How small business can beat the global megacorporations today
Looking for a good small business idea that could turn into a big business idea? If you are, I think we’re living in extremely exciting times and I say this because it’s clear to me that businesses we used to think were established and virtually untouchable are now vulnerable to startup competition. Some of these are obvious and the popular press runs stories about them every day. I’m thinking about enterprises like Uber, Airbnb and other peer-to-peer or sharing business models that are using the advantages of today’s technology to launch an assault on an established business sector. But some startups are getting traction even without leveraging the bleeding edge of technology. (Maybe I shouldn’t have used the word “bleeding” here, because I want to talk about what’s going on in the razor shaving industry.) Let me set the stage with a very brief history lesson. Gillette and the company’s competitors sold reusable razors with the intent to make most of their profits from selling the blades used to fill the razors. It was a fairly advanced way of thinking at the time. This business model chugged along merrily for generations. It’s so simple that it seemed almost unassailable. How could anyone make inroads against the likes of Gillette and Schick? A funny thing happened on the road to success for Gillette and Schick – they got fat, sassy and complacent. With a corner on the market, they tolerated each other and let their attitudes towards their customers – especially when it comes to pricing and service – get the best of them. This opened the door for some newcomers in the game, players like Dollar Shave Club, Harry’s Razor Company, 800Razors, Shave Mob, and Dorco. Some of these startups leverage the Internet in ways that caught Gillette and Schick off guard, but frankly their subscription model could have been launched without the Internet. These startups recognized that the established brands were vulnerable in pricing and in the hoops they make buyers jump through to get their blades (dealing with locked cabinets in stores). If we look hard and with fresh eyes, we can probably find all kinds of supposedly established legacy companies that would be vulnerable to competition from an eager and creative startup. This could be your golden small business startup idea that has the potential for huge growth. Think about the companies that you more or less dread doing business with. When your spouse asks you to run an errand to a certain store or to get a certain product and you immediately groan, where are you being sent? How can you make the experience better? Don’t worry if it’s a huge global corporation or included among the Dow Jones Industrial Average stocks. In the end, it could be that, “The bigger they are, the harder they...
read moreWhy You Need a Good Accountant, Starting Yesterday
If you were a carpenter – or ever took wood shop in school – you would know the old adage, “Measure twice. Cut once.” The principle applies to almost any human endeavor, but in other areas the measuring device isn’t a tape measure. In your small business, the best financial measuring device is often your accountant. There are financial aspects of organizing and running a small business that most owners don’t fully understand. After all, tax law changes from year to year, various principles of accounting are not always clear to the nonprofessional, and small business owners often don’t even have the time to fully understand or control how money is flowing in and out of their businesses. Small business owners are terrific at a lot of things, but handling the financial side of their companies isn’t always one of them. Unfortunately, many small business owners do not have a single, professional accountant they depend on. Many get by with a bookkeeper and some don’t think about a financial professional until tax time rolls around each year. This isn’t the ideal approach. We should consider accountants the financial doctors of our small businesses. They can jump in when it looks like something is threatening our financial health and in the good times they can get us on a healthy financial plan that will be most beneficial. However, underlying this approach is developing a strong, ongoing, personal relationship with a good accountant. For example, what is the best way to organize your small business? LLC? Sole proprietorship? S-Corp? That’s just one important question. Here are other instances where having developed an ongoing relationship with a good accountant versed in your area of business will prove very beneficial. Year-end tax preparation. Not only will your accountant make sure you are taking maximum advantages of the deductions to which you are entitled, he or she will get you set up with a system that makes year-end, and quarterly reporting easy and efficient. Staying legal. If an accountant prevents one audit – although you’ll never really know this – it would be well worth the investment. But to put this in practical terms – when your accountant is able to keep you on the right side of the contractor-employee line, it’s a very valuable service. Also, properly sorting personal versus business expenses for a small business owner is critically important. Training you. I said at the top that many small business owners don’t really know how to read financial statements. Work alongside a good accountant for a number of years and that will change. You’ll improve your financial literacy and it will make you a far better and successful small business owner. Advise on expenditures. Is it better to buy or lease? Should a purchase be made this year or next? Who is the better supplier for a given item? Which clients should you jettison? Being able to fine tune decisions like these to best suit your current situation can be the difference between a profitable year and one that’s not so rosy. Let me add one general management principle to this list. It’s always wiser to devote your time to the tasks that you’re good at and grow your business. Even if you could do some of the things a professional accountant...
read moreThis Week in Small Business: Find success through love!
Valentine’s Day, customers in love with your business and courting Millennials make this a heartfelt collection of tips from around the Interweb. Leadership, management and productivity With Valentine’s Day in mind, Noreen Seebacher writes that the customer experience is like a great marriage and explains how to keep that marriage healthy with nine points. A key to getting everything done in your small business is to get some clarity…but that’s easier said than done. Here are three leadership strategies you can put into action right now that will lift you above the fray. Check out these six ways to make your customers absolutely fall in love with your small business. This piece outlines one hashtag you hope your customers aren’t using when they mention your small business in the social media. Steve DiGioia shares six customer service facts every business should know and internalize. Marketing and sales Okay, you’re blogging, but if you aren’t generating enough business from your efforts, these seven ideas from Ian Cleary will help a lot. Tapping into the Millennial market is fundamental for continued growth and success. These three “show-and-tell” tips will help you gain credibility in that crowd. If your small business can be marketed with visuals, check out this guide on how to advertise on Instagram. Content marketing can certainly be cost effective, but not if you’re making these common B2B content marketing mistakes. And if you really want to be successful, you need to craft a killer brand voice and mission statement for your marketing. Just as crucial as content marketing is mobile marketing. These seven strategies will help put you on the road to success. This article explains retention marketing and tells you why you need to start using it today. Entrepreneurship, startups and innovation Check yourself against these 15 signs that say you’re destined to be an entrepreneur…following that link may be your first sign. Politics, government and the economy Are importing and exporting in your future? About half of the small businesses in that sector think international trade conditions will be improving. It looks like Fortune 500 firms are still grabbing federal contracts that are supposed to go to small businesses. This editorial from the other side of the pond says that the growth of part-time, flexible jobs offered by companies such as Uber is a double-edged...
read moreHow to be a futurist and boost your small business success
This may be a dumb question, but have you seen the new “Star Wars” movie? Considering the amount of money the movie has earned, I don’t think there are too many of you out there who have not yet sat through its 135 minutes of action-packed sci-fi drama. The epic plot of the “Star Wars” series is great, but I enjoy the smaller details even more. For example, we get multiple insights into how the series’ creators view the commercial evolution of the galaxy. We see a bar that serves species from various planets – Talk about multiculturalism! – and we see mining operations, inter-planet trading and other elements that weave the economic fabric of this imagined future universe. If you want to be a very successful small business owner, let me suggest that you need to be something of a science fiction writer, or at least a futurist yourself. You must have a vision of where your business will be tomorrow, and the next year and into the next decade, if you want to create real long-term value. There are different strategies for dealing with the future in a business setting. For example, when Apple introduced the iPhone, in many ways the company created a new future in digital communications. However, many other businesses then saw the potential of the iPhone and realized what impact it would have on the future of their products and services and they reacted accordingly. All of this has practical implications for the way you manage your small business. You need to always be assessing where your industry will be in the near future and beyond. Of course, the closer you get to today, the easier it is to make these kinds of predictions. In any case, it requires careful consideration and study on your part. If you have a local business whose success hinges on your community, how is your area growing or changing? Consider questions like these: What areas are slated for new development? How are neighborhoods changing? Are some aging? Where are the young families settling? Are immigrants making up an increasingly large part of the population? What are their needs? The answers to all of these questions would benefit many small local businesses. Let me suggest that if you have a business that is sensitive to these kinds of local developments, that you engage area planners and other civic authorities. Find out where they see your community heading over the next five to 10 years. If you have a business that would benefit from opening additional locations, the answers to these questions will help you plan successfully. However, also look beyond your immediate area. Where is growth happening in your state? Is that area ripe for an outlet, or should you relocate your business entirely? Of course, trends play a big role in growth as well. Not long ago I covered this topic here. Sometimes you can be very successful by riding the wave of a trend. Other times you can be equally as successful developing a business relationship with someone else who is riding the trend. If you supply a product or service to someone else who is heavily invested in a new trend, it helps you limit your risk if the trend comes crashing down. Of course,...
read moreAre you taking advantage of ‘presales’ in your small business?
The “presale” is a concept that is fairly new in the world of sales and it’s used in a variety of ways. Here are just a few: Kickstarter campaigns “presell” items that are in development. Retail stores – most notably Macy’s – have presale events. Customers buy items before the “actual” sale starts, at the sale price and then pick up their items once the sale starts. Concert tickets often are offered in a presale basis and in this case it’s the opportunity to buy tickets before the “general public.” Services and seminars sell future sessions at presale pricing. Almost anyone who sells something today can find a way to use a “presale” for strategic advantage. You may be able to accomplish some of these objectives: Create an aura of exclusivity, Judge overall demand and order accordingly, Get additional sales when customers return to your brick-and-mortar location to pick up their presale purchases, Obtain an email address or other useful information in exchange for access to notifications of presale events, Get a deadline that motivates you and your team to finish a project, Improve your cash flow, Have the ability to conduct online tests of various price points and marketing materials, and more. You don’t want to cross any ethical or legal boundaries with a presale strategy. For example, you shouldn’t collect money when you don’t really know if you’re going to go ahead with your plans, or you don’t have a concrete delivery date you can give your customers. Sometimes, just having people put their names on a presale list will give you the information you need and also create the demand you’re looking for. Dobie Gray had a hit song with “The ‘In’ Crowd” back in the mid 1960s. He sang, “I’m in with the in-crowd” and that’s a feeling most of us like to have. In many cases, being included in exclusive pre-sale events taps into that psychology. Other times giving access to the lowest pricing levels can be the motivating factor: “When the seminar becomes available to the general public next month it will be $500.” When Macy’s has presale events, the psychological trigger is availability. Customers fear that the items they want will be sold quickly, so to guarantee their purchase, they pay in advance and then return to the store at a later date. Of course, when they return I suspect Macy’s is hoping they find additional items that they would like to buy. In this scenario the retailer wins both “coming and going”! See how tapping into the presale psychology might work with your customers. Maybe you can create a presale club of “approved” customers. They would get advance notice and access to lower prices than others. If you do sales at all, adding the dimension of a “presale” to some of them gives you second way to essentially market and promote the same event. This should allow you to squeeze more sales out of what really amounts to only one...
read moreIs Your Next Small Business or Side Hustle Ecommerce Drop Shipping?
There are a lot of people making money selling products today without ever having to touch the products themselves. Drop shipping and Fulfillment by Amazon (FBA) are two popular ways to do this. Drop shipping is the focus today, although we’ll touch on FBA. If you need to know the basic drop ship model, the totally “hands-off” version of drop shipping follows a course like this: Find a supplier for a product you believe you can sell via the Internet. If the supplier will drop ship for you, great, if not, buy the stock and ship it to a fulfillment house. Set up an ecommerce website and create the pipeline that will channel orders to your drop shipper and maintain inventory information. Promote your website and the product you’re selling. Ecommerce packages available I’ve oversimplified a little here, but you get the idea. On the bright side, there are turnkey ecommerce software packages or plugins available that have drop shipper connectivity built into them, so you don’t have to compile that code from scratch. If you can achieve any level of success at this model, it becomes a money machine. However, success doesn’t come easily. There are two basic paths to take if you’re going to be profitable drop shipping. Either one will work and if you can do both, you’re gold: Find a unique product to sell. Be the best in your product niche at SEO and Adwords. The downside of the drop-shipping model is that the barrier to entry is low, so the competition is high. You’ll be going up against some veterans who have mastered the strategies of driving traffic to their websites. Drop shipping profits While a traditional retailer likes to get keystone pricing with its 50 percent markup, the drop-shipping model typically yields a 7-10 percent margin. That’s very slim and even though this is a model that (supposedly) requires little work on your part, it can be time consuming nonetheless. There really is no such thing as cheap drop shipping; the costs add up. Competition in easily sourced products is fierce, to put it mildly. If you scan different sellers of the same products on Amazon, for example, you’ll see how the lowest prices are usually only pennies apart. That gives you an indication of how close they are to not having any margin at all. This means that to be successful you have to be able to drive a lot of traffic to your product page and if you can do it at little or no cost, you’ll be in a much stronger position. Are you an expert at SEO? Have you had success achieving very high organic rankings on Google search engine results pages? And if so, have you had that success in a highly competitive niche? Finally, more headaches that come with the drop-shipping model are customer service, inventory control, and operational control. You’re at the mercy of your fulfillment company. You can’t respond to any issues faster than they want to respond. This can create major customer service problems and those will eventually be reflected in ratings, which have the potential to sink your future sales. (By the way, these issues lessen significantly if you set yourself up with an FBA account. Then you have the professionalism and power...
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