marquez: This is a good time to mention that Amazon through our Climate Pledge-Friendly program is helping customers discover products with third party sustainability certifications like USDA Organic to help sellers like Kin+ kind offset some of the economic hardships of starting a sustainable business. So, Kin+ Kind does a few things to ensure that they're transparent about what's in their products. First, Thomas says that they use the common name and the scientific name for every ingredient they use.

00:04:52

Thomas Ling: So we don't use fantasy names, we don't use made up names.

00:04:55

Andrea Marquez: They also have third party certifications on their products.

00:04:58

Thomas Ling: Because inspectors come in, they audit our books, we do lab testing for our products so that there's 100% certainty that you know hat's going in or on your pet.

00:05:08

Andrea Marquez: And they use responsibly sourced ingredients.

00:05:11

Thomas Ling: We are a certified USDA organic brand because we feel very passionately that things should be grown with minimal negative impact on the earth. So if you're certified USDA organic, that means all of your ingredients are USDA organic. That means they're grown without pesticides, they're grown without GMOs, they're grown without other harmful farming practices because the United States Department of Agriculture defines what that means.  

And so people throw away that term organic. They don't really know what it means, but if it's got that organic seal on it, you are compliant with the program that the United States Department of Agriculture has put out there that makes us feel good that we're protecting the earth.  

And that makes you feel good that you're protecting your pet because you know what's in that cosmetic or in that supplement that you're putting it. And the newest category is a Pee+ Stain so you can feel good about what you putting in your home so that you know that you're not inhaling these ingredients that are just bad for you, your family, your pet.

00:06:06

Andrea Marquez: Kin+ Kind wants to be a responsible company and provide clean and transparent products to their customers. But being a clean company goes beyond this. It also includes caring for your employees.

00:06:18

Thomas Ling: So we have our own team working in our own facility. So being local obviously is good for our community, but it's also good because it's good for the employees. So our employees have healthcare benefits, they have dental benefits, they have retirement programs because this is important. It's important that we are running the kind of company that we want to see out in the world, and we're doing here is how we want to be treated, and we want other people to be treated.

00:06:44

Andrea Marquez: Thomas mentioned greenwashing when he was talking about the pet space, and if you don't know what that is ...

00:06:50

Thomas Ling: So greenwashing specifically just saying, I'm natural, and then there's nothing in your package that's natural or there's nothing in your package that's good for the environment. There's nothing other than the name of your product potentially. So there are a lot of products, particularly in the pet space that says, I'm natural or I'm clean.  

Then you look in their bottle and you're like, “There's not a single natural ingredient in here.” So it's kind of this practice. People know that there's a consumer demand for natural, and a lot of it's a lot of confusion because these terms, organic, what does that mean?  

Natural doesn't have a legal definition and they pretend that this is good for the environment or that this is good for pets, but that they have no right to that claim. Some of it can be quite difficult. That's something we should be concerned about. It's not fair to you as the consumer. It's not fair to the environment because they're putting out products that aren't good for the environment.

00:07:40

Andrea Marquez: But using high-quality ingredients that are natural or organic isn't cheap. So if you're planning on starting a business that centers around sustainability or a specific value you have, Thomas says that you have to be prepared to potentially roll your products out at a loss when you're first starting out.

00:07:58

Thomas Ling: I have a lot of experience at that. Yeah, so in terms of, hey, if I was in a kind of different space and I wanted to put my values into my business, I think it's focusing on a small segment of people who share your values and can you have a value added service in that small segment instead of trying to do something at scale, because if you try anything at scale, it takes a long time to ramp up. It takes a lot of experimentation, it takes a lot of cost before you can do that. And so kind of do a proof of concept in a small idea.

So if it's like, Hey, I want to make brownies, you're never going to make money doing it, but go ahead, make brownies, see if there's a market for it, then scale up. But you're not going to make any money in the first infinity period of time until you know okay, this is a good product, I see a path forward to profitability for it because I've done the math. So, okay, I need this equipment and I need this price tier, and I need X, Y, Z to profitability. So you have that mapped out, but you find that that there's a proof of concept that there's a market out there that wants it and responds well to it.

00:08:59

Andrea Marquez: But for Thomas, the benefits he gets from having a clean company outweigh the cons.

00:09:04

Thomas Ling: I'd rather have a smaller business that succeeds based on its values and that has customers that relate to it than a large business that just turns out things to a larger public. My products are not for everybody. I sit on pet shelves next to value brands, and that's fine. They're just a consumer might want that value because that money might mean a lot to them, or they just don't really care about my values, and that's okay. It is what it is.  

But being able to have a company that I want to go to work for every day is in of itself a value that's dissonant with kind of the idea of capitalism, that I should only produce the thing that the market wants because if I produce only the thing that the market wants, I'll only produce the highest-margin product, which isn't good for me or the other important stakeholders, the people who work with me at my company or the people I'm serving.

So there are other values other than that pure consumer choice. And then two is, yes, you can run a successful business if you find a cohort of people that you want to work with and consumers that you want to serve because they have demands and they want those demands to be met. And those demands are value-based. I'd love for that community to grow, and it is growing. We see that the natural space and the clean space are areas that have very consistently been growing more rapidly than other areas and areas that there was a shocking low level of sacrifice during harder economic periods.

So during COVID, I thought, “Oh gosh, I'm going to go out of business.” I am like, “I'm doomed. I'm doomed.” There's no way that I'll be able to stay in business when people don't know if they were going to have money in a month. And it was so scary, and it was interesting that no, actually, we grew huge leaps and bounds because people continue to think of their pets as family and the values that they were putting into the product that they're getting for their pets were important to them. So they stuck with us and we grew. And so that's great having someone that's loyal to us as a value-based business as opposed to just a commodity that's on the shelf because the next person who makes it cheaper, you buy it from them, but they didn't. They stuck through it.

00:11:12

Andrea Marquez: So aligning your business with your values, even if it makes the product a little more expensive than usual, might get you a bunch of loyal customers. I learned so much about creating a sustainable business and what it means to be a clean business. If you missed anything, don't worry. We've taken notes for you. You can find them at www. smallbusiness. amazon. com.

If you liked what you heard. Don't forget to subscribe and tell your friends about us by sending them a link to this episode, and I'd love to know what you think. So please leave us a review on Apple Podcasts. It's easier to do it through your phone or send us an email at thisissmallbusiness@ amazon. com with your thoughts.

That's it for this episode of This Is Small Business, brought to You by Amazon. Until next time, I'm your host, Andrea Marquez. Hasta Luego, and thanks for listening.  

This is Small Business is brought to you by Amazon with technical and story production by JAR Audio.

The more people see your products, the more sales you’ll probably get – and a marketing strategy can help you do that.

Just ask Elena Fahrländer, the Chief Commercial Officer of Danish Endurance, a company that sells their products worldwide. She’ll be sharing what they do to find their target audience and how their approach to marketing changed as they grew. You’ll also hear from Elizabeth (Liz) Downing, director of partnerships at The Ecom Cooperative. She’ll give more actionable advice on how to build your marketing strategy using realistic goal setting and data analysis.

“It's really important to look inward, really examine who you are as a business, and then set your goals and your expectations based on what you think you can achieve,” says Liz, “and it all comes down to the data.”

In this episode you’ll hear:

(02:18) Danish Endurance’s story

(04:02) How to find your target audience

(07:02) The importance of clear and realistic goals and budgeting when building your marketing strategy

(11:02) Starting out with a structured marketing strategy

(11:50) How and why Danish Endurance constantly updates their marketing strategy

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Key Takeaways:

1 - Before you start working on your marketing strategy, you need to figure out who your ideal audience is and how to reach them. Liz says there’s a few questions you need to ask yourself: what do you have? Do people want it? And which people want it and what is the best way to reach them. Elena also adds that Danish Endurance relies on data to understand their customer journey and figure out the best way to reach them.

2 - Customer reviews are important for multiple reasons. It tells you what your customer thinks about your product. Most customers use reviews to figure out if your product is worth buying, and it's important to the algorithm -- so it helps people find your product.

3 -  Realistic expectations and goals are important – and data will help you figure out what that might look like. But even if you don’t have data yet, Liz suggests that you look at data from other businesses that are similar to what you want to do.

4 - Build a marketing budget and monitor it. Monitoring how much money you spend on marketing and how successful your campaigns are will help you figure out what works and adjust your spending accordingly.

5 - Stay dynamic. Once you create a marketing strategy, be prepared to update it. Elena says Danish endurance review their strategy on a monthly basis to maintain competitiveness.

00:00:01

Andrea Marquez: Marketing is an essential part of your business. And I know, I know, I feel like I say that about everything we talk about on This is Small Business, but marketing is how you get people to know you exist. And even if you have the best product on the market, it'll just collect dust if you're not putting any effort into getting the word out.

I'm Andrea Marquez, and This is Small Business, a podcast brought to you by Amazon. Today we'll be talking about how to get started on your marketing strategy, because marketing yourself isn't always easy.

00:00:37

Elizabeth Downing: Whether you're in person business, whether you're an online business, it's just really hard with the saturation of people entering the marketplace, with the saturation of all the noise out there and all the different types of new media we have, and the changing behaviors of buyers based on their age and their demographics. It's just fascinating to me. And it's always such a hero story to me when somebody manages to get the word out about their product, and a small business becomes a bigger business because of their marketing efforts.

00:01:04

Andrea Marquez: That's Elizabeth, Liz Downing, Director of Partnerships at the ECom Cooperative, a platform that provides free resources to eCommerce businesses.

00:01:13

Elizabeth Downing: I got interested in marketing early in my career, I did promotional marketing for a while. And then I did so much freelance writing, and that was obviously to support people's marketing efforts. And when I started working at ECom Engine, we started working with all different types of sellers, people who had been on the marketplace since it opened, people who were just entering the marketplace. And I just found it fascinating.

00:01:36

Andrea Marquez: Liz says that she was always interested in marketing, mainly because of the psychology behind it.

00:01:42

Elizabeth Downing: I was always more entertained by commercials than other kids were, because I thought it was really interesting the way different products positioned themselves, different companies positioned themselves. And I just think that the marriage of small business and marketing strategy is my favorite thing to think about and my favorite thing to talk about.

00:02:01

Andrea Marquez: Liz has a lot of marketing advice that she'll share with us throughout the episode, but first, let's hear from a company that succeeded in getting its products in front of as many eyes as possible.

00:02:12

Elena Fahrländer: So DANISH ENDURANCE was founded in 2015 in Denmark by two Brothers. So it's a family business, and the brand is rooted in the belief that physical and mental balance forces personal endurance. So therefore, DANISH ENDURANCE, our brand, aims to inspire greater happiness through quality sports and casual wear. So it's really products for everyone, I would say.

00:02:37

Andrea Marquez: That's Elena, the chief commercial officer of DANISH ENDURANCE.

00:02:41

Elena Fahrländer: I oversee the sales operations across various third party platforms and marketplaces at DANISH ENDURANCE, and over the past six years I've witnessed the company's evolution from really a startup to a more established brand. It's been an exciting journey, contributing to the growth of our brand from just about four products when I started to now plus 100.

00:03:09

Andrea Marquez: DANISH ENDURANCE started because Nicolaj, the CEO, couldn't find high quality and affordable compression socks when he was training for a marathon.

00:03:17

Elena Fahrländer: So he thought, if you want something done right, you need to do it yourself. So he did. And then we entered into many other clothing categories, such as underwear for men and women, headwear base layers, and everything is with a very clean, Danish design and a sustainable twist.

00:03:37

Andrea Marquez: And they're selling these products all over the world, so clearly they know a bit about how to get their products seen by their customers. But before you start thinking of how to reach your customers, Liz says that first you need to know who your target audience is, which is a lot easier said than done.

00:03:56

Elizabeth Downing: As you get started with a small business in general, obviously you're going to want to take the temperature of the world out there and find out what the demand is for whatever it is that you're selling. So step one is what do you have? Step two is do people want it? And then step three is which people want it, and how is the best way to reach them? But there are things that you need to think about as you ramp up and you get started with that before you can even actually start marketing.

So it is a real chicken and egg situation, in that you have to have a pretty good idea of who's going to want what you're selling out there. But in terms of how you reach them, there are lots of steps to take, including what your competitors are doing, identifying what channels are successful for your competitors. That's probably the easiest hack, is look at who you're going to compete with and how they're doing it, and then figure out how you can do it better.

00:04:52

Andrea Marquez: Elena says that DANISH ENDURANCE is constantly using data to understand who their target audience is and how to best reach them.

00:04:59

Elena Fahrländer: We regularly request customer segmentation data, then we can use that to customize our imagery and our campaign content, such as headlines of the campaigns and so on. So it really tracks the very first touch point of the customer and lets us see where exactly the customer converts then in the end, how many touch points the customers had until the purchase happens so that we can see that all the different campaign types that they all play into, basically in the end, convincing the customer to buy our products.

00:05:31

Andrea Marquez: Understanding the user journey to your products is helpful, and looking at your reviews is another way to know more about what your customer wants.

00:05:39

Elizabeth Downing: Customer reviews are important, because it is the social proof behind the success of your product and how good your product is, but it plays into the search algorithm and it plays into how often you win with your advertising. It's a metric that's really important and really to get, because what we used to say is, “Happy customers don't leave reviews.” And for every bad review you get, you need to get a lot of good reviews to make up for it because that average star rating is really important.

00:06:10

Andrea Marquez: So reviews are important for multiple reasons. First, it tells you what your customer thinks about your product. It's how most customers decide on whether they'll be buying your product or not. And it's important to the algorithm, so it helps people find your product. Now, let's dig into how to set up your marketing strategy. One of the most important things you need to do is make sure you set clear goals and have realistic expectations.

00:06:38

Elizabeth Downing: So if you're launching, then you have an expectation for your launch and an expectation of the marketing you do around your launch. And then once you get into growth, then you're going to have a growth expectation. But you have to be realistic, so it's really important to look inward, really examine who you are as a business, and then set your goals and your expectations based on what you think you can achieve. And it all comes down to the data. So even if you don't have any data because you haven't done anything yet, you can look at the data from other people who have done what you're trying to do and you can get an idea of what your category is going to do.

00:07:16

Andrea Marquez: And of course, another important part of your marketing strategy is your budget.

00:07:21

Elizabeth Downing: So you'll have a marketing budget that you can allocate according to your goals. You can figure out which channels are going to be higher impact for you based on what your competitors are doing, based on what complimentary services are doing. You have to really geek out on it. You have to really get your data, set your expectations, set your goals, and then start small and execute from there. And if you do that, it's easier to avoid mistakes. But if you go in with unrealistic expectations, you're putting yourself at a huge disadvantage.

00:07:58

Andrea Marquez: When you're starting a business, money is always top of mind. And even though marketing isn't always cheap, there are ways to market your business and build brand awareness without breaking the bank.

00:08:09

Elizabeth Downing: So I think that what a lot of businesses do, and I think it's a good idea, is to get your product to some people and get some feedback on that. Because you don't want to put your product someplace and then all of a sudden have to change something about your product.  

So first, get it out there, get some feedback on it, and then you can develop your launch strategy and you can figure out which marketing channels are going to work best for you. And then conservatively using the social space, using whatever virality you can achieve is a good way to get your brand name out there without spending a whole ton of money right at first.

00:08:49

Andrea Marquez: We have a whole episode that's dedicated to social media and virality. It's episode 45 of This is Small Business, and it's filled with tips on how to go viral, what to do if you go viral, and how to create content for your brand on social media.

Let's say you've already set aside a budget for your marketing strategy and are now spending that money. Now, you'll need to make sure to monitor the data that's coming from your marketing efforts so you know what's actually bringing in customers. And keeping an eye on the data will also help you know what to stop spending money on.

00:09:19

Elena Fahrländer: I think at the very beginning when we started up our brand, we invested a lot. And we didn't have a lot of data transparency in the first few years, I would say. And now our company has adopted a very data-centric approach, it's one of our core values at DANISH ENDURANCE. And we really monitor different marketing KPIs so we know exactly how much we're spending on marketing every day. We have a few always-on campaigns that are very targeted towards different audiences and also our best-selling products mostly, but then we also make sure that we budget a bit of money to test some new initiatives. For these, we really oversee them very closely to make sure that we are not overspending on that.

00:10:04

Andrea Marquez: But before you experiment with different strategies.

00:10:07

Elena Fahrländer: I would really recommend everyone to start with a very structured marketing campaign account from the very beginning and roll that out then to the other locales that are opening up, or also new products that you're launching. And get full transparency into your product profitability from day one, because that's just so important that you know how much marketing money you can spend and what your margins allow you to spend. And then you can take very conscious choices about maybe selling at an unprofitable level for some time to gain market share. But I think the most important is that the choice is conscious on that.

00:10:42

Andrea Marquez: And once you create a marketing strategy, be prepared to constantly be updating it.

00:10:48

Elena Fahrländer: We create an annual budget for each market and for the company as a whole, and that's when we establish our overarching strategy. So our marketing strategy is very much aligned with our annual budget. But then we need to stay dynamic, so we conduct regular monthly reviews as well. We have some market trends, competitor activities that we need to monitor and that we need to adjust to. So it doesn't make sense to just create one annual strategy in January and never adjust. So I would say we go over that on a monthly basis, that ensures that we stay competitive in our marketing activities. And on top of that, there's always some new campaign types that are launching and that we need to test, and then roll out if the test proves successful.

00:11:37

Andrea Marquez: So to sum it all up.

00:11:39

Elizabeth Downing: You're going to want to set your goals and expectations. You're going to want to allocate a marketing budget. You're going to want to explore your most cost-effective channels that will have the highest impact. You don't have to do this alone, small business owner. You've got resources out there and people who really, really want you to succeed. Take advantage of that, because that's something that not every industry has that the e-commerce industry does have, is a ton of support and a whole lot of love.

00:12:06

Andrea Marquez: I totally agree. I definitely see that support and love in all the people I've talked to on This is Small Business. I learned a lot of important information about marketing from Elena and Liz. One thing that stuck out to me is that data is key to figuring out your marketing strategy. And if you're just starting out and don't have any data yet, you can always look at data from similar businesses. If you missed anything, don't worry, we've taken notes for you. You can find them at www. smallbusiness. amazon/ podcasts.  

If you enjoyed this episode or found any of the tips helpful, make sure to subscribe and tell your friends about us by sending them a link to this episode. And please, please, please consider leaving a review on Apple Podcasts. It helps other people find the show.  

Plus, I love hearing your thoughts on the episode and how you'll be using this information in your business. If you're an aspiring entrepreneur, or maybe you already have your small business up and running and you're ready for the next step, a super valuable resource that can help you is the Amazon Small Business Academy. Take the free self-assessment on the Amazon Small Business Academy site at www.smallbusiness.amazon.  

That's it for this episode of This Is Small Business, brought to you by Amazon. Until next time, I'm your host, Andrea Marquez. Hasta luego , and thanks for listening. This is Small Business is brought to you by Amazon with technical and story production by Jar Audio.

Your small business (or idea if you haven’t started yet) is a lot more important than you think. Just ask Karen Kerrigan, the president and CEO of the Small Business & Entrepreneurship Council. She’ll be sharing a ton of fun facts about how small businesses drive innovation, help the economy, and create jobs. You’ll also hear from Kylie Jiwon Hwang, an Assistant Professor at the Northwestern University Kellogg School of Management. She’ll give us more insights on how entrepreneurship can help marginalized individuals and how starting your own business can benefit your community.Get a quick refresher on why the work you’re doing (or planning to do!) is important and learn all the benefits and challenges you might encounter on your entrepreneurial journey.

In this episode you’ll hear:

(01:42) Why Small Businesses are important.

(04:27) Why Marginalized individuals are gravitating towards entrepreneurship and the benefits that come with it.

(07:33) Challenges that you might face when starting a business.

(10:48) How technology has been helping small business owners overcome some of the challenges they face.

(14:41) The importance of being prepared before starting a business.

Key Takeaways:

1 -  Small businesses create jobs. According to the SBA, small businesses in the US generated 1.5 million jobs and 64% of new jobs.

2 - Small businesses drive innovation which makes the economy more vibrant. Karen says that 80 to 90 percent of patents are filed by small businesses so entrepreneurs are at the forefront of innovation.

3 - Entrepreneurship provides opportunities for marginalized individuals to find jobs and achieve financial independence and success.

4 - It’s important to be aware of the challenges that you might face before getting into entrepreneurship so you’re better prepared to handle them. Some of these challenges may be inflation, and limited access to capital, funding, and the social networks you might need to help you succeed.

5 - Getting training is important. We’ve talked about how you’ll learn as you go in other episodes of This is Small Business, but it is important to know what you’re getting into to increase your chances of success. Karen mentioned that a lack of training or preparation is the reason why some businesses fail.

6 - Utilize technology. Karen says that technology has helped lower the cost of entry to entrepreneurship. You can use technology to find customers, advertise affordably, and even launch your business online on your own.

00:00:00

Andrea Marquez: We are constantly hearing that small businesses are important. They contribute so much to the economy and they give people jobs. It's why I love working on this podcast. I get to elevate their stories and give you tips and key lessons on how to start, build and grow your business. We've covered a lot on how to get into entrepreneurship, but we barely scratched the surface on why you should do it, and since sometimes it can feel like you don't have access to the same resources as other people, is it really a good idea to start a business?

Hi, I am Andrea Marquez, and This is Small Business, a podcast brought to you by Amazon. Today we'll be digging into the importance of small business, some of the challenges to expect and how to navigate them. So whether you're already starting a business and need a quick refresher on why the work you're doing is important, or if you're considering starting one but feel like the odds are stacked against you, then this episode is for you. But first, let's start with the basics. What is entrepreneurship?

00:01:14

Kylie Hwang: I define it as a labor market status, which is distinct from paid employment. So working for an employer, which essentially means that it's individuals who start their own businesses, and I think it will include small businesses, even businesses that aren't incorporated or don't have employees. So it's a pretty broad definition that I think about.

00:01:32

Andrea Marquez: That's Kylie Hwang, an Assistant Professor at the Northwestern University, Kellogg School of Management. Kylie says that entrepreneurship is important in many different ways. The first is job creation.

00:01:45

Kylie Hwang: So according to the Small Business Administration, small businesses actually generated 1. 5 million jobs and account for around 64% of new jobs in the US.

00:01:54

Andrea Marquez: And they don't just stop at providing jobs. Karen Kerrigan, the President and CEO of the Small Business and Entrepreneurship Council says that most small business owners also like to focus on providing quality work life to their employees.

00:02:10

Karen Kerrigan: They want to pay them well, they want to provide them with healthcare. They want to provide them with the best benefits that they can to retain their workers. Sometimes it's just very, very difficult, costly and expensive. That's why we're working on solutions to bring down the cost of healthcare and other benefits and making it much easier for these employers to provide the benefits that their employees deserve.

00:02:34

Andrea Marquez: When thinking about entrepreneurship, the word innovation also comes up. Karen says that 80% to 90% of patents are actually filed by small businesses.

00:02:44

Karen Kerrigan: When you look at the innovation and the competition and all the vibrancy, it is coming from individual entrepreneurs who have these great dreams and they're taking them to the marketplace.

00:02:55

Andrea Marquez: This is something that Kylie also points out.

00:02:58

Kylie Hwang: Entrepreneurial firms, and you're probably thinking about your typical Silicon Valley type of tech startups, have been really at the forefront of innovation and technological developments. They're the ones doing creative destruction. So that's also been a reason why entrepreneurship has been seen as so important to the economy and the society in general.

00:03:17

Andrea Marquez: And that leads us to another point, economic growth.

00:03:21

Karen Kerrigan: When you look at every sector of our economy, whether it's technology, agriculture, manufacturing, biopharmaceutical, energy, retail, it's all dominated by small businesses and the entrepreneurs behind those firms that are really helping to make our economy more vibrant and more competitive and viable.

00:03:41

Andrea Marquez: Kylie says that there's one more reason why entrepreneurship is important.

00:03:45

Kylie Hwang: Entrepreneurship in small businesses really provides opportunities for marginalized group members to actually find jobs and gain employment that would otherwise not have been possible for them and actually work and achieve financial success and independence.

00:04:03

Andrea Marquez: I'm really excited to dig into that. We've talked about this on previous episodes of This is Small Business, but when you see people who look like you succeed in something you want to achieve, like starting a business, it makes it seem more achievable. And Kylie says that marginalized individuals are increasingly becoming entrepreneurs because of two reasons. The first is because the barrier to entry is low.

00:04:27

Kylie Hwang: There are a lot of platforms that provide ways to become an entrepreneur more easily, a lot of online things that you could do, for example. So that's making marginalized individuals more likely to become entrepreneurs because it just lowers the barrier to go into entrepreneurship, compared to the old ages where you actually had to have more financial capital, social capital, et cetera.

00:04:48

Andrea Marquez: And the second reason is because becoming an entrepreneur is sometimes easier than finding a job.

00:04:54

Kylie Hwang: I think this can be generalized to a lot of populations. So research has found that immigrants or racial minorities or even mothers who face the motherhood penalty are more likely to become entrepreneurs because they find that traditional employment is hard to get or because the jobs that they get aren't satisfactory in a certain way.

00:05:14

Andrea Marquez: Kylie has done a lot of research on this. She mainly looks at how and why formerly incarcerated individuals become entrepreneurs.

00:05:22

Kylie Hwang: And the main reason behind this, there could be other reasons that are going on as well, but the main reason is really that it's difficult for them to find work. So they're going into entrepreneurship as an alternative way to overcome this discrimination that they face in the labor market.

00:05:36

Andrea Marquez: But it's not just formerly incarcerated individuals who turn to entrepreneurship to overcome discrimination.

00:05:42

Kylie Hwang: Other cases, which I mentioned like the motherhood penalty, recent research, which I haven't done myself, so I can't really speak to that research, but they've found that mothers who are more likely to face penalties, for example, in countries that have more biases towards women, they're more likely to engage in entrepreneurship as almost a plan B to employment. So I think, and this generalizes to immigrants and other marginalized populations. So it does seem to be that entrepreneurship is many times the route that people tap on when it's very difficult for them to find traditional work.

00:06:16

Andrea Marquez: And these entrepreneurs could end up benefiting their communities as well.

00:06:20

Kylie Hwang: So some of them were specifically working on products or services that were serving their communities or their local communities, and they also had some initiative going on within the company that was something about having more social impact. So I think that beyond job creation or beyond helping the focal individual who's the entrepreneur, there seems to be this spillover effect from having these marginalized group entrepreneurs who may be more likely to be open to hiring others and also being more socially impactful in their businesses as well.

00:06:56

Andrea Marquez: Okay, so clearly there's a lot of benefits to entrepreneurship. You get to create job opportunities for yourself and for your community, and you help the economy grow. And it doesn't hurt that it's becoming a lot easier to start a business because of all the resources out there. But if you want to get into entrepreneurship, it's also important to be aware of the challenges you might face so you're prepared to face them. Karen says that an ongoing challenge that a lot of small business owners face is inflation.

00:07:23

Karen Kerrigan: Many have not kept pace with inflation. So inflation was a very big concern of business owners over the last year or more. And hand in hand to that is just economic uncertainty. What is going to be happening in the economy? Is there going to be a recession? Is there going to be an economic slowdown or not? That uncertainty really affects confidence and their willingness to invest in their businesses.

00:07:48

Andrea Marquez: Karen also says that recently, a lot of small business owners have been struggling to find the labor they need to operate smoothly.

00:07:54

Karen Kerrigan: I think in our last survey, our small business checkup survey that we did, and business owners say the lack of skilled labor or labor was affecting their operating capacity.

00:08:05

Andrea Marquez: Another challenge is getting access to capital or finding funding.

00:08:08

Karen Kerrigan: And that is one of the other issues that has really been an increasing pain point for small business owners, particularly during the last year as interest rates were rising. So with higher interest rates, the cost of capital goes higher and makes it much more difficult for business owners to access the credit and the capital that they need to invest in their businesses, to scale their businesses, to operate their businesses.

00:08:35

Andrea Marquez: Another challenge that Kylie says could affect entrepreneurs is access to social networks.

00:08:40

Kylie Hwang: They lack the social networks to gain financial capital, gain ideas, et cetera, that are really important to be successful as an entrepreneur. So I think for this, and also connectedly, they also lack the human capital to actually found and succeed in a business, which can be really little things like general business knowledge, like bookkeeping, how to incorporate your company. But these things are things that they also lack in human capital, which also hinder them from being successful in founding or even after founding, that they are more likely to exit out because they were unsuccessful. So I think for social capital or human capital, I think things that could be done is that increases in perhaps training or incubators.

00:09:24

Andrea Marquez: Getting proper training is important for anyone who's trying to start a business. Karen says that a lack of preparation and training before jumping into entrepreneurship is the reason why some businesses fail.

00:09:35

Karen Kerrigan: Going into that endeavor with as much information as possible in order to succeed. So really, lack of preparation, lack of education, and I don't mean education in terms of college degree or a master's. I'm just saying educating yourself, right? Accessing the type of training and the skills that you need, financial management particularly, to grow that business.

00:09:59

Andrea Marquez: But Karen also says that small business owners have also been turning to technology to find solutions.

00:10:04

Karen Kerrigan: So we've seen small businesses really embracing technology. In fact, artificial intelligence, AI. It's really the fastest that I've ever seen small businesses embrace any type of technology. AI has just been extraordinary in what it has meant for many small businesses in terms of resolving some of these challenges that we just talked about.  

There's been technology and tools that have come along to support entrepreneurs in their dreams, and the risk has become far less because of that technology and the barriers to entry and the costs have been greatly lowered because of technology, being able to find customers quicker, being able to advertise them more affordably, being able to launch the business without having to have a storefront or a brick and mortar, being able to do it on your own or with independent contractors.

So again, technology really has been an enabler of entrepreneurship, which given the reasons why people start businesses, has pushed them and encouraged them and allowed them to pursue these dreams.

00:11:12

Andrea Marquez: The digitization was really accelerated because of the pandemic. The pandemic also had other effects on small businesses.

00:11:21

Karen Kerrigan: In 2020, there was a massive boost in individuals that filed business applications. A lot happened during the pandemic that is driving this interest in starting businesses. Obviously digitization, people wanting more flexibility. There's more opportunity in the economy. There's been disruption in business models. Obviously the different types of technology that are coming online now, AI, AR, VR, they're all driving new business models and driving new entrepreneurship. So there's been a massive increase in people that are interested in starting businesses, and the business models has shifted as well. It's really an exciting time to be a business owner.

00:12:05

Andrea Marquez: So one of the things that I end up talking to a lot of entrepreneurs on the show is the drive behind wanting to do this because it's risky, but there's also a reward, right? So in your words, why do you think people should do it?

00:12:20

Karen Kerrigan: We've asked startup entrepreneurs this question over time, and for many, it's they want to be their own boss. The number one reason why most people start businesses is they want to be their own boss. They want control over their time. They do like the flexibility, particularly for many women entrepreneurs, they like that flexibility. That doesn't mean that they're working less. They might be working at 2:00 in the morning as opposed to three o'clock in the afternoon, but having that flexibility is very important. And then for many, they believe there's an opportunity in the marketplace and they can fill a need. They have a solution. They found a niche, and they're very passionate about that and wanting to make it happen.

00:13:09

Andrea Marquez: So if you've been considering starting a business...

00:13:11

Karen Kerrigan: I would say do it, but go into it with preparation, with the right information, with a sounding board. It could be friends, it could be family, it could be people who've started businesses themselves to check your ideas, help you check those ideas against market realities, really do your homework. And there's people that are out there that are willing to help you. The local business owner, local entrepreneurs, people online, organizations that have mentoring programs. You don't have to do this alone, and you shouldn't do it alone. Do it prepared and knowledgeable and knowing that it's going to be a grind, but also knowing that when you succeed, it's going to be well worth the risk and well worth the time and worth everything that you put into it.

00:13:58

Andrea Marquez: So being prepared and aware of the risks before you start a business is key.

00:14:02

Kylie Hwang: So I think for our marginalized group members who are seeking entrepreneurship, I do think that they have to spend some time to think really about what the business that they can actually be successful is, not just follow the crowd of who's going into entrepreneurship. And also seek out. I think there actually is a lot of non-profits and also policy help for marginalized group members these days. So I think they have to extend their networks to think more about how to get help specifically from non-profits that target marginalized entrepreneurs and try to go in with a bit more knowledge.

00:14:38

Andrea Marquez: I think that's an important piece of advice to end on regardless of your background, because a lot of the time, I think we romanticize entrepreneurship. And even though you do learn as you go, it's important to know what you're getting yourself into.

We covered a lot in this episode. If you missed anything, don't worry. We've taken notes for you. You can find them at smallbusiness. amazon/ podcasts.  

That's it for today's episode of This is Small Business, brought to you by Amazon. Reach out to us at thisismallbusiness.amazon.com to tell us what you're up to, or let me know what you think of this episode by leaving a review on Apple Podcasts. It's easier if you do it through your phone. And if you liked what you heard, I hope you'll share us with anyone else who needs to hear this. If you're an aspiring entrepreneur or maybe you already have your small business up and running and you're ready for the next step, a super valuable resource that can help you is the Amazon Small Business Academy. Take the free Self-assessment on the Amazon Small Business Academy site at www. smallbusiness. amazon.  

Until next time, I'm your host, Andrea Marquez. Hasta Luego, and thanks for listening. This is Small Business is brought to you by Amazon with technical and story production by JAR Audio.

Aside from a regular paycheck, what more can you do for your employees? And can going the extra mile for them really help your business' bottom line? Listen in to hear from brothers and founders of Mr. Tortilla, Ron and Anthony Alcazar. Their approach to business was formed at an early age, while watching their parents work hard with no buy-in. And then we’ll speak with Ludmila Praslova, PhD. Professor of Industrial Organizational Psychology, and author of The Canary Code: A Guide to Neurodiversity, Dignity, and Intersectional Belonging at Work. "Imagine having to walk in shoes that are extremely big or way too small, way too wide, way too narrow," said Ludmila. "That's painful, that's not comfortable, …flexibility just makes sense."

In this episode you’ll hear:

(00:43) Why Mr. Tortilla wanted to take care of their employees

(03:26) How it’s good for business to prioritize a healthy workplace

(04:58) The bare minimum an employer could do for its employee

(06:40) The importance of flexibility and how to implement it into your company

(12:18) How to start a conversation with your employee about their needs

Key Takeaways

1 - There’s a business case for treating your employees well. Feeling safe, accepted, and valued is a part of our core psychological well-being. When employees don’t feel this way they can’t do their best work because they’ll waste  their mental resources on negative feelings. Plus, good morale leads to less turnover.

2 - An employer owes their employees a bare minimum of fair treatment, and financial safety.

3 - A flexible work environment allows employees to work when they’re at their most predictive in a way that works for them. This doesn’t have to come at any cost to the employer and can lead to a healthier life for the worker.

4 - Talk to your employees about what constrains their productivity. Putting up barriers, simply because that’s how things are done unnecessarily makes life hard for some employees who don’t fit the mold.  

5 - Normalize an intake form that asks questions about preferences and needs. This builds trust, which makes for better workplaces.

00:00:03

Andrea Marquez: I've heard so often on This is Small Business that connecting with people is a massive part of running a small business. There are customers, suppliers, lenders, the list goes on, but an absolutely integral item on that list is employees. What can you and what should you do for them beyond some of the basic expectations? How do you keep your workplace flexible enough to ensure you're attracting the best people, then enabling them to do their best work.  

I'm Andrea Marquez and This is Small Business, a podcast brought to you by Amazon. Today we'll be talking about how small business owners can create a healthy work culture for their employees. My first guest learned about that at an early age.

00:00:51

Anthony Alcazar: We saw how hard my parents worked their whole lives and they really didn't have much to show for it. They'd dedicated their lives to companies that they helped grow, and at the end of the day, it was just a job and dead edge and that's it.

00:01:03

Andrea Marquez: That's Anthony Alcazar. He and his brother Ron are the founders of Mr. Tortilla, a low-carb tortilla they created in a quest to make Mexican food healthier.

00:01:14

Anthony Alcazar: When me and Ron decided to talk about this business he said, “Listen, let's start a business where we make sure we take care of our employees that can grow with us and are with us and the company grows, they're taken care of.”

00:01:24

Andrea Marquez: So 10% of Mr. Tortilla's net profits go toward employee profit sharing, on top of sharing the wealth. They also wanted their approximately 40 employees to like going to work.

00:01:36

Anthony Alcazar: We said, “When we have our own factory, we want to make sure that the culture is right, that people love to come to work, that people get along, that no bullying happens, and there's just this work environment that people love.” That was super important for us.

00:01:48

Andrea Marquez: It was important to the brothers to differentiate themselves by having a higher quality product. They knew one of the best ways to do that was by having a higher quality workplace. Creating a culture of caring is integral to Mr. Tortilla's brand. It's a simple concept of being nice to their employees, but according to Ludmila Praslova, it goes a lot deeper than that.

00:02:10

Ludmila Praslova: I usually come to it from a human centric perspective where there is an absolute value in affirming the dignity of every human. But I realize that for many people it's also important to understand the business case perspective. From that perspective, when people are felt valued, when we experience the sense of belonging, we are well. It's a core of our psychological wellbeing to feel like we are with people where we can feel safe, accepted and valued. Otherwise, our mental resources are going to be consumed by anxiety, insecurity, looking behind our back, expecting the knife, and we're not going to be our best selves. We're not going to be performing at our best.

00:03:02

Andrea Marquez: Ludmila is a professor of industrial organizational psychology whose work really zeroes in on diversity and inclusion. She's written a book called The Canary Code, A Guide to Neurodiversity, Dignity and Intersectional Belonging at Work. Ludmila, can you tell me a little bit more about the financial benefits of prioritizing a healthy work culture?

00:03:25

Ludmila Praslova: If you have good morale in your organization, if you have employee loyalty, if employees stay, there's a tremendous cost just on notating turnover heading to rehire, retrain, which is extremely expansive. When people work on their best, they are significantly more productive. People who feel like they had input in developing what they do, they are heard, they're valued, also performed significantly better than people who feel like they're cogs in the machine, who have no control and no input into what is going on. When you add this together, it's a multiplication effect of treating people right on human productivity and human involvement. That's even before we get into things like organizational reputation and the word of mouth.

00:04:30

Andrea Marquez: It's true. Customers are more and more concerned about where their products come from, how they're made, and under what conditions the employees are working. That's also the case for prospective employees. It's common to do a bit of digging about the culture, not just around the job you'll be doing. Beyond making people feel valued and heard, what is the minimum responsibility you think that an employer has to an employee?

00:04:52

Ludmila Praslova: There is a bare minimum of social safety where you are treated properly, psychological safety, where you feel like you can participate, and financial safety. As a bare minimum, I think people need to get out of their jobs a life that doesn't hurt. That, unfortunately, doesn't always happen, but life that doesn't hurt means satisfaction of basic needs, appropriate levels of food and housing that doesn't cause suffering. Now, inspiring life is beyond that. When you want people to really be on their best, not just not suffering, but thriving, you really want to be able to give people ability to travel, have vacations, have sabbaticals, time for their creativity, time, and a little bit of financial cushion where they are building their future, where they're feeling confident about their future.

00:05:56

Andrea Marquez: As a creative myself, one of the things I value the most in wherever I'm working is a flexibility to be able to do my job and do it very well, but also have the time to have a life and pursue my career interests. I think even outside of work, those feed the work that I'm doing anyways. It's all interconnected and it allows my mind to be a little more at peace and I'm a little more happy. That's what flexibility and creativity does for me. Why it's important to me. Why do you think it's important to organizations on a larger scale?

00:06:29

Ludmila Praslova: Well, absolutely. Imagine having to walk in shoes that are extremely big or way too small, way too wide, way too narrow. That's painful, that's not comfortable, right? Why would we force someone to work in ways that hurt them and doesn't allow them to perform their best? Flexibility just makes sense.

00:06:57

Andrea Marquez: What does that look like?

00:06:59

Ludmila Praslova: Some people work best in 25 minutes, little break, 25 minutes, another little break, the Pomodoro way, for example. Other people need three to four hours of uninterrupted time to concentrate and be on their best. Why would you force someone into someone else's working reason? It's just like forcing someone to wear shoes that are completely nowhere close and expect them to perform well and run a marathon and win. They're not going to win if they're not supported in working in a way that supports them in their best. Doing work that is aligned with who we are, being able to maybe creatively tailor our responsibilities for job crafting and having flexibility in our schedule and where we work, not because it's a win, but because it actually makes us work better.

00:08:04

Andrea Marquez: If we're talking to a small business owner who's like, “Great, I'm on board. I want to do this.” How do they implement this into their small business?

00:08:13

Ludmila Praslova: It is going to depend on what your business goals are, what kind of skills you want. A more general answer is think about what you are trying to define your own business goals and then be open to more than one way that people can help you achieve that goal. Because sometimes we're stuck in this assumption that this is how I work and this is the only way to work. Just openness to the fact that there are many ways to get from point A to point B, and different people work best in different ways. That's a very good starting point. Then brainstorm with your people. You hired someone, maybe you just have one part-time employee, talk to that person. How can you bring out the best and what will help them to achieve? How can we just remove artificial constraints on their productivity? When you have your second and third employees talk to them what will help them to be on their best.

00:09:26

Andrea Marquez: Artificial constraints, that's such a great way of putting it. It's so important to reassess how we do things and wh. y Anthony Alcazar talks here about how they reassessed their hiring practices.

00:09:38

Anthony Alcazar: I knew what equal opportunity employment was, but I never really felt it. When I started going into retailers, different stores, I saw what equal opportunity employment meant, everybody. I saw adults with special needs be employed and how happy they were to work. I got the chance to get to know them and I told Ron, “This is what we have to do. We want to do this.” They're part of our team, a core part of our team. They do exceptionally well. They just needed an opportunity and they've excelled.

00:10:05

Andrea Marquez: That's a win-win situation and Ludmila expands on it.

00:10:09

Ludmila Praslova: Why would you leave out a huge percent of the population and a huge talent pool? Not hiring people who have some kind of difference doesn't make sense because most organizations accommodate the needs of parents without any kind of issues. Working students have needs and most organizations say, “Okay, we'll accommodate your schedule.” Just think about it as how do we enable their best performance. Then you stop thinking about, let's say, accommodations is something special that you do for people, but you are simply enabling humans to do their best work. Just like you allow parents to pick up their kids or students to take their tests.

I think we need a little bit of mindset adjustment. If you need to have quiet place to work because you need to concentrate, it just makes sense because you're going to do your best work. If someone needs instructions in writing and that is going to help them perform their best, why not? It's just a performance enabler. That's what those people understand and that's what allows them to create winning and high performing organizations.

00:11:28

Andrea Marquez: How do you go about having that conversation around what an employee needs? Do you start with the new hires or is it during the application process? What's the best way to do it?

00:11:37

Ludmila Praslova: If you have flexibility in onboarding and do you also get to know your people and to say, “How do you work best? Do you need a long period of time to concentrate or do you work in short spurts of time?” Really make a default across all people who work for you without singling anyone out. That is something that normalizes human differences and allows everyone to work on their best. You can build trust by allowing everyone to say, “Okay, this is what I need to perform on my best,” without even requiring them to disclose. Then if you build that trust, people might be much more comfortable also bringing those specific needs and differences to the manager's attention.

00:12:28

Andrea Marquez: Trust is always so integral, and Ron and Anthony showed us how to put all of that into action because if there's one thing I learned today, it's that healthy workplaces can often happen through minor adjustments.

00:12:40

Anthony Alcazar: One important thing is that we always have raffles every other week, and so we have prizes we give to our employees. We have a weekly meal where we vote, “You guys want pupusas? Do you guys want mole,” and we'll bring in for the employees.

00:12:52

Andrea Marquez: I love that. Who doesn't want some mole or pupusas? That was a lot of great information, so much to take in at one time, but don't worry, we've taken notes for you. You can find them at smallbusiness. amazon/ podcasts.

I hate to blow on our own horn, but we've had some great reviews come in lately and I wanted to share this one with you, Josh949 of somewhere in the great US of A wrote, “I love the podcast format. It tells small business stories while focusing on a main business topic. Andrea also does a great job summarizing the key takeaways at the end.” Thank you so much, Josh949. I really do appreciate it. I'd love to hear what you think. Please make sure to leave a review on Apple Podcasts. It's easier to do it through your phone or send us an email at thisissmallbusiness@ amazon. com.  

That's it for this episode of This Is Small Business, brought to You by Amazon. Make sure to subscribe and tell your friends about us by sending them a link to this episode. Until next time, I'm your host, Andrea Marquez, Hasta luego and thanks for listening. This is Small Business is brought to you by Amazon with technical and story production by JAR Audio.

Dealing with audits doesn’t have to be scary as long as you’re prepared for it. Just ask Erick O. Bell, an accounting professor at the Haas School of Business at UC Berkeley, who used to work at KPMG LLP in the Audit Risk Advisory Services. Erick simplifies everything you need to know about audits – even the IRS audit – so it doesn’t feel as daunting. “Most audits that are happening. They're not audits that are at odds with each other,” Erick says. “A typical audit generally is just, you've made an assertion. Can we verify that that assertion is accurate?”

Learn about typical audits, how to navigate them, and when you might need them.In this episode you’ll hear:

(01:00) When should you get an audit.

(03:45) About IRS audits.

(07:36) How to navigate a typical audit.

Takeaways:

1 - If you’re just starting out, you won’t need an audit anytime soon. You only need an audit when you’re asking for a huge loan or trying to get investors. And if you’re trying to get a smaller loan and your bank asks you for an audit, Erick says that you can let them know that you don’t want to take on the cost of an Audit. Instead, ask if you can provide them with the financial documents they need – they’ll usually agree to that.

2 - An IRS Audit is a little scarier than a typical audit, here’s how to navigate it: Make sure to be responsive and hire a tax attorney to help you out. Usually an IRS audit will be a series of questions about some of your finances and you need to respond with receipts.

3 - Here’s what you can do so your typical audit goes smoothly: first, make sure to be organized. You can hire an accountant or bookkeeper to help you with that. Second, be honest. Auditors aren’t out to get you. They’re just there to help you understand the accounting rules. Third, know some key audit terms, so you’re more familiar with what’s going on. And fourth, be nice to your auditors.

00:00:01

Erick O. Bell: Really what an audit is is someone testing the work that someone else has done. So for example, take financial statements. Management is proclaiming that these financial statements are accurate and so the auditor's job is just to go in and make sure that that assertion that management has made is correct. At its simple form, that's what an audit is.

00:00:21

Andrea Marquez: Audits can sometimes be associated with fear and it's a scary process to go through for some businesses. And if you're starting your own business, you might be wondering if you should even get an audit and what that process looks like. I'm Andrea Marquez and This Is Small Business, a podcast brought to you by Amazon. Today, we'll be digging into some things you need to know about audits with Erick O. Bell, an accounting professor at the Haas School of Business at UC Berkeley and an active certified public accountant. And yes, we'll touch on the scary IRS audits too.

00:00:54

Erick O. Bell: Most small businesses should not need an audit. And so a lot of times, small businesses will come to me and they'd say, “We're interested in getting a loan and the bank says that we need to have an audit done. Can you do an audit of our financial statements?” And my response is, “No, I won't. I don't think that's what the bank really means when they say they need an audit done.”

00:01:17

Andrea Marquez: Before getting into academia full-time, Erick worked at multiple auditing companies. And now, in addition to teaching, he also runs an accounting firm where he does accounting and bookkeeping services for small businesses.

00:01:30

Erick O. Bell: And I just think as a business owner, you push back on that and say, “We don't want to incur the cost of having two years of audited financial statements. What information on our financial statements are you most interested in and can we have an independent accountant come in and give an opinion on our assertion of either how much revenue we've earned over the last two years, our statement of cashflow over the last two years?” And so it would be much less in scope than an audit.

00:02:01

Andrea Marquez: Erick's referring to an audit that's done in accordance with the American Institute of Certified Public Accountant standards or AICPA standards. These audits can be pretty expensive, so it's great to hear that banks can be open to other ways to approve your loan. If you're a small business, you might not need an audit anytime soon if you're just starting out. But if you're planning on growing your business, then you might want to be prepared just in case.

00:02:26

Erick O. Bell: Once I'd say you've crossed maybe 5 million in revenues and now you're looking to get outside investors, you're looking to get multimillion dollar loans, it's at that point when you should be looking at hiring a auditor. And an auditor is an independent accountant and so these types of businesses will have their own accountants who's doing the work on a monthly, weekly basis. And then once a year or several times throughout the year, they will have a second set of accountants. The independent accountants come in and say, “Let's give an opinion on the work that's been done. Has it been done accurately?”

00:03:04

Andrea Marquez: So if you're trying to get an investor to grow your business or you're applying for a multimillion dollar loan, we'll dig into what the process looks like and how to do it. But first, let's talk about another type of audit, the IRS audit.

00:03:15

Erick O. Bell: An IRS audit is very scary and it happens very rarely. And so when the IRS is auditing companies, they're auditing their tax return. And the whole purpose of that audit is making sure that they've reported all the income that they've earned, so that they can apply the appropriate tax rate to receive the tax dollars that are due. So the IRS audit is separate. I think a lot of people have fear around it. As I was thinking about this yesterday, I was reminded of a time when I was at a barber shop.

This was probably 15 years ago and the barber said, “So Erick, what do you do? What's your job?” And I said, “Oh, I'm an auditor.” And the entire barber shop got quiet. Everyone was like, “Oh, man. We can't say anything around this guy.” And I said, “I'm not that type of auditor.” Most audits that are happening, they're not audits that are at odds with each other. An IRS audit, they are saying, “We believe you've under-reported your income and we're going to prove the opposite.” Whereas a typical audit generally is just you've made an assertion. Can we verify that that assertion is accurate?

00:04:27

Andrea Marquez: So when we're talking about the typical audit, it's not like they're here against you. They're just trying to be like, “These are the facts. We're just laying them out.” Versus the IRS audit is much more like, “Oh, you really have to have your stuff together.”

00:04:42

Erick O. Bell: Usually what happens in an audit is it was a mistake that was made and so there'll be additional taxes, there'll be interest that you have to pay for the unpaid tax and then if you've significantly underpaid, there'd be penalties associated with it. But in a normal audit, you get to pick who your auditors are. The company selects their auditors.

00:05:03

Andrea Marquez: And just to ease your mind a bit, in case you do end up getting an IRS audit, here's what the process might look like.

00:05:10

Erick O. Bell: I think that first, you get the letter from the IRS, is be responsive. And then at some point, you may consider hiring a tax attorney, someone who has experience with negotiating with the IRS.  

And again, when we use this term, IRS audit, it's really more like an IRS agreed upon procedures. They're looking at a very specific aspect of your tax return. We see that you had $300,000 in revenue and you spent $100,000 in travel. Can you give us the receipts for those travel expenses? And so it sounds scary, but the reality is you just go to your credit card statements and pull up the receipts and say, “Here are my receipts for the $100,000 of training.”  

Now, if $50,000 of that was trips back and forth to Vegas, they're going to ask some follow-up questions. And so to the extent that you did your best, it really isn't a overwhelming or scary process. It's just a back and forth asking for questions and you're providing responses.

00:06:13

Andrea Marquez: So now let's get back to talking about the typical audits. If you're planning on getting an audit, there's a few things you need to do. The first one is be organized.

00:06:23

Erick O. Bell: Hire an accountant or a bookkeeper, someone that can help you navigate the audit process. Small business owners are really good at doing what they do and you don't want to be distracted from your business's purpose by focusing on an audit.

00:06:39

Andrea Marquez: The second is be honest.

00:06:42

Erick O. Bell: Most auditors are not out looking for gotcha moments. That's not the goal. The goal is to be collaborative and to help you understand the accounting rules and this is when and how you should or could recognize revenue.

00:06:58

Andrea Marquez: And the third is know some key audit terms.

00:07:02

Erick O. Bell: So for example, one term is materiality. Auditors are testing for whether or not the financial statements are correct in all material respects, which means if you had a million dollars in revenue, it doesn't matter if there's the extra $1, 000 that did or did not make it on there. A million dollars in revenue is a million dollars in revenue. Different from $1. 2 million. Now that 0. 2 becomes a material number. And by materiality, it's what information in the financial statements would be significant enough to influence the decision making of a potential investor or creditor.  

And then another key term, for example, would be audit adjustments. And this is just very standard and so this goes back to being honest and just understanding an auditor is going to come in and look at your financials and say, “You should have recorded this expense or you should not have recorded this expense, so what we're going to do is present you with adjustments that you can make to your financial statements that they will be correct.”  

And so a lot of times, people get nervous, because they say, “We want zero audit adjustments.” And I always say, “That's not how it works. You're going to have audit adjustments. That's why you have a second set of eyes coming in and looking at it and not to get all worked up and not even make that a goal.”

00:08:22

Andrea Marquez: And the fourth and in my opinion, the most important thing to keep in mind when you're getting an audit is...

00:08:27

Erick O. Bell: Be nice to your auditors. Here's what I would explain to my clients. Say, “I need you to understand something. I just came from a place where they did not want me there and now I'm here and I know you don't want me here. And when I leave here, I'm going to go to another place where someone doesn't want me to be there, so let's just work together, make this as painless as possible. I'm going to send you a list of documents that I want to see and then I'm going to add to it based off of what I've seen. We'll just try and get through this as easy as possible.” That usually gets a chuckle out of them, but understand that we're just here to do our jobs and ultimately, it's to make your financial statements be reliable.  

The whole purpose of an audit of financial statements is you can put those out to potential investors and creditors and say, “This information is reliable, because we did it and then we had someone else come in and they gave an opinion that says, ‘Yes, they did it right.’ ”

00:09:21

Andrea Marquez: That was Erick O. Bell, an accounting professor at the Haas School of Business at UC Berkeley. This was such an informative conversation on audits. I love that Erick managed to make getting an audit less daunting. We covered a lot in this episode.  

If you missed anything, don't worry. We've taken notes for you. You can find them at smallbusiness. amazon/ podcasts. That's it for this episode of This Is Small Business, brought to you by Amazon. Make sure to subscribe and tell your friends about us by sending them a link to this episode. And please leave a review on Apple Podcasts. It's easier if you do it through your phone, or send us an email at thisissmallbusiness@ amazon. com.  

Until next time, this is Small Business. I'm your host, Andrea Marquez. Hasta luego and thanks for listening. This Is Small Business is brought to you by Amazon with technical and story production by JAR Audio.