Potential clients will remember best what you say last. When doing your sales pitch – make a big ‘finale’ out of it. So, in one sense, the end of your sales presentation will be the beginning for your clients. Did you know that speakers often reach their momentum in the middle of the presentation and then lose contact with the audience by the end of the show?! One way a speaker (YOU) can ensure new beginnings for an audience (your future clients) is by having a very strong ending.
First, focus on the general purpose of your sales presentation. Are you moving the audience to action at all? Does your audience understands how you and your services will help them to generate a better return of investment (ROI)? Or are you simply entertaining (wasting their time in this case)? The purpose of your sales speech is to get the clients wanting your services badly, you want to be able to close a deal. Some speakers lose sight of this, their endings do not fit their purposes, and the audiences will wonder what the actual purpose of your speech and your visit really was all about.
The purpose of your speech it to get the clients wanting your services – now. Prepare your speech accordingly. You are most-likely talking to business owners. Show them how hosting a website with you will increase their ability to sell their own products. At the end the clients need to know if they don’t start any action they are already loosing out. They have to come to the conclusion to get started right away.
It is very important for you to summarize all the benefits of your services. Create a sticky phrase that will stay on their mind for a while. Make them think about it, make them remember you. A solid exit phrase is the key for a new beginning’. The exit line will increase the likelihood of the audience’s remembering what you want them to do as they begin after the presentation.
We can’t stress it enough. Be prepared. A former Senator (Bill Bradley) once said: “When you are not practicing, remember, someone somewhere is practicing…and when you meet him, he will win.” Practicing means preparing in this situation. It might make sense to buy a book with quotes of great people. Something they said that is worth being printed in a book, might be something worth for you to use in your sales presentation. Make sure you let them know who originally said that quote.
A good way to enhance the ending of your speech is to understand the mechanics of a conclusion. It should be short. Don’t start concluding when you still have ten minutes of material left to talk about. Don’t say, “In conclusion…” unless you really mean to finish. You will lose the attention of your audience if you continue talking long after you announce you are finishing.
Speak the conclusion without reading it. Look at your audience as you end; know exactly what you want to say and avoid fumbling with your notes. This would distracts people from your important words. The ending should raise the emotional level of your interaction wit the audience. Look pleasant and try not to hide as you end. Be present, be visible. Conclusions are great opportunities to move away form the lectern and toward the audience. Do not introduce new stuff when making a conclusion. This will distract people from the message you were selling before..
Finally, don’t take the ending too seriously. Do not expect standing ovations. Let it sink in. Prepare a follow up soon. Do not wait too long to close the deal. Concentrate on the ending to get a new beginning (=new customer).
The IRS will not tell you this, but you can avoid quite a few tax tangles by setting up your business as a partnership, LLC or an S corporation, rather than as a sole proprietorship.
Not well known but sole proprietors are preferred IRS audit targets. According to the latest statistics, more than 4% of taxpayers filing Schedule C (Form 1040) returns get audited. Compare that with less than 1% of returns for small businesses that have gone to the trouble of incorporating. Partnership tax returns have an audit rate of just about 0.5%. Example: If your spouse is active in your business, form a partnership with him/her and file a partnership return, Form 1065, US Partnership Return of Income, instead of a Schedule C. You’ll reduce your audit exposure by almost 90%. Apparently he IRS does not expect big payoffs from partnership audits.
Did you know that sole proprietors who claim home office deductions hold up two red flags for the IRS?! They must file a separate home office deduction form, Form 8829, Expenses for Business Use of Your Home, and attach it to a Schedule C. Both Schedule C and Form 8829 attract IRS attention – especially if filed with the same tax return. If incorporated, however, either as an S corporation or a C (regular) corporation, you can take home office deductions without filing Form 8829. For instance, you can put the business portion of your electric bill down as a corporate expense. The same is true if you report business expenses on a partnership return. Assuming you meet the criteria for home office deductions (principal place of business, regular and exclusive use), by incorporating or forming a partnership, you can legally take these deductions without drawing attention to your return. To reduce the visibility for an audit you can eventually decide not to use any home office deductions. Do the math. Also ask an accountant for advice.
S corporations avoid much IRS scrutiny, too. One advantage is that people who pay income to the business don’t have to file Form 1099s with the IRS when they deal with an S corporation. By contrast, Schedule C filers get 1099s from anyone who pays them at least $600 in a given year. A copy of these 1099s goes to the IRS. By electing the S corporation status, you’ll have fewer pieces of paper with your name on them floating around IRS files. When you do business as an S corporation, you can pay yourself a “reasonable salary”–an amount that the tax code does not clearly define. Amounts earned beyond your reasonable salary are corporate earnings. Even though corporate earnings are subject to income tax, you won’t have to pay Social Security and Medicare tax on them.
Also make sure to get a tax payer ID for your business and not to use your personal social security number. It will reduce visibility of your own tax return a little bit.
All the things mentioned here will not guarantee that no audit will come down to you, but it eventually helps to reduce the risk of being audited by the IRS.
PS: The advice in this article could eventually be incorrect at the time you read it. Laws can change and so does the IRS. Check with a tax lawyer or an accountant if necessary. We cannot be held responsible for ugly situations based on this article.
One of the most difficult tasks you will face as a business owner will be firing employees. Employees who consistently break the rules, do not perform the functions of their job, or cause difficulties for your business can be a strain on the work environment, your cash flow, and even disrupt your business from thriving and performing as expected. This tutorial will give you steps and hints about firing employees or associates.
Document, Document, Document
The first step in preparing when letting go an employee is to make sure you have all the documentation you need. When you give verbal warnings, be sure to document them properly. Make a case for this specific situation by documenting everything you did before making the decision of releasing the employee. Anything that shows that you tried to solve things to the better. Your business should have a well documented procedure for what it expects from employees and anything that is considered grounds for immediate dismissal. Be sure to use these as guidelines and consult with a lawyer experienced in HR questions if necessary.
Have a friend, family member, or business partner be there to assist in any paperwork and any issues that arrive from the employee. Not only does this representative help with anything you might forget, they also serve as a witness if any lawsuit arises. This will be difficult for either one of you but in the end it will be well worth the effort.
“I’ve been fired, but why?”
Explain to the employee the performance you have expected, the steps you have taken to help them meet that performance, and that he/she has not met them. Do not say more than you have to, just state why they are being dismissed and fill out any exit paperwork. If you are upset, cool down before talking to them. If you have to fire somebody over the phone because he or she is in a different location advice the employee that you have somebody with you listening to the conversation. Make it very clear that you are in control and prepared.
Establish Exit Procedures
Make sure you backup any important files before firing the employee and take steps to lock them out of any computer system. Change all passwords but make sure the employee does not realize that before the actual moment of truth. It is also recommended that you fire someone on a Monday and not on a Friday. Employees fired on Fridays have the whole weekend to stew, while those fired on Mondays usually are more upbeat because they have the week ahead of them. Be sure to explain when the last paycheck is coming, when benefits terminate, and any information regarding extending their health coverage or any other details (if this applies to your situation).
Remember to keep the meeting short and to the point. Explain to the other team members that you fired the individual without going into too many details. They do not need to know all the details but you need to make sure that they understand that this was not a personal dispute between you and the employee fired. You want employees to be honest to when disagreeing on something and not scared to get fired. When a new potential employer calls you for a reference, remember to just state the title and dates of employment. Specify that you are not able to provide any further information. Advice your remaining employees that your business policies specify that all calls for references have to go through HR (you?) or yourself. Document again how the complete process of firing went, what the employee had to say and what happened.
When working from home …
A home-based business has a lot of advantages over the traditional 9-5 office system, and most web hosting businesses seem to be run out of an home office. However, working from home could mean that you might lose the structure and schedule of a normal office environment. We collected a few tips and tricks to keep you on track.
Kick Start Your Day
How you start off will determine how you end up! Begin your day with some positive thinking, do some workout (running, ride your bike) to get your head cleared out, have a healthy breakfast of reasonable size (too much food makes you tired again), take a shower, and then get started on your work day.
Develop A Work Schedule
Working at home will come with it a lot of flexibility and freedom. However, you need to be careful that you don’t misuse it. You are now your own boss, so act as if you ARE the boss! Work out strict time schedules -and stick to it. Plan out all the all the tasks you would like to get accomplished in your day, and make sure that you achieve your target. If you are not disciplined enough it will come back and haunt you.
Love Your Work
Make sure that the work you do is something you really enjoy doing. To be successful in this business, you need to be really passionate about your work. Don’t fall into the trap of thinking that because you have a background in web hosting and the experience in this field, that this will be a breeze. Learn to recognize what will motivate you, what will excite you – and build your business based on that spirit. If you are afraid to check the status of your servers and email every morning and it is giving you a weird feeling in your stomach you should eventually consider a different career. One sure sign of knowing that you really love your work is to get that motivating and relaxed feeling when you wake up every morning. Of course, you’re going to have your good days and your bad days at the office – but a strong enthusiasm for your work ensures that you’ll end up having more good days than bad days at the office.
Have a Real Home Office
Running your business from your bedroom is really not the best idea. You should have a separate area to work from. This could be a second bedroom in your apartment or a finished basement in your house. If that is not possible (e.g. you live in a one-bedroom apartment, you will have to work around it – especially if you do not live alone. A Spanish wall and a real desk will eventually give you a little ‘room’. Make sure you keep an office a priority when moving one day. If you already have enough space and a separate office, furnish it accordingly. I personally use a kitchen countertop board as my desk. It goes from wall to wall across the room. It is deeper than a regular desk and I have plenty of space for everything. Having space can be a key. It is easier to find tools, manuals, or documentation. I can reach the printer and the cable router easily and the fax is also just ‘around the corner’.
Establish that “you are at work”
Imagine you are at work in your home office and your wife or kids come into the room every 5 minutes. As nice as it is to have them around – often you need to make sure that they understand that you are working. You cannot just run down to the grocery store to buy diapers or milk real quick. You are at work. Or did your boss at your old place of employment did let you go to the grocery store ‘real quick’? Probably not.
You might feel like munching while you work, and that’s one of the benefits of not working in a conservative corporate environment, right? However, be sure that you do not have to leave your office for everything. A journey through the house in search of food might lead to a detour or two to check up on what the kids are doing. 5 minutes here and there can add up really fast. Remember – you want to be productive.
Family Time Out
This one might seem a very difficult initially – but keep your work time separate from your family time. Of course, one of the prime reasons of you opening your home-based business was probably to spend time with family. However, your business is serious business, and needs some serious time too! The great thing is – you can often work around family things. Seeing your son playing soccer in the afternoon can be rewarding and it makes the work at night easier to handle. Most parents will miss a lot of their kids activities because they have to work in an office downtown.
What Are Possible Signs of Fraudulent Transactions see at Web Hosting Companies?
– Customer wants to pre-pay for a year
– Domain Name Registration for 5 years or more
– Orders using free email address providers like Hotmail, Yahoo, etc.
– Usage of multiple cards to complete order.
– International address. AVS can not validate those international addresses.
– Multiple purchases in a short time period.
– The customer and billing addresses are different.
AMEX, VISA, and MasterCard implemented a security feature known as “CVV2” and “CVC2”. These are the three-digit or four-digit numbers printed on the back side or front side (depending on card company) of the card (signature panel) to the far right. The three/four-digit code helps to validate that the cardholder has the card in his possession. You can include the code in your transaction processing and need to receive a match to successfully complete the transaction. If you are using a shopping cart for your hosting sign-up process, make sure that it is capable of collecting and processing these numbers. IMPORTANT: The ToS of the credit companies state that you are not allowed to store these numbers.
Use Address Verification Service (AVS) on all US transactions to verify the billing information provided in the order with what is on file with the card issuing bank. As a bare minimum, the zip code should successfully match before the transaction is approved and you hand out the account information. You should retain the response information for some time in case of a chargeback.
The possible AVS messages are:
Y – Exact match on street address and 5 or 9 digit zip code.
A – Address matches, zip code does not
Z – zip code matches, address does not
N – No match.
U – Address information is unavailable or Issuer does not support AVS. These transactions are only applicable for Visa and the merchant isn’t responsible for chargeback liability.
R – Issuer authorization system is unavailable, retry later
E – Error in address data – unable to complete check.
G – non-US Issuer not participating in AVS – Visa only. The error messages will vary from one provider to the next. Contact your provider for more information.
S – Address information is unavailable or Issuer does not support AVS – MasterCard only.
The most important warning sign of fraudulent transaction are international orders. It is very sad to be so generic with this statement but the percentage of having a fraudulent orders goes up immediately if the order comes from a non-US location. Be aware of cities or countries with high rates of fraudulent transactions. Malaysia, Indonesia, and most countries of the former Soviet Union tend to be source of many fraudulent orders.
The most effective way to help eliminate fraud or chargeback’s is to simply call the customer. A confirmation over the phone is most definitely advised for any large transactions. If you process a fraudulent transaction, not only do you lose the funds, but the product/service as well. A phone – even if it is international will save you a lot of hassle in the long run.
What if you find a transaction to be suspicious? Contact your authorization center and let them know you are concerned about the transaction. They will look at the transaction and may give you advice. You should also call the customer to request additional information (copy of drivers license or Passport as an example). Check the IP address of the sign-up and see where it is globally. Does it matches the customers address at least by country? Send a confirmation email to the customer verifying their order.
It may be a good policy to only accept orders with identical Customer and billing addresses.
Maybe you want to scrutinize international orders as your protection against these consumers is very minimal and not accepting them could be a wise choice for your web hosting business.
Placing fraudulent notices, buttons and images on your web site and order forms will help discourage any person trying to place a fraudulent order. Make sure that the customer will se upfront that you are recoding the IP address and that you will notify the law enforcement agencies if needed. It might not protect you in every case but eventually it will help to cut down the number of fraudulent orders.
Many of the big web hosting companies have a reputation for being invulnerable, but in fact it’s very possible to compete against the Yahoos and 1&1s and still win.
The key to be successful is to remember that these big companies are not a one-unit business, but rather are made up of many business units (Yahoo: Search engine, web directory, web hosting, email, advertising and, and, and). Some of those business units are highly effective, others are more vulnerable to competition.
Let’s take Microsoft as an example: One company that successfully competes against Microsoft is Logitech, which competes by focusing on technology that Microsoft doesn’t consider strategic: computer accessories
The situation of Logitech: Staying focused Microsoft is a software and tools company, but it also used to dominate the mouse and keyboard market. Microsoft then started producing gaming equipment, such as joysticks, and steering wheels. It even sold speakers. It made great products but it did not become market leader in these areas and never made the final push against the competition like it did with Netscape.
Microsoft pulled back into the mice and keyboard markets after becoming to wide-spread and after becoming not focused enough. Logitech continued to offer a broader range of products which could be combined with each other in retail packages (wireless mouse and keyboard). While Microsoft continued to build quality products, Logitech started dominating this segment with a broad line of accessories including mice, keyboards, cameras, and speakers – all of great quality.
Logitech could grow to become market leader because they don’t go around pointing out that they are beating the crap out of Microsoft. Executives often want to brag about beating the crap out of Microsoft, but it only motivates Microsoft to want to squash the competition. They stayed silent in the background and concentrated on making great products and to market those. Logitech also stays very focused. Microsoft has to watch markets that are much more strategic than peripheral hardware, but Logitech can fully concentrate onto this one segment of the market.
This is one of the best ways to go after a dominant company: find the areas where the giant isn’t focused enough, and quietly slip from behind in and start taking market share. Inside the big and dominant company, the business unit you compete with will see declining revenues over time. It’s not a large decline in a short period. Employees won’t want to take jobs in that business unit–and, once there, they’ll either be treading water or looking to get out. Once the sleeping giant realizes that you have taken over a large share of that specific market it might start acting against you, but if you play your cards right you have a great position to fight back and to keep your share of the market. Or the sleeping giant just stays where it is and holds on to the market share that it has – no retreat but also no attack. It depends on how important that market share is in the strategic planning. The 3rd option might be that the giant gives up this market segment and concentrates on its strategic important products. Example: Microsoft stopped offering broadband products like wireless routers not too long ago. It had a great product but the competition did not had to concentrate that much on other products and was (is) more focused.
Following the tactics Microsoft used 10-15 years ago, Logitech has been able to establish itself as a market leader in the accessories segment. Job well done.
Large competitors often have two big weaknesses. 1) They often have an image problem, which they refuse to even acknowledge. As a result – the leaders and upper management lose contact to their normal customers. Hereby forgetting that this is often the customer segment that made them big.
2) Large businesses also toss people into jobs without properly matching skills and position. Like many big companies, they have executives leading core units who took the job without formal training. People get the title of a CEO, and they start acting as if that instantly makes them an super manager, when in fact they simply don’t know what they are doing. This can be a real problem for a business – especially during times of extensive growth. The web hosting industry has many folks employed that have great technical knowledge but when it comes down to having proper business skills the business hits a big bump.
Large companies are very vulnerable to competition from a small, but smart company that goes after a certain market segment. Strategies for successful competition against large hosting web hosting businesses include finding a market that they consider non-strategic, and you can even partnering with the competition in areas where the companies don’t compete. You can play against the giant without getting crushed.
Marketing Budget – A quick How to …
Before going and spending your whole marketing budget at once you should create a marketing and advertising plan. Just having a budget is not enough. A year has 365 days and you will not want to have spend your complete marketing funds after the first quarter.
Deciding upfront when spending how much money on what type or marketing will give you some better understanding of how to budget your funds and allows you to prepare properly throughout the whole year on your marketing campaigns. Here is a quick spreadsheet-style marketing budget plan that allows you to create something similar for your own business. We added already several options so that you get a kick-start in planning your marketing and advertising for whole year.
Proper planning and allocating funds for your different ways of marketing will give you a better understanding how this whole business thing works – especially when you are just starting out and almost everything looks kind of new to you. Adjust the plan to your business requirements. If you are an online business only you can specify the different ad networks one by one and remove things like “Travel” from the list.
When entering a new market you will need to spend more money on marketing to gain market share. Do not be overly concerned if your first quarter of doing business shows much higher marketing expenses compared to the other ones.
Many small businesses use their sales results to determine how much money to spend on marketing (percentage of gross sales). This will usually work well for established businesses.
Buying or Selling a Web Hosting Business
You might come to the point where you would like grow by acquiring another web hosting business or maybe you want to sell your own business and retire from the industry. It is easy to find a buyer and it is also not difficult to find sellers who want to get out. But how do you put a fair value onto a web hosting business? This part of the process is the most difficult step. The seller always wants the highest prices while the buyer only wants to pay a small amount of money. The gap between those two expectations will either make or break a deal.
Here are a few consideration and recommendations about how to determine what a web hosting business is worth and what people are willing to pay for clients.
Clients – what are they worth at all (money-wise) when buying a web hosting business? How do you determine the value? What do you have to keep in mind?
The first thing to consider and to find out – what payment terms are in place for the client payments? Do the clients pay monthly, quarterly, semi-annual, or even yearly? This is important to know, as it will affect your cash flow right away. Imagine you pay for clients that have yearly payments in place. In the worst case you would have to work almost 12 months before seeing any money. Clients with yearly payments in place are much less worth for the buyer compared to clients who pay on a monthly base. If a web host has different payment models in place you should split the clients into groups according to their payment schedule. Then work out a price for each group.
You also have to keep in mind that very often clients do not like change. They will be leaving the new web host very soon after the deal has been closed and the announcements to the clients have been made. From what we have seen – the percentage of this can go up to 15% in some cases – though 5% to 10% is a more reliable number. This should be considered when working out the deal.
Now it comes down to determine – how much are the clients worth?! Common values put on clients in the web hosting industry range from 3 to 9 months of the monthly revenue. In some cases even up to 12 months revenue has been recorded. It really depends on the business model and the quality of the clients. Small business clients are to leave the hosting company less likely than a customer with a personal website.
What else needs to be considered? If you are buying just the clients to integrate them into your business and under your business brand name, you’ll be fine with the model introduced above. But what if you buy the complete business – including the name? Building a brand is a difficult and time-consuming process. Buying an existing brand gives the buyer a short cut. The result is that the business brand name is worth quite a bit. How much is it worth? It depends on each single case. One way to determine the value of a brand name is to see what the expected number of sign-ups per month is. 50 new clients per month on average will give you a good ballpark number. As it is more difficult to get new clients compared to keeping existing ones, the value put on these possible clients is less than the value put on existing clients. A 3 to 6 month value of the expected revenue from this seems to be a fair value to determine the brand name value. But again – this might vary and each case needs to be looked at separately.
If a complete business is being sold, it might include hardware and software licenses. Determine the value of these items per age (especially hardware) and what kind of software licenses you would sell/buy.
Buying a business (not just the customer base) might also bring liabilities. Are there any employees to take onboard? Are there existing contracts with vendors (data center, software, etc.) that need to be served? Determine the outstanding $$$ amount per item. Make sure that the supply cost is reasonable and that you are allowed to buy/sell the contract/agreement. Under normal circumstances this should not pose a problem. But if the cost or contractual agreement is limiting your way of taking advantage of the business this should be considered when making an offer for a business.
How about the terms of the payment when selling a web hosting business? Paying for everything 100% is not a good thing. The seller walks away and you just have to hope that everything will go on as ‘advertised’. A 60% payment when the deal closes gives the seller security to get his money. The buyer also knows that he is not risking 100% of his investment right away. The outstanding amount should be split into smaller payments. Depending on the overall amount of the outstanding money, the time frame for the payment should be split between 3 to 12 months before 100% are paid out. The smaller the amount is, the shorter the time frame should be.
A good way for the buyer to make sure he gets what he is paying for is to keep the seller around for 3 to 6 months. The contract should clearly state that the seller is available a certain amount of time or the outstanding price is not being paid. The seller should also sign a non-compete agreement and eventually a no-disclosure agreement to protect the buyer.
Buying an existing business also requires a good strategy upfront. Would you be integrating the clients into your business or run the new business under its old name? Do you want to move the clients to your hardware and consolidate or leave them where they are? How about support? Does your staff have the skills and knowledge to support the different environment? Do you have staff at all or do you eventually need to hire someone? Would you rather buy one big business or maybe many smaller ones? Consider these things when being in the market for buying a web hosting business.