Trade Off Serial Entrepreneurship

Many successful owners of small to midsize retail businesses are serial entrepreneurs. They occupy themselves with one business concept at a time rather than undertake a range of diverse business enterprises simultaneously. What valuable habits distinguish the most profitable serial entrepreneurs?

• When successful serial entrepreneurs have positive results, they move quickly to build on those results. Because they’re focused on the one business concept, they can recognize successful results promptly and then devote all their resources to carrying out the next steps in their plan. 
• Their close attention to the one business concept at a time helps them see trends and thereby not only predict the likely future of their retail business, but also plan for how to create the future they desire for their retail business. 
• They are not discouraged by failures. The unanticipated obstacles are seen as learning opportunities, and prolonged setbacks motivate a search for better alternatives. Those alternatives might include abandoning the current enterprise and promptly moving on to the next entrepreneurial challenge. Successful serial entrepreneurs know when to cut their losses. 

     It follows that less successful serial entrepreneurs fail to spot when to cut their losses. Researchers at Warwick Business School, Durham Business School, and Nottingham University compared serial entrepreneurs to portfolio entrepreneurs. The latter group are those business people who diversify in their retailing endeavors, running a set of businesses at the same time. The researchers found that the portfolio entrepreneurs learned better from failure because they have less investment in defending their prior actions. Their pride isn’t tied so tightly to one enterprise. They experience less pain from the failure.
     Associated with this, serial entrepreneurs are less likely than portfolio entrepreneurs to see accurately what they themselves did wrong. Their zeal to move on could result in serial failures.
     Together, both these sets of research findings point out the tradeoffs for you, retailer, in focusing on one business at a time. Even within one small to midsize store, the owner/operator must carry out a broad range of duties. Taking on more than one business at the same time could quickly corrode effectiveness in any of them. But beware of overinvestment in the one business to the point where the pain of admitting failure prevents you from initiating essential corrections.

For your profitability: Sell Well: What Really Moves Your Shoppers

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Sell Optimism

The California Lottery aimed to leverage consumer optimism with their tag line, “Believe in Something Bigger.” backed up with a choral arrangement of the song “California Dreamin’.”
     Since the odds of a net gain on the lottery are truly small, any optimism might be considered misplaced. Still, optimism itself is a valuable commodity. As long as costs to the consumer are not too great, using existing optimism to sell an item which prolongs optimism makes sense.
     By and large, we’re an optimistic lot. Researchers find that, if asked to compare ourselves to others, about 80% of us will say we perform better than the average person. That is, of course, a mathematical impossibility. You can’t have 80% better than the 50% benchmark. My favorite of those research studies found that 80% of us even believe we are more likely than are our neighbors to go to Heaven.
     Combine even unrealistic optimism with an irrational belief in magic, such as you might find in purchasers of lottery tickets, and it becomes a force of consumer motivation. Researchers at HEC-Montreal and at Queen’s University-Kingston analyzed how magical thinking helps people stay on a diet. The researchers recommend against confronting dieters with the objective odds of success, since those odds would discourage them from persevering.
     Don’t lie to consumers. The California Lottery website said in boldface type that the odds of winning anything in the MEGA Millions lottery are only about 1 in 40. However, stoking the magical optimism can facilitate success. Keep things in the spirit of the children’s book The Little Engine That Could, with its mantra of “I think I can, I think I can.”
     Acknowledge the power of shopper superstitions and distinguish between two types. Researchers at University of Texas-Pan American, Ohio University, and China’s Chongqing Technology and Business University differentiate between consumers who do things like carry good luck charms and those who believe in the power of fate or karma regardless of what lucky charms they're packing.
     Researchers at Dartmouth College and Columbia University suggest that for those who respect karma, you show extra perseverance in resolving any complaints. Research at St. Louis University and Oklahoma University suggests that the other type of superstitious consumer will become a fan of your store if you pair positive shopping experiences with a memory aid, like items carrying your store logo.

For your profitability: Sell Well: What Really Moves Your Shoppers

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Notice How Teens Are Into Exclusive Resale

Resale retail is attractive to teen fashionistas, according to a feature article in last Sunday’s Hartford Courant. The article attributes the popularity to both a social consciousness and desire for extra funds which the teenagers satisfy by recycling their clothes for cash they can then spend on the low-priced merchandise at the resale store.
     Operating a successful resale store takes planning. You'll require expertise about what to pay for the used merchandise, knowledge of what used merchandise you can legally sell, polices about returns of used merchandise, and more. Still, consider joining in on this opportunity for profitability.
     For the strongest appeal to teens, think “exclusive.”

• Devote an entire department exclusively to teen fashions. Along with the appeal to teenagers of the resale model, there’s a stigma springing from associations of “resale” with “outdated.” This stigma is exaggerated when there’s resale clothing for older adults directly adjacent to that for the teens. One of stores named in the Hartford Courant article is This Ain’t Your Momma’s Closet. Other shops use names like Teenage Wasteland and The Dresscode to let it be known they’re for teens only. 
• A related point is that marketing methods helpful with adult resale stores won’t work as well with teen resale retailing. For instance, with adult resale, a tie-in of your for-profit business to charity can overcome resistances to patronage, since many adult consumers think of resale as benefitting charities. Savers, with nearly 300 stores, uses as a slogan “Good deeds. Good deals.” to portray that it gives a percentage of its profits to nonprofits. The appeal of that is less attractive to teen shoppers than to the adults. 
• It’s best to sell used items exclusively. If you do have both new and resale for teens, merchandise the two in completely different areas. Auto dealers don’t mix new and used cars. A stigma can rub off on new merchandise if it’s physically close to the used. There’s even evidence that having the same salesperson handle both the new and the used can decrease the willingness of the shopper to pay full price for unused items. 
• Market the exclusivity of the items you sell. The Hartford Courant article quotes the executive director of the Association of Resale Professionals as saying, “Teens… don’t want to go to the mall and get the exact same items as everyone else. Shopping resale allows them [to] find one-of-a-kind items….” 

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Ready Men for Good Deals Using Red

Put promotional prices in red ink, advise researchers at Fairleigh Dickinson University, Babson College, Drexel University, and Oxford University. When a sale price appears in red rather than black, it increases the perception of savings by about 70% among male shoppers. Related to this, the men in the studies liked retail ads better when prices were presented in red.
     The effect was much smaller for women shoppers. The increase in perceptions of promotional savings with red instead of black ink was about 8%, a difference too small for the researchers to consider it significant, given the variation among people in price perceptions. However, there was no evidence women liked sales prices in black over red, so there’s no reason for you not to use the red prices.
     Why does red have this effect? Other research finds that the color facilitates purchasing and consumption in general. It’s physiological. Red on the walls of the shop or restaurant speed up the consumer. Reds create excitement associated with fast movement and enhanced appetite. In a McDonald's, red means you eat more quickly, leaving space sooner for the next customer. In a Target store, red means you pile your purchases into the cart more quickly.
     It does depend on context. When you see a stop sign or a red light on the traffic signal at a busy intersection, you stop. The red raises alertness. So if you don’t stop, you’ll probably drive through the intersection faster than otherwise.
     But with the red prices, why did it make much more of a difference with men than with women? Because women pay closer attention to analyzing prices than men do, the color on the sign or in the ad isn’t as much of an influence. In fact, the Fairleigh Dickinson/Babson/Drexel/Oxford researchers discovered that when they managed to get the men more involved in analyzing the purchase possibilities, the red/black savings perception difference pretty much faded away.
     You can increase the effect of red on female shoppers in merchandise appraisal, even if not in savings perception, by giving red some personality. Research findings from Boston College and University of Pennsylvania indicate that Shakespeare’s Juliet had her accuracy clouded by love when she uttered “What's in a name? that which we call a rose By any other name would smell as sweet.” Retailers sold more items when packages carried the label “cherry red” instead of just “red.”

For your profitability: Sell Well: What Really Moves Your Shoppers

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Defend Against Store Name Dilution

Business education retailer WBF is being sued by trustees of the University of Pennsylvania. The reason is that WBF is the nickname of Wharton Business Foundation and University of Pennsylvania includes Wharton School, the oldest business school in America. The lawsuit understandably claims that consumers are likely to think the services they’d get from WBF have lots to do with Wharton School.
     WBF hasn’t even applied for a U.S. trademark registration for the name “Wharton University” or “Wharton Business Foundation University,” while Wharton School has been using the Wharton registered mark for business education since 1881.
     The Penn lawsuit is a reminder of the importance of trade protecting the name of your store and then monitoring for violations of your rights. U.S. federal law protects against trademark dilution. The Trademark Dilution Revision Act of 2006, which amended prior legislation going back to 1946, allows for legal action when there is a likelihood of dilution, not just proven dilution.
     Researchers at Rutgers University, California State University-Long Beach, and Ohio State University demonstrated the reality of dilution. They measured the proportion of study participants who think exclusively of one brand’s products when asked about a given brand name. They found that a single exposure to a logo similar to the logo for the given brand name, but for a different business, diluted exclusivity by about 35%.
     Defend against store name dilution by maintaining strong associations between your store name and store image. Market in all the channels the shopper uses when engaging in searches that could end up with purchases from you. Remember to include these:

• Personal contacts. When people visit your store, be sure they’re exposed to the name in signage, shopping bags, what salespersons are saying, and more. 
• Non-internet advertising. Use a full range of channels and have the store name in distinctive fonts and in a memorable logo design. 
• Interpersonal contacts. Beyond social media are the face-to-face interactions your satisfied customers have with other consumers. Give to those customers business cards with the store name in prominence. 
• Colleagues. If you operate under a franchise or in a retailer cooperative, the name you use is probably used by others. How well are you teaming up with those others to maintain the quality of the brand? 

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Bill Right by Considering Sample Constitution

In deriving from survey findings and study results the recommendations I make to you, I attend to characteristics of the people constituting the sample used in the survey or study. For instance, a great deal of consumer behavior research is conducted on college students because of the easy availability of the students to the researchers. Therefore, I assess how generalizable those findings are to consumers you aim to serve in operating a small to midsize retail operation.
     The matter of sample constitution arises with a report this month by Thumbtack.com, which rates locally-owned businesses, of a survey conducted in partnership with the Ewing Marion Kauffman Foundation, a booster of entrepreneurship. The objective of the survey was to identify areas of America which are most and least friendly to small businesses.
     Here are a few of the findings:

• Of the business friendliness factors surveyed, the one most important to the respondents was the ease of continuing to satisfy regulations, especially licensing regulations. 
• Among states, those seen as most friendly to small businesses included Alabama, Idaho, New Hampshire, and Utah, all at A+. Ratings of least friendly, with a grade of F, were given to Hawaii, Maine, and Rhode Island. 
• Among the 57 U.S. metropolitan areas assessed, an A+ went to Austin, Colorado Springs, Houston, San Antonio, and Virginia Beach. Notice that three of these cities are in Texas, which received a grade of A overall. Ratings of F went to Cincinnati, Newark, Sacramento, and San Diego. California received a grade of D overall. 
• Most improved state from last year’s survey was North Carolina, although its grade was still only a B+. 

     But how representative was the composition of the survey sample?

• On the positive side, the 7,766 survey respondents were truly from small businesses. About 96% had fewer than ten employees. 
• Also good is that the self-reported race, ethnicity, and gender distribution of the sample closely matched that reported for American small business ownership. So did the statistics for the small business longevity. 
• However, because the sample was composed completely of Thumbtack.com clients, there was a substantial overrepresentation of retailers who primarily sell services and underrepresentation of retailers who primarily sell products. This skew might explain why more than half of the respondent sample said they believe the level of taxes they pay is about right. 

     The constitution of the survey sample influences the value to you of the results.

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