Small Businesses, Big Lessons
In the wide world of small business ownership, challenges and opportunities abound.
Through a recent series of interviews with diverse entrepreneurs in partnership with Leaders Perception, several key insights emerged, highlighting both common hurdles and innovative strategies for success. Across a range of industries including healthcare, retail, or emerging technology, all owners brought up similar themes:
Resource constraints
The need to stay adaptable
Technological advancements (and what to invest in)
Customer-centric approaches
Resiliency of spirit
In the following series, Third Act will be sharing hard-earned wisdom and insights that all small business owners will find helpful.
Time, for Insights
Every small business owner needs to keep the pulse of their customers, employees, and partners to stay ahead of the competition.
At Third Act, one of the ways we do this is by volunteering within the small business community, and we appreciated the New York Post covering our efforts!
Not only does it feel good for us to give freely of our expertise and help others succeed, but the insights that come out of these conversations are priceless. Everything is confidential, though these conversations ultimately help us to better serve all our clients by:
Understanding consumer (and employee) pain points and how to solve them
Better forecasting consumer preferences and how to meet them
Uncovering common inefficiencies or gaps in a sales or marketing process that impact growth
If you need help staying ahead of the competition, contact Third Act today.
Check out Third Act on “The Changeup”
A big thank you to Keith Hernandez and The Changeup for having Jesse on the podcast recently! You can listen to our episode here, plus more fun and insightful conversations from The Changeup featuring other great entrepreneurs.
For small business owners pushing through strategic challenges, hopefully this conversation can serve as a reminder that there's no singular path to success. Building a network of trusted resources and subject matter experts can be invaluable not just for your business's health, but for your mental health too.
We're not all experts at everything we try to do, and that's totally normal!
Reach out if you're wrestling with strategic challenges holding your business back from the growth or value you know it deserves. You’re not alone, Third Act is here to help.
Partnerships: A Small Business Superpower
Last week, Third Act’s Jesse Samberg was invited by SCORE Fairfield County and U.S. Black Chambers, Inc. Southern Connecticut Black Chamber of Commerce to share some tips about how small businesses can leverage partnerships to grow.
From how to find complementary partners that align to your goals to structuring win-win relationships, check out the recording to get some actionable plans for your own small business.
Find the full recording from the webinar here.
📩 If you're looking for a deeper dive into how to create winning partnerships for your company, reach out to Third Act today!
Do you want the bad news first, or the good?
Interest rates are the highest they’ve been in 22 years and small business bankruptcies are on the rise, per recent reporting from the Wall Street Journal.
With nearly 1,500 small businesses already declaring bankruptcy in 2023, we’ve surpassed last year’s total with another quarter of the year remaining. Add to that the rising averages for loan delinquencies and defaults - now tracking above pre-pandemic levels per Equifax - and there’s clearly some stress factors at play for small business owners when also factoring in the inflated costs of goods and employee wages.
In talking to some owners - or worse, reading the comments on some business forums and blogs - it appears there’s even more hidden trouble. Some owners who borrowed less than $200,000 through the COVID Economic Injury Disaster Loan program are simply walking away from these obligations, rather than declare bankruptcy, since they’ll face no personal liability.
But it’s not all bad news! There are over 30 million small businesses in America, so some perspective is important when considering their relative health. According to recent data from the US Chamber of Commerce and MetLife:
71% of small business owners say they expect next year's revenue to increase
66% of small businesses reported being in good health
72% feel comfortable with their cash flow
It's amazing to hear a majority of small business owners are optimistic about the economy's prospects, but like we covered last week, Cash Rules Everything Around Me for small businesses. Whether you need a major shift in strategy to stay afloat or you’re looking for help scaling because you can’t keep up with how quickly your business is growing, Third Act is here to help.
What Can Wu-Tang Clan Teach Small Biz Owners?
“Cash Rules Everything Around Me”
Last week, Third Act had the chance to speak with Leader’s Perception. We covered some trends in marketing like the rise of AI, how to use your data to spark creativity, storytelling, and more.
For small business owners, in any industry, marketing can be hard! Staying on top of new platforms and consumer trends, making solid strategic decisions based on ever-increasing data points…it’s a lot to think about, and that’s just from a marketing lens. AI-enabled tools can help and have been gaining significant traction. More and more clients Third Act talks to want to know how to better use them too, especially since AI is now being embedded into programs lots of small business owners already use, like Canva for design or Constant Contact for CRM and email marketing.
As the old saying goes, tools are only as good as the person using them. And smart small business owners probably resonate with Wu-Tang Clan’s famous song C.R.E.A.M., since “Cash Rules Everything Around Me” when it comes to investing precious capital and time into marketing efforts.
Here’s a couple observations from the LP interview that might help think about how to set yourself up for success:
Leaders Perception: What’s the most significant shift you’ve observed in the marketing and branding landscape in the last year, and how should businesses adapt to it?
Third Act : The rise of AI. It’s gone from a theoretical tool accessible to a few intrepid early adopters to a daily topic of conversation with clients in a remarkably short time span. For small business owners in particular, AI-enabled tools can play a huge role in leveling the playing field against bigger spending competitors when it comes to areas like lead generation, customer service, digital marketing, competitive research, and more. AI doesn’t necessarily have a role to play in every business right now, but for most companies, completely ignoring AI seems unlikely to be beneficial over the next few years.
LP: In the era of data-driven marketing, how do you balance the need for data and analytics with the creative aspects of marketing and branding?
Third Act : I love data because it can help create a business case for taking a creative risk, which is often essential when securing senior stakeholder alignment for marketing investments. Similarly, having a proper view into how marketing campaigns are performing through solid analytics is great for understanding how to optimize investments and hit company goals, whether that’s increasing conversions on landing pages or increasing engagement with a brand on social media, for example.
However, I’m a firm believer in the power of human creativity and storytelling. Data is just one part of the equation when it comes to crafting compelling campaigns that motivate human audiences to take the action we want them to as marketers. Without humans to bring the story behind data’s importance or relevancy to life, they’re just stats on a screen.
If you need a better strategy in place to harness trends like this for your 2024 growth plans, Third Act can help.
Your Expertise Should Get Out More
I spoke to six different small business owners last week. Only two could even remotely be considered in the same industry, but they all wanted help with a similar challenge: how can they expand beyond their core audience to make more money?
Most smart business owners find ways to diversify their revenue streams. Some find ways to double down on their expertise, like a plastic surgeon who consults as an expert witness. Or a professional chef who also hosts a podcast, and gets affiliate revenue for promoting cooking tools they use every day. Hell, name a beer company that doesn’t sell merch. I’ll be surprised if you find one, given that our favorite hand-me-down t-shirts are probably the longest-lasting advertisement a beer brand can buy.
For small business owners looking to create profitable alternative revenue streams, getting beyond your core audience is definitely helpful. But finding ways to scale these efforts can be tricky, since they can eat into your limited time if not managed correctly. Here are a couple things to keep in mind:
Build once, sell to many
Recently, a few of my solo practitioner clients mentioned they had given an interactive lecture series or hosted a workshop. What they needed a little help realizing was that this experience provides a rock solid foundation for building their own online course — a repackaging of work they’ve already done, to sell again and again. Online courses can open doors to bigger and broader audiences, leveraging the same body of work with just a few tweaks and optimizations for self-paced rather than live sessions. As we were talking through the key elements for a successful course, it became clear why they’re surging in popularity. Versioning out your master talk or workshop into a digestible course lets you scale yourself. Create once, sell to many.
Courses aren’t one-size-fits-all, but with the right marketing strategy - you still need to figure out the right hosting platform and how to best promote your course - you can resell the IP that you already got paid to create to new audiences. Plus, once it’s created, you can also choose to realize even more revenue just by adding a higher price point option for increased live participation or feedback from you, the expert.
You’ve earned trust. Use it (but don’t abuse it)
Let’s say you own a modern accounting firm. By now, you probably have a newsletter packed with helpful information you’re sending to your clients and prospects regularly. Hopefully, you’re also sharing and promoting some of that expert content on social media to reach even more potential clients. That’s all great, but what if your newsletter also generated revenue from partners who want to reach an audience that already trusts you?
Every audience is valuable to some company – and oftentimes the same audience can be valuable to multiple companies. A B2B HR software tool might be a welcome sponsor of your accounting firm’s newsletter because they’re looking to reach your clientele of business owners (but aren’t a direct competitor).
When looking for potential sponsors, just make sure to focus on companies that are trusted and make sense for your subscribers – your audience is most valuable to you, and you don’t want them to start hitting unsubscribe because they’re getting spammed.
The takeaway
Small business owners looking to diversify their revenue sources can likely leverage two things that already exist: their expertise and their audience’s trust. Find the scalable opportunities in the work you’re already doing to open up additional revenue streams that aren’t a huge drain on your resources. For those who need help getting started, Third Act has your back.
Partnerships, done profitably
I’ve seen some wacky partnerships between companies from my advertising agency days, including plenty from my own teams. A partnership between local Washington D.C. food vendors and Trojan Condoms to deliver an unforgettable tailgate and a “sampling experience” that created relationships with thousands of NFL fans is a personal favorite, but that’s a story for another time!
But the funny thing about good partnerships is that they don’t just happen randomly. They cost money, effort, and time to plan, develop, and execute. We can probably all see how DoorDash delivering Taco Bell anytime of day is a no-brainer in today’s world. But, trust me when I tell you that plenty of late-night agency fees were incurred trying to invent a sh*ttier version of a DoorDash-like app to sell more taco-like objects before the right technology existed. And even if the idea was spot on, we might have needed outside expertise or tools to execute, eating into our profit margin.
Because small businesses are, well, small, partnerships can be a great way to grow — and for less than you might think, too. Since even the best partnerships aren’t initially obvious or possible, make sure your efforts are focused on developing one that serves a purpose. Here are a couple ways partnerships can help small businesses, and how to judge a partnership’s potential value:
Cross-promote each others’ services to increase customer reach and lead generation
This is probably the easiest path to get started. Think strategically about other businesses that complement your own. Imagine you’re an HVAC company owner — you’re likely not competing with a landscaping company and you probably see a lot of the same customers. Creating a relationship where a trusted landscaper can recognize a house with an older model AC unit and an HVAC technician can spot a dangerous walkway in need of repair might make for a low-effort, high-reward lead funnel. And sending periodic email blasts offering free consults, or even discounts, on each other’s services to your unique audiences can really help scale.
Maximize marketing budgets through co-hosted events
Let’s say you’re a regional law firm with a high concentration of environmental services providers as your clients, and you’re looking to expand. Since most law firms don’t spend significantly on advertising and marketing, another way to grow could be by developing a co-sponsored event series highlighting best practices relevant to the legal and environmental services fields and bringing together experts and prospects to learn — all while creating high-quality content from the event series to use across different marketing channels throughout the calendar year, or longer. Both groups get a win-win by positioning themselves as trusted experts and reducing the time and costs needed to develop evergreen marketing content that resonates with the desired audiences.
Don’t chase shiny objects that cut into your profit margin
It’s just as important to know when not to enter into a partnership that’s going to drag time and focus away from what already makes you money. For example, one of our clients is a Shopify-based clothing boutique owner who has always dreamed of opening a brick and mortar store, and was evaluating a “store-within-a-store” opportunity in a hair salon. While we hate deferring dreams, we love saving clients money, time, and aggravation. We uncovered that the greater partnership value would come from working directly with the salon’s influential stylists by leveraging their personal social networks. By gifting half the clothes she planned to sell at the salon to the stylists, our client avoided paying expensive build-out costs and spending time maintaining the space and her inventory, not to mention having to split profits with the salon on anything sold. More importantly for our client, she built a network of traveling stylists that continually grow her revenues as affiliates, increase her brand awareness, and provide enough user-generated content (UGC) to use for product shots, social media campaigns, and more.
A good idea for a partnership isn’t a guarantee of anything. The best partnerships are built on solid strategic thinking about their potential value and impact on your business, and on your proposed counterpart’s business too. And of course, make sure to run the numbers to ensure it’s a profitable relationship for all.
Third Act loves giving small businesses the outside perspective to rethink how partnerships can work. Let us help you get started on a win-win partnership path today.
Smart business owners ask…and listen.
I recently saw a Twitter post (maybe one day “X” will stick) that I can’t stop thinking about, sharing 14 questions any business investor should ask .
The author, Michael Girdley, is an interesting guy — anyone who built a diversified $100M holding company on the back of a retail fireworks business definitely qualifies as “interesting” to me! Most of the questions in the post were about due diligence — how to help potential business investors more critically examine an asset, and the nuances of that asset (e.g. market, customer base, competitors, etc.).
A few of Girdley’s questions stood out to me:
“What happens if you raise prices?”
“Why do customers leave you? How do you know?”
“What’s the number one thing you can do to increase retention?”
While helpful for people looking to buy or invest in a business, we can easily flip the perspective and consider these questions from the POV of a small business owner who’s trying to grow, and think of the answers to those questions as strategic imperatives to implement.
Why do this? First of all, there’s a hell of a lot more small business owners trying to grow rather than sell their company. Secondly, these are critical questions every owner should be asking themselves and their team at least quarterly (if not more often). But, perhaps most importantly, these questions can provide clarity and measurable basic success metrics that businesses of any size can lean on.
Let’s look at each of those questions from this new perspective…
What happens if you raise prices?
What you’re trying to uncover here is a combination of market fit and customer loyalty. If you’re trying to grow without spending a lot, testing whether your current customers will pay more can help you understand how attractive a higher price point will be with new customers. Just make sure to share your rationale with your existing loyal customers — they live in the same world of inflation and challenging hiring situations that you do.
Basic Measurement: Average Order Value (Are customers buying more or less of your product or service after the price increase?)
Why do customers leave you? How do you know?
This should be fairly self-explanatory, but the amount of small business owners who can’t answer this question is staggering. If you don’t know where you’re falling short of customer expectations or needs, you’re behind the 8-ball. And while no one likes rejection or hearing a less-than-glowing review, asking hard questions does make life in business easier — way easier. Luckily, it’s simple to get started quickly by just asking for customer feedback. You can do it in lots of different ways, but creating a culture where feedback is welcome consistently improves business performance.
Basic Measurement: Net Promoter Score (A simple, time-tested 1-10 scale of whether or not a customer would recommend you to another customer. Pro tip: You always want to be trending up, so go the extra mile and follow up with simple surveys to understand why a customer gave you anything below an 8; people love talking about why their expectations weren’t met. This also works internally to track employee satisfaction, too.)
What’s the number one thing you can do to increase retention?
One quick way to find out the answer? You’ve probably already guessed it: listening to the feedback your customers give you is an easy place to understand how to improve your offering. If you want to grow customer lifetime value, i.e how much people will spend with you over time, engaging with customer feedback and making them feel personally listened to goes far.
Basic Measurement: Net Promoter Score (Yep, again. If you’re consistently scoring below an 8 from your customers, you’ve got to know why before you can get your churn rate down or repeat purchase order up.)
Smart owners will have picked up on a consistent theme here: talking to your customers is essential. If you’re an owner who is looking to grow your business, or at least not leave money on the table with your current customers, you need a plan to measure and attack these types of strategic imperatives. Lucky for you, Third Act obsesses over metrics like AOV or NPS so you don’t have to.
Change is hard. But you don’t need to do it alone.
It all begins with an idea.
Last week, I attended SCORE’s 2023 National Leadership Conference in Jacksonville, Florida. I’ve spent the better part of the last year volunteering as a mentor with the organization, which is the non-profit arm of the Small Business Administration (SBA).
SCORE used to stand for Service Corps of Retired Executives, though they recently relaxed the ‘retired’ requirement and younger volunteers like myself have joined.
And that’s not the only thing the organization plans to switch up. One of the most consistent themes I heard at the conference was that continually adapting and evolving is the best way to help, because the real world is dynamic and ever-changing.
Over three days, we talked about new technology, new processes, and new methods of collaboration. It was refreshing to see the national organization clearly listening to its field members on the frontlines, taking feedback on how they can better help clients and implement changes that will continue to drive results. To stay relevant as a business, change is a must, whether it’s a national organization with 10,000+ volunteers or a neighborhood coffee shop with five employees.
Was there widespread enthusiasm for all the proposed changes? Hell no, change is hard! But there was definite enthusiasm to do it as a group, because everyone in the room was working towards the same goal: better helping our clients and addressing their real-world needs.
All small business owners have undoubtedly faced a similar scenario. How do you change the way your business operates to be more efficient, to attract more clients, or just to stay relevant?
I left the conference feeling energized and ready to work. The passion I felt from other volunteers, no matter what age, was infectious, and it was an eye-opening experience to join 300+ other mentors from around the country who are just as passionate as I am about helping small business owners (I met a volunteer couple from the NYC Chapter who have helped over 1200 people between them just this year!).
No small (or large) business owner can do it alone, and that’s where Third Act comes in. Armed with marketing and business strategy experience, we’re here to help, whether you’re looking to change up your approach to sales and marketing or need new processes for better servicing your clients.
This is Third Act. And we can help.
Third Act’s inspiration
Hey there.
I’m Jesse, founder of Third Act, a new company dedicated to helping small business owners.
I grew up in New York’s Hudson Valley, and like the best businesses that put down roots in their community, I’ve found it hard to leave ever since.
When I was a kid, I loved hiking with my family, coming off busy trails to eat at a local restaurant on a bustling main street that seemed even busier than the trails did. I was always kind of amazed that everything just seemed to work as it should.
Many years later in 2023, I still love to hike in the Valley — I just see it differently when I come off the trail. More specifically, I have a greater appreciation for the people and businesses that make it special. My wife and I opened a short-term rental property business last year — our property is humming along now, but it was a challenge to find reliable and quality help for specialized essential services like plumbing, HVAC, carpentry, etc. during the renovation.
For small service businesses like the ones I was looking for, there are plenty of issues that Angie’s List or NextDoor aren’t solving, and businesses are leaving money on the table as a result. With over a decade leading revenue teams at global advertising and marketing agencies, I know with clear perspective that growth is not a given.
These same small businesses I couldn’t get a hold of, probably couldn’t find me either. If they got back to me, maybe it took them so long because they didn’t have a good system in place to handle inbound Angie’s List leads vs. other leads. Or maybe they couldn’t manage the increased demand. I put myself in their shoes and realized the trends I was observing in the abstract about the decline in availability of skilled tradespeople, were not at all abstract for these owners. They wrestle with these challenges every day — and then still have to find time to actually grow their business!
So many small business owners, especially service businesses, face these struggles.
As I watch businesses I’ve driven past for years start to show their age, I’m paying more attention. What’s their parking lot traffic like, how are they getting customers, how could they do more business online, who owns the business this year, and who might next year?
Why do small business owners keep going, and more importantly, how can Third Act help them continue building value?
To name a few specific ways, Third Act has the clear perspective and operational know-how to help older business owners:
Work more efficiently to save time and money
Find and retain more customers
Prepare for an ownership transition, if they’re ready
Moving forwards, we’ll aim to share helpful resources, best practices, and maybe a few stories and trends from the community to spark new thinking and keep small businesses thriving, in the Hudson Valley and beyond.