Yesterday I was privileged to give a presentation at the first Marcshoret conference in Jerusalem for marketing professionals. I wasn’t able to attend the whole event, but from what I could see Paula Stern and her crew at Writepoint did an excellent job putting a high-level, professional event together. You can see the program here if you’re interested.

In my presentation, we discussed how to market and manage your business in tough economic times by using the many excellent, free tools that are available on the web. Many entrepreneurs who have survived previous market crashes are talking about how those that get through these difficult times are those that tighten their belts. We’re lucky to live in a time when we have access to applications that in the past were the domain of Fortune 500 companies, like shared email, calendars, CRM systems, etc, but are now accessible and affordable.

We discussed what cloud computing is, since most of the tools I discussed are hosted on the web, meaning you don’t have to download them onto your computer. I also pointed out that now is a time when you should actually invest in marketing, so that you are in a stronger position when the good times arrive again. But when I say invest, I’m talking about time, not money, and most of the tools we spoke about demand time investments, which is something we may find we have a lot of if business slows down. I also mentioned how some of the biggest blogs today, like TechCrunch, started during the last bubble burst.

Some of the advantages of working in the cloud are:

1. Collaboration - you can easily share documents, spreadsheets, presentations, and more when using online services.
2. Accessibility - working from home? Your computer crashed? You can still access your information since it’s not dependent on one machine – it’s sitting on the web.
3. Cost - these services are much lower in cost than software that you have to license and install on your own hard drive or server. These services also take care of upgrades and glitches, removing the need for you to hire IT people.

Disadvantages of cloud computing:

1. Dependence on Internet connections - you can only access your online information if you are near an Internet connection. However, this problem is mostly disappearing thanks to the proliferation of Wifi hotspots. In addition, Google has tried to solve this problem with Google Gears, which allows you to download and sync your online info. WordPress and Zoho have integrated Google Gears, for example.
2. Dependence on their servers – when your information sits online, you are dependent on the integrity of the service provider’s servers. If their servers go down, you are stuck. This recently happened when Amazon’s S3 servers crashed, taking down with them all the services hosted there by other companies.
3. Security (or lack thereof) – when your information is sitting on servers that can be accessed from any computer, it becomes much more vulnerable to hackers or glitches that inadvertently expose your data to others.

Despite the drawbacks, my own business is heavily dependent on the cloud, and I believe it’s made us more efficient and productive. Here are our favorite services:

• Google apps – that’s gmail where you can use your own domain name. It includes all the Google goodies, including chat, which we use a lot internally for short messages.
• Google calendar – so we’re all on the same page in terms of meetings, events, vacation, etc.
• Zoho CRM – the lowest cost, best CRM service out there. Someone who knows about these things took a look at it and said “It’s just like Salesforce, but cheaper!” Manage leads, contacts, opportunities, quotes, sales orders, and invoices, all in here. Fantastic!
• Zoho Writer – the only online word processor that offers styles. To me, that is essential.
• Zoho Projects – great project management app
• Zoho Wiki – the best free wiki I could find that offers password protection. This is where we share all internal documentation.

I briefly mentioned twitter, but I didn’t give any tips on how to use it. Since twitter is such a great tool for marketing and networking, I recommend that  you read a recent post that I wrote on the amuta 2.0 blog about getting started with twitter. In that article, I discuss using twitter for non-profits, but the principles are pretty much the same for businesses.

And finally…the presentation is embedded below, and every screenshot and title in it is a link that will take you straight to the app or service displayed.

Enjoy!

The following is a guest post by Heather Johnson. Her details are at the end of the article.

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In order to maximize sales and improve marketing tactics, each small business must learn the fine art of bootstrapping. There are many ways to cut costs in order to leverage your assets. Some of these methods are complex and only gradually save money, which is fine if you have the luxury of waiting.

However, many businesses resort to bootstrapping out of urgent necessity and there are certainly ways to cut costs immediately. Below are eight bootstrapping tips that will show you quick results.

1. Switch to VoIP – Many companies are saving thousands each year by using VoIP (Voice over Internet Protocol) providers like Skype. All phone calls are free between Skype users around the world and Skype-to-landline calls are cheaper than traditional long distance services.
2. Sell Your Unnecessary Frills – Did you get overexcited when you opened your office and purchase some unnecessary goods? If you need to free up some cash for more important ventures, then you can certainly do without your hip decorations. Sell them on eBay or Craigslist.
3. Stop Faxing Everything – Are long distance costs rising because of your constant faxing? There are cheaper alternatives, such as scanning documents and emailing them. Most companies will have no problem with receiving a PDF instead of a fax.
4. Go Easy on the Thermostat – Energy costs are hard on everyone these days, not just small business owners. While you don’t want to create a terrible work environment for your employees, there is nothing wrong with asking them to bundle up a bit in the winter and dress cooler in the summer. That way, you can be a bit more sensible with the thermostat.
5. Outsource That Open Position – If you are struggling to cut costs, then the last thing you need to do is hire more employees. Outsourcing is a preferred method of saving money for companies both small and large. Sites like Elance and Get a Freelancer are brimming with eager, virtual assistants who will save you time and money.
6. Buy Secondhand / Refurbished Goods – The fact is, you don’t need a new desk or copy machine. You can find secondhand office furniture at many stores, as well as refurbished electronics. Conduct some research beforehand, however, and make sure you are buying from a reputable source.
7. Go Open Source – There are numerous open source alternatives to the commercial software you may be considering. In case you haven’t heard, open source = free. Free is good, so find out more about open source software at osalt.com.

8. Stop Paying for Lunch – Are you the type of boss who likes to buy lunch for everyone several times a week? That ends now if you want to leverage your assets to the max. Yes, even those pizza deliveries are adding up. For those of you who run a one-person operation, the same rule applies. Stop eating out and start packing your own lunch.

Great companies have been built with very little money and efficient bootstrapping skills. Don’t be afraid to start cutting costs on a smaller scale with the above tips. You will be surprised at how much money you will save… money that can be put toward marketing, for example.

Heather Johnson is a freelance business, finance and economics writer, as well as a regular contributor at Business Credit Cards, a site for business credit card and best business credit card offers. Heather welcomes comments and freelancing job inquiries at her email address heatherjohnson2323@gmail.com.

Small businesses have small marketing budgets. In a previous post, I listed 5 low-cost ways to market your business. Two of the methods mentioned were advertising on Google Adwords and Dapei Zahav. Since bootstrapping businesses need to ensure that every advertising dollar is justified, I decided to conduct an unofficial study comparing Google Adwords and Dapei Zahav (the Israeli version of the Yellow Pages).

The winner with no holds-barred: Google Adwords.

Here is a comparison of the features of both advertisers:

Dapei Zahav:

• For a relatively low monthly fee, you can have your business appear on their site at the top of the classification of your choice. I put illuminea at the top of the copywriter classification, and wrote a blurb in Hebrew about what we do.
• The features of the package that I selected included the option to add an image, and provide a discount coupon for those who order via Dapei Zahav. The salesperson was very unclear about many things, such as selling me the option to add a button which links to my site. What I didn’t understand is that there is no need for such a button, since a link to the site appears under the blurb.
• They offer you other additions, like a map of where you are and a contact form. A map is mostly useless since if someone wants to come to your office, they can either look up your address or call and get directions, and if they want to contact you, they can send you an email to your listed email address or call you.
• Your listing can appear under other classifications too.
• I also was given a listing in the print edition of the Tel Aviv directory.

The Results: Not one phone call or email from my Dapei Zahav listing, even with all its prominence. No one even tried to use the coupon to get a discount. I got better results when I had a tiny free listing on Dapei Zahav.

Google Adwords:

• You can choose as many search words and phrases under which your ad will appear. You can also select the countries in which your ad will appear. This is a good way for Israeli advertisers to save on advertising costs.
• You only pay when someone clicks. If you are selective with your keywords, this means that only people who are interested in your type of services are clicking. Even if they don’t order, this increases exposure of your site and business to the right people.
• You can set the maximum you are willing to pay for clicks on different keywords. This is also a good way to manage your budget.

The Results: Many phone calls and emails from interested prospects, and quite a few orders that more than made up for my investment.

Apparently, when my clients in Israel are searching for service providers, they use Google. Maybe it’s because they are more web-savvy, while businesses in other sectors could benefit from a Yellow Pages ad. I don’t know.

Once I realized how innefective my Dapei Zahav ad was, I called to cancel my order and reduce my listing to a minimum. It turns out that they were also not clear at all when I ordered, and when they said I could reduce my listing after four months, they were only referring to certain parts of it. So now I’m stuck paying for it until the end of the year, and I can’t even find my own listing there anymore!

When I told the Dapei Zahav saleswoman that I was cancelling because I had recieved no orders from them, and many from Google Adwords, she said to me “But we’re working very hard on raising our rankings in Google!” I asked her why I would advertise with them if all they were trying to do is use Google to get better results – why not just pay Google directly?

So, if you are looking for a low-cost and effective way to advertise your business – Google Adwords is the way to go!

Dane Carlson lists 20 Things Not to Do Before Starting A Business. While I agree with some of his points, I disagree with many others and think that if you follow them, they will either hinder the growth of your business, or get you into trouble. Dane’s point was to help entrepreneurs bootstrap, but it is important for business owners to walk the fine line between saving where possible, and spending where needed.

So let’s go through his list. I will discuss five points at a time, so let’s begin:

1. Don’t quit your day job: Disagree
   This is advice I see repeated for entrepreneurs, but it’s not necessarily good advice in all situations. If you really believe in your business and want it to grow, this is more than a full time job. Aside from the actual work ordered by clients, you have to spend a lot of time on marketing, networking, administration and more. If you don’t quit your day job, your business might not get anywhere since you won’t be able to give it the time it needs.
2. Don’t incorporate: Agree
   I think this is good advice in most situations. Unless you are involved in huge amounts of money or have an investor, incorporating is an unecessary cost and uses money which might be used better elsewhere. I recently met two young entrepreneurs who started a film-making company. They had one or two clients and had been working on very small projects. For some reason they had incorporated their business. By incorporating, they had increased their accounting fees and added many additional annual expenses to their budget, such as the need to open a business bank account (see point 3 below), and use the services of an attorney (see point 5 below).
3. Don’t get a bank account: Agree
   This is true especially in Israel. Israeli banks suck you dry, and every bank account means added fees for every little move you make. This is another reason not to incorporate (see point 2 above), since if you are incorporated you need to open a business account, and in these types of accounts the fees are even higher. In the MATI small business course, the teacher told us that we should open bank accounts for our businesses right from the beginning. I followed his advice, paid the fees for a while, and then decided to save myself some money and close the account.
4. Don’t rent an office: Agree
   If you can work from home and it doesn’t detract from your business in any way, then this is a great way to save yourself a huge expense.
5. Don’t hire an attorney: Agree
   You can generally get by with straightforward contracts with clients that you put together yourself or from templates. Unless you are involved in huge deals like mergers and acquisitions or real estate, attorneys are an unnecessary expense. This is yet another reason not to incorporate your business (see point 2 above), since to incorporate you need to hire an attorney.

Stay tuned for an analysis of Dane’s next five points: Don’t hire an accountant, Don’t get a loan, Don’t hire anyone, Don’t get a business license, and Don’t try to patent anything.

The media exudes an aura of authority. They write and talk like they are experts and know-alls on whatever topic it is they are discussing at that moment. And many people refer to the media for their knowledge on many issues; how many times have you heard someone say “But I read it in the paper!”

Ramit at I will Teach you to be Rich documents some of the errors made by financial and business magazines in predicting which businesses that would succeed and fail. When these publications would be proved wrong, there would me no mention of their mistakes.

I’ve personally seen how the media can take events and either purposefully or irresponsibly change details or misreport it. That is the beauty of the blogosphere: now there is accountability. When the media uses altered photos in their reporting, the din from the protesting bloggers is so loud that it can’t be ignored. Same too with sensationalist reports on how and where to invest your money: people like Ramit don’t let the media get away with it.

With Pessach around the corner, many people are busy scrubbing their homes to rid them of all signs of chametz. In honor of this season of cleaning, here are 6 (mostly) free tips on housekeeping for your computer that anyone can do to keep it optimized and in good health:

1. Antivirus program – make sure you have a good antivirus program installed on your computer, and that is constantly being updated. Two good antivirus programs are Norton Antivirus and McAfee, and they cost about $40-$50 for a one year license. These programs are constantly monitoring your computer’s activity in the background, and scan documents and email attachments for potential threats. Once a week, manually update your antivirus program and run a complete scan of all of your computer.
2. Disk and registry cleanup – as you install, uninstall and run your programs, a lot of garbage files are created that take up space and slow down your computer’s performance. I use a free program called CCleaner to clean up my computer. CCleaner analyzes your hard drive for files that can be safely deleted, such as temporary files and cookies. For example, I just ran it and deleted 360 MB of extra stuff. Then it scanned the computer for issues, and identified registry files that needed to be fixed.
3. Update your Windows and Office software – To update your Windows, go to http://windowsupdate.microsoft.com/. It checks your computer to see what updates you need, and installs them for free (as long as you have authentic Windows software).
4. Protect your computer against spyware – As you surf the web, chances are little files and programs are being deposited on your computer without your permission. It is recommended that you run at least two different anti-spyware programs, since they tend to catch different things. I use Windows Defender and AVG Anti-Spyware, both of which are free. Update your anti-spyware programs and run a full system scan at least once a week.
5. Disk defragmentation – In Windows go to Start > All Programs > Accessories > System Tools > Disk Defragmenter. Analyze your hard drive, and then defragment. Defragmenting your disk organizes your file system and helps Windows read files faster. Don’t do anything on your computer while it is defragmenting your hard drive. Do this about once a month.
6. Backup backup backup! Wouldn’t it suck if that paper you were working on for days was lost forever? Backup as frequently as you don’t want to lose new information. You can burn your information onto a CD or DVD, portable hard drive, or use any of the online services. Just make sure to do it.

A happy computer means a happy computer user!

Happy Pessach and enjoy the matza!

Unquestionably, there is progress. The average American now pays out twice as much in taxes as he formerly got in wages. – H. L. Mencken (1880 – 1956)

I recently became bit despondent about the state of my business. I felt like I was taking one step forwards, and one step back: every time I earned a little bit more, I was taxed a little bit more. I wondered how the government thought I could ever make it if I just worked to fill thier coffers, leaving little for me and my family to get by on.

So I went to discuss this issue with my accountant. I explained the situation, and asked him what he thought. He said “May you be blessed that your tax rate only continues to go up.” Thanks. He explained: “A higher tax rate means that you are earning more. It is always worth it to earn more, and pay more taxes.”

That theoretically makes sense, but here’s something I’d like to throw out to other small business owners: a growing business tends to bring along with it a growing amount of work. If your business continues to grow, you will probably need to hire people to help out with the workload. More workers means more expenses. So what you end up with is a growing income and growing expenses, and after all is said and done, and you’ve calculated your profit, you may find that you’re just running on the small business treadmill. And the taxes certainly don’t help.

Or do I have it all shockingly wrong, and I should be smiling while I write out the checks?

In Part 1 of this series, I wrote about self-employed women and the issues facing them when trying to get proper compensation from Bituach Leumi/Social Insurance. However, a self-employed mommy faces another significant dilemma after giving birth: how can you just stop your business for three months?

Can you afford to lose clients?

Running a business involves more than just getting the work done – it means being there for your clients. Loyal clients are very valuable, and part of what makes them happy is that they know that you are there for them all the time. This is particularly true if your clients are other businesses. In Israel, as I’ve written before, business is very fast-paced and chances are that most clients won’t be able to wait three months for you to get things done. They need your services now; they want results yesterday! Losing these clients is very costly, so you really want to make sure you retain them.

And how about new clients? Every new client presents not only the opportunity for income, but also the opportunity to grow your business, which is probably the number one goal for most business owners. If they are happy, they will hopefully come back to you again, and even recommend you to others. But if you turn them away, you have lost an opportunity to create a new net of potential customers.

It’s possible that the situation is different for large, established businesses. If you own a business with tens or hundreds of employees, and you’ve been around for many years and the business can kind of run itself, then you may be able to fade out for a few months. But if you are a small business that is relatively new, and you don’t have the resources (time and money) to hire a team to take over while you’re gone, I don’t know if you can just turn out the lights and hope for the best. Owners of small businesses are often the business – clients work with the company because of the owner. In addition, the owner also takes part in more than just management and actually provides the service as well.

My maternity leave strategy, which failed – or succeeded, depending on how you look at it

My personal take on maternity leave as a business owner was that I would not make any efforts to bring in new business. That way existing clients would be happy, and I could maybe rest a bit, read some books (I did manage to read The Tipping Point), and/or learn something new (during my last maternity leave I learned how to build websites and started planning my new business – all from the comfort of my computer chair!). Well, that didn’t work out quite as planned; business actually started pouring in from the day I gave birth! I don’t quite understand that one, but there is an old Yiddish/Hebrew saying: “A child brings their bread with them,” i.e. you don’t have to worry about how you will support your children because they bring the income with them. It’s one of those metaphysical things.

Ok, but babies = no time for anything else!

The final question that many of you may be asking yourselves, especially other mothers who’ve been there, is “How can you get any work done with a baby around?” The answer to that, dear readers, will be in Part 3…

Business plans are considered standard fare for the budding entrepreneur. Business mentors and guides will tell you that you must have a business plan in order to succeed. Even if you aren’t looking for funding or loans, and even if your business already exists, they will tell you that you must put together a business plan in order to create structure and discipline for your business.

But do you really need a business plan?

An excellent article on Wall Street Journal’s “Startup Journal” looks at some recent studies on the effectiveness of business plans. According to a study recently released by Babson College, businesses that began with a formal business plan were not more successful than those without. Another study conducted by Amar Bhidé, a Columbia University entrepreneurship professor, found that 41% of Inc. magazine’s 1989 list of the 500 fastest-growing private firms didn’t have business plans and 26% had only rudimentary plans.

The Problems with Business Plans

I never wrote a formal business plan because I felt uncomfortable with the idea. Business plans try to pin the business owner down to a specific idea and goal. That is not necessarily a bad thing, since focus is good. But very often businesses start out with one product or service in mind, and shortly discover that something else will be more profitable. This means that their precious business plan that took so much time and even money to put together is now outdated.

Another problem with business plans is that many entrepreneurs are under the impression that they can’t or shouldn’t start their business until their business plan is completed and is a work of art. Since the conventional business plan format is often encyclopedically long and heavy, its composition can significantly delay the opening of a new business. Also, this type of approach to action where everything needs to be thought out and analyzed to death before implementation is not necessarily beneficial to a young business in general. There are many situations where the modus operandi should be act now, think later, or else many opportunities may be missed.

So who does need a business plan?

The Babson College study concludes that the only ones who need a business plan are those who want to raise external start-up capital. But if you are a bootstrapper, and you are building a low-cost, lean business with no outside financing, you don’t necessarily need the usual 30 page document.

My opinion is that every business should have some type of business plan since it helps their owner focus their goals and learn more about their industry. My favorite business plan format is the one page business plan!

This template focuses on the core issues an entrepreneur needs to answer about their business, and encourages brief, succinct answers. You can complete this plan in a morning, and launch your new venture by lunch.

Here are some links to other articles related to business plans that you might find interesting:

• Lesson Learned: Don’t write a business plan, esyLife. Theo Tonca describes how he spent a month writing a business plan for his new startup, and now it sits gathering dust in his desk. He says if you want to raise money, investors care more about a proven business model and profits than they do about a business plan.
• Business plans should be simple, passionate, USA Today. A long business plan will not save an unprepared business. “The real key to being an entrepreneur who has a chance to succeed is knowing precisely what business you’re in. If you don’t, you die.”
• Why you don’t need a business plan, Heart of Business. “For a truly micro-business, or being self-employed, a business plan is a recipe for disaster.” The author of this article says that a new business only needs to know three things: the target market, products and services, and if it has sufficient nourishment, i.e. capital.
• 8 Outdated Notions of Entrepreneurship, Brazen Careerist. Penelope Trunk compares the “old” notion of entrepreneurship to the “new.” In the “old” model, entrepreneurs raised lots of money and spent it on advertising, while the “new” do not raise any money, and spend none on ads. “Old” style entrepreneurs planned a lot to make sure their new idea would work, while “new” owners “Forget the big plan.” They just go for it, and if it doesn’t work, they try again. See Penelope’s other excellent articles about entrepreneurship: 9 new ideas that may sway on-the-fence entrepreneurs, and Finding courage to steer your career.
• Getting Real, 37signals. 37signals is a privately held developer of web-based software that is used by over 1 million people and businesses in 70 countries. What makes them remarkable is that they “launch[ed] five successful web-based applications (Basecamp, Campfire…), and Ruby on Rails…in just two years with no funding, no debt, and only 7 people. [my bold]” Getting Real is a book that describes the “unconventional” process used by 37signals to achieve their success, which includes avoiding long, heavy planning strategies and simply taking action. Highly recommended.

I am a big fan of the bootstrapping business approach. I am also a big-talker, since I was forced into bootstrapping by circumstances – investors weren’t knocking down my door, and banks weren’t handing me cash. I was a bootstrapper before I even realized that this approach had a name.

At the beginning of my journey to business-dom, I took the MATI Small Business Course. This is a comprehensive course that covers the basics of running a small business, such as banking, financing, marketing, sales, and more. The teacher at that time placed a lot of emphasis on what were considered accepted business practices: writing a comprehensive business plan, getting loans or investments, buying supplies and stock, renting office space, etc. The basic idea was that a business can only succeed with a business plan that is a work of art, and lots of funding to do all those things businesses are supposed to do.

This approach didn’t work for me. I was hesitant to become indebted to banks or investors (not that investors invest in my kind of business), and I couldn’t write up a business plan since I had not pinpointed the exact service I would be providing. Profit and Loss projections – how could I project something based on nothing? It seemed like a type of fortune-telling to me. “Market Research,” our teacher announced. “Lack of funding, resources, and time for Market Research,” I thought to myself.

Bootstrapping and the Jewish People
I ended up taking the bootstrapping track out of necessity. This is a perfectly legitimate approach, and has been used for hundreds of years by businesses. Many of us know the stories of the Jewish immigrants to North America before and after WWII. These people came with nothing – not a penny to their names. Those who came after the Holocaust came with even less – whole families had been lost, homes and livelihoods destroyed. Yet these survivors came, scraped together some capital, and began their businesses. Many went into real estate. They started with one little structure, moved up to a few buildings, and over the years became significant players in the market.

My grandfather, Charlie Levenstein, and his family moved to Toronto before the Holocaust. Life was tough, and Jews had it even tougher due to the unabashed discrimination at that time. He got a job working for another Jewish guy who had a wholesale and retail electrical supply business. Charlie started off as a truck driver doing deliveries. He worked his way up to manager, and then succeeding in putting together enough money to buy one of his boss’ stores and trucks. Slowly his business grew, and eventually he needed bigger premises and moved from Queen Street to Martin Ross Avenue in the Downsview area. My grandfather’s business was very successful, and he became well-known as a generous philanthropist as well. He closed his business in 1969 when he retired, and his sons decided they wanted to pursue different careers.

Dot.com Boom = VC; Dot.com Bust = Bootstrapping
During the dot.com boom, we became used to start-ups with oodles of money from angel and venture capital (VC) investors. The dot.com bust led many to reconsider the wisdom of pouring truckloads of cash into new, unproven businesses, and many began to promote the bootstrapping approach – starting small, and growing with your success. Slow growth is now seen as a sign of stability and sustainability, and not of weakness.

Investing and VC does have its place. But I think it is important to consider and educate entrepreneurs as to the benefits of the other approach of slow and gradual growth. Therefore, illuminea blog has now introduced the bootstrapping category of articles, which will include articles on the methods, tools and benefits of bootstrapping. Let us know what you think!