Key Idea #2: Focus On What You Know Uniquely
Donna said, "My whole life is in this two-ounce bottle that I'm making today."

Q: What does she mean by that statement?

A: No one but Donna could have invented the products she sells today. This does not mean that Donna will become a millionaire. It does not mean that her company will become as well-known as her mentor, Este Lauder.

Donna's mother surrounded the family with plants, including flowers. As a young adult, Donna traveled in Europe and then found herself in India. She was fascinated by how the women would use the plants around them for hair and skin care. For example, women would comb coconut oil into their hair. As an American girl growing up on Breck shampoo and Cover Girl cosmetics, Donna's international travel caused her to see the connection between plants and health care. She even said in this interview that many people see food and medicine as the same.

While working for a plastic surgeon, she learned more about skin care and about inner beauty. Like, Maxwell Maltz, the famous plastic surgeon and author, Donna learned that beauty comes from the inside.

Dr. Maltz wrote in his best-selling book published first in 1960, Psycho-Cybernetics, that women who came to him to make them beautiful were always disappointed. He said these women thought they would be more lovely with a smaller nose or more pronounced cheek bones. Often after he performed the surgery, they would often look at themselves and cry.

He could see the changes were cosmetically correct, but these women didn't see themselves as improved. They were the same unhappy people inside, so they were still unhappy with their appearance. By studying Donna's web site, cowgirlenterprises.com, you will see that her beauty tips emphasize paying attention to your how you feel inside.

Next, Donna moved to Boulder where women are very open to "alternative therapies." Skeptical of products that come from big factories in fancy packages, the women in Boulder look for "natural" remedies. Donna studied with many teachers in Boulder. On a car trip in the western part of Oregon, she started dreaming about the pioneer women who left the big cities of the east 250 years ago and ventured west for land, freedom and a new life.

She wondered, how did they take care of their skin? The answer is to use the surrounding plants. Plenty of new products are born out of the business founder's life experience. We have produced shows here about about many of these entrepreneurs including: mountain climber Peter Metcalf of Black Diamond, new father Kevin Abt of Take Out Taxi, wheel-chair-bound Bill Malleris of Maple Court Development, vegetarian Debra St.Claire of St.Claire's Organic Sweets, publisher Marty Edelston of Boardroom Inc., and skateboarder Donald Cassel of The Grind King.

We could go on and on. From their life experience, these men and women invented new products which are today enjoyed by thousands of others. Don't ever ask yourself, what kind of business should I get into? What kind of business should I start? What would make me a ton of money? Ask yourself, what do I know? What is my experience?

You think about it:

• What product or service could you develop based upon your unique life experience?

Key Idea #3 Move Out Of The House
You've read about the surge of home-based businesses. Yes, this is a happening, but staying at home could keep you smaller than you want to be.

Q: How long did Donna operate from her kitchen, and why did she move out?

A: Donna was overrun with people and stuff. Her home was being taken over by bottles and packing materials and paperwork, not to mention her kitchen was the non-stop scene for the incubation of new formulas.

Donna had had it. She did not have a personal life. Cowgirl Enterprises had spread itself into the closets and hallways of her home. Donna rented the space the business occupies today, but she still has a home office.

She is connected to the Internet and functions 24X7.

The Cowgirl team is better served by a location away from Donna's home, and Donna has the clear separation from the stuff of work (although you should know that she is still trying to clean the beeswax from her kitchen floor) .

Key Questions:

• Do you operate a business from home?
• Is your business growing?
• Are your dreams bigger than you kitchen table?
• Is your work an intrusion on your family?

Key Idea #4: Outsource Manufacturing
Donna Baase is not interested in running a manufacturing plant. She wants to give her customers unique, botanical based skin products.

Q: How has Donna organized the business so she can focus on what she does best?

A: She is building a virtual corporation. She has just one full-time employee, several part-timers and four business alliances. An outside lab makes the liquid products. Two other companies make the bars and lip balm. And, of course, prisoners do packaging.

This is the new way to run a business. You do what you do best, then find others to do the rest. The old way is to hire employees. The new way is to form alliances. This way is efficient and saves you from burdening yourself with infrastructure and overhead. Donna may change her mind as she grows, but for now, she's glad to have teams of people who don't work for her, but with her.

Q: What is the downside of outsourcing?

A: You don't have as much control as you would if you employed every person who is working with you. The part-timers can be irresponsible or inconsistent in their work schedules, and then your service suffers. In the manufacturing processes, you may not always get what you negotiate for.

Q: Is building a virtual company only good when you don't have enough money to do everything yourself?

A: This is the reason Donna is currently still virtual. She doesn't have the money to build labs and plants to make her products. However, she accidentally discovered that this is a great way for her to work. She personally likes it.

Q: If the people-part of running a business is the most difficult part, then isn't forming alliances for specific tasks a viable solution?

A: It is for Donna and plenty of others. Her bookkeeper does bookkeeping for others, her artist does design for others, her sales reps handle other products, the plants that manufacture her products do so for others, and the team of workers at the jail does work for others.

This business model is the future.Small business can start small and stay small today because it allows everyone in the supply chain to only do what they do best. With digital workflow, everyone can work as if they are in the same room 24X7.

Q: Is managing all of these strategic relationships/alliances really easier than simply hiring people?

A: If you pretend you have all the money you need to start and build a business, you ask yourself, what's best for me? What fits my personality? What makes me happy? What brings me the most joy and the least frustration? With technology, you can now have anyone in the world working for you.

Do you envision walking into an office and dozens of faces raise up from behind computer screens and greet you with a smile and a verbal, "good morning?" Do you see yourself pulling up in your pickup to a job site and you not only see work being done, but also you see individuals you have hired and invested yourself in? You know their spouses' names and the names and ages of all their children? You feel a warm family feeling when you call these employees into your office to discuss how to solve a customer problem?

Or, do you see yourself in a state-of-the-art office on the phone doing deals with the owner of the manufacturing plant that makes your products? And you're in an e-mail "conversation" with independent sales people who handle your products. Also, you work strictly online with your web site developers You don't want to know people too well. You don't want to fuss with all the personal problems people bring with them to work every day. You don't want to think about employee benefit packages and training and parking places and clean rest rooms.

You get to choose! What kind of life do you want?

Key Questions:

• Is your payroll a big burden to you?
• Would it be possible to re-organize your business to outsource the tasks you don't enjoy?
• Could you do more with fewer people if you added more technology?
• What strategic alliances do you have now and do they work for you?
• What strategic alliances should you form?

Key Idea #5: Develop Multiple Sales Channels
Donna was patient and used her own market to test and validate her products before she expanded.

Q: Why was Boulder the perfect place to test her products?

A: Donna's plan for her first product, Cowgirl Cream, was to sell it in stores that carry natural products. Boulder is the bedrock of this retail category. As a customer of these stores there, she knew the product selection and the people who run the stores. Her confidence was high because making and marketing an all natural moisturizer in Boulder is like making wine in Napa Valley. You are surrounded by the gurus, plenty of users and in general the best of breed which means you have a sophisticated test market. If you can sell this stuff in Boulder, you'll probably be able to break into all of the country's natural products stores.

Q: Just a few short years after seeing Cowgirl Cream flow into production, you can find it in gift shops, spas and online in addition to the natural products stores where Donna envisioned it originally. How did she get into the other markets?

A: She cranked out news releases which generated inquiries. She went to a gift market in the Denver Merchandise Mart. She couldn't afford to rent a room at this mart, but she met some people selling western wear who loved the name of her company. They thought they could sell her products even though they didn't care one bit about the perfectly balanced botanical ingredients. This was the surprise. Donna was making all natural products which she knew would have appeal to a certain market segment. She didn't realize that when she named her company, the name alone would open doors for her.

There is a robust market around the world's fascination with the American West. Novels such as Lonesome Dove, television Westerns, and the late 60s Clint Eastwood Westerns, Fistful of Dollars and Hang 'Em High, all combine to form in millions of minds a magical mythical bigger-than-life West. You can see the video here and read about Sundance Catalog which is Robert Redford's company that sells western chic. Redford's "Sundance Empire" all sprang out of his role in the movie, Butch Cassidy and the Sundance Kid.

Q: Could she have made her way into the spa market with only her first product?

A: She says it was her herbal rub that opened the spa door for her, not Cowgirl Cream.

Donna's plan for her first product, Cowgirl Cream, was to sell it in stores that carry natural products. Boulder is the bedrock of this retail category. As a customer of these stores there, she knew the product selection and the people who run the stores. Her confidence was high because making and marketing an all natural moisturizer in Boulder is like making wine in Napa Valley. You are surrounded by the gurus, plenty of users and in general the best of breed which means you have a sophisticated test market. If you can sell this stuff in Boulder, you'll probably be able to break into all of the country's natural products stores.

You think back: Just a few short years after seeing Cowgirl Cream flow into production, you can find it in gift shops, spas and online in addition to the natural products stores where Donna envisioned it originally. How did she get into the other markets?

Key Questions:

• What markets could you expand into?
• Are there markets that exist now that did not exist when you launched your business?
• What percentage of your sales come from the web today?

Key Idea #6 Communicate Often With Customers
Direct mail is the most cost effective way for a small business to stay in touch with customers and prospects so building a mailing list should be goal #1 for every business owner.

Q: What did Kendra discover about post card design?

A: Actual photographs on a post card elicit a greater response than do line drawings.

Q: How did she know for sure?

A: The beauty of direct mail is that you can track every variable. On every offer Kendra mails, she adds a tracking code. When a sale comes in, it is credited to the tracking code the customer has in hand when they order. It costs more to have a high quality photo taken of products than it does to have an artist rendering, but for Kendra it pays off in more sales.

The big idea for all of us is to track everything we do, for you have to spend money to make money.

Key Questions:

• Is your database up to date?
• Can you email or physical mail your customers easily?
• How often do you communicate with your customers?
• When you do, do sales bump up?

Key Idea #7: Consider Prison Labor
Donna creatively addresses her need for seasonal labor.

Q: Why does Donna go the Boulder County Jail to get her packaging done?

A: She has her products made in batches which saves on her production costs. Therefore, just a few times a year she needs the products packaged. She formed a strategic alliance with Chuck Pringle of the Boulder County Jail Work Program.

Q: Does Donna save money with the Jail Work Program?

A: Yes and no. She saves because she doesn't have to keep a workforce on her payroll all year round, but she pays the going wage for the work.

We know from going to the jail with Donna that she sees her relationship with the jail as a ministry. She pays for the work and the prisoners are required to send the money to either crime victims or their family. In addition, Donna volunteers in the women's side of the jail to mentor and teach classes on how to be productive when the women leave jail.

Key Question:

• Are there ways for you to create work and do good for people who need your influence?

Key Idea #8 Create Work That Isn't Work
When your work is your play, time disappears. Why is it than when kids are sitting in a classroom studying a subject they don't like, the time drags? When the bell rings to dismiss the class, the kids shoot for the door with an incredible force of energy that has been building up during the course of the 50-minute class. On the playground, the same kid that was nearly asleep in class, is running to dodge a ball or put one over home plate.

Q: Do business owners have a different definition of the word "work" than the general population?

A: Yes. We believe that work is what you call something you'd rather not be doing. We might say we're, "going to work," or, "we have to go to work," or, "we're tired from a long day at work." However, we have never met an owner who would rather be playing golf than be at work. In fact, Jim Schell, our veteran entrepreneur and mentor to us here said, "I knew I needed to sell my business when I was wishing I was on the golf course rather than on my sales floor."

He went on to say that he was burned out and the business would not thrive if he stayed so he sold.

Q: Why do adults get so confused between work and play when kids can so clearly define the two?

A: We're not psychologists, but we know what we see and how we feel. Kids are honest; they don't fake it. The saddest thing in the workforce is a person who actually thinks work is work. The right thing is to have Scott's attitude that work is play.

I've read child psychologists who say that play is the work of children. So, why can't work be the play of adults? At Small Business School we say that a job is something you are doing when you would rather be doing something else. Fortunately, excellent small business owners have positioned themselves to play 24 hours a day, seven days a week. People who don't understand this concept actually think small business owners have it easy because it seems as if we can do what we want when they want to do it.

We arrived at our position through putting forth years and years of effort. And all along the way, we actually thought what looked like to others to be work was play.

Key Questions:

• Are you having fun at work?
• If not, why not? Should you sell your business?

Key Idea #9 Learn The Marketing "P's"
The four "Ps" of marketing are product, price, place and promotion.

Q: Where do you start to get marketing right?

A: You start with the product. The right product, at the right place, offered at the right price and properly promoted will make you rich.

Without the right product, you're dead in the water.

John also tells us that if you have the right product then proceed with the eight marketing functions which are:
1. create awareness
2. build traffic
3. generate leads
4. qualify leads
5. sell directly
6. provide service
7. develop a customer dialogue
8. build loyalty

Key Question:

• Are you happy with the pace of your growth? Do you think you have the right product or service?
• Do you think it's time to re-think your offers?
• Could a new technology make your product or service more compelling?

COMMENTS OR QUESTIONS. We invite your comments and questions. Was the show inspirational and/or educational? We hope this episode of the show is both!