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2011

White-in article.pngIs the market you currently serve reaching a saturation point?  Are you tempted by offers to blend your company with another synergistic small business?  Do you see untapped opportunities in other countries? Have you gotten bored with selling the same set of products to the same narrow market?

 

If you’re asking yourself any of these questions, you may be thinking about branching out from your core business. There are many ways to accomplish this. For example, you can create a subsidiary business; sell into a peripheral market merge with another company; or move toward taking your business global.

 

The following is a roadmap to the different paths you can take to grow as a small business owner: 

 

Discovering a new audience

There are multiple approaches to reaching a new audience.  Some examples include; repackaging existing products and services for a younger or older market, expanding to an adjacent geographic area, or selling via a new channel such as mobile and social media. If your focus is on expanding geographically, make sure you analyze the size and buying preferences of the market, as well as any geographic barriers that might affect your transportation costs or store traffic. Similarly, if you are considering expanding to the web, ensure your brick-and-mortar business complements (rather than cannibalizes) the e-commerce site.  Further, you should educate yourself about search engine optimization and web site analytics so you can be sure that your site will reach a prominent position in web searches.

 

Finding a strategic business partner

Rather than constantly looking over your shoulder to see what your closest competitor is doing, you may want to consider a temporary strategic partnership or, if all the stars align, merging your companies.  In addition, you might consider gaining more control over your supply chain by buying a key supplier.  In either case, don’t forget to blend potentially disparate corporate cultures and technology systems; retain customers and employees; and to proactively perform due diligence audits of any legal or environmental issues you might be inheriting.

 

Pull Quote.pngEmbarking on a global adventure

You may have a product or service that has even more earning power in overseas markets than in the United States.  If so, you may want to consider a gradual global expansion.  Don’t hold off for fear of excessive costs.  Selling overseas requires a minimal investment at the outset, particularly if you start with only one or two strategically chosen countries.  You may want to consider hiring a local manager or work through a distributor, particularly in countries where English is not the primary language.  Conversely if you have a web-based business or the budget for frequent airline travel, you may be able to manage by yourself.

 

Heading off the beaten path

Although it is not practiced as often today, true diversification still has a place in today’s business world. You may find that you are interested in more than one type of business, all of which can be branded under the same basic name and housed under a holding company.  Another way to diversify is by creating an add-on business, e.g. teaching classes, writing articles or giving presentations related to your products or services.

 

Expanding your business can take months or years, depending on the path you choose and how large you want to grow.  Remember though – it’s not only about the destination. Make sure you enjoy the journey and learn along the way.

White-in-article.jpgFour tips to keeping customers coming back and sales staying put.

 

By Sherron Lumley.

 

Giving back is an admirable holiday tradition, but not one that retailers like to experience at their customer returns desk. And though this holiday season’s sales figures set a new record, the National Retail Federation (NRF) estimates that merchants will have had to give back 10 percent of that revenue—roughly $47 billion—in returns come the end of January.

 

So how does a small business avoid this blowback effect and ensure its sales stick? Two small business owners share their post-holiday strategies for keeping sales strong and customers coming back (to buy).

 

Tip # 1:  It starts with good customer service

 

Bill Evans, longtime owner of the Pacific Northwest Shop in Tacoma, Washington, says holiday returns call for “C.S. and that stands for customer service.” For four decades, his store has prided itself on that very trait, so he treats the post-holiday period no differently. Service is what they are known for, he says, from complimentary gift wrap to hassle-free returns.  Whatever it is, “we take it off their hands,” says Evans, who chuckles and adds, “the fellows just stand there and say, ‘You do everything!’”

 

Pull-Quote-Tall.pngAt nearby Dwell Home Décor in Tacoma, Suzanne Molt says their return policy also emphasizes customer service, allowing for refunds or exchanges within 14 days with a receipt. “We don’t want them to worry about their gift purchases,” she says. When customers know their holiday gifts are returnable, she adds, “It makes them more comfortable.”

 

It’s important to remember, though, that most people don’t bring gifts back. In fact, a NRF Holiday Returns Survey from 2010 found that nearly two-thirds of holiday gift recipients—64.5 percent—didn’t return a single item. Still, retailers would be wise to plan for extra staff during the traditional post-holiday rush to ensure a more seamless experience and to avoid souring the customer on your business as a whole. And that idea that there’s still goodwill to be salvaged in customers returning items is an critical one—the same NRF survey found that the nine out of 10 Americans say they find store return policies to be “fair.”

 

 

Tip # 2:  An annual January sale

 

Every January for the last 35 years, Evans’s Pacific Northwest store has had its once-a-year sale. His customers now look forward to the annual event, where he features artisanal products such as paper, clothing, wine, food, books, pottery and tea made by small, local businesses. The five-day January sale achieves about 50 percent of his total holiday rush volume, which means the shop can pay more money to its producers in what is traditionally a tough sales month.

 

At Dwell Home Décor, Molt sends out a direct mail coupon for 25 percent off one item in January to bring customers back into the store. For customers with returns, Molt says her staff tries to suggest a replacement item rather than just refund the cash.

 

 

Tip # 3:  Keep the sales momentum going to the next ‘event’

 

Because Dwell carries many gift items, one thing it does to keep January sales up is to start promoting Valentine’s Day early. Molt, who took over the business with her partner two and a half years ago, says it gives customers another reason to visit the store. For its part, the Pacific Northwest Shop begins to promote several annual charity events right after the holiday season, such as a local Breast Cancer run.

 

 

Tip # 4:  Tap into online sales (where returns are less common)

 

“We’ve had Internet sales for five years and we just got our first return,” notes Evans, who recounts the tale of a woman in the eastern part of the country who wasn’t satisfied with the paté she ordered. As part of his hassle-free returns policy, he issued a refund immediately, likely saving her as a customer. “We’ve worked our Internet sales up to 25 percent of our business,” he says. And with a lower rate of returns, e-commerce sales can help a small business to thrive, not just survive.

 

Internet sales also add to a company’s bottom line by opening up new markets. What’s more, when trying to avoid a post-holiday sales hangover, it’s important to remember international markets also have different holiday seasons. For example, the Pacific Northwest Shop just filled an order to ship tea…to China, where the important New Year’s holiday arrives during a typically slow period in the Western calendar—late January or early February. 

 

Tip #5: Beating Holiday Return Fraud

 

Unfortunately, the high volume of holiday returns brings with it a higher level of fraud. For the 2010 holiday season, 7.5 percent of all returns were suspected to be fraudulent and four out of five retailers were likely victimized at some point. In all, nearly $4 billion is expected to be lost to fraudulently returned merchandise this year, according to the NRF’s Return Fraud Survey. Stolen merchandise and employee fraud returns were the most common types, but other tactics such as receipt counterfeiting and wardrobing—the return of used, non-defective merchandise—were also pervasive. 

 

There are two commonly recognized (and easy to implement) tactics that business can use to prevent return fraud. One, follows Molt’s lead and establish a firm time period—two weeks, in her case—beyond which returns are not accepted. Then stick to it, especially after the holidays. Two, ask to see customer ID for all returns. This is a particularly effective method for preventing fraudulent returns of those items presented without a receipt, but one-third of retailers still don’t take this simple step.

 

To beat the holiday return blues, keep in mind that customers returning to the store are an opportunity to generate more sales, not just lose them to returns. Since some shoppers may be visiting the store for the first time, it’s also chance for a small business to introduce itself through excellent customer service in the hopes they do come back. But not to give back.

Steve-Strauss--in-article-Medium.pngThere is no doubt advertising has evolved a lot in the past decade, with advertisers increasingly moving from print to electronic media. It’s not hard to understand why. The beauty of a pay-per-click campaign is that, unlike a print campaign, you only pay for the ads when people who see it like it enough to click on it and that in turn means that you are typically paying less for more qualified leads. Paying less for better leads? Yes, that is hard to beat.

 

Here is how you can join the pay-per-click party:

 

1. Brainstorm: There are two types of pay-per-click ad campaigns. The first is a branding campaign that simply gets your business’s name out there. The second, and likely the type you are interested in, is the one that gets people to buy now. Most pay-per-click campaigns are intended to create an immediate sale.

 

2. Choose the right outlet: Different online sources have different strengths and weaknesses. Google ads may reach a different audience than, say, Facebook ads. Here are your main options:

  • Google Adwords
  • Facebook
  • Microsoft adCenter
  • Yahoo Search Marketing

 

Your campaign may use only one, or it may take several of these sources to accomplish your goals. Determining the one you need is simply a matter of deciding which platform can best reach your target market and how much you want to spend.

 

 

Click here to read more articles from small business expert Steve Strauss.

 


3. Budget: Advertising and marketing is an ongoing process. The Small Business Administration suggests that you earmark 2 percent of your gross sales toward advertising. Others suggest 5 percent. Either way, the important thing is to make a commitment and earmark your chosen percentage of gross sales for ongoing advertising and marketing.

 

What you don’t want to do is spend too much of your ad budget on your first pay-per-click campaign until you know, 1) what you are doing and 2) if your ad pulls. Set a reasonable budget to test and evaluate the results.

 

When you create your ad campaign on the platform (s) of your choice, there will be a place to set your budget. Let’s say you want to do a one month test for $1,000.Fill in that amount and then refine it, to say, $33 a day for 30 days. Once your ad has been clicked on a certain day enough to where it adds up to $33, the ad will disappear until the next day. This lets you really control your budget and your test.

 

4. Figure out the ad: First, you must choose the keywords that you think people will most likely use when looking for whatever it is you are selling. Do your research – don’t just guess, Google has a good keyword selector tool for example.

 

After that, you need to figure out what your ad will say. As you typically only have room for a headline and a sentence, your ad has to very quickly and clearly use your keywords to explain what the value proposition is to the reader and why they should click the ad.

 

5. Create the ad: Creating a pay-per-click ad campaign is logistically easy:

  • Go to the site of your choice and use the point-and-click design tool to create your ad.
  • Target your exact audience. Your audience can be as large or small as you like, and as specific as you prefer, but the greater the reach, the more you will pay. Be sure that you focus the demographics for the ad so it is seen by those folks who are most relevant to your business; this is where the magic of pay-per-click comes in.

 

6. Test the ad: It is unwise to simply create an ad, check out, and come back two weeks later to see what happened. I once did a Google ad campaign, seeking people looking for a “small business speaker.” I ended up paying a lot of money for clicks from people looking for Bose speakers for their small office. As I said, test first.

7. Roll it out:  Once you know you have a successful ad, go for it. Spend more and run it often. It should become your cash cow. An ad that pulls becomes a trusted friend; something you can rely on.

  • As indicated, you will be asked to create a budget.
  • Review your ad and budget and get started.

 

Have you used pay-for-click campaigns? What are your thoughts? Share your experience with the SBOC community below.

 

 


 

About Steve Strauss

Steve Strauss is one of the world’s leading small business experts. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. Steve is also the author of the Small Business Bible and his latest book is Get Your Business Funded: Creative Methods for Getting the Money You Need. A popular media guest, Steve is a regular contributor to ABC News Now and frequently appears on television and radio. His business, The Strauss Group, creates unique, actionable, entertaining, and informative multi-media small business content.

 

You can read more articles from Steve Strauss by clicking here.


White-in article.pngAlthough there may be various reasons to rebrand your small business, it’s important to ensure there is a definite need before committing the time, money and resources to the project. Below are some questions to consider before ultimately deciding if you should move forward with rebranding:

 

  • Is your current company name too limited to encompass new product lines?
  • Is your target audience a completely new market, i.e. upscale versus cost-conscious?
  • Have you merged with a business that has a more established brand identity than your own?
  • Is your old brand not considered trustworthy for some reason?
  • Is your company name easily confused with others in your industry or community?
  • Is your company name easily misspelled or does it have a negative connotation?
  • Is it difficult to get the domain name associated with your brand, no matter how much you’re willing to pay?

 

Once you’ve determined that you have strategic reasoning behind rebranding, it’s important to recognize that not all rebranding efforts are equal. The undertaking can range from a simple logo change to a full revamp of the company, its image and even its internal operations. 

 

At the simplest end, you may just want to make a slight shift. For example, you can update a tired logo without losing all its design elements, or tweak your corporate name to make it more current or reflect an expanded market. At the most extreme end, you may need to overhaul your entire corporate look at once.  This includes your logo, website, marketing materials, storefront signage and even the interior and exterior architectural elements of your business place.

 

Regardless, if you are planning to rebrand based on a merger or a major change in the markets you target, be sure that your internal processes and procedures also change to reflect your new image.  Put in the effort to inform your senior management and staff about the new brand so that all communications from the company reflect your updated image.

 

Regardless of the extent of your small business rebranding effort, there are some general principals you should bear in mind:

 

  • Don’t be afraid to expand your customer base in the long term, even if that means losing some customers in the short term. Don’t become too closely attached with the original idea you created (i.e. a logo or a name)..This may cause you to not take valuable input from others.
  • When you develop a new name or logo – with or without the help of a branding consultant’s expertise – don’t solely rely on inspiration.  Go through an analysis that encompasses questions such as the following:  What does your company stand for?  What are your strengths and weaknesses?  What problems do you help customers solve?  How do you stand out from your competitors?
  • Once you’ve settled on a new brand, be prepared to communicate publicly your new brand identity.  Your loyal customers should be informed that your company’s identity has changed. You need to tell the story of your company’s evolution and the reasons behind it.   Already loyal customers can help you do that.

 

Pull Quote.pngFinally, examine your reasons for rebranding prior to making the investment. Don’t make changes simply because you’re bored, or fearful that your small business is becoming outdated.  The most important questions to consider are the following: Is there something different about my company that requires a different image? A new product line?  A new audience?  A new corporate structure?  If you can answer yes to any of these questions, then it might be time to consider a new image. Have you ever rebranded your small business? Share your experience and best practices with the SBOC community below.

Article Handshake.pngDespite the fact that a significant portion of business marketing has gone digital, trade shows are still a common tactic – 9,000 per year in the United States alone. They can be particularly valuable for owners of smaller businesses who may not have the budget to travel to widely dispersed customers but can benefit from seeing many of them in one place.  If you’re grappling with how to allocate your marketing budget, perhaps it’s time to consider “putting on a show.” 

 

Here’s some direction on how to produce your show to ensure your time is well spent:

 

Be a good “Producer”

 

The right Setting: Any gathering that includes your target audience and relevant media

The right Timing: Concurrent with a new product launch or offering, change in strategic direction or major personnel change

The right Cast: Senior executives, sales people and the product marketing staff;

Supporting cast: Public relations representatives and administrative staff

 

Don’t forget “Rehearsal”

What you do before the trade show’s doors open is perhaps most important.   Considerable thought should be put into the messages you broadcast in your trade show booth signage, relevant news stemming from the previous year and what your main “news” will be for customers and prospects.  Bear in mind that 70 percent of trade show attendees plan which booths they will visit in advance so you should send out invitations to your booth and arrange speaking appearances to key customers.  This will ensure that you maximize your time at the show talking to the people with whom you want to build business relationships.

 

Put some thought into “Set Design”

Whether you have the budget for an over-the-top booth with a lot of bells and whistles, or a simple 10x10 table and chair set up, you need to make your booth as inviting and user friendly as possible.  Signage should use a large, easy-to-read typeface with one simple benefit-oriented message per sign.  Any decorations or gimmicks should dovetail with brand attributes.  Tables and chairs should have a use and not block entrance to your booth.  Particularly in a crowded or loud section of the trade show floor, having a booth that is welcoming and interesting can draw people in.

Pull Quote.png

 

 

Give an award-winning “performance”

Be sure to staff your booth with your best and most engaging representatives.  Booth staff should be trained to deliver a scripted customer greeting, pull off a convincing “elevator pitch” on your company and key products, and utilize techniques for getting information on customers’ business issues. Remember that, for every 10 square feet of space you have, you only have four seconds to engage a customer.  Once you’re involved in a conversation, quickly find out who the person is, what they are looking for at the show and whether there might be a synergy with your company.  If it’s a good match, steer them toward booth personnel designated to do product demos or provide additional information on your business services.

 

Don’t overdo the “props”

In today’s budget-conscious world, corporate giveaways without any value are considered wasteful.  If you are set on giving something away, keep a few thoughts in mind: Perhaps you can keep the tchotchkes hidden and only give them to prospects with whom you’ve had a conversation.  Alternatively, invest in a giveaway that will do some free advertising for you, e.g. a well-made tote bag that can be carried around the trade show floor, or one that highlights your brand’s best qualities.

 

Earn “good reviews”

To garner media attention, be sure to work the show’s media list and find out what stories are already planned so you can be part of them, if appropriate.  Consider giving advance notice on a major product announcement to one or two key publications that can break the story on the day your product is unveiled.  Don’t forget to study the editorial calendars of key trade publications to see if your product announcement might be included in any roundups they’re planning.  And be sure to target the show magazine or newspaper with new product and service launches.  Finally, don’t forget to prepare media kits that include key product announcements, company backgrounders and fact sheets.  These can be handed to select media at the show, or housed on a trade show-specific website connected to your company site.

 

Make sure the show’s “a hit”

The difference between a successful trade show and a waste of money lies primarily in the follow-up. Collecting business cards, scanning badges and getting prospects excited about your company are all of limited use if you don’t make contact after the show.  For particularly hot prospects, you may want to follow up with a gift or a special offer within a few weeks.  For others who say they may need your services in the future, keep following up on a regular basis for up to two years.

 

If trade shows are a dedicated part of your marketing budget, remember that you can’t just show up and hope for the best. Do your homework and come prepared to make the most out of your time.   Do you typically attend trade shows? Why or why not? Share your thoughts with the SBOC community below.

In-article.pngThe Importance of inventory control in building a profitable small business.

 

By Sherron Lumley.

 

Understanding the shelf-life of your company means taking a careful look at the amount of merchandise, parts, supplies, or finished goods your business is keeping on hand. When done right, inventory management can pay big dividends, notes Jonathan Byrnes, a profitability expert and a senior lecturer at MIT. “Product flow management,” he notes, “leads to improved earnings and happier customers.”

 

But according to the U.S. Small Business Administration, these important connections often go unseen by entrepreneurs. “Many small business owners fail to appreciate fully the true costs of carrying inventory,” notes the SBA in an “Inventory Management” white paper. This mistake can be a fatal one for a small company, however, as the paper’s authors note that “many small businesses cannot absorb the types of losses arising from poor inventory management.”

There isn’t one single method of inventory management that will optimize results for every business, however. So, it’s worth looking at two of the top schools of thought on the subject.

 

 

Traditional Approach: First In-First Out (FIFO)

 

Graphic Products in Beaverton, Oregon, a company that provides safety products to support OSHA compliance, favors the more traditional First In-First Out method of inventory control. “It’s very important when you have inventory items that may have a shorter shelf life to make sure they are received, shelved and shipped out using this system,” says Kelly Hardin, Graphic Products’ inventory manager. A slightly different variation on this approach, Last in-First Out (LIFO), is sometimes used when prices are rising because it eases the taxable income burden on the business.

 

Pull-Quote.pngSo what are the advantages of FIFO? For one, it is often easier to manage since the materials flow through a company typically follows an orderly, chronological path. (Here’s a simple example of how FIFO inventory would move during a typical month.) Second, by allowing for a larger inventory base, FIFO can make a small business more nimble and able to adapt to fluctuating demand.

 

“Many customers need products right away and cannot afford to wait days or weeks for their orders to ship. If we don’t have what they need, they might look elsewhere and we lose that sale,” Hardin explains. “Having the inventory on hand to fill orders right away means satisfied customers, and satisfied customers will be repeat customers.”

 

But stockpiling large amounts of raw materials isn’t without its drawbacks. All that inventory takes up money and space, after all. And customer returns can begin to wreak havoc on a system that is generally designed to be a single-file, one-way street.

 

New Favorite: Just-in-Time (JIT)

 

In the Just-in-Time inventory strategy, a large inventory is viewed more as a burden rather than a benefit and supply-on-hand approaches zero in some cases. The idea behind JIT, or lean manufacturing, is to have the necessary inventory arrive at the manufacturer or retailer at the exact moment that it is needed. James Womack, founder of the Lean Enterprise Institute in Cambridge, Mass., believes JIT will remain popular because of the potentially significant cost savings to small companies, despite its admitted disadvantages

 

“The downside with Just in Time is it doesn’t allow for unplanned swings in consumption, and an upturn or swell could mean an inability to meet demand due to inventory shortages,” acknowledges Ken Leava, a retired Supply Chain Specialist for Shell Solar. In addition, the complicated logistics involved in JIT inventory control sometimes become too difficult for a small business to manage without outside help or tracking software.

 

“The pros are that it keeps inventory at a minimum, so it’s financially efficient and doesn’t require a lot of space,” Leava explains. “Inventory sitting on a shelf is not healthy for a company, and not a good use of capital.” For example, at his former company, Leava reduced a $5 million-per-year expense item to just $50,000 in inventory on the shelves—a one-day supply. As a result, when an unexpected power outage hit, it only caused the loss of one day’s worth of stock. Thanks to a strong vendor relationship and the existence of an inventory contingency plan—both musts when adopting a JIT system—Leava had his supplier air freight all the replacement materials. “[It] wasn’t cheap,” he acknowledges, but he points out that it was still less costly to the company overall than incurring the long-term expenses of all that extra storage and potentially lost capital.

Which inventory method works for you? Weigh flexibility versus cash flow

 

Still, the JIT technique is not right for every business and the cost-savings may not be worth the potentially disenchanted customers for some businesses. But at companies with more steady production flows, slimming down the shelves can free up much needed capital for other investments.

 

One good metric to have on hand when you start this analysis is your company’s inventory turnover ratio. Defined as the cost of goods sold divided by the cost of an average amount of inventory, this ratio is a good bellwether of a business’s inventory churn. A low ratio indicates stock is sitting on your shelves for longer amounts of time and, so, is less efficient. Comparing your individual business’s inventory turnover ratio to industry averages can then give you a good sense of where you stand relative to your competitors. (Here’s a simple case study using this process.)

 

Nearly every small business looks for ways to better use its assets, keep costs down, and improve profitability. And because inventory represents an often-sizeable investment of a business’s cash that can’t be used elsewhere, balancing the competing requirements of fluctuating customer demands and cash flow is a challenge small business owners must get right.

Steve-Strauss--in-article-Medium.pngIn his great book The E-Myth, Michael Gerber says that many small business owners spend too much time working in their business and not enough time working on their business. Why is working on our business so important?


 

Because clients and customers leave.


 

They leave for all sorts of reasons – maybe they don’t need you anymore, or they found what you do somewhere else that is more convenient or cheaper, or they moved, or whatever. Working on your business means it is not a crisis when a customer leaves.


 

Here then are five innovative ways to work on your business – to grow your business – without breaking the bank:


 

1. Tap into the Power of Testimonials: Satisfied customers can be one of a small business’ best marketing tools. A testimonial impresses potential customers because it is an independent third-party validation that a business really is as good as it claims to be.


 

So get out there and ask some of your best customers to write you some letters of recommendation on their stationary. Then you can take these testimonials and:

  • Put them in your shop window
  • Add them to your website
  • Add them as an email tagline
  • Use them on your blog or e-newsletter
  • Use them in sales presentations


 

What about adding a video testimonial to your website? Talk about making an impact.


 

2. Boost Your Word-of- Mouth Advertising: We all know that word –of-mouth is the best sort of advertising there is. But aside from just waiting or hoping that a customer passes your name along, you can:

  • Create a referral reward system that gives customers a discount when they refer you business
  • Encourage comments on your Facebook page, blog or website
  • Ask your best customers to recommend you

 

Finally, check out the organization Le Tip; a group whose purpose is to foster word of mouth referrals.

 

Click here to read more articles from small business expert Steve Strauss.

 

3. Stay in Touch: One way to make a one-off customer into a loyal, repeat customer is to remain top of mind. If you want to get repeat business, your customer has to think of you when he or she has a need. They will more likely think of you if you gently, consistently (but not too often) stay in touch with them.

 

Here are two ways to do this:

  1. Social media is all the rage for a reason: It works. Creating a Facebook page for instance is easy, and through contests and great content, you can get people to “like” it. Thereafter, that page becomes a friendly place to stay in touch. Tweeting can also be used.
  2. Email marketing is a great way to stay in touch because it is permission marketing, that is, by signing up to receive your e-newsletter; customers are giving you permission to stay in touch with them.

 

 

4. Sell gift certificates and gift cards: You see gift cards for sale everywhere these days – at the market, in department stores, heck, I even saw some for sale recently at my car wash. Bottom line: Gift cards sell, it is estimated that up to 10 percent of all holiday sales now are in the form of gift cards.

 

 

Gift cards cannot only be used by large businesses.  Any small business can and should create them as well.  Also, if you currently accept debit and credit card payments, check with your card processor to see if they offer a gift card program.

 

 

5. Up-sell, but do it right: As you likely know, up-selling is the art of having a customer buy more than their initial purchase. Up-selling, when done wrong, is annoying, but when done right can help both you and your customer. The key is to offer the item in a helpful, non-aggressive way, i.e., “Did you know that if you buy two more gift soaps, we throw in another one for free?”  If they say they are not interested, don’t pursue it any further, or you may be seen as overbearing and pushy.

 

 

What types of approaches do you use to get new business? What have you found that works/doesn’t work?  Share your tips with the SBOC community below.

 


 

About Steve Strauss

Steve Strauss is one of the world’s leading small business experts. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. Steve is also the author of the Small Business Bible and his latest book is Get Your Business Funded: Creative Methods for Getting the Money You Need. A popular media guest, Steve is a regular contributor to ABC News Now and frequently appears on television and radio. His business, The Strauss Group, creates unique, actionable, entertaining, and informative multi-media small business content.

 

You can read more articles from Steve Strauss by clicking here.

 

 

White-in article.pngWorking remotely has become commonplace for businesses of all sizes. According to a recent IDC report, the United States has the highest percentage of mobile workers in its workforce, 119.7 million workers or three quarters of the workforce expected to be mobile by 2013. Currently, nearly 85 percent of employees work remotely one day a week or more.

 

Technology has made telecommuting a viable and attractive alternative.  Advanced laptops, smartphones, wi-fi, high-speed internet and cloud computing applications enable operations from anywhere at any hour. For small businesses with limited resources, remote arrangements can be particularly attractive. First and foremost, telecommuting could substantiallyreduce rent, utility and other overhead expenses. Moreover, eliminating aggravating commutes and providing employees with greater flexibility to manage childcare and other commitments enhances work-life balance and improves morale – both critical factors in attracting and keeping talent.

 

 

However, while businesses are increasingly embracing this trend, without the right policies and guidelines in place, out-of-office can become out-of-business.  In fact, a Microsoft survey of small and medium-sized businesses found that nearly half don’t have official policies to govern the nuances of telecommuting.


 

When deciding to transition some, or all, of your workers to remote schedules, there are a number of considerations you should keep in mind:

 

  • Who is right for the (remote) job – Remote work isn’t necessary the right fit for every employee. When hiring or transitioning workers to remote schedules, jobs skills relevant to the role are only one part of the equation. Being comfortable and effective outside of a conventional workplace and away from a manager and colleagues generally requires someone who is team-oriented, a self-starter and a strong communicator.


  • Better safe than sorry – Guidelines for using and securing company technology should be updated to reflect the realities of remote work including specifics steps for ensuring that company equipment is protected from damage and loss and that confidential information is not compromised. For example, the policy should include specific standards for encryption, firewalls, virus protection, remote wipes in case of loss/theft, etc. Depending on the nature of your operation, you may want to consider retaining an IT professional to assess whether company data or customer information will be adequately protected on external servers or employees’ personal computers.


  • Pull Quote.pngOut of sight, but not out of mind – A prevailing concern regarding remote arrangements is that without regular supervision and oversight, workers might slack off or be less efficient. However, the key to maintaining performance and productivity high in or out of the office is setting specific expectations and keeping the lines of communication open. You should maintain the same schedule of routine meetings and check-ins as you would with in-office teams and enforce office policies and deadlines. Lead by example by remaining engaged and accessible via phone or email. Finally, there are a number of affordable web-based software programs -- Basecamp, Zoho Projects, LiquidPlanner, 5pm, and others -- that can help add more structure and clarity by enabling you to assign tasks and deadlines and receive updates when milestones are completed.


  • Staying close knit while working apart Clearly, there are cultural advantages to having staff under one roof. Opportunities for in-person collaboration, impromptu brainstorms and social outings build a bond between employees and a connection to the company. However, it is possible to preserve a sense of culture even if the majority of your workforce is remote all or part of the time. Scheduling group events/meetings at regular intervals is one easy idea. Another is using interactive technology like Skype and other video/audio conferencing systems. Unlike traditional conference calls, these tools put remote workers “face to face.” Many also have simultaneous chat features that make it easier for every person on the line to be an active participant in the conversation. 


Small Business Owner.pngWhile entrepreneurs may be disproportionately under represented among competitive runners and tri-athletes, they should also consider helping their employees work fitness into their work weeks.  The possible benefits are legion; less absenteeism, higher productivity, a positive impact on team building and lower health insurance premiums. 

 

In fact, a recent study from the American Journal of Health Promotion says that wellness programs result in a 27 percent reduction in sick time and a 26 percent reduction in healthcare costs.  Further, the healthiest employees are thought to be three times as productive as the least healthy, according to a recent Australian study.  All for a return on investment that has been estimated at as much as $5 for every $1 invested.

 

The following are 10 ways small business employees (and owners) can sneak fitness into the work week whether they like the zen of solo exercise; the motivation of a group weight loss program or the competition of company-against-company sports.

 

  • Offer extended lunch hours once or twice a week for employees who may be training for anything ranging from a 5K race to a marathon
  • Encourage standing breaks as often as every 15 minutes in order to improve circulation and lower heart-related risks
  • Blast through calories while brainstorming on the move with a walking meeting
  • Respectfully promote weight loss, as well as perseverance, through a companywide “Biggest Loser” competition
  • Reap the benefits of a staff with increased confidence and stick-to-itiveness by putting them through a weeklong fitness boot camp
  • Foster teamwork through corporate sports leagues against other companies in the same industry or office park
  • Light a fire under the sedentary by creating an incentive program to get at least 10,000 steps a day, monitored by a pedometer
  • Lower office stress by teaching employees to meditate throughout the day, while standing at the copying machine; riding in the elevator; or taking a taxi to a business meeting
  • Allow employees to close their office doors to indulge in stretching sessions, including neck rolls, torso twists, toe touches and deep breaths
  • Promote adherence to exercise routines during business travel by investing in innovative equipment, including travel yoga mats; hollow dumbbells that can be filled with water and collapsible hula hoops

 

Pull Quote.pngTo implement office-wide wellness initiatives, you may have to earmark  extra dollars for organized fitness programs and allow some flexibility with work hours. However, helping your increasingly busy employees get and stay fit can reap benefits in the long run.

Steve-Strauss--in-article-Medium.pngIt is pretty trendy these days to lament how difficult business travel has become – “the airlines charge for everything,” “the security at airports is a pain,” “there are so many other travelers,” blah, blah, blah.


 

I beg to differ.

 

 

I find this a fairly great time to travel, for all sorts of reasons: many airports are very comfortable and have nice amenities, such as Wi-Fi, an abundance of outlet plugs, shopping and a wide variety of restaurants. This helps us avoid ever being bored while traveling.  Additionally, it’s easy to be productive while on the road. . . I could go on, but you get the idea.

 

 

All of that said, there still are some tricks of the trade that can make you an even more savvy business traveler. Here are my Top 7:

 

 

1. Check in, online, exactly 24 hours ahead of your flight: I actually hate sharing this suggestion because I don’t really want too many people to know it, but it’s my job to share great business tips, so alas, here goes: If you don’t like your seat assignment, or don’t have a seat, you can easily fix this by checking in exactly 24 hours before your flight. As you likely know, that’s when airlines allow you to check in online. What you may not know is that most airlines typically release a bulk of seats at that time as well – emergency rows, bulk seats, that sort of thing. By checking in as soon as they become available, you can change your seat location and nab a great spot.

 

 

2. Bring extra batteries: Yes, an extra battery for your computer is not cheap, but it is great to have when you are trying to get a project done on a long flight. You’ll also need extra batteries for your noise-cancelling headphones that will eliminate unwanted noise during a flight. (You have some, right?)

 

 

But here’s the real kicker: Buy and bring an extra battery or charger for your smartphone. iPhones are notorious for not having enough battery life or the ability to change out batteries, but did you know that for less than $50 you can buy an external, extra iPhone battery? Yep, it’s true.

 

Click here to read more articles from small business expert Steve Strauss.

 

3. Use apps: While we are on the subject, there are no shortages of great apps that can make your travel life much easier:

  • Flightstats: Allows you to easily check for flight delays, or use your airline’s app to do the same
  • TripIt: Allows you to organize trip details – flights, car rentals, hotel reservations – into one master online itinerary — even if arrangements are booked at multiple travel sites

 

 

4. Find a haven: Airports can be very hectic, but locals know where to go to find some peace and quiet. And you can learn their tricks at AirportHavens.com. On this site you can see where regular fliers escape the hustle and bustle while at the airport.

 

 

5. Get maximum frequent flyer miles: Recently while in New York I asked the hotel where I was staying if they gave miles for my airline and found out that they do. I had stayed at this location at least five times before I asked about this benefit. Other ways you can receive frequent flyer miles is by using certain credit cards, opening a new credit card, shopping online and renting a car.

 

 

6. Bring along a portable fabric steamer: Again, for less than $50, a portable travel fabric steamer will make your travel days much easier. This handy device will save you time and effort when you need to get wrinkles out of the clothes you just unpacked.

 

 

Do you have any business travel tips that you swear by? Share your thoughts below with the SBOC community.


 

About Steve Strauss

Steve Strauss is one of the world’s leading small business experts. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. Steve is also the author of the Small Business Bible and his latest book is Get Your Business Funded: Creative Methods for Getting the Money You Need. A popular media guest, Steve is a regular contributor to ABC News Now and frequently appears on television and radio. His business, The Strauss Group, creates unique, actionable, entertaining, and informative multi-media small business content.

 

You can read more articles from Steve Strauss by clicking here.


White-in article.pngDressing for success as an entrepreneur can be a challenge. Your company culture,  your clients, your location and your comfort level, can all factor into deciding what works best for your small business. Television shows like “What Not to Wear” illustrate what fashions are in style and how to achieve similar looks. The show also reiterates that the image you project through your attire can have great meaning and speak to your level of confidence.  Perhaps most significantly, how you dress and present yourself can make or break a sale depending on whether a potential customer takes you seriously and trusts you with their business.

 

So how do you know what to wear? Business suits or golf shirts and khakis?  A skirt or slacks?  Or, something else?  The following are some tips to keep in mind as you determine not only what you wear to work, but also the dress code you want to establish for your small business.

 

  • Bear in mind that, in some “roll-up-your-sleeves” work environments, business casual is not only appreciated but may help boost productivity, raise morale and create a team-oriented culture (think software start-ups, music industry businesses).  Casual dress is becoming more and more common in all industries.  In fact, 75 percent of U.S. workers dressed casually on a daily basis, according to a survey from a major clothing manufacturer
  • If you do have a casual dress policy, even if it’s only on Fridays, be sure you’re clear about what constitutes casual dress, and what does not. Employees may not realize that there’s a big difference between a t-shirt and jeans versus an unstructured jacket and baseball cap. Some employees may take casual dressing too far.

 

  • In challenging economic times, even laid-back companies are returning to the business suit – especially for customer meetings. Customers have said they feel more at ease entrusting accounting and legal services to someone who looks both serious and prosperous. 
  • Dressing formally doesn’t mean being flashy or showing off.   Wherever you shop at, make sure your suit is well tailored and well fitting with a secure hem.  Your shoes should be polished.  Consider things besides your clothes when contemplating your appearance.  Haircuts and make up (for women) should be neat and understated.
  • When in doubt on how to dress, it’s generally better to over-dress than under-dress by preparing for the most formal possibility. Keep a blazer in the office – in the event you need to give your look a more professional edge.

 

Pull Quote.pngLastly, it’s important to be comfortable with what you’re wearing so that you’re able to concentrate on your work. It’s possible to dress to impress – while keeping your individuality. At the end of the day, you should always feel like yourself.

 

White-in article.pngAlthough 80 percent of the world's businesses are family owned, according to research from Kennesaw State University Coles College of Business, these businesses are not necessarily hiring their own family members. We took a look at the dynamics, benefits and pitfalls of family businesses earlier this year, click here to read more about it.  Today, we are going to offer some advice on hiring family members, whether it’s your child, your parents or your spouse.

 

 

Children

Many entrepreneurs dream of passing on their business to their children, or just spending extra time with them. In some cases, they start grooming their sons and daughters from a very early age – involving them in product design around the kitchen table; introducing them to clients and staff and even analyzing their playtime behavior for signs of business potential.

 

 

If you decide to bring a family member into the business fold, you might want to consider these basic guidelines:


 

 

 

Parents

As the vibrant baby boom generation is reaching retirement age, many find they want to continue working.  A good number of them are going to work for their children who are small business owners.

 

If you decide to hire your mom or dad, consider the following before bringing them on board:


 

  • Decide if your parent has a skill or set of contacts
  • Be sure to pay your parent the same amount that you’d pay anyone else in the same position – don’t be tempted to hire them for less than the going rate
  • Assess your relationship with your mother or father and make sure you’re not in danger of playing out a family drama
  • If your parent is somebody who has typically overstepped personal boundaries, i.e. giving you unwanted parenting advice, you might want to think twice

 

 

Your spouse

It might sound pessimistic: However, the first thing you should do before bringing a spouse into your business is to anticipate the worst.


 


 

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Hiring a family member can be tricky. Keep in mind that for every benefit, there is also a potential downside.  Once you have committed to the decision however, sit back for a minute and realize how lucky you are to share something this important with family.

in-article.pngBy Sherron Lumley.

 

For many small business owners, finding the time to grow, not just run their business can be a perennial challenge. “It’s tough,” says Sharon Rose, owner of Rose City Acupuncture in Portland, Oregon. In addition to seeing clients throughout the day, Rose keeps her own books, manages her own billing, writes a monthly newsletter, and handles the marketing for her business.

 

“With relatively few resources and often no support staff, managers of the nation’s 26 million small businesses can find themselves even more pressed for time than overworked and stressed-out colleagues in big corporations,” writes Hillary Chura for The New York Times.

 

Pull-Quote3.pngTo get a sense of the challenge and scale of the small business growth problem, a 2011 National Small Business Association (NSBA) survey of 400 small-business owners reported, “Unfortunately, 45 percent do not believe there will be any growth opportunities for their business in the coming year,” and, the number of small businesses reporting decreases in profits was just as large, at 46 percent.  In another new report by market research firm Infogroup, more than half of the small business surveyed—56 percent—reported their “growth” was flat or had declined in the previous 12 months. 

 

Creating a blueprint for change


But in keeping with the entrepreneurial spirit, both the NSBA and Infogroup surveys found that a majority of small businesses reported feeling confident about the future of their own individual firms, with most anticipating growth. So how does one go about making growth a reality?

 

Distinguishing short-term goals from long-term goals is an important first step in putting one’s business on a growth track. Long-term goals are big picture, purposeful and mission statement driven. Short-term goals are S.M.A.R.T:  Specific, measurable, action-oriented, realistic and time-specific. “Give yourself daily, weekly and monthly activities and standards to which you hold yourself personally accountable,” writes Bob Phibbs in his book, The Retail Doctor’s Guide to Growing Your Business. “You must feel all of the work is worth it, or you will be doomed to failure.”

 

Kurt Andrews, who runs his own American Family Insurance Agency in rural Corvallis, Oregon, definitely feels his work is worth the time investment. Though he has two employees, Andrews still handles most day-to-day operations, saying, “I believe in being available to speak with my customers personally.” That’s not surprising since it was that same personal touch that helped him initially build his customer base—his early sales prospecting involved heading out to construction sites with coolers full of ice water in the summer and coffee and donuts in the winter to chat up small contractors and their employees.

 

Twelve years later, though, taking care of all his current customers leaves him little time to find new ones, he acknowledges. “I can’t rest on my laurels,” he says, “It’s change or die.” To avoid that fate, Andrews says he would like to grow his business by ten percent in 2012. Again, that short-term goal is precise, measurable and time-specific. And to accomplish this goal, he is specifically blocking off four hours per week to focus on growth, make cold calls, and contact referrals. He will also participate in an upcoming Farm Expo to meet potential new clients and plans to take the time to visit all of the local co-ops and grain elevators in his farming community this year.

Don’t make today the enemy of tomorrow

Time management expert Peter Turla, founder of the National Management Institute, says, “Many people prioritize items based on what’s most urgent and what’s next-most urgent.” Instead, he says the key is to ask, “How does this activity fit in with my long-term objectives and where I want to go with a particular project or with my career or my life?”

Although it is tempting to concentrate solely on building relationships with existing customers, this can’t be a business’s sole focus if it is to survive and prosper. When the NSBA surveyed small business owners about which future growth strategies they plan to implement in the coming 12 months, the top four responses were: new advertising and marketing strategies (43 percent), expanded Internet presence and e-commerce (36 percent), and strategic alliances (26 percent). However, “no growth strategies planned” came in at fourth with 24 percent.

 

“With me,” says Rose, “I see people a couple of times and then they are healed and they go away, so I always need to find new business.” To raise the visibility of her acupuncture business, Rose takes advantage of 20 minute pockets of time to update her business Facebook page, network with other professionals, and handle email correspondence, tasks that will ultimately lead to more business. Occasionally, she sacrifices a weekday of appointments to participate in trade shows, where she offers a limited range of services to attendees, who she sees as potential future customers. “I lose a Friday when I do a trade show over the weekend,” she explains, “but it’s essential.”

 

Learning to delegate

 

Do it, ditch it, or delegate it is a favorite tenet of time management, but of the three Ds, delegating is the perhaps the hardest for small business owners to do. “If you want your business to grow, you need extra brains—not just extra brawn—no matter how smart you are,” says Rhonda Abrams, author of The Successful Business Plan:  Secrets and Strategies. She adds, “While this may seem self-evident, hire well. Just as it’s easier to be a good parent if you have good kids, it’s much easier to be a good boss if you have good employees.”

 

To better delegate his agency’s clerical tasks, Andrews hired an assistant to work afternoons and a licensed agent who works in the mornings. His assistant takes care of the front desk responsibilities, filing and making past due calls, while the additional agent can handle functions that require an insurance license, such as following up on leads. Although he intends to stay available to his customers, having the phone lines covered throughout the day at a minimum frees his time to pursue his business growth strategy.

 

Creating a blueprint for change, prioritizing tasks with an eye toward bigger goals, and understanding the importance of delegating: following these three steps will help small business owners finally find the time to grow, not just run their companies.

Steve-Strauss--in-article-Medium.pngWith 2012 around the corner, it’s time to start thinking about what you might do differently and better next year. Here are a few ideas:

 

Spring cleaning: Spring cleaning in winter is often a good idea. This can really take two forms. Of course there is the traditional spring clean-up. Give the shop or office a once over. Get rid of the clutter, clean out the storage room, and get into the nooks and crannies. Most of us have some old files hanging around that can be moved or tossed. And what about some new paint, blinds, or even some new furniture?

 

You, your staff, and your customers will like and notice the difference.

 

But don’t stop there. Consider some spring e-cleaning. Clean out your computer inbox. Delete unused, old e-files. Back up your system or sign up for a regular, online backup service if you do not have one. Update necessary software. Get some new software and apps.

 

I am not suggesting cleaning up for tidiness sake alone (though my wife would say that is a fine enough reason) but rather, as a smart business practice. The ugly secret of owning a business is that it can become repetitive and stale. Cleaning things out – both literally and metaphorically –can shake things up for the better and create new thoughts and new avenues.

 

Click here to read more articles from small business expert Steve Strauss.

 

 

Spruce up your website: If there is a © 2008 at the bottom of your website, it is time for a little updating, wouldn’t you say? We are deep in the Web 2.0 era, meaning your site needs to have some interactive tools if you want to be taken seriously – a blog, some video, a poll, something. If your site still looks like it did back in the day, you are missing a significant opportunity to impress people and get some new business.

 

So start by checking out Craigslist. There are plenty of highly-qualified twenty-somethings with mad skills who can freshen up your site at very affordable prices.  Create some new content and have that whiz kid add it in.

 

Plan ahead: This is also a good time to get ahead of the game a bit. Make a list of projects you would like to get done in the next six months or a year. Prioritize them. Write them down. List them on the white board. I read today that President Obama’s political strategy is to “have a long-term strategy and goal in mind, and then work backwards from there.” That sounds like a pretty good business strategy too.

 

Planning ahead can also involve planning for some fun. Build in some time off. And while you are at it, consider some fun things you could do with your employees, or some ways to give them a little extra time off during the warmer months.

 

Try something new: For many businesses, winter is a slower season. As such, it is a perfect time to try out some new ideas that you don’t have time for during busier seasons. For instance, what about making a commitment to experiment with social networking a few hours a week for a few months? Set up a Twitter account and begin to tweet, create a Facebook fan page or set up Google+.

 

A new year means new opportunities and challenges.  So make sure you are ready.  What are your plans for 2012?  Share your thoughts with the SBOC community.

 


 

About Steve Strauss

Steve Strauss is one of the world’s leading small business experts. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. Steve is also the author of the Small Business Bible and his latest book is Get Your Business Funded: Creative Methods for Getting the Money You Need. A popular media guest, Steve is a regular contributor to ABC News Now and frequently appears on television and radio. His business, The Strauss Group, creates unique, actionable, entertaining, and informative multi-media small business content.

 

You can read more articles from Steve Strauss by clicking here.

White-in article.pngWhat has happened to the idea of taking vacation time? Even if your small business has a formal vacation policy, the reality is this: In a down economy, many employees are afraid to take vacation time because they feel like they are leaving their employer in the lurch and that they might not have a job once they return.  

 

 

Further, according to a 2010 survey from consulting firm Right Management, 66 percent of employees polled did not use all of their accrued vacation time in 2009. Further, 54 percent of American adults said they wouldn’t take a vacation at all, according to a Rasmussen poll

 

 

Younger employees, i.e. Generation Y, seem to find it hardest to take significant time off from work.  According to a Work Watch survey, 35 percent of 18 to 34-year-olds said that “giving up control of my projects, work and responsibilities” made them hesitate about taking vacation time.  Sales reps, financial services employees and IT professionals are other common groups that seem averse to tearing themselves away from work.

 

 

Due to a down economy, and having to do more with less, small business owners may be relieved that employees are dedicated to their work and are spending more time in the office. However, here’s why you should not cut your employees vacation time - if other companies in your area are offering paid time off and you are not, that could put you at risk of employees jumping ship.  And, staffers who have been working twice as hard in a leaner work environment may feel disheartened if they can’t take time to rest and rejuvenate.

 

 

So where do you start in crafting a formal vacation policy?  The following are some tips you may want to consider:


 

  • Know that a standard approach is to have employees’ vacation time increase with their number of years at the company.  For example, employees could earn two weeks after one year of employment; three weeks after five years and four weeks after ten years.
  • Adopt a “use-it-or-lose-it” policy, where employees can’t carry their vacation over from year to year.  Don’t leave this task to human resources.  Have management enforce this policy by encouraging their staff to take much-needed R&R. 
  • Consider using one of the newer approaches, such as “paid time-off banks.” This is where employees accrue a bank of hours based on the number of hours worked. They can then cash in the hours for vacation time, or opt to redeem them for additional pay.
  • Think carefully about whether part-time employees are integral to your success. If so, you may want to offer them some paid time off as well.
  • Take a close look at your corporate culture and see if it might be a better approach to let employees manage their own vacation policy.  Many forward-thinking companies are embracing the idea that, as long as the work gets done, employees should be able to determine for themselves when it’s an appropriate time to take a much-needed break.

 

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You may have a formal vacation policy.  And you may gently nudge your employees to take a week off during the summer.   But do you, the small business owner, take vacation time yourself?  If you don’t, you are not alone.  Only 46 percent of small business owners had plans to take a vacation in 2011, down from 67 percent in 2006, according to a recent poll.  


 

Small business owners who take vacation time often face difficulty temporarily ceding control to employees, refraining from calling the office on a daily basis or checking e-mail poolside. Just as you may tell your “Type A” employees:  If you have a hard time rationalizing going on a vacation, perhaps you could view your time off as an opportunity to search for inspiration on how to grow, or make improvements to, the company. Now get packing.

White-in article.pngAs an entrepreneur, how much thought do you give to pricing?  Do you view it as an intricate calculation to which you do not devote a lot of time and consideration?  Do you simply try to copy what your competitors are charging?  Or, do you calculate how much you’d like to earn and set prices for your products or services from there?

The reality is pricing is a complex but essential component of a small business’ success. And the most important perspectives from which you should approach it are not the competitive field or your company’s bank account. The most important factors to consider are covering your costs and the buying habits of your customers.

When you look at your
costs, don’t just jot down a few notes and move to the next item on your to-do list.  Take a careful look at labor, marketing and sales costs for each individual product.  Be sure not to forget hidden costs such as debt service fees and rate of return on your own and others’ investments.  As the owner of the business, factor in your own salary.  Once you have your costs sorted, determine how much of a mark-up is standard in your industry. For example, jewelry is known to have a markup of almost 50 percent while restaurants markup around 4 percent. 

Then, when you turn to getting to know your customers, you may want to undertake
market research.  If you are a micro-business, you might conduct informal surveys of your existing customer base.  However, if you have the budget, detailed research conducted by a third-party consulting firm will allow you to segment your market and analyze how they make decisions (e.g. by price, by convenience, or by perceived status of the goods and services).

With cost-conscious consumers, you may want to investigate couponing strategies, temporary discounts, and a gradual lowering of prices during an economic downfall.  However, keep in mind that even when marketing to consumers who are looking to save money, a sudden price decrease may create the impression that your company is in financial trouble.

With
status-conscious consumers, under-pricing and discounting may actually work against you.  People who fall into this category do not want to own or associate with a product or service that is viewed as “cheap.”  Companies can gain status not only by pricing their products in the high-end range but by garnering positive word of mouth and by becoming the de facto standard for an industry.

Some techniques to bear in mind when increasing or lowering prices are as follows:

  • You can always reduce prices gradually, if necessary.  If you are cutting prices in response to a recession, don’t offer discounts across the board.  Consider cutting prices only on lower-end items to maximize sales volume.
  • Offer discounts incrementally, e.g. only to new customers or for a limited time period.
  • If you think a price cut will be viewed negatively, it is okay to repackage products and services into different configurations, or to offer fewer features for the same price.
  • Consumers are often willing to pay more for items if they fear the lower-priced item may require an upgrade sooner.  This is particularly relevant to small businesses in the technology and electronics sectors.
  • Charm prices, or prices that seem lower even though they are not, i.e. $19.99, should be considered.  The buying process is perception based, even for the most intelligent shoppers. The bottom line is: $19.99 just feels lower than $20.

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Finally, pricing is not a static exercise you should be continuously monitoring the prices charged by competitors in your industry.  You can test new prices, discount strategies and different packaging of goods and services.  And when you do make a major change, whether it’s an increase or a decrease, make sure to communicate with your customers in order for their trust in you to remain intact.  Remember, at the end of the day, your pricing reflects how you value yourself and your business. 


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