Archive for the ‘For & About Entrepreneurs’ Category
Here is a way to very effectively generate publicity without the need for an expensive agency. The names of the journalists who are currently writing about your product or service specialty area are right in front of you on the Google News section for everyone to see.
For example, I recently wished to generate an article for a client, a non-profit association working in the employment field. I particularly wished to help generate the article on the Associated Press knowing that if I were successful it would be syndicated to thousands of newspapers and other publications. I went to the Google News search bar and typed in “employment” and “Associated Press.” Up came many articles with the bylines of the authors at the top.
Let’s say that in one case the author’s name was Arthur Pascal (not his real name, of course). By surfing around it was not hard to determine how the Associated Press email addresses were configured. It was the first initial and last email@example.com — so in this case it would be firstname.lastname@example.org. I then wrote to Mr. Pascal suggesting the article I thought was newsworthy. I included as much supporting material as I could and I made as compelling an argument as I could. I did not “hype” my offering but added credibility by backing up my argument with facts as to why my suggestion was original and had not been covered elsewhere.
Two weeks later I got a call from the reporter at the Associated Press. He was interested in researching background for the article I suggested. Thus commenced a period of literally about two months in which this reporter interviewed just about everyone he could find related to the topic I had presented. The Associated Press dates back to the 1840′s and they are very thorough about their credibility and their research.
The wait was well worthwhile. The day after the “A.P.” distributed the resulting article it appeared on more than 50,000 websites (really, 50,000). Soon thereafter the article began appearing in most of the nations’ newspapers. I have now built what I believe to be a great relationship with the journalist and he calls on me for additional story ideas in the same related field.
This, of course, is not an everyday event….but if you go after smaller fish than the Associated Press you have a better chance of getting published. One great advantage of tracking down journalists this way is that you know they are the current people writing about your subject. When you subscribe to a P.R. database most of the names are months old and most of your “pitches” to the media bounce back to you.
The most important thing to remember is to approach journalists with a real story…not a “spin” of the facts in your favor. Also, I believe in sending personal email letters rather than standard P.R. releases. There are sites on the Internet where many as eight releases appear per minute and a little known secret is that there is no one in the media whose job it is to look at these releases…that is why they rarely generate any coverage. Good Luck. I will be reading about you!!
We are grateful to Richard Berman for contributing this valuable information for ActSeed members and readers. Richard was a News Editor for the NBC Nightly News, where he wrote for Tom Brokaw Jane Pauley, Maria Shriver, Connie Chung, Chris Wallace and many other prominent broadcast journalists. Now, as President of Berman & Associates he helps clients as a Publicist, Public Relations Practitioner and Promotional Writer.
As an entrepreneur, do not make the mistake of thinking that your company is too small to need workers’ compensation insurance, also referred to as “workers’ comp”. First of all, unless you have less than five employees, you are probably required by law to obtain this coverage for your workers. Secondly, just one accident at your workplace could potentially bankrupt your business.
Maybe you think that there is nothing dangerous at your workplace, so there is not much cause for concern? Think again. The Bureau of Labor Statistics reports that 3.1 million workers report non-fatal injuries and/or illnesses every year across the country. The chances of one of these millions of injuries happening at your workplace is not at low as you may have initially thought. This coverage is also not that expensive, considering the safety net it provides.
What Does It Cover?
Workers’ comp covers damages caused by any injury, illness, loss of limb or loss of life that may occur at the workplace. This plan covers your entire staff, and also provides you with liability insurance in case your employee chooses to sue you for damages. If an employee is injured at the workplace, the insurance plan will cover the costs of your employee’s medical treatment, rehabilitation services, transportation expenses to appointments, and lost wages, as well as a flat sum for the a loss of limb or death. Obtaining this coverage prevents your business from being personally liable for all of these expenses.
How Are the Rates Determined?
Workers’ compensation rates are based on the job position or positions at your workplace. The Council for Compensation Insurance, Inc. has a list of over 100 different job categories. Your insurance adjuster will place each of your job positions into one of these categories and the rate will be based on that classification. Typically, the more hazardous the job duties are, the higher the workers’ compensation rates. This rate will then be calculated for every one hundred dollars of your payroll. It is possible to lower your rates by having fewer accidents and putting specific safety measures in place at the job site.
Tips for Finding the Right Carrier
There are many different companies on the market that offer workers’ compensation to both large and small businesses. The first thing you want to do is shop around and see who is willing to give you the best rates. Ask for a quote from several different companies before making your final decision. You also want to be clear about exactly what workers’ compensation expenses they are responsible for paying. Ultimately, you should not have to pay any out-of-pocket expenses when a worker is injured if you have compensation insurance.
While cost may be a determining factor as to whether you purchase workers’ compensation or not, you really should try to calculate if you can afford not to have this insurance. Just one accident can lead to hundreds-if not thousands-of dollars in medical expenses, not to mention lost wages.
Do yourself a favor and obtain this coverage of soon as possible. It will work to protect you and your employers, and prevent a huge out-of-pocket settlement to be paid by you.
NOTE: ActSeed thanks Nik Donovic for guest-authoring this useful post. Thanks, Nik!
There is a depth of wisdom in the “Main Street Entrepreneur” segment of early stage business growth. More often than not, the guidance we crave isn’t how to close a $3 million round from a VC, how to set up a stock option pool or how to plan for an IPO or acquisition. Only a few businesses need this guidance. All of us, including those trying to create the next Google or Facebook, benefit from “meat and potatoes” guidance.
We pulled many pearls of wisdom from our recent interview with seasoned entrepreneur David Sandusky and his wife, Julie. They founded Idea Chic, a stationery and gift company with all products designed and produced in-house using vintage letterpress to some of the best modern technology. They sell online and in shops around the world.
The quality of their custom paper products reflects their quality as human beings. Good people plus good product plus good execution usually equals good business. Enjoy the knowledge they share below.
Q. Describe your “Eureka Moment”. What was the market opportunity that drove your decision to form a company around this product/service?
A. My wife, Julie, has been designing and producing invitations and related products since 2003 and has developed great fans of her style. We found paper lovers are fanatic and look high and low for a style they like. That coupled with my marketing and confidence to drive sales online we decided to create a retail line of products and started Idea Chic to be the company we could scale.
Q. How did you fund the company to its current state?
A. We funded slow growth the first two years with income from Julie’s wedding invitation business (JS Design) and my other entrepreneurial ventures or consulting. Idea Chic was a side or part time venture for both of us utilizing our equipment, office and production space for JS Design. Julie and I have officed and enjoyed our short commute together for many years but in the past worked on different business. We launched Idea Chic in 2009 but I did not start planning to actually grow the business for two years.
Christmas 2010 was our first real effort at producing a line of products. It took until early 2013 to dramatically extend our product lines. Last year I decided to focus on Idea Chic because our products sell and we are having a blast also because we were getting so busy with orders. Julie continues JS Design on an exclusive specialty project basis but has also shifted to Idea Chic focus on the growth plan.
From a financing standpoint this has been stressful because now we had to make sure Idea Chic worked and we wanted to continue via bootstrapping. This focus meant turning down outside opportunities and revenues which started off strange and difficult but is now easy. Managing a growing business really helps dictate how you spend time. We had traction with regular customers and daily online sales because of Etsy and our own website, so we could invest back to product development, more equipment, more space and hires.
Space and people are currently a stress point. We need more of both. We have decided to grow as we can including opening new Idea Chic boutiques and the required people without outside funding or debt. It will take longer.
Q. ActSeed champions the need for solid planning and preparation from the very beginning. How important is planning and prep to your company’s success?
A. Planning is very important and should have a focused target but flexible and adaptable at the same time. Since we decided Idea Chic was a good business and one we love to grow, we started scrapping the multi-business plan. For us planning to scale one business has prepared us for large wholesale orders and volume retail shipments.
Q. How long did it take to get your idea into the market from initial concept to first customer?
A. Idea Chic is unique in that it started to build a small customer base before we launched the company. We did not realize at the time that Julie was doing market research with existing custom clients. We literally sell some of our retail products out of initial request from existing customers as long as ten years ago. Now we launch products and list them online followed by email to those who subscribe for product updates.
Q. What influence have the internet and social media had on the way you are marketing, selling and supporting your products and/or services?
I started playing with ecommerce and building online communities ten years ago with some success. I’m passionate about marketing and the Internet as a tool. We reserve some resources for traditional marketing channels but as time goes on really seeing the Internet and mobile as most significant for us.
Q. Describe the challenges you faced as you built your customer base.
A. Our target market is a no-brainer so no challenges there – women 25 to 60 who love paper. A pleasant surprise has been the market size of the young women who buy stationery. The average age of our regular customer is mid-40s and active online but the number of passionate paper fanatics in their 20’s is awesome! We may not have ventured into the business if not for how many young brides wanted personal stationery, everyday greeting cards and packaging.
Pricing is always interesting but our industry is not new and there are plenty of examples of pricing. The problem is you see prices all over the map. Even quality work and materials like we use is found heavily discounted. We know some find us expensive and we have also been thanked for being reasonable. The income bracket we target has no complaint. We make everything and sell at our own boutique, retail priced online and we sell wholesale as well. We keep our prices consistent across all places of sale. Margins are different across product and of course in volume numbers retail vs. wholesale teaching us how to listen to numbers.
My advice for pricing is to understand every penny of your expenses. Not accounting for what seems insignificant will bite you. Know what you need to make. Know your brand. Price dictates perceived experience. Know if you want to be premium or discount, somewhere between and why. If you live in a long time industry like we do you know what the market is and any pricing difference needs to have an obvious benefit. If you are doing something new you need a lot of testing. The biggest mistake I see is giving away demos. Put a value on it and take that calculated risk. Besides, it is all about marketing.
Q. What techniques have you used to establish credibility in the eyes of customers, investors, partners, personnel and the general public?
A. Locally we do tours of our production. The letterpress, her name is Hazel, is an attraction. We also mail items to our targets and existing customers. We mail invitations to events, birthday cards, Christmas cards and Valentine’s Day cards. We show off the quality and design. People take pictures and share on social media and we convert sales.
Q. Have government, University, or other community / economic development programs been useful?
A. I believe in networking and giving back so my involvement in each of these areas exists. Even when I’m advising, speaking or in some way involved I get direct benefit and learn too.
Q. What is the most important thing people never tell you about joining or founding an early-stage company?
A. I think people generally know if is difficult even though there has been glorification of the perceived easy millions success stories. The most important thing people don’t talk about is how being an entrepreneur changes you. Doesn’t matter if you are a serial entrepreneur and started in high school or a boomer who has been in corporate until their first business, the experiences change you. This is important because relationships like family are affected by the entrepreneur’s often misunderstood passion and depression.
Q. Is there anything else you’d like to share that we didn’t ask you in the questions above?
A. First hires. Even part time or contract have a direct relationship to your culture and therefore brand. Knowing what you stand for as a founder and how to recruit to that standard is critical. Joining a community like ActSeed is important in sharing experiences and allowing debate on your business or products. That coupled with the resources is helpful in navigating through peaks and valleys.
Aristotle Onassis claimed that “The secret of business is to know something nobody else knows.” But in the age of the Internet, business success is about much more. No matter which industry your journey takes you towards, the entrepreneurial advice of leaders who tread before you is worth absorbing and heeding.
Success requires wisdom, drive and consistency, and these leaders know how to achieve it. However, little tidbits of personal discovery have meant a lot to three successful entrepreneurs and we share their advice below.
Pete Cashmore, CEO of Mashable Says “Listen”.
Mr. Cashmore tells The Huffington Post that the best advice he ever received is to “keep listening.” The CEO of Mashable accredits his ability to listen and absorb what people say to his success.
He reminds us that we live in an era where the best and brightest minds are available to us with the click of a mouse. He learned what he knows by spending hours pouring over the advice and wisdom of his business heroes. He calls them “unknown mentors.”
Bob Parsons, CEO and Founder of GoDaddy Says “Stay out of your comfort zone”.
Mr. Parsons has come a long way since he started out as an entrepreneur and continues as a philanthropist. Bob Parsons, GoDaddy CEO, didn’t happen by accident. In his article “16 Rules for Success in Business and Life in General,” Parsons’ number one rule is to “Get out and stay out of your comfort zone.”
People who only do things that they’re comfortable with never do much anything of significance, Parsons warns. “Security is for cadavers,” he says.
Craig Newmark, Founder of Craigslist Says “Pick your battles.”
Craig Newmark knows a thing or two about how to launch a fresh and engaging business. He knows so much, in fact, that he jokingly refers to himself as a “know it all” to The Huffington Post. When Craig was starting out at IBM, his co-workers became so irked at his tendency to correct people that they lament the only time he was tolerable was when he was trying to make a joke. When Craig heard this feedback, he changed his focus, and his best advice is “don’t correct people when it matters little.”
It took harsh feedback for Craig to learn how to lasso his focus, but once he did, he was met with great success.
After countless lattes and café-centric business meetings, are you the biggest customer of Starbucks, or might they be your biggest customer?
Being a small business shouldn’t keep you from thinking big. You never want to rely on one customer to keep you in business, but even a small contract with a major corporation can be a catalyst for major growth. There are plenty of excuses for sticking with the status quo: things are too busy, your staff can’t take on another project, you can’t serve a big client with your current infrastructure. But that’s all they are: excuses. Savvy small business owners know that they have to leap at every available opportunity and then make some more opportunities for themselves.
One of the big keys to small business success is cash management know-how. Small businesses, especially in a troubled economy, can’t always qualify for the grants, loans or other funding opportunities that could help them expand, strengthen and improve their business. Landing a corporate contract, however, can make a huge difference in qualifying for financing or landing investors.
Do you manufacture ceramics? If so, have you ever been to a Starbucks and imagined your products on the shelf? If so, why haven’t you pitched them? Starbucks, as part of their “Indivisible” line of retail merchandise, sells American-made items and gives a portion of the proceeds to an initiative called Create Jobs for USA. Starbucks is a great example for this because they are a high-profile, major corporation with retail stores all over the globe. And they want to sell ethically produced and sourced materials. They want to buy from American manufacturers. Their partnership with American Mug and Stein, a company based in Ohio, has basically saved the company from going out of business.
American Mug and Stein Revitalized
Once dubbed the Pottery Capitol of the World, East Liverpool, Ohio is now merely a shadow of what it once was. Nearly the entire town’s workforce worked in the ceramics industry. When the demand for quality, American-made ceramics waned, all of the pottery manufacturers but two closed down. With a high rate of unemployment and a higher rate of skilled workers biding time in unskilled professions, all signs pointed to desolation for the workers, the factories and the town as a whole.
Then, Starbucks came calling – by way of Ulrich Honighause, the owner of tableware company, Hausenware. American Mug and Stein owner, Clyde M. McClellan couldn’t believe his luck. He told the New York Times that he thought the call was a “crank.” It wasn’t. With an initial order of 20,000 mugs, McClellan was able to secure financing to increase production and hire more workers. The first run of mugs sold out and their partnership has continued.
Find Your Formula
This kind of story doesn’t happen for all small businesses, however worthy they might be. McClellan’s call from Honighause was like the mythical golden Wonka ticket — a fantastic tale, but not a good formula for finding success. But your business can take a cue from this tale. Identify who your market could be, what the benefits of a partnership would be and start making contacts. If you don’t try, you’ll never succeed.
In other words, it’s definitely “NO” until you ask.
There is a lot of advice out there about whether or not you should register a small business with governmental agencies and trade organizations. Whether or not you choose to join organizations is mostly a personal decision that heavily depends on your current circumstances and preferences. Let’s look at some of the pros and cons.
The Small Business Administration (SBA) is the federal agency that serves as the primary governmental advocate for small business. From the SBA.gov web site, a small business owner can find links to registration requirements. If you are doing business as a sole proprietorship, you will be working in your own name and subject to personal liability related to your business. As a sole proprietor, you will still need to obtain local business licenses, too. If being personally liable for your business activities doesn’t sound appealing, register your business with a state as a corporation or LLC and obtain a federal tax ID. Don’t forget to find out if there are any business licenses required for your business at the county and city level, too.
Agencies and banks for small businesses might offer loans, perks, or training to small businesses. For example, the SBA is currently partnering with the W20 group, which is a group of digital communications companies, to offer a social media webinar series to help small businesses develop their web presence. The SBA also offers special loan programs to veterans, minorities, and women. The loans are actually backed by the SBA and issued by participating banks, so don’t think the SBA directly offers loans, though.
State business organizations provide venues for members to network and share resources. Members can help each other by referring customers, or providing mutually beneficial services. Being registered as a small business increases your chances of being invited to events you might otherwise not know about.
Business organizations also can be an effective political group. As with anything, the louder the voice, the more likely you are to be heard. Therefore, joining a small business organization can be a good way to promote policies that would benefit small business owners. These groups are not necessarily partisan, but rather they can work together to support common business interests.
Although there may be fees associated with joining some business organizations, the dues are usually tax deductible.
Many small business organizations offer group discounts for professional and personal services, which can be a very nice perk.
While the SBA is set up as the main advocate for small businesses in the US, the definition of “small business” is rather broad. For example, some of the business categories allow businesses with over 1,000 employees to be considered a small business. As you can see, the definition of “small business” is wide and often, a truly small business of less than 20 employees may find some SBA benefits are not useful.
SBA-backed bank loans sound good in concept, but the loan requirements make the loans out of reach for many early stage companies and very small companies. If you don’t have at least two years of operating history and a year’s worth of revenues, then you are unlikely to qualify for any SBA-backed bank loans.
Like everything in business, professional and trade associations cost money. Just about every small business organization has some kind of annual fee and many charge a fee for joining in the first place. Such fees can add up over time, especially for a new business. Additionally, participation in the events requires additional expenditures.
Being an active member of a business organization can be a big time-consumer, especially if you’re involved in more than one or at higher levels of an organization. Most organizations have a monthly meeting, but for members of several organizations, a few monthly meetings can turn into what is essentially a meeting every week. As a business owner, your time is extremely valuable so spending significant amounts of time on professional organizations can turn into a huge distraction.
If you don’t thrive on working with others or mixing business and social events, business organizations may not be for you. These organizations often combine social activities with things like networking or seminars, which is great for a lot of people, but there are many people who do not like to combine those aspects of their lives.
If you decide that registering your business is right for you, check out the US Small Business Administration for information about how to register a name for the business and find state agencies.
This has been a guest post by Angie Picardo, a writer for NerdWallet, a financial literacy website dedicated to helping consumers leverage their own business and set better personal financial goals.
Whether you need to lease commercial office space or retail space, it’s important to take the decision seriously. If you’re like most start-ups, your rental space will be a significant investment – both in up-front deposit costs and in monthly commitments. So before you rent that space, consider these six factors:
1. Location, location, location
Obviously, location is particularly important for retail businesses. The closer you are to your customers, the more business you’re likely to get. But location is important even if you’re renting office space and will rarely see customers in your own office.
Think about your employees or potential employees, for example. A luxurious office in a less-than-desirable part of downtown might turn off otherwise excellent employment candidates. And, of course, your own commute to your office is important to consider, if possible.
2. How much space you really need
Too many small business owners with big dreams end up in an overly-large office or retail space. Take some time to carefully consider how much space your business actually needs, and don’t get any more than that.
Also, think about what you may be able to do to cut down on the space you need. Can you store some files at home or in a small off-site storage unit? Can you use all your vertical space to avoid needing extra storage room?
3. How much you can afford to pay in rent
Obviously this is going to be one of your number one questions, and it’s one that you should really consider extra carefully. If you can’t afford to pay your lease for a month, your business could take a huge financial hit. So look at your current or expected earnings, and lowball the estimate. Don’t forget to factor in the related costs, such as insurance, utilities, and even hidden costs in the lease, such as the landlord’s ability to pass on increases in taxes or other operational costs.
Often, your ability to rent a place can be limited by your creditworthiness. If you’re just beginning, you may want to get some leverage by building credit with a business credit card. In addition, having a credit card or line of credit on hand as an emergency fund can help if account receivables don’t come in on time to pay your rent, as you’ll have some sort of short-term backup plan in place.
4. The nitty-gritty of the lease terms
Unless you’re a lawyer, it’s probably a good idea to hire one to review the lease terms with you. Again, this is one of the most important decisions you’ll make as a small business owner, so it’s worth putting the time and money into having an expert check over your lease.
According to the Small Business Administration, some things you should check for on your lease include:
- Expenses you might incur beyond rent
- Maintenance and repair terms
- The ability to sublease
- Flexible lease terms
- The ability to lock in the rental cost for a long period of time
5. Potential extra costs
As noted above, one thing you should look for in your lease terms is potential extra costs. For instance, unlike an apartment building where the landlord is usually responsible for maintenance, you may be responsible for a good portion of the maintenance of your commercial space.
You’ll also want to look into how much you can expect to pay for utilities. If possible, negotiate to have utilities included in your rent payment, which can at least make them a predictable extra cost.
6. Other options besides renting
Finally, before you sign a contract, look into other options that you might have besides renting. It’s a huge commitment, and can be a very expensive mistake if you don’t do it right. Most small business owners are better off working at home, meeting clients at coffee shops, or even selling products through distributors rather than renting their own space.
Another increasingly popular option right now is co-working. A co-working space allows you to rent a small desk space or even an office where you can meet with clients. This gives you the opportunity to work with other entrepreneurs, to get out of the house, and to rent at a minimal cost.
As with every business decision you make, you’ll want to walk into this one with both eyes wide open. Plan for the worst, but expect the best, and your first business space rental will be great.
Can you run a business out of something that can fit in your back pocket? PC World says yes. Running a small business from your smartphone — virtually — is possible with the many apps available, on iTunes and Google Play, like videoconferencing programs and PowerPoint assistants.
You can sell products, keep track of mileage, calculate the amount of time spent on a project, build spreadsheets and complete other tasks, too, with a variety of apps.
What apps would best serve a small business owner who wants to rely more on a smartphone? Forbes has several suggestions for making a business productive this year.
If you’re a traveling sales representative, you could use EchoSign to manage, send and sign documents from your smartphone. EchoSign alleviates the need to carry large paper contracts because users access documents from the mobile device instead. If you’re a small company of 1 to 5 users, the app is free, otherwise you’re looking at spending $299 to $399 for a global or enterprise license.
The Right Hosting Service
Email is definitely a business necessity. You should get reliable VPS hosting, which allows business partners, employers and customers a fast and secure way to share files and data. VPS hosting at MyHosting.com provides email benefits such as push email, which decreases a user’s reliance on SMS Messaging, a dated technology. Customers’ emails, contacts, tasks and other information also are saved on the server. This data can be automatically synched on a new device.
Forbes’ David K. Williams recommends Evernote for Business because it’s a multi-platform app that specializes in note-taking. Improved support, simplified billing and business notebook features all for the small price of $10 per month (premium version), per user. It’s great for capturing and organizing everything from photos to emails to web sites. It’s the ultimate brainstorm tool and you can download for PC, Mac, Android and iOS platforms.
PayPal and Money Center Smartphone Apps
Most major banks and PayPal have advanced smartphone apps. Even some of the smaller regional banks have good apps. As an entrepreneur on the go, make sure you have your bank’s app and understand the features. Many will even give you a free dongle that will allow you to swipe a credit card using your phone.
Speaktoit is the top-rated virtual assistant for Android or iOS/Windows, according to Forbes. However, the app will target productivity for businesses this year. More features are being added, including calendar/meeting scheduling. Users can schedule meetings via voice through their Assistant. The app will remind users of their daily agendas, also via voice. Reminders can be given so users will know to book an airplane flight or a room in a hotel. Speaktoit also will partner with financial news services to give automatic updates on financial news and stock quotes.
So far, we’ve highlighted apps to help you run your business. Now, we share a company that can create a custom smartphone app for your business. Having your own app enables you to connect with your customers wherever they are. Custom app creator company Vandrio does this well, and the costs are incredibly affordable for a small business to have a custom app.
Long gone are the days when business people were tied to their desks with their traditional land-line phones, large personal computers, paper calendar and a cumbersome file cabinet filled with space-hogging documents. Although office time probably is a necessity for most business people, mobile apps and smartphones make it easier to take on many tasks, while growing their business on the open road.
One of the best ways for small businesses to stay competitive is through pricing strategies. As part of your overall marketing and business plan, your pricing strategy is quite important. But, it can also be one of the most difficult parts of your plan to put together.
Here are six tips that will help you take advantage of your pricing strategy to stay competitive in an increasingly competitive marketplace:
1. Figure out what you can actually afford to charge
First, you need to understand what you can actually afford to charge. If you’re making absolutely no money keeping your business afloat, you’re not going to be selling products for long.
Understanding what you can afford to charge means carefully looking at the costs of your products or services, including the overhead costs that are often more difficult to spot. Then, you figure out how much money you need to keep your business afloat (preferably while keeping your personal budget going, as well).
A good rule of thumb for managing overhead costs is plan on spending 80 cents of every forecasted dollar. This gives you a 20% buffer and if you hit your forecast, you have a nice profit margin.
2. Focus on introducing new and better products
According to an interesting Entrepreneur article on this topic, the best businesses don’t simply focus on competitive pricing. Eventually, the free market will find the price that consumers will pay for a particular product or service, and you’ll just have to stick close to that to remain in business.
But if you don’t want to be completely controlled by these market forces, innovate. Focus on introducing new and better products. Yes, you’ll need to have a pricing strategy for all these new things, too. But if you can get a leg up on the competition with better or more innovative products, you won’t have to be constrained as much by the going price.
3. Keep careful track of costs
Obviously, as you’re creating your pricing strategy, you need to keep track of your costs. Putting your business expenses on a business credit card (compare here) instead of a personal credit card can help you keep track of your spending. All business owners prefer to have a larger profit margin, but getting your profit margin to grow is all about understanding your costs. Cutting costs while keeping your products and services similarly priced will raise your business’s profits.
If you’re not already familiar with basic bookkeeping for your business, it’s time to get there now. And if you need to run more complicated cost and profit margin calculations, it may be best to hire an accountant.
4. Consider lower introductory prices
When you’re just starting out, you can often break into the market by setting your prices lower than those of your competitors. This works if you just want to get your products into the hands of many people, or if you’re breaking into a new local market.
While your prices are set lower, though, you may not bring home much profit. In this situation, it may be wise to look into credit cards or a business line of credit that can help keep your business afloat until you have the customer loyalty you need to raise your prices. Once your prices are higher and your profit margin is better, you can use some of your extra revenue to pay down those credit card balances.
5. Understand how price affects image
Psychology is probably the most difficult piece of setting a pricing strategy, since the way consumers think has much to do with what they’ll pay for a product. Most of the time, consumers will shop for the best value – the lowest price among very similar products.
However, be careful to not set your prices too low if you want to position yourself as a luxury brand. Too low a price for certain products or services could lead customers to believe that your brand’s offerings are shabby, sub-par, or simply not as luxurious as you’d like them to be.
6. Talk to distributors, if necessary
You can’t actually tell your distributors what they have to price your items at, but you definitely can have conversations with them. Explain to distributors why your pricing strategy is important, and how it will benefit both you and them to follow this strategy. Selling to distributors means lower revenue per unit for you, but it usually means higher volume and greater access into the market, and faster.
If you’re having trouble coming up with your business’s pricing strategy, you may want to call in a professional. Those who are more familiar with marketing could help you find the best prices for your products and services. Otherwise, you may just need to do some market research into your competitors, and try out different prices with consumers to see what sells best.
What are some other tips you can share in addition to these six?
Why do so many New Year’s Resolutions fail after the first six weeks? People fail to achieve their goals for lots of reasons, but we’re not focusing on excuses here. We’re focusing on solutions.
The typical day of an entrepreneur or small business owner is crammed with surprises and distractions, and the long list of longer term, strategic, goal-oriented activities often gets pushed to the following day, then again, until so many days slip by that those big goals become completely ignored. This is akin to treading water instead of swimming and wondering why the shoreline fades in the distance.
One useful tactic to help you get back on track with your goals is to create a List of One.
Each day, amid the minutiae and distractions, focus on completing one goal or one milestone toward a larger goal. You can have a larger list, but each day, just pick one key milestone and make material progress. If you complete your List of One, then create another List of One and apply the same focus and tenacity to completing that task. One step at a time.
Yes, the process is as simple as it sounds, and you’ll find that more gets done when you chew one bite at a time of the metaphorical elephant we call building a small business.
What’s on your List of One today?