The Vault July 2009: The Art of Negotation

Everybody wins
Negotiating is a way for people or groups to work out their differences. Whether that means bargaining over the price of a car or working out an arrangement with a business partner, it’s a great way to find solutions and stay friends. Ever heard the phrase “a win-win solution”? That’s what you’re after when you negotiate.

Check out clips from the show!
Learn about the art of negotiation in this hilarious clip: https://bizkids.com/show.aspx?clip=/resources/flv/season_2/206C_DirectEd_HowToNegotiate.flv

 

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Biz Kid of the Month: Brittany Bergquist
Brittany and her brother Robbie founded Cell Phones for Soldiers (http://www.cellphonesforsoldiers.com) in 2004. They were 12 and 13 years old. They started with $14 from their piggy banks. Today, the organization has raised over $2 million!Tell me what your organization does.
We collect unwanted cell phones, sell them to a recycler, and use the money to buy phone cards for soldiers stationed overseas.How did you get started?
We saw a story about a soldier with an $8,000 cell phone bill from calling home from the Middle East. We wanted to help him and others like him to call home without having to pay for it. We started with our own money. Things kind of took off from there with car washes and bake sales, then bigger donors and partners.

What was one of your biggest challenges?
When we first started, we thought we could send phones directly to soldiers. The Pentagon called us and told us that was a no-no! We were pretty much left with nothing.

How did you overcome that situation?
Through research and talking to our contacts, we came up with the idea of cell phone recycling. The recycler pays us for each phone we send them–enough to buy about one 60-minute phone card for each phone donated.

How does negotiation play a role in your success?
Negotiation is really important in our relationships with partners, particularly large partners like AT&T. They agreed to have drop-off centers at many of their retail stores.

What are some of the things that help you be a successful negotiator?
The first thing is not being afraid to hear “no.” It’s also important to know your facts. If the other person knows more than you do, you’re at a disadvantage. If they see my knowledge and passion for what you are doing, they will see it and want to participate.

What’s the best thing about being a Biz Kid?
It’s way more interesting than anything else I could be doing as an 18 year old! I’ve met dignitaries and celebrities, along with soldiers who have been helped by the program. Plus, it helped me get into college!

 

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Why negotiation is important
In business, the value of a relationship over time is usually more important than a single transaction. The same thing is true in life. Plus, without negotiation, at least one party loses–and sometimes neither side gets what they want.A skill you will use every day
You might negotiate with siblings about what to watch on TV; you might negotiate with a teacher about what you’re going to write an essay about. Everybody negotiates, but not everyone thinks about how to get the most out of it. With a few simple strategies, you can get more out of the process.Top tips for better negotiating

• • Get smart: Just as Brittany said, it’s super important to know your stuff before you start negotiating. If you think $50 is a fair price for that beanbag you’re selling at a garage sale, you’d better be ready to back it up with facts. If the other person tells you they saw it online, brand new, for $40, what are you going to say?
  • Start high: Never start a negotiation by telling the other party what you really want. If you want to watch a show that lasts half an hour, ask to watch TV for an hour. That way, you have some wiggle room!
  • Look for win-win: Think of the other person as your partner, not your foe. How can you find an outcome that benefits both of you?
  • Stay cool: Don’t get emotional. Negotiation isn’t personal–it’s just a way of working things out. If you can keep a clear head, you’re more likely to find a good solution.
  • Be creative: If you’re negotiating where you’re going to eat lunch with a friend, don’t just blindly stick to your choice. Maybe you can find a place that both of you like. Or maybe you could let him choose where to eat lunch if he helps you with your chemistry homework. Anything can become part of a negotiation.

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Ask John Paul
What is the hardest part of negotiating?
The hardest part of negotiation is getting past the word “no.” Parents teach you that “no” is the final word. In REAL life, the word “no” is where you start. When you hear “no,” ask, “What I could do to change your mind?” Or just ask, “Why do you say ‘no’?” Sometimes “no” just means “not yet” or “not now”.  The point is to find out why they said no, and then make a deal that turns “no” into “YES.”John Paul Pigéon is a 12-year-old financial guru from Fort Worth, Texas. Visit his Web site athttp://www.johnpaulpigeon.com. Send your question to askjohnpaul@bizkids.com. It may be selected for our next newsletter! 

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Info to go

• A quick overview of win-win negotiating from the “For Dummies” books: http://www.dummies.com/how-to/content/winwin-negotiating.html
• Tips on negotiating from Dr. Phil: http://www.drphil.com/articles/article/112
• Visit Biz Kid$ on the Web: https://bizkids.com

June 2009: Risky Business

Life is full of risk. But do you know what “risk” really means? And do you know how to protect yourself and your business from risk? You’re about to find out!

Think you have a great lemonade stand? You could win big!
Inc. magazine is holding their annual ‘Best Lemonade Stand in America’ contest.  Each week, they select a winner and post the story on their website.  This year, the grand prize winner will be featured in an upcoming episode of Biz Kid$! Follow this link for details:http://www.inc.com/lemonade/2009/
Fast Fact
What do you think is the riskiest sport for women? Read to the end for the surprising answer.
See clips from the show–on your computer
Our new Web site is live, with an enhanced blog, an archive of past newsletters, and lots more video. Follow this link and go to episode 207, “The World Is a Risky Place”: https://bizkids.com/show.aspx

What is risk?
A risk isn’t something that actually happens–it’s the chance that something will happen (also known as the probability). If you are riding a skateboard, there’s a risk that you will fall off and sprain your ankle. If you actually do fall off and sprain your ankle, it’s no longer a risk–it’s a reality.Examples of risk for a business:
* An employee might do something illegal
* Someone could get hurt on the store’s property
* A customer could be injured by a product 

What to do about risk?
No matter what you do, there is always some chance that something bad will happen. But you can make that chance as small as possible.

 

Be careful
If you ride a bike, you wear a helmet to reduce the risk of injury. Business risk is the same–think about the risks and do what you can to reduce them. A business that puts together bicycles could use a checklist of everything that needs to be tightened and tested before a bike is ready to sell.

Buy insurance
Insurance is a way for groups of people or businesses to pool their risk. Imagine our bicycle business again. They sell a faulty bicycle and someone is injured. The business could have to pay the medical bills, which could put them out of business. With insurance, the medical bills would be paid for by the insurance company.

Use contracts
Contracts are legal agreements among people or groups. Think about a business that sells music lessons. Perhaps they have several teachers under contract. If teachers can go solo and take students with them, the business will not survive long. The business should have a “non-compete” agreement that says that the student relationship belongs to the business, not the teacher. Contracts can be used in lots of ways. If you think you need contracts in your business, consult a lawyer.

Risk and reward
Risk isn’t necessarily bad. Often, to reach bigger goals, you have to take bigger risks. Maybe you have to invest more of your money in your business. Maybe you have to try something you’ve never done before. The important thing is to look before you leap. Consider whether the risk is worth the possible reward. If it is, do what you can to minimize the risk. Even sitting and doing nothing has risk–the risk that you will become a couch potato!Fast Fact Answer
What was your guess? Soccer? Football? Gymnastics? Nope–the riskiest sport for women is cheerleading, accounting for 65% of all severe injuries in high school athletics. Read this article to learn more: http://www.msnbc.msn.com/id/26293199/ 

Info to Go
* Is cheating worth the risk? http://www.cs.dartmouth.edu/farid/mathkids/risk.html
* Fun fish tank game about probability: http://www.bbc.co.uk/education/mathsfile/shockwave/games/fish.html

May 2009: Marketing Madness!
Got a great service or product? Tell the world! In this issue of The Vault, we cover the famous “four Ps” of marketing–product, price, promotion, and place.Fast fact
Some marketing campaigns talk about why the product is superior. Others try to catch your attention. The best ones do both. For a hilarious, yet effective marketing campaign, read down!

See clips from the show–on your computer
Our new Web site is live, with an enhanced blog, an archive of past newsletters, and lots more video. Click here and go to episode 211 for this month’s topic!

Biz Kid of the Month: Leanna Archer

Leanna Archer started her personal care products company at the age of 9 using a family recipe and now fills hundreds of orders a week through her Web site,http://www.leannashair.com. She recently launched a forum for young entrepreneurs, http://www.teenceo.us.

Tell us a little about your business.
My family had a hair dressing recipe that was passed down for generations. My mom used it on me since I was three. People would stop and ask me questions about my hair, so I got the idea to start a business selling it.

I understand your first marketing project was convincing your parents that you were serious.
They thought it was just a phase, so I started giving people samples. When people came back to me asking to buy $20 or $30 worth, my parents realized I was serious.
Once you had the product, how did you figure out the price? 
I put together the cost of the ingredients and added enough to pay ourselves for the work we put into the products. Some products take a lot longer to make, so I charge more for those.
What do you do for promotion?
Word of mouth is number one. For recurring customers, I recognize the name when we pack boxes, so I put in some fliers so they can tell their friends. And I started a kid representative program, where kids can sell the products door-to-door with the help of their parents. At holidays, we do gift baskets that are less expensive than buying the products individually.
Do you sell products in stores?

Mostly through the Internet, but I always stop by beauty salons and give them samples and if I’m lucky they will carry the products.

 

You’re featured in a lot of magazine articles and you also speak at events. Does that translate into additional sales?
Yes, the day an article comes out, I always get pages and pages of orders.

 

What do you think is the most important aspect of marketing?
Product. You have to know your product so that when customers ask questions, you can answer them in ways that are persuasive. I help my customers understand how to get the most benefit from using my products, so they come back for more.

What do you like best about having your own business?
I love bonding with my family as we make the products. We put on music and have a great time!

 

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Find your target audience
Before you do anything marketing-wise, you need to consider to whom you’re selling. If you have a dog-walking business, where are you going to find your target audience? You might post ads in pet stores and pet-friendly apartment buildings. And think about what they are likely to want–for example, some people might be attracted by a lower price, while others want extra services. If you can, do some research–talk with some prospective customers yourself!

Product: What are you selling?

Product is the first P because it’s the foundation of everything else. What are you selling, exactly? Does it stand out from the crowd? Check out your competition and see if there are areas where you can do better. Or, if your product is truly unique, congratulations–now all you have to do is convince people that they need it!

Price: How much does it cost?

If you charge too much, nobody will buy. If you charge too little, you won’t make a profit. Figure out the lowest price you can charge and still make a profit, and then work up from there.  Also remember that people judge quality by price. If you charge to little for something, even if you are still making a profit, people may think of it as low-quality. Sometimes, charging more actually creates demand

Promotion: How do people find out about it?

This is what most people think of as “marketing.” It’s the business of getting the word out. Even in the age of the Internet, the most powerful marketing is word of mouth.

• Ask your satisfied customers to give you referrals to their friends.
• Ask friends and family to recommend your product to people they know.
• Use Web sites, like the online classified section of your local paper
• Post fliers on bulletin boards at grocery stores, community centers, and parks
• Start an e-mail newsletter like this one! You can use a service like Emma, Constant Contact or Mail Chimp, or you can just do it on your own.

Place: Where can people get it?

Whether you’re offering a product or a service, people need to know where to buy it. Are you going to sell online? Will you build a Web site, like Leanna Archer did, or sell through one that’s already built, such as Ebay or Etsy? Will others sell for you? If you have a service, how do people get hold of you? Once you’ve figured out the fourth P, you’ll be on your way to Marketing Mastery!

 

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Fast Fact

Blendtec makes fancy blenders. To show off their products–and get thousands of Web visitors–they started the outrageous viral video series, “Will it Blend?”. iPods, glow sticks, golf balls–they all get blended. See the videos here:http://www.willitblend.com

 

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Ask John Paul
Q: Why is marketing important?
A: Look at it this way: maybe the reason that small business stay small, and big businesses are big is a difference of mindset.  Most people think that the big companies can advertise because they are big.  But maybe the big companies are big because they advertise. Think of marketing as an investment: if you do it even when it seems like you can’t afford it, the road to the top will be much easier.John Paul Pigéon is a 12-year-old financial guru from Fort Worth, Texas. Visit his Web site athttp://www.johnpaulpigeon.com. Send your question to askjohnpaul@bizkids.com. It may be selected for our next newsletter!

 

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Congratulations to the winner of our Super Saver Sweepstakes!

Last month, we asked readers of The Vault to submit their savings goals. We selected a winner at random to receive an iPod Shuffle and a profile in our newsletter. The winner was Jonathan, a 5th grader from Fairport, New York. Jonathan says:

 

“I am in a rock band called Two Moons. I am saving up my money to buy a Roland AX-7 ‘keytar’ so we can go on tour. I currently have $235.70. If you think that’s a ton of money, keytars cost $400! The money comes from jobs, allowance, and a sale that I will put out during my town’s Canal Days. I am going to hopefully sell enough items to get $400!”

 

Happy saving, Jonathan!

 

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Info to Go

• American Marketing Association: http://www.marketingpower.com
• Small business marketing tips: http://marketing.about.com/od/marketingtipsandadvice/a/10smbizmktgtips.htm
• Wikipedia article with lots of information on the Four Ps: http://en.wikipedia.org/wiki/Marketing
• Biz Kid$ on the Web: https://bizkids.com