Archive for the ‘Work Your Biz Wednesday’ Category


Finding the Right Price Point for Your Product

7-22 Pricing Strategies smallOnce you start a business, how do you know how much to charge? If your product is priced too high, it won’t sell. If it’s priced too low, you’ll be swamped with orders, and have such a small profit margin, it wont even be worth the effort. Finding the balance is the trick.

What Goes Into Cost

Your price should:

  • Cover your costs
  • Highlight the value you provide your customers
  • Earn you a reasonable profit
  • Be competitive

There is no such thing as the perfect price. It’s all about developing a price that your customers are willing to pay, that also makes you a profit. Because remember profit is how we keep score in business. Pricing effects every aspect of business because price is used to create sales projections, establish a break-even point, and calculate profit. There are three ways to find the right price for your product:

1. Look at the competition.

Use your competitor’s price as a reference point. If your product is of a higher quality, and you can justify more benefits, then you can probably justify a higher price point. The goal must be to stay competitive. If your product is knock off, then your price point will be less.

2. Calculate the total cost of your product.
This should include your hard costs (labor, materials/inventory, packaging, shipping.) You should also include a percentage of your overhead expenses such as (legal, accounting, marketing, and administrative costs.) Once you have a all your costs then you need to determine your profit margin to calculate the final price. Depending on what you sell the profit margin could be anywhere from 30 percent to 300 percent.

3. It's all about the perception of value.

Perceived value is one of the most common factors business owners use to determine product pricing. Unfortunately, some small business owners we perceive their value to be much greater than their would-be customers, which is a great way to go out of business. The main factor that adds value to a product is the brand behind it. Lots of stores sell mixers, but if you have a Kitchen Aid mixer, you have a top of the line machine. Why is that? All mixers basically function the same.

It's all about the perception of value. The Kitchen Aid mixer has a higher perceived value.

Let me give you a quick MBA lesson:

Price = (Labor + Materials) x profit margin

What that profit margin is will depend on your industry and who you’re selling to. If you’re selling wholesale, you might double what your labor and materials cost. If you’re selling retail, it might be double what you’d charge wholesale.

Don’t Compete on Price

There’s often a pull to be the cheapest seller on the block. Resist the urge, otherwise you people will assume your products are lower quality. Someone will always be able to offer similar products cheaper than you, so this is a no-win situation.

Don’t be afraid to Charge a Premium!

People pay based on perceived value. If you are confident — and competent — and can point to great work you’ve done in the past, people absolutely will be willing to pay what you charge.

Down-the-Road Discounts

It’s easier to charge more and come down in price than to start out low and then charge more. If your prices seem to be too high for your marketplace, test out different promotions and see what price point resonates with your audience. Psychologically, you may see better results simply offering a discount occasionally than to reduce your prices across the board.

Test your Price Point

Pay attention to people’s response to your prices. If you don’t want to cut your profit margin down, consider adding more value to what they get, such as a free product, or discount on future purchases.


The Lowdown on Small Business Bank Loans

7-15 small business loan smallStarting a small business is a costly endeavor. It’s rare that a business owner has so much cash saved that she doesn’t need any capital once the business really start rolling. One way to secure funding is through a small business bank loan. While bank loans are not easy to obtain, once you’ve been in business at least 2 years and have financial statements which show your company is growing, you can find some local bank or CDFI’s Community Development Financial Institutions that will extend you a loan.

The key to finding a loan is to seek out banks that are more likely to work with small businesses. Smaller banks move faster in terms of processing the loan, but they are much more rigid in their loan requirements and require significant collateral. That being said, if you have a relationship with a local bank,that may be the first place you want to look at for funding.

Many of the large national banks chains cannot adequately service the needs of very small businesses. In addition, the lending decisions are not made locally. Whether you decide to seek funding for a larger national bank or small one, make sure you consider the six Cs, which is the way a bank will assess your application.

1. Capacity:  This is the most important factor your bank will consider in deciding whether to advance you money. It is essentially whether you can pay back the money you borrow. Your current cash flow statements should illustrate how you can repay the loan in a timely manner.

2. Credit: Your personal credit score is a factor in your small business loan application. Banks will require you to sign a personal guarantee on a loan to share the risk. The higher your credit score, the more favorable terms you can negotiate.

3. Capital: How much money do you need and how will you use those funds? It’s important to detail exactly how much you need and what you will use that money for in your business. Keep in mind the more money you ask for, the more scrutiny your loan application will receive. Typically you can borrow 10 percent of your gross revenue.

4. Collateral: Any business owner will be asked what assets he can provide to secure the loan. For example, if you own a home, car, or other personal assets, those will be considered when a bank decides whether to grant your loan request. The more collateral you have, the more willing a financial institution may be to lend you money.

5. Character:  Simply put, this is your reputation. You will be asked for references that can speak to whether you are trustworthy and have community connections. Banks will also look at your business experience and your industry background.

6. Conditions: This refers to your loan’s terms and conditions. You need to answer the question: is it a good deal for you or the lender? Your bank wants to make sure that you are using the loan for a legitimate business purpose. As such, some lenders will require invoices from your vendors and will cut checks directly to the vendors for payment.

When you’re seeking a small business loan, it’s important to understand what all six of the Cs look like for your business before completing your loan application. Keep in mind that credit unions and nonprofits may also offer small business loans. These organizations may give smaller loans than banks, but they are often a great first step in securing financing and establishing business credit, especially if banks are not an option. 


The 4 Ps of Marketing (and How to Incorporate Them in Your Marketing Plan)

When many business owners think of marketing, the things that often come to mind are techniques like writing advertising copy or crafting messages for social media. While those tactics do eventually become part of the plan, they are not the sole components of marketing your services. The first step to successfully developing your businesses’ marketing plan is defining the four Ps and understanding how they inform the strategy in its entirety. Let’s take a look at the four Ps and how to include them in your marketing plan.

What are the Four Ps?

The ultimate goal of all marketing is to generate sales. As such, the four Ps of marketing are tools to help you effectively turn a profit, (which I believe should be the 5 p’s actually). Understanding what you need to maximize both profits and sales is key to developing an effective marketing plan. The four Ps — Product, Placement, Promotion and Price — help you do that.

Product

The foundation of any business is the item or service you are selling. Hence the first P is product. Take time to describe in detail the product or service you offer. If it’s a physical item, write down the different options, packaging, features, and sizes.

Once you’ve described the product itself, delve into how that product meets the needs of the client, the features and benefits, and your competitive edge. Explain how it will be manufactured or performed. Then take it a step further and identify what deeper problem it’s helping the client solve. For example, the product may be a technology service that helps the client better track inventory. But it’s also helping the client attain sales goals and make more money each month.

Placement

The second P stands for placement, which covers how the product or service will be delivered. At this point, describe the distribution channels and physical facilities needed in order to move the product from manufacturing and storage to the consumer. For example, is the product placed in a warehouse, garage, fulfillment house, or office space?

Promotion

The third P — promotion– is where many of the tactical and fun ideas for marketing your product come into play. At this stage, outline what advertising channels you will use to let people know about the product. For example, will you use the Internet, flyers, magazines or newspaper ads, direct mail, broadcasting, or social media? Write out all your public relations strategies and ideas. Then review your personal and business networks to determine who can help you implement the marketing strategies.

Price

The fourth P is price, and it is here where you determine what the market will pay for the product or service. Pricing strategy is all about pricing your product or service for your different target markets. Determine the list price, discounts, wholesale allowances, markdowns, payment periods, and credit terms.

The good news is that much of the information you need to develop a marketing plan is free or low cost. Before you sit down to write your four Ps and marketing plan, spend time online listening to your potential customers and your competition. Go to the library and subscribe to industry publications. Join trade organizations, contact the local Chamber of Commerce, and talk to potential customers. Doing these things will help you articulate your four Ps and write a marketing plan that really targets your target markets with the right messages, and through the most effective channels.  


4 Must-Have Keyword Research Tools for Your Business

7-1 Keywords for website smallKeywords are instrumental in helping people find your website. Every time someone searches for a keyword that relates to your brand, you want them to find your site, nestled toward the top of search results. If that’s not the case, you need to invest serious time in researching the right keywords and adding them to your website. These tools make it easy to do.


1. Google Keyword Planner

This tool is part of Google AdWords, but you don’t have to buy ads to use it. Google Keyword Planner lets you search for keyword ideas as well as see how many people are searching for a given keyword.

Go one step further: Once you find a handful of keywords that you think accurately describe your products or services, incorporate them on each page of your website. But only use one or two per page! Using more may trigger Google to push you down search results rather than up, as the search mogul is cracking down on black hat SEO strategies.

2. WordTracker

Google’s Keyword Planner is free to use, but WordTracker is a subscription-based keyword research tool. It also provides relevant and related keywords, and can help you find ones you wouldn’t otherwise have thought of. You get more keywords than with Keyword Planner, and you can access your searches by logging into your account, rather than dealing with clunky spreadsheets of data.

Go one step further: Check out WordTracker Academy for great resources to help sharpen your SEO skills and stay on top of the latest updates. They also offer some great reports and downloads.

3. Twitter Hashtags

Just like with Google Trends, hashtags on Twitter can let you know what people are buzzing about right now.

Go one step further: Check the lefthand sidebar on your Twitter homepage to see the hashtags that are being used heavily at any given moment. Use them in your own social updates, or use the topics as blog fodder.

4. Ubersuggest.org

UberSuggest is one of the best free Keyword suggestion tools with an easy to use graphical component. Übersuggest is one suggestion tool that makes good use of different suggest services. You can get suggestions from regular web searches or from search verticals like shopping, news or video. Ubersuggest can be very useful for quick keyword based post ideas.

Bonus tool: Google Trends

While not a keyword research tool per se, Google Trends shows you what’s hot right now. This is especially useful if you’re looking for blog topics. Ride on the tails of trending searches or news, and you’re more likely to see more readers for that particular post.

Go one step further: Subscribe to Trends to get emailed whenever topics you care about pop up as trending.

Keywords change over time, so make sure you constantly stay on top of the best keywords to promote your small business website.  


Using Case Studies to Grow Your Business

One of the ways to build credibility for your business is to share information about your company’s products and services from satisfied customers. Your ability to get a foot in the door with prospective customers depends in part upon how well you tell your company’s story. If you are a service business, you can’t talk about a tangible product. But what you can do is develop case studies to do that help you illustrate the results you deliver for your existing customers.

case study is in-depth profile of work you've done. This is typically written to highlight the work you’ve done on a high-profile project or client. This summary report can then be used as a one-pager in a marketing kit or on your company’s website. Here are the elements to include on a compelling case study.

Name of Client and Type of Service

Always include the name of the client you plan to profile (with their permission, of course), and select a business that will resonate with your target audience. The goal of writing case studies is to ensure that your ideal customer will hire you after reading the case study.

Also include the type of service you provided. For example, if you provided social media consulting or online marketing, include that as a sub-heading after you list the client’s name in the title. Since this will live on your website, you'll need to ask the company’s permission before publishing.  

Purpose of the Project

This is where you write about the problem the client was facing, and why you were hired to solve it. For example, was the purpose of the project to raise awareness of their company or brand? Was it to build brand awareness, generate sales or increase their online traffic?

Execution Brief

Here is where you illustrate how you solved the problem for the client. Describe in detail all the services you provided, and highlight why you chose certain strategies over others. Do not simply say you increased the number of newsletter subscribers. Be specific and note HOW you increased the subscribers.

Since this section of the case study can be long, don’t be afraid to break up the text into sections with bolded headers, or use bullets and numbers.

Share Results for the Clients

Use real numbers to illustrate the successful work you did. Don’t just say, “We doubled traffic to the website.” Instead list the before and after numbers or percentages and consider displaying those figures in charts and graphs. Using screenshots of Google Analytics information are great additions if that reflects the work you did. This section is a great way to use visuals to display the information.

Client Endorsements

One of the most effective ways to sell your products and services is with customer testimonials. Potential customers are really not that interested in your passion or belief that your work produces amazing results. Let your customers do that bragging for you. Include a few testimonials from the satisfied clients in your case study. Ask the customer to write the testimonial in a way that highlights tangible results and benefits. These words are a great way to close the case study with praise for the work you conducted. 

The addition of case studies to your website will help you tell your business story, highlight the services you provide, and illustrate results at the same time. Try if you can to get testimonials in video as well, to add to your website as well.


How to Under Promise and Over Deliver to Your Customers

6-17 over deliver smallHow well you connect with your customers through your products, services, and support will determine whether they come back to you to buy again and again. But even if you sell the most amazing products ever, there’s still room to improve your customer service. One strategy is to underpromise and overdeliver. What do I mean by that?

Some may tell you to think of underpromising what you can give a customer as an “in case of emergency” cushion for worst-case scenarios, but it’s better to plan for success than for failure. By promising one thing (5-day delivery, for example) and beating expectations (2-day delivery) you'll surprise and delight your customers. And that will keep them coming back. Here are four ways to ensure that your customers are constantly enchanted with your service, plus one freebie tip for the customer who cannot be satisfied.

When you thank your customer for her business, ask her for feedback.

One way to know how to overdeliver to your customers and also gain valuable insight is to ask your customers what they want. Institute an outreach program that connects with customers within 7-10 days after the transaction is complete. Ask your customer to provide specific ratings and input on a few specific topics. Then look at trends. If you constantly hear that your product isn’t well-packaged and sometimes gets damaged in shipping, that’s something you can take direct action to improve.

Work smarter with Customer Relationship Management Software (CRM).

If you’ve ever called a customer service line, been transferred, and then had to re-explain your situation, you no doubt were frustrated that the company didn’t keep better records on your past interactions with it. Delight your customers by storing detailed records on past transactions and calls with CRMUsing CRM, anyone with access to the software can become an expert in your customer’s history quickly and painlessly and instantly improve your customer’s experience.

When your customer completes a transaction, surprise her with a gesture.

There are many ways to acknowledge your appreciation for your customer’s business. You might send a handwritten thank you note for doing business with you — in this day and age, handwritten notes carry a lot more significance than a canned email. You may offer a small discount if she purchases again within a short time frame. It is important to let your customer know that her business is important to you and that you value it — the incentive or gift is just the icing on top.

If your customer has a problem, find out what the problem is and solve it.

If your business is reviewed on yelp or any review site, you need to stay on top of anything unhappy customers are saying. Make it your mission to solve problems for your customers. In the event that a customer is unhappy with your product or service, make it right immediately. It's not worth them telling their story to 10 more people, is it? Keep that old adage, “the customer is always right” at the center of your actions, and go above and beyond in not only remedying the situation, but making her a glowing fan of your business.

Freebie: So what, if your customer’s demands are unreasonable, Can you say ‘no.’ Yes, you can!

Every now and again you may run into a customer whose demands are unreasonable and who refuses to be pacified with your customer service efforts. While you may be tempted to appease this customer’s demands, it is better to put your energy toward your customers who do appreciate your efforts. Sometimes you may have to tell these challenging customers, “I'm sorry, I couldn't possible do that.” Just say No, and move on, as there is little you can do salvage this type of customer relationship. Save your energy and focus for your rational customers.


7 Things Small Businesses Do To Lose Online Customers

6-10 online shopping smallRunning a small business isn’t easy. Finding and keeping customers is even more difficult. If you don’t make it really simple to buy from you online, shoppers will go elsewhere for their next purchase. There are specific bad behaviors to avoid with the shopping experience on your website.

Here are seven things small businesses do to lose online customers.

1. You Have Confusing Information on Your Site.

As an entrepreneur, time is often your most precious commodity. If you don’t regularly review what’s on your website, you might be turning away potential customers with misinformation or simply old data.

If your newest blog post, for example, was written over a year ago, that’s a turnoff. If your products don’t have a sales page or enough detail to help shoppers make an informed decision about buying them, they won’t.

Remedy:

Periodically review all your web copy. Update it on an annual basis at minimum, and make sure it’s always accurate.

2.  No Contact Information.

Spam is a definite concern when posting your email address online, but there are alternatives that will make it easy for customers to reach you via email while keeping your inbox spam-free. Instead of burying your email address on a never-visited page, post a phone number and set up a contact form for customers to use to reach you.

Use FAQ page to help answer many of the questions people have before they hit submit on that contact form. Being helpful is always good customer service!

Remedy:

Ensure your contact information is clear and easy to locate. Offer multiple ways for customers to contact you (email, chat, phone, social media).

3.   You Don’t Answer Email in a Timely Manner.

Have you even sent an email trying to get help and no one every got back to you? Sure you have, but don't have that happening in your business. Don't set up an info@xxx.com email account no one checks. Time is money when people are shopping online.

It might have been acceptable for you to respond to a customer’s email within 24-48 hours several years ago, but now every minute counts in your response time. As in: the sooner, the better. Taking even a day could lose you serious business.

Remedy:

If your inbox is overflowing, consider hiring a customer service rep or social media virtual assistant to help field some of those emails.

4.  You Use Social Media Inconsistently.

Social media can be a game changer for small business owners…but only if you use it regularly. If you aren’t making an effort to update your profiles at least once a day, potential customers will not know you exist. A steady stream of fresh content, on the other hand, can pique people’s interest and lead them back to your website, which is your best opportunity to generate a sale. 

Remedy:

Focus on only one social media site to engage prospect customers. Update your social media account daily. Dedicate a few minutes each day to the effort.

5.   You Don’t Engage with Potential Customers with Email.

You need to make sure you have at least three ways to capture a potential customers email address when they come to your site, so even if they don't buy that day you can nurture the relationship. Use email to building your brand to attract future customers, share helpful information to a build a like, know and trust relationship with your prospects.

Remedy:

Use email marketing to engage potential customers by demonstrating your ability to anticipate their needs, and offer help.                                                                                            

6.  You Share Too Many Promotional Updates on Social.

One of the best ways to create a relationship with a potential customer is to provide assistanceOf course, you want to bolster your connection with your audience, but it is critical to provide value first especially in social media. Don't start selling relentlessly as soon as you start using social media, Instead, share informational tidbits in the guise of links, tweets and conversations to build community with potential customers. Make it about them and not about you.

Remedy:

Use the 4:1 ratio. For every four useful, informational updates, post one promotional one.


5 Tips for Picking the Right Business Partner

Having the perfect business partner can help you take your business to another level even faster than you could take it on your own. Not only will you have someone to bounce ideas off of, but you can also have someone whose skill sets complement your own, making you a well-rounded team. But just like any relationship, you need to date first and test the relationship, so that you don't make an expensive mistake. Breaking up a business partnership is a major distraction, so you must choose well.

Here’s how to make sure the person you pick is right for your business.

1. Pick Your Partner Carefully.

Just like you wouldn’t marry someone you barely know, it’s important that you get to know the person you want to run a business with. In other words: date before you get married in business.

How can you do that? Work on a few projects together before joining forces in business. See how you work together. Do you flow well, or do you butt heads? Do you enjoy working together?

It’s also a good idea to do a background check to know who you're getting in business with. 

2. Get an Entrepreneur's Prenup.

Even if you trust your new partner implicitly, it’s still a good idea to hire a lawyer to develop a formal partnership agreement. Make sure it addresses how money will be managed and when net profits will be shared, as well as how hiring decisions will be made, and spells out each of your roles and responsibilities. Make sure to clarify terms on exits, buyouts, death, and divorce.

Money can ruin a good partnership. Have clear policies drawn up on how money is handled, including vendor payments, reimbursements, cash withdrawals, etc. Having this document can help you if things go south and you need legal proof of your original agreement. If you agree to change the partnership agreement, legally document the change. 

3. Keep it Business.

Unless you’re married to your business partner, your relationship will do better if you focus on business and keep your ego in check. Never make decisions based on emotions, and do take your partner’s opinion into consideration. Schedule meetings to rtegularly review your financial statements together. Be open with information and clear with communication.

4. Don't Be a Credit Hog.

There is no "I" in team. Successful partnerships can be ruined when one partner wants to take credit for everything. If your partner has come up with a great idea, pat him or her on the back and make sure credit is given where it’s due. It takes teamwork to make the dream work.  If one of you dominates the relationship, the business partnership won’t last long.

5. Value a Good Partnership.

If you have a good partner and the business is successful, celebrate this. That way both will thrive. Always make sure to make decisions in the best interest of the business and not your personal self interest. Just like in any relationship it will take time and effort on your part to develop trust and keep balance in the partnership.  

Understand the value of that partnership and make concessions for the good of the partnership. Remember: this isn’t just your business anymore. You share it with someone else, and everything you do should take that into consideration.


The Difference Between Being an Entrepreneur and a Franchisee

5-27 comparing smallIf you’re planning to become your own boss, one option you might want to consider is becoming a franchisee. In a franchise everything’s already laid out for you in terms of the products you’ll sell and the marketing plan. Many people prefer becoming a franchisee over starting a business from scratch. Still, there are several differences between being an entrepreneur and being a franchise owner that you should be aware of.

1. There’s Less Risk with Franchises (But Still Risk)

Many franchisees are attracted to the fact that they’re buying into a proven business. After all, there are thousands of burger franchises across the country. People are already familiar with the brand, so you don’t have to work to establish it on your own.

Still, it’s important that you know that there are risks with running a franchise. No business is guaranteed, and it will be susceptible to all the same threats as any other business, including recessions, competition, and location (a bad location for your franchise can kill the business).

2. You Have to Follow the Rules as a Franchisee

While technically, yes, you are a small business owner as a franchisee, you essentially sign up to have a master, your franchisor, who will tell you exactly how to run your business. You will sign a contract agreeing to do business the franchise’s way, and there may be penalties if you don’t.

You can’t, for example, change the brand logo, or add new products the menu. The franchise may provide you with marketing materials (though you may have some freedom in how you market locally through newspaper ads, events, and social media).

3. Being a Franchisee is Expensive

Becoming a franchisee involves paying a franchise fee to the company. This is essentially your buy-in fee to have the right to use the brand’s name and products. But you’ll also probably pay a monthly royalty fee based on your sales. When you start your own business, you pay for start-up expenses — like your website, marketing services, inventory, uniforms, etc. — as they come up, and you’re beholden to no one over the long-term.

4. An Entrepreneur Has More Creative License

Because franchisees are limited in the creative decisions they can make, many who want to color outside the lines prefer to start their own business. That way, they can set up exactly how the business will operate, what they’ll sell, and how they’ll market it. If you feel stifled by other people’s rules, franchising might not be for you.

It’s important to understand the difference between starting your own business and buying a franchise. Based on your personality and preferences either one could work for you.




 
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