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Category Archives: Business

Small Business Administration

The most important part is the generation of revenue, whether you are selling something, making a product, servicing customers or any other activity. It is in the interest of any business to secure as much revenue as possible whilst keeping under control the overheads. This is the reason planning and controlling your business in the greatest possible detail is essential and, monitoring the performance of your business against your business plans regularly. This is why your administration should be organised to give you all the information you require with as little delay as possible.

Stock control is a very important item that has to be dealt with continually. Some of the costs involved in stock items should have been covered in the business forecasts, but not all. If you carry too much stock of products or materials, whether bought in or manufactured by you the same result applies. You have tied up capital and labour that could be used for other purposes. You also have the danger that the stock could depreciate and even become obsolete. If you stock too little or carry too small a range you will lose sales to your competitors. It is essential therefore to have a good, efficient and accurate stock control that gives all the information you require such as cost prices, date of purchase, maximum and minimum stock quantities, turnover ratios and any other information relevant to your business. A typical use for a good computer program.

Another administrative function which needs careful and close attention is debtors. If your normal trading terms for credit transactions are 30 days from the date of supply you expect to be paid within that 30 day period. If you are not paid within that time your customer is in default. So take action to recover your money immediately your customer breaks the agreement. This does not mean becoming heavy handed or upsetting the customer, very often a simple polite phone call will resolve the problem. Explain the situation. Ask if there is any sort of problem with your goods or service and make the point that you agreed terms which they have failed to keep. If you still do not receive payment after a few days confirm your telephone conversation with a letter adding that you require payment by a certain date. If you still do not get paid it is then time to take a firmer approach. It is better to lose a customer who does not pay than to keep supplying them in the hope that one day they will eventually pay.

Debtor control is an important task, do not neglect it. If you do not relish the idea of chasing debtors there are other ways of overcoming the problem but all of them will cost you money. Just to name a few methods that you may wish to consider are:- Factoring Services, Solicitors, Debt Collection Agencies, individual debt collectors and other debt collection services. As stated they tend to be expensive and one other drawback is that the debtor is not their customer, but yours. This can very often upset your customer but if the customer really is a liability this should not cause you undue concern.

You will need the services of a good accountant who can advise you on financial matters, offer tax services, employment costs, staff payroll and many other services you will require. It is always advisable to discuss with the accountant just what they are to do on your behalf and how often it is to be done. You must also agree fees with your accountant before committing yourself and do not forget that you can negotiate fees in most cases.

Banking for your business is a necessity which you have to arrange. It is an expensive service that so it is advisable to shop around. Find the best deals available to suit your business and circumstances even if it means changing bankers occasionally. You may wish to consider on-line banking, which the banks claim is less time consuming and cheaper than conventional banking. The type of banking that you use depends entirely on the requirements and situations of your business, but whatever they are, examine the offers and plans that the banks have to offer. Talk to your accountant and bank managers. Obtain the best deal that you can and, above all, make sure that any proposals put forward are in your interests and always query any charges which are not self explanatory.

 

Small Business Marketing Keys

1. Know your niche. Choosing a target market will help you focus your marketing efforts. If you aren’t sure who to market to, how will you effectively choose advertising outlets and marketing activities?

Knowing your niche will also help you create products and services your potential customers are interested in. Hang out where they hang out and ask them what they need. Create products and services to meet those needs – voila! Sales will follow.

2. Start an e-zine. And if you already have one, actively promote it.

If you build a mailing list, you will have a group of people who have told you they are interested in your products, and, you can consistently market to them over and over again. The key is to actively promote your list, and get as many subscribers as possible. A great way to entice people to sign up for your list is to give them something in return. For example, you could give away an e-book, a report or an e-course.

You may be worried that you can’t write well, or that writing isn’t exactly your favorite thing to do. No worries. If you’re not a writer, there are article banks where you can pick up great content that your niche will love. Do an Internet search on “article bank” and you’ll find hundreds of sites that provide great content.

3. Be consistent. You need to be in front of people on a consistent basis so that they will get to know you, and they will remember you when the need for your products or services arises.

If you decide to do an e-zine, publish it consistently. If you decide to write articles, do it on a regular schedule. Whatever efforts work for you, do them regularly.

A good rule of thumb is to spend about 1 to 2 hours per day on your marketing activities. This will ensure that your name is consistently pushed out into the market.

4. Choose marketing activities that you love. For example, if you love networking, make that a part of your marketing activities.

If you choose marketing activities that you love, you will be continually motivated to carry them out. You do not have to engage in activities that aren’t authentic to you. There are plenty of activities to choose from.

Create a marketing plan using the tips above and act on it consistently. Remember, people will purchase products and services from those they know, like and trust. Allow people to get to know you by engaging them on a regular basis. Before you know it, your efforts will be paying off, and you’ll have a powerful business.

 

Know the Reasons Why Business Needs a Custom Website

Credibility and Identity Building

Like it or not, your potential customers are going to judge the quality of your products and/or services based on presentation and image. Therefore, an aesthetically pleasing web site will give you and your company more credibility in the eyes of you customers or clients.

Lower Your Expenses

Why spend thousands of dollars on static traditional media such as brochures? If there was ever a change in your business, such as an expansion or additional products/services, it would require printing all new corporate brochures. A web site is dynamic and can be changed or updated in a very cost effective manner. Best of all, your clients can access this information from anywhere in the world, without the delay of snail-mail. A properly constructed web site can also reduce the time that you and your employees spend answering redundant customer questions.

Complement Your Existing Marketing Efforts

Most people think of a web site as advertising. Unfortunately, they would be wrong – A web site is a medium which complements and enhances your existing marketing efforts. Your potential customers or clients can easily gain access to information that isn’t suitable to include in other traditional advertising mediums. In less than a decade, a web site will be just as common as having a listing in the Yellow Pages. What would your potential customers or clients think of your business if you didn’t have a web site?

Customer Service

A web site allows potential customers or clients to get to know more about your company, increasing the personal side of doing business. Your business will be open 24hrs per day, 365 days per year, and if someone has a question concerning your product or service, an answer is only an e-mail away. Some people may feel uncomfortable on the phone or in your office / store, and, to these people, e-mail is their preferred method of communication.

Get a Jump on the Competition

A professionally designed web site will make your business appear larger than it actually is, and therefore challenge larger competitors. When it comes to getting listed in the search engines (Google, Yahoo, MSN, etc.), the longer your web site has been active, the higher ranking you will receive, and therefore more traffic will be directed to your web site. It is for this reason that you can’t afford delay this important decision any longer.

 

The Business Production Model

Most of us start out in business by applying what we might call the “production model”. We are all capable of doing certain things — cutting hair, cooking food, framing houses, fixing teeth, designing buildings, etc. — and we set about to sell these services. We ask ourselves “What can I do? What are my skills?”, and then we ask “How can I sell these skills? What products can I produce that take advantage of these skills?”

Many, many people believe the production model is the only way to do business. They believe Kevin Costner in “Field of Dreams” was uttering an important truth when he said “If you build it, they will come.” They just change the words around a bit:

“If I set up my restaurant, people will come.”
“If I start building bird houses, people will flock to my store.”
“If I set up a lemonade stand, the neighbours will buy some.”
“If I learn to be an airline pilot, surely someone will hire me.”

And generally, this works. People go to school to become dentists or engineers or teachers, and they actually end up being dentists, engineers, and teachers. Other people love to cook or make bird houses, so they set up restaurants and craft shops, and miracle of miracles, their restaurants and craft shops are actually successful.

But this is an oversimplification of the marketing process, and distorts what actually happens “on the ground” when a new business is started.

One important reason trained dentists end up with successful practices is because the dental market is tightly controlled to allow only the right number of dentists to graduate every year.

And the reason we can point to successful restaurants and bird house companies, is because we are looking at them after they have been successful. What about all the restaurants, construction companies, and land development conglomerates that were not successful? Their owners were probably equally skilled, and enjoyed cooking and serving the public as much as the next guy. They built it, and nobody — or at least, not enough people — came.

So obviously going into business is not as simple as “If you build it, they will come.” There are factors we cannot control, variables we cannot predict. And once we acknowledge this, we are forced to begin looking for an alternative to the “production model”.

A Real Life Example

Let me give you another example. Many years ago, long before the internet even existed, I had a client involved in the music business. This company had been around for many years, and had grown to become one of the country’s major publishers of certain niche music products. These were aimed mostly at the music-in-schools market, and included things like sheet music, children’s music, and specialty record albums, featuring a stable of relatively low profile artists.

Like most companies, this one had built up a set of “skills”, and had developed specific products and services in response to market demand. There was just one problem. The market was changing and the company was now losing money. My job was to help them sell more of their products.

Sometimes being an “outsider” is not a good thing. It seemed obvious to me that the market was changing, that sales of the old faithful products were doomed to decrease rather than increase, and that the long term answer to their problem was to develop new products in response to new demands, rather then try to flog the old ones. It was hard for me to be a “true believer” in the long term success of the company. It looked to me as though we were fighting a losing battle.

Of course, this was the beginning of the end of our relationship. As I’ve said, my job was to help them sell stuff, not reorganize their company. Most companies have a very difficult time shifting gears, and they certainly don’t want to hear about it from some young whipper snapper who knows virtually nothing about their business. Within a few months we lost the account. And within a year or so the former client declared bankruptcy, and was forced to contract to about 25% of its former size.

I don’t think this is very unusual. Lots of companies — probably most — are successful for a while, and then fall on harder times and are forced to change. My point is that eventually the “production model” stops working, and we are forced to consider alternatives.

The Most Obvious Alternative is the “Marketing Model”

When confronted with these obvious facts of business life, most marketers trot out the theory they learned in Marketing 101. “You must begin with an analysis of your market, determine what people are likely to buy, and then develop products accordingly.”

In other words, the marketing guy (predictably) advocates that the marketing / production process be inverted. Marketing should be used to determine which products are likely to be successful in the market place, not brought in after the horse has left the barn. Marketing should come before production, not after. Don’t worry about what skills you have. Skills can be bought or rented. Worry about what products you can sell. And then figure out how to make them.

The purest application of the marketing model these days is in internet marketing. For example, take Ken Evoy’s instructions in the Site Build It manual where he details how to choose your marketing “niche”. The process goes more or less like this:

1. Choose four or five possible areas of interest you might enjoy. These are your “website concept” candidates?? the type of businesses you should consider going into.

2. Then analyze each of these website concept candidates in terms of the potential traffic you can generate, products you can sell, etc.

3. Choose the one with the best sales potential.

This sounds like a perfectly reasonable procedure. But in fact it is rather revolutionary for most non-marketing people. They are being told “Don’t get “production” underway until you make some important decisions about what people are likely to buy.” This is the “marketing model” in a nutshell.

Problems with the Marketing Model

The “pure” marketing model has one obvious problem. It assumes we are all sitting around a table as consultants with unlimited options and infallible information about all of them. The model seems to assume we can just feed the information into our decision-making machine and have the answer to the question “What should I do?” pop out the other end.

Even committed marketers know it does not work this way. Every person or organization has their own special likes and dislikes, and generally are good at doing some things, and not so good at doing others. Ken Evoy’s procedure addresses this by saying “Be sure to choose something you feel passionate about.” He should probably add “…and make sure you’re good at it too.”

Think of it like one of those industrial food processing units where you put a variety of things in the funnel at the top, and it spits out products at the bottom. What we feed into our business idea processor is not just a bunch of statistics about products and markets and prices, but also information about our own preferences, skills, habits, and experiences.

And we must keep all the ingredients going into the top of the machine in their proper proportion. It’s not just about what people will buy. And it’s not just about what we are good at or what we enjoy. It’s about all of these things at the same time.

 

Starting a Small Business, How?

The first thing you, as a potential small business owner must always do, is research your market. Then research your competition, then the available supply for your product or service, and find your unique selling position. This alone can take weeks often months.

Once you are satisfied that there is a market for your product or service then you need to sort out your business plan and cash flow projections.

Small businesses may appear low cost but many suck up substantial capital before they turn a profit so now, unless you are very fortunate, you must sort out how to finance your small business. Do you remortgage your house? look for investment partners? borrow from friends or family? or approach the bank? Whichever you choose you need to convince others that your small business will be profitable and they will get a return on their money.

Once finances are in place the hard work starts. You may have premises to arrange, suppliers to sort out, staff to recruit and mangage, accounts to keep, products to design or source, lawyers to consult, accountants to hire and we must not forget in all of this market and get the all important customers to look at and purchase your products.

To do that you have to advertise your small business, but where and at what cost? Don’t forget you have to provide customer support and accept returns. Then there’s waste disposal … and on and on.

Who’s paying for all of this – in simple terms you, and your friends, investors and/or your bank are paying, until you are selling sufficient product or service to cover the costs – usually many months or even years away.

New small businesses rarely return a profit in the first year and frequently not for two or three years. Make sure you can finance it properly.

Is it worth doing it? That’s your decision but every year tens of thousands of people do start their own business and many are succesful and reap the rewards of all that hard work. But many also fail, and all too often it’s due to lack of preparation

If you’re about to set off on your new business venture prepare well and Good Luck. With good planning, persistence and a lot of hard work you too can build a profitable small business.