If you’re just starting with Microsoft Excel, you may feel overwhelmed by the sheer number of options available at first glance. The good news is that these programs and their functions will start to make sense after using them for just a few minutes. Once you get your footing, you’ll be able to take advantage of all of the great features that Microsoft Excel offers and become an Excel pro in no time! Here are some tips and tricks to help you become an Excel master.
1. Master the Shortcuts
2. Import Data from a Website
You’ll also need to know how to import data from a website. If you’re not sure how here’s how! Open your spreadsheet, go to File -> Import, and select From Web. Paste in the URL of the webpage with your data, select what columns you want to import, enter any filters that you might want (optional), then click on Import.
3. Filter Your Results
1) Select any cell within the column or row you want to filter by.
2) Click on Data > Filter > Create New Filter
3) Type in the condition (e.g., is greater than) and set your parameters (e.g., 10).
4) Click OK when you’ve finished creating your new filter to apply it.
When working with large data sets in Excel, finding the information you’re looking for can be challenging. That’s where the filter function comes in handy. By using filters, you can quickly and easily narrow down your results to only show the data that meets your criteria. Here’s how to use filters in Excel:
4. Calculate the Sum
The SUM function in Excel is one of the most commonly used functions. It allows you to quickly add up a range of cells. To use the SUM function, select the cell you want the sum to appear in and then type =SUM( followed by the range of cells you want to add up. If you want to calculate the sum of a row or column, select that row or column before using the SUM function.
5. AutoCorrect and AutoFill
AutoCorrect is a great way to ensure your data is entered correctly and consistently. Simply type in the first few letters of what you want AutoCorrect to change, hit Enter, and then choose the option you want from the drop-down menu. AutoFill is another tremendous time-saving tool that can populate cells with data based on patterns you enter. For example, say you have an address list that’s easy to create if you know the first letter of each person’s last name. With AutoFill, all you need to do is start typing A, and Excel will automatically fill in all the A’s for each row—no need to manually enter them one by one!
In a nutshell, becoming a spreadsheet master is all about breaking down your work into easy-to-follow steps. You don’t need to be an expert to become proficient in using Excel. Just keep practicing! The more you do it, the better you’ll get. It may take some time before you are confident enough to automate your spreadsheets, but if you keep learning and trying new things – then soon enough, those times will come when you can automate them like a pro!
You’ve heard of a SWOT analysis. But, you don’t know where to start. Even if you did, you don’t have the time.
What if a SWOT analysis could really help your small business, though? What if it could provide direction and help you to look at business decisions through a more beneficial lens?
Are you certain that a SWOT analysis isn’t worth the time and effort? How much of either have you put forth in this pursuit, thus far?
What business decisions have you made recently that you felt were “off.” Do you feel like these decisions are nudging your small business in a decision you don’t want to go?
If you’ve read some of my other posts, you might know that I’m a big believer in the Pareto principle. I think that principle applies here.
Most of the benefits of analyzing your opportunities, threats, strengths, and weaknesses will come from 20% (or so) of the time and effort.
Hopefully, this post will help you isolate that 20% and reap the rewards of a SWOT analysis.
The 5 minute SWOT analysis
Set a timer for 1 minute
Use the ideas I provide as inspiration
Hyper-focus on each section of the SWOT analysis
Don’t overthink
Come back to the analysis with fresh ideas later
For each section, I suggest you take a timer and set it to a minute. Then, spend that minute laser-focused on the task at hand.
In the sections below, I’ll provide thinking points for your small business SWOT analysis. These will hopefully grease the gears and help you to utilize this time to create something useful.
Write down or type whatever comes to mind. Don’t scrutinize your answers too much – there’s not enough time!
The “5-minute” time limit is only used in the title to draw readership. Of course, if you want (or need) more time, take it.
Think of an opportunity while driving home? Discover a threat you had not thought of while reading the news? Has a customer mentioned an undiscovered strength? You can always return to your SWOT analysis and edit it.
Opportunities
Opportunities may not always be obvious. If they were, every company would have a better chance of being successful. You need to keep looking for opportunities and you need to think hard on them if you find one.
Opportunities, in a SWOT analysis, are positive external factors affecting your business. They are outside of your control. Opportunities are great. But, your opportunities are most likely opportunities for your competitors too.
That being said, opportunities aren’t always obvious. If they were, every business would be successful. It can take a keen eye to spot opportunities. If you’re more of a pessimist – remember that nearly every threat can be turned on its head to represent an opportunity. And…vice versa.
It can also be difficult to know how to react to opportunities. But, if you can spot them and take the time to calculate your actions – the result can be very positive for your business.
Ideas for opportunities
What is handled inefficiently in your industry?
What middlemen are offering little value in your industry?
What parts of your business can be digitized?
What would your customers like to have customized?
What training could you provide for customers or other businesses in your industry?
How have franchises performed in your industry?
What are the best-performing businesses in your industry doing right?
Threats are things outside of your control. You should not worry about them for no reason, but make sure you try to be as realistic and reasonable as possible.
Threats, in a SWOT analysis, are negative external factors that could affect your business. They are also outside of your control. But, that doesn’t mean they can’t do serious harm.
Threats, like opportunities, can be turned on their head if you need ideas. Threats and weaknesses are what cause businesses to shut down. Especially when they work in tandem.
You don’t want to drive yourself crazy with threats. But, don’t stick your head in the sand either. Try to be as reasonable and realistic as possible.
Strengths are things that make your business special. This is what makes you better than other businesses. Use them to do good things for your business.
Strengths, in a SWOT analysis, are positive internal factors that (can) help your business succeed. They are unique to you and they give you an edge over the competition.
You want to crank these qualities up and get the most you can out of them. Particularly in instances where you can use your strengths to exploit opportunities or hedge threats.
Being humble is normally good. But, this is not a time for that. On the other hand, don’t let your ego get the best of you. Pretending you have a strength that you really don’t have, is a weakness.
You should try to improve your weaknesses. These flaws could prevent you from capturing opportunities in the future.
Weaknesses, in a SWOT analysis, are negative internal factors that (can) hurt your business’s chances of success. Your competition may or may not do these things well.
You should strive to improve these shortcomings. You don’t necessarily have to turn them into strengths. But, ideally, you’d like to get them to the point of being “good enough.” Weaknesses could prevent you from capitalizing on opportunities. They could also ruin your business if a threat comes along that exploits them.
Nobody likes to admit their shortcomings. Be honest with yourself here and get input from dependable third parties if you must. Weaknesses that are ignored can’t be fixed.
A SWOT analysis is a good way to think about your business environment. You can find out if you have strengths, weaknesses, opportunities, and threats you weren’t aware of. It might seem complicated at first, but it will be worth it.
A SWOT analysis might seem like business school mumbo jumbo. And, it can be if you get lost in the weeds.
Hopefully, if you took the 5 minutes or so to perform a SWOT for your small business, you now have some ideas on:
Opportunities to exploit
Threats to protect against
Strengths to utilize
Weaknesses to fix
Finally, here’s a little food for thought as you work on your business’s SWOT analysis. This poll can be found in my church SWOT analysis post.
If you decide to perform a SWOT analysis (even if it’s a quick one) AND follow up with action, you’ll probably be in rare company. It could give your company the boost it needs to beat the competition and reach your growth goals.
You’d like to be able to charge more for your small business’s products or services. However, you feel pressure to sell for near or below what your competitors do. Otherwise, your customers will go elsewhere, right?
However, every dollar more that you can charge is (likely) an extra dollar in profit. Bringing in more revenue would help your small business with cash flow and would contribute to achieving your goals. You know that better pricing strategies exist, but maybe you’re not sure how to implement them?
Is every business forced to compete on price? Everybody knows that, to a greater or lesser degree, you get what you pay for. Most people, at some point, have “spent a little extra” but felt like they got their money’s worth.
Do you know everything that compels your customers to buy, besides price? Unless you’re selling highly commoditized products, I’d say it’s unlikely that price is the only purchasing decision.
Why not sell your products and services at a bare minimum, then? Only make enough profit to stay in business – assuming that nothing unexpected happens. Customers are the only side of the transaction that matters after all…
How do your (potential) customers make buying decisions – have you asked them? Think about this, along with what it is that you do better than anyone else. The better you understand variables, beyond price, the better position you’ll be in to maximize your small business’s revenue and potential.
What would really happen if you raised your prices? Sure, it’s probable that some customers would leave. I’m betting it wouldn’t be your best customers. In fact, for a lot of small businesses, I’d hazard to guess that earning more revenue from “good” customers and having less hassle from the “bad” customers would be a very welcome development.
Understanding how much your customer thinks a product is worth is important. That’s why companies try to price their products with what the customer values in mind. This type of pricing is customer-focused. Companies that employ this strategy have to make sure they are meeting customer needs.
Value-based pricing is an approach to pricing products and services that focuses on the value provided to the customer rather than the time or cost incurred by the provider.
Value pricing can be contrasted with cost-based pricing. Cost-based pricing focuses exclusively on the costs incurred to bring a product or service to market.
Since the perceived benefits from a product or service can far exceed the cost it took to create it, the potential for a small business to earn extraordinary returns is very high.
How to convey value to customers?
It is important to know the value of your products and services. If people don’t think they are getting their money’s worth, then you have no power to raise the price. But if people believe they are getting their money’s worth, then they will stay with you even if you raise prices.
Small businesses need to be careful with value pricing, however. If you overestimate how much the customer values the product or service then, it’s possible, that sales will suffer. It’s rare that customers will willingly overpay for something.
Emotion plays an important part in value-based pricing. It’s emotion that drives the desire to purchase a product or a service.
Whereas value can determine price, price can also convey value to the customer. Counterintuitively, not having a relatively high price can communicate a lack of quality to customers. Even if that’s not necessarily the case.
By its very definition, we know that the more value a small business can create for customers the more it can charge. So, how to create and convey all of the value you’re providing?
Be authentic and transparent
Deliver on what you promised to customers. Both explicitly and implicitly.
Customers are customers, not employees. So, don’t expect them to spend additional time and money handling things that should have been handled by you. Make doing business with your company easy, not a chore.
Draw a distinction between you and your competitors
Your customers aren’t stupid. They know that they could spend their money elsewhere. So, there’s no point in pretending that you don’t have competitors.
Highlight where you’re strong and they’re weak. Where the opposite is true – try to shore those weaknesses up.
Every customer is unique. Even those within the same market segments.
Not every business model is built for customization. However, try to look for ways to get closer to giving your customer exactly what they want.
Follow up (gently)
If practical, follow up to make sure the customer is satisfied with their purchase. Most times, they should be. If they’re not, this is a good opportunity for feedback.
Get testimonials
Customers believe other customers. Frankly, more than they believe you. Reviews and testimonials provide valuable social proof that provides very real justifications for raising your prices and increasing your profit.
Make giving testimonials and positive reviews easy. Provide an incentive if you can.
Calculating a value-based price
Value-based pricing is a way to set a price. You start by figuring out what your product is worth, or how much someone might pay for it. This can be confusing because some people think that they should charge as little as possible.
Data about customers and their purchasing patterns can help drive value pricing decisions. Analyzing this data can help you decide what your customers value. CRM software can help with this.
The problem is – nobody is really average and every individual values different things. It’s not advisable or even practical to charge each individual a different price based on what they value.
Marketing your product or service with value in mind is a great place to start. It actually puts you into the mind of your customer. This helps ensure that you are giving them what they want.
Save time with value pricing
Most businesses are trying to get as many eyeballs on their products and services as possible. Since value pricing forces you to get into the mind of your customers, you’ll better define your customer segments. More importantly, you’ll not waste time on those customer segments that aren’t interested in your small business’s products and services.
Not every small business has a good grasp on its costs. This makes discounting dangerous. If you haven’t allocated all your costs in a meaningful manner, you could be losing money on sales.
Alternatively, by focusing on value pricing, your presumably getting the most revenue possible out of every sale. You still need to know your costs. However, your likelihood of maximizing profit is much higher versus an alternative strategy.
Not every small business owner is a math or accounting wiz. That’s absolutely fine unless you are selling math or accounting services.
Once you get a feel for value pricing, you might find it simpler than, say, a cost-plus method. You might find it more intuitive.
Promoting quality instead of quantity
Value-based pricing isn’t just about selling more products or services, it’s also about selling better products with higher quality standards.
Value pricing makes you focus on what you are providing your customers. So, you have quality on your mind. Contrast this with a discounted pricing strategy where you’re starting from a point of cutting costs (and likely quality). Even if prices are higher, your customers might appreciate a focus on quality.
Disadvantages of value-based pricing
Different markets might have different values
Subjectivity
Time-consuming
Every decision has upsides and downsides. There are disadvantages to value-based pricing that you should consider when deciding if it is suitable for your small business.
Different markets, different prices?
One of the most notable disadvantages of value-based pricing is that different niches will have different values. Having niche markets for customer loyalty purposes is good. But, it may also mean that certain niches may get over or underpriced. That, or you have to charge different prices to different markets. Which, can get tricky.
Challenging to set the prices
This might seem to contradict the “simplicity” advantage. But, it all depends on where your strength lies.
If you’re a more quantitative-minded small business owner, then a cost-plus pricing strategy could come more naturally to you. The nuance of a value pricing strategy might elude you.
Time and effort
If value pricing proves to be challenging to you, it could take an inordinate amount of time. Time that could be spent on other aspects of your business. Generally speaking, given the importance of pricing, even if it is time-consuming, it is most likely time well spent.
Benefits probably outweigh costs
Competing on price is a losing battle. There are only so many costs that can be cut. Plus, low margins put your small business at risk of cash flow issues and impede growth.
A little thought and a little research will help to uncover what it is that your customers value. Highlighting the value you are giving your customers will reassure them that what they spent was worth it.
Anecdotally, I’ve never seen a story where a business was regretful for raising prices. Granted, this could be an issue of survivorship. But, I think, generally speaking, raising prices (and conveying value) offers a bigger upside for your small business than downside.
Some small businesses are quick to embrace technology. Others, not so much.
For small businesses in technology-heavy industries, it’s natural, and often necessary, to understand digital trends. Other small businesses are in more “traditional” industries. Even if they wanted to be on the cutting edge of technology, they’ve still got a business to run. An “analog” business that doesn’t need digital dohickeys to operate.
Digital advertising is a complicated subject. Navigating this domain takes a certain amount of know-how. It might even require the help of somebody with in-depth expertise. This post won’t tell you everything you need to know about digital advertising. Hopefully, it will start you on a path to understanding what your next steps should be.
Consider the following:
Are you able to calculate an ROI for your non-digital advertising?
Do you currently know all of the digital advertising options available to your small business?
What other technological tools have you tried and been pleasantly surprised with?
How can you manage your small business’s digital advertising so that it provides a satisfactory ROI?
What’s the worst that can happen? You can do nothing and your competitors can gain an upper hand. Perhaps jeopardize your business’s existence. Or, you can be proactive and learn a little about this subject so that you can proceed with confidence.
Digital vs traditional advertising
If the media you’re using was created before the internet – it’s traditional. After – it’s digital.
Tradition advertising includes the following mediums:
Billboards
Radio
Broadcast television
Direct mail
Magazines
Newspapers
Anything tangible
Not surprisingly, attention has shifted over the past 10+ years away from traditional mediums toward digital. In fact, in 2018, it’s estimated that digital media eclipsed traditional. Source.
Credit: statista.com
Simply put, advertising is when you pay for a place to talk about your company. The goal of advertising is to find people who want what you have and convince them to buy it. It follows, of course, that advertising is going to gravitate toward where the attention is.
“I still use, and benefit from, traditional advertising” you might be saying. If traditional advertising is working for you, you’re not going to abandon it. It might be time, however, to start gauging exactly how well those old mediums are working for your small business. One of the simplest ways to do this is to simply ask how customers found you.
Why is digital advertising superior to traditional?
Digital advertising is direct and can be tied to sales
It lets you make low-cost changes or try new things
It requires less of a time and money commitment
It facilitates feedback
It’s easier to reach your target audience
First and foremost, what makes digital advertising most appealing is its direct interaction with customers. Traditional advertising is more indirect. It’s easier to tie a sale to digital advertising than traditional. This analytical data is priceless when it comes to inventory management, product development, and other marketing duties.
Digital advertising also allows you the ability to edit, tweak, and A/B test. With traditional, once it’s out there, it’s out of your hands. You can certainly make changes the next go-around. But, traditional advertising can’t compete with digital in terms of flexibility.
The time and money commitments are also less with digital advertising. At least with a given provider/medium. This, coupled with its flexibility, allows you to fine-tune your digital marketing message in a much more efficient manner.
Feedback is another important consideration. Conveying everything you want your customers to know in limited print space or during a 30 second TV/radio spot is tough. Customers are still left with questions. Digital advertising helps to address your customer objections. This can be done by communicating with them directly, or by making it easy for them to learn more about your products or services.
Finally, it’s easier to get your marketing message in front of your target audience (customer avatars) with digital mediums. This means less waste than with traditional means.
Digital advertising is still relatively young. And, while the actionable insights are greater, digital advertising simply doesn’t have the decades of research that traditional advertising does.
There are other “cons” too…
Your customer avatar might not spend time online. And, if they do, they might go to great lengths to protect their privacy or not share enough to be identified.
Traditional advertising is subject to space constraints. But, so is digital advertising. It’s relatively cheap to produce, but not every digital piece of content gets in front of a lot of eyes (trust me!). Social media and the web are winner-take-all domains. So, “prime real estate” is highly sought after and could become cost-prohibitive.
We all know that digital advertising can be obnoxious. Ad blockers are very popular and as advertisers get more creative on how to work around them, the creators of these tools get more creative too. If your target demographic uses ad blockers, then your ability to reach them could be hindered.
Finally, all of those advantages listed above create more complexity. There is a lot of information to wade through and a lot of decisions to make. It can overwhelm you if you let it.
Types of digital advertising
Digital advertising includes the following mediums:
Search engine
Social media
Streaming
Websites
Videos
Anything internet or web related
Keep in mind that these are ever-evolving and this list could grow or these mediums could be obsolete in a relatively short amount of time. Also, there are some blurred lines between these different mediums. Some digital advertising could qualify under two or more of these categories.
Here’s a very general idea of what each medium entails.
Search engine PPC (pay per click) ads appear when people search the web. When, where, and how much it costs for your ads to appear is typically is decided by an auction system.
Social media ads utilize the information that platforms know about their users. This allows you to target very specific types of customers. The ads typically take the form of the normal content on the platform.
Advertising on streaming services is similar to TV advertising. But with a little more control over who sees your ad. Rates for this type of advertising can vary considerably. There is also the cost of production to consider.
Website advertising can also be done on a PPC or cost-per-impression basis. This type of marketing allows you to incorporate graphic elements more than search engine advertising. Which comes at the slight cost of not being able to target your audience quite as well.
Video advertising allows your small business to piggyback on specific topics. TV has conditioned us to tolerate streaming ads – to a degree. However, I think that video (YouTube) advertising had the distinct challenge of competing directly with the content your customers actually want to see. It’s like someone standing in front of their screen when they just want to watch a movie trailer.
How to get started with digital advertising?
Create a website and social media profile
Learn about what increases exposure (for free)
Try other platforms
Draw inspiration from others
Dip your toe into paid promotion
Learn the relevant advertising metrics
Keep failures small and adapt
Get help as needed
Exploit high ROI opportunities as you find them
Familiarize yourself with the digital “terrain” before moving forward with advertising. The name of the game in digital marketing is understanding algorithms and keywords.
The first step would be to create a website if you don’t have one. Try to get it to rank high on search engines. This will help you learn a little about SEO (search engine optimization).
Also, pick a social media platform to experiment with. Try to find out what constitutes popular content and what doesn’t. Once you feel comfortable on one platform, try another.
Don’t be afraid to copy what others are doing. Don’t make carbon copies, but do look to what works for inspiration.
Once you’re comfortable with the “free” marketing, dive into the paid side of things.
Understand your conversion rates, the value of your customers, and your costs.
You’re going to fail. Keep those failures small and learn from them.
You might consider getting help with the finer points. Tap into any skills that you may have within your staff. If needed, hire out help. There’s no shortage of digital marketing agencies out there.
Proceed smartly. Get feedback. Learn from it and adjust. When you finally discover that super-high ROI message/medium – put your foot on the gas and reap the rewards!
Here are some videos that will hopefully help you get the ball rolling with digital advertising:
Throughout this post, I have used the terms advertising and marketing interchangeably. They are not synonymous, however. Here’s how I’d draw the distinction:
Marketing is about understanding your customers and what they need. Advertising is a way to promote your company. It is just one part of marketing.
Utilizing digital or traditional advertising isn’t a black and white matter. There are shades of grey. If you feel that the advantages of digital advertising are worth it, you should consider transitioning to the extent you are comfortable.
As a small business owner, you’ve probably heard of crowdfunding. You probably haven’t thought about how it could help your business. It depends on your industry and familiarity with technological trends.
I can’t say if it’s right for your business or not. Below, however, you’ll find some answers to the most commonly posted questions regarding crowdfunding for small businesses. Hopefully, this will help you decide if you want to do more research on the subject.
Think about the following:
You don’t want to be ignorant of something that could help your business, do you?
If others in your industry aren’t doing something then it’s not right for your business?
Why not ignore every technological trend that could impact your business?
What’s the biggest cost to adopting technological trends? Is it money or time?
How has adopting other technological trends worked out for you?
Like anything, it’s not black and white. Crowdfunding has both good and bad elements.
Raising capital is hard and complicated. It takes a lot of time, effort, and dedication to be successful in this area. But if you want your business idea to come to life then you’ve got to do everything necessary!
There are many crowdfunding platforms out there and you can never be sure which one is right for your business. You can always apply to more than one (more on that below). Try not to get discouraged if there’s little interest in your first stab at crowdfunding. Just as it takes some salesmanship and marketing savvy to sell to your customers, the same will be needed here too.
Stick with reputable crowdfunding sites. If crowdfunding is unexplored territory, there’s no need to take unnecessary risks by dealing with disreputable or unproven platforms.
These are some well-respected crowdfunding sites (Source):
Kickstarter
Indiegogo
Crowd Supply
Crowdfunding is a good way to get the word out about your brand and it can help you find investors and customers. Crowdfunding could also speed up the product development process by committing you to specific deadlines.
The benefits of crowdfunding are numerous. From networking access with potential partners, getting feedback early before going into production, and being able to showcase ideas that might not otherwise meet investor criteria.
It also provides an avenue for testing demand outside traditional channels by gauging customer interest first-hand. This allows you to conduct valuable market research concurrently with your capital raising efforts.
Crowdfunding can be humbling too. That’s one of the primary downsides.
There can be times when the feeling of rejection will make you feel discouraged. However, it’s important to just accept this and move forward. Waiting for your fundraising goals to be met might seem to take forever. Remember that patience is, sometimes, a virtue when running a small business.
How much money can you get from crowdfunding?
Crowdfunding is a type of funding that can help you get the funds you need to start and grow your business. It’s an amazing way to get your company off the ground and can be used to fund anything from movies and music projects to art and fashion. Most businesses will likely use crowdfunding for product development, however. Crowdfunding has become easier with websites like Kickstarter, Indiegogo, GoFundMe, and others.
What is crowdfunding?
Crowdfunding utilizes an online platform where people can pledge money to a project; generally for a reward in return. Crowdfunding allows you to gain exposure and raise funds to help start and grow your business.
How much money can you raise?
At some sites, like Kickstarter, there is no set limit for how much you can raise. Other sites have a limit or cap. Be sure to read the fine print and understand what to expect.
Many projects never get funded, so it’s important to keep expectations realistic. Also, be aware of the timeline. Your project may take a few weeks to a few months to raise the desired funds.
Risks and challenges of crowdfunding
Crowdfunding is an increasingly popular means of funding for small businesses. Although a good portion of the people who start a crowdfund fail, this is consistent with the other risks taken as a small business owner.
More than a few companies have already risen through crowdfunding. These companies are great examples of how the platform can help businesses that need funding.
You can run more than one crowdfunding campaign at a time, but it’s not recommended. You could be juggling too many balls in the air if you do that. It can be difficult to find the time and energy to manage two or more crowdfunding campaigns along with your other obligations to your company.
You have a lot of commitments that need your attention, but it is not just about the workload. You may also receive inquiries related to the crowdfunding project. Be careful not to overcommit yourself.
Perhaps, the best way to use multiple sites for your business would be to start with one platform, then when your crowdfunding is over then you can start with another. Running back-to-back or concurrent campaigns can make you look a bit too desperate. Even worse, it might give the impression that you are trying to run some sort of scam. This is not the exposure you need when you’re trying to launch a new product or a new business.
Maybe you have an entrepreneurial streak, but don’t work well with others? Well, every business has to deal with customers in one manner or another. But, if you prefer to work alone as much as possible, then it might surprise you how successful a company-of-one can be.
Credit: census.gov
Does working with other people stress you out?
A one-person business is pretty self-explanatory. Like anything, though, operating a one-person business has its ups and downs. Knowing what to expect will help you be prepared if you decide that being a “solopreneur” is right for you.
A one-person business is exactly what it sounds like – it’s a business that consists of only one employee. This employee is the owner and has responsibility for all of the business’s assets and liabilities. They also receive all of the revenue and pay all of the expenses. That means, of course, that they also keep all of the net profit.
A one-person business is sometimes, more technically, known as a nonemployer business.
So, why might someone want to operate a one-person business?
Well, we all have different personalities. And, we all do our best work under different circumstances.
Some people might thrive in an environment where they hire employees and work with a multitude of different customers and suppliers. They do their best when working with other people.
Other people, however, interacting with others makes them feel stifled. The more they have to deal with other people’s issues the less energy there is for value creation.
Running a one-person business does not mean that you do everything yourself. You can, for instance, outsource some of your responsibilities. Thus freeing yourself up for activities that are more value-added. In cases like this, the relationship is more customer-supplier than employee-employer.
When you decide to move on from your one-person business, you could sell it to someone else and they could continue to operate it as such. Or, they could elect to hire employees and take the business in a different direction. If you decide not to sell, the one-person business might cease to exist once you’ve decided to move on.
Being “too close” to your business for appropriate perspective
No reality checks
Wasting time (I can attest to this!)
Assuming all the risk
There are many advantages to owning and running a one-person business. For starters, it is simple to launch. It’s also easy to terminate. With a one-person business, you can pack up and move on, the day you decide you’ve had enough (short of fulfilling any contractual obligations).
There’s no worrying about how decisions will be received by employees or the 2nd/3rd order effects of those decisions.
It’s not all upside of course. There’s a reason why many businesses choose to hire employees.
One disadvantage of a one-person business is that succession might be an issue. As I mentioned earlier, many times, the business dies once the owner is through with it.
By avoiding partners, the one-person business owner assumes responsibility for all liabilities. They are also responsible for raising all of the necessary capital.
The biggest disadvantages are, however, that there isn’t necessarily anyone else available to complement the owner’s strengths and weaknesses. Though, this disadvantage could potentially be worked around by utilizing contractors or freelancers. It’s this disadvantage that can make it challenging to scale the business up and to reach its full potential.
If you’re interested in running a one-person business, below, are some industries you might consider. What makes each option appealing is also listed.
Finance and insurance
Recurring revenue
Retail
The most popular industry in the $2.5 – $4.99 million annual revenue tier
Real estate
Lots of supply
Designing
Ability to exercise creativity
Currency mining
Potentially very lucrative
E-commerce
Availability of tools to help with the technical aspect & ability to sell worldwide
Fast food (food trucks)
Consistent demand
Coaching/teaching
A wide variety of markets
Mobile laundry
A growing industry
Child care
Consistent demand
While one-person businesses do have their limitations – they can also be very successful. In fact, there are many that top $1 million in annual revenue. Keep in mind, of course, that $1 million in annual revenue does not mean anything close to that in net profit. I think it is safe to say, however, that this level of sales is enough to put a one-person business in a position for success.
As tools for automation become more readily available, the prevalence of one-person businesses will hopefully continue to grow.
Here are some examples of one-person businesses with $1 million or more in annual revenue (Source).
As you can see, there is something of a consistent theme with the above examples – each has decided to hire employees after achieving a remarkable amount of success as a one-person business. It could be that once they got a taste of success they decided that remaining solo wasn’t as important as it once was.
How to start a business by yourself?
People who launch one-person businesses tend to follow a similar path. It’s not for everyone, but if you’re trying to get a one-person business off the ground, here’s a rough plan to get started:
Start your business while working full-time
Choose a business structure
Preferably LLC or corporation
Focus on the most important tasks
Is it possible to start a business while working 9-5?
User jumbotron198 advises: work just hard enough to not get fired at your full-time job. Make sure you meet your responsibilities to your employer. But, as long as you’re doing that, you shouldn’t feel guilty about taking control of your own professional destiny.
User rsimmonds has a few bullet points to keep in mind:
Stay engaged
If your side hustle becomes a “chore,” you’ll run out of energy
Prioritize and make a schedule
Beware of “time sucks”
Activities that add little value but prevent you from growing your side business
Don’t feel guilty about taking control of your financial and professional situation
Finally, user binaryOne advises you to do what you can while on company time and utilize as much time as you can outside of your full-time job. Keep in mind that you won’t (can’t) keep up this pace forever. Take action and sort out the details later.
Starting your one-person business on the side can ease some of the potential financial stress. Plus it allows you to “work out some of the kinks” while still bringing in income.
Of course, starting your business as a side hustle also means that you’ll probably only be able to commit part of your time and effort to it. If you’re sitting on a business with a lot of potential, you could simply be delaying that glorious day when you can quit your job and work full-time on something you actually care about.
What’s the best business structure for a bootstrapping one-person business?
User Sam Mollaei suggests structuring your business as an LLC, or an S/C corporation. As a business lawyer he states how:
An LLC will help protect your personal assets and taxes will pass through the LLC to you personally
A C corporation will create an entirely separate legal entity from you, the owner
You and the corporation will each be taxed separately
An S corporation is similar to a C corp, but the taxes also pass through to you
There’s very little downside to structuring your one-person business as an LLC or corporation. Operating as a sole proprietorship comingles your finances with that of the business and puts your dream at risk due to liability (Source). My only advice would be to wait to form your LLC or corporation until you start earning revenue. There’s no point, that I’m aware of, in forming it sooner.
Work on your side hustle when you are most productive
Figuring out when that is might take some trial and error
Use your time wisely
Focus on tasks that are important and/or urgent
Plan your days and weeks in advance
Group similar tasks together
Use a timer to stay focused
Take notes
To remember ideas and to sort out your thoughts
Eliminate distractions
When you’re going solo, everything is on your shoulders and that can get a little overwhelming. If you’re starting your one-person business on the side, you have that much less time to handle it all.
Try to focus on those tasks that add value (i.e. revenue). It can be tempting to work on less important, or vanity projects if you are earning an income from a full-time job. The link above also recommends:
Setting goals
Short and long-term
Blocking off time for critical tasks
Staying organized
Starting a side business and turning it into a successful one-person business is going to take discipline. My only caution would be to avoid becoming your own tyrant. Don’t become the annoying coworker or manager that you’re trying to get away from.
Curation posts were created to address small businesses’ biggest problems by gathering some of the best resources from around the web and summarizing them.
This month’s problem is – Hiring!
Quickly scan the most important points and click the link for a specific article if you’d like to learn more.
Curation posts are published once per month. So, be sure to check back!
Topic 1 – How to hire an employee for your small business
When your small business grows to the point that you can’t handle everything by yourself – it’s time to hire. Hiring is a somewhat complicated process, especially if you’ve never done it before. The information below will prepare you for hiring your first employee and every other employee after that.
Hiring employees for your small business: Tips before your first payroll
Step one is to write a quality job description and to prepare interview questions. Get feedback from an HR expert, if you can. Additionally, consider drafting a simple employee manual.
Next, check into insurance that will provide protection against bad hiring. Background checks are advisable too.
Make sure you’re prepared for payroll taxes. The government will expect you to collect these taxes from the get-go.
Here’s a checklist of things to do to prepare to collect payroll taxes:
Have the employee complete a W-4 form
Have the employee complete an I-9 form
Employment eligibility
Start paying unemployment and worker’s comp insurance
Make payroll tax deposits
File with Federal tax authorities
Also state and local, if necessary
Consider using a payroll service. They will handle all payroll taxes and filings. They will also help ensure that all wage and hour laws are obeyed.
Also, think about having an attorney draft an employment contract if you want to protect trade secrets or have employees sign non-disclosure agreements.
Educate yourself on Federal, state, and local employment laws. Laws can vary widely from locale to locale. Here’s a list of links to learn more:
Handle the administrative necessary administrative tasks
Set up a tax ID
Register business
Obtain payroll software
Find a workers comp plan
Settle on pay, benefits, and perks for each position
Use online job sites to get an idea of market rates
Post your job opening
Highlight your company culture
Look into free applicant tracking systems (ATS)
Ask your best employees for referrals, if applicable
Consider hiring a recruiter
Costly
Review resumes and interview
Understand anti-discrimination laws
Make a job offer
Be willing to negotiate
Prepare for the employee’s first day
Completing new hire paperwork
Training, if necessary
Retaining quality employees helps to save time, save money, and reduce risk. Providing feedback, ongoing training, and engagement/appreciation/motivation all help with keeping quality employees satisfied and on your payroll.
Small Business Hiring: How to Hire Your First Employee
Before taking the time to hire – determine what will fit in your small business budget. Use a job listing site to get an idea of the market salary and benefits. Consider part-time, temporary, or contract hires if you can’t afford a full-time employee.
Create a job description and post it online. Utilize your network too. If you don’t have the time, but do have the money – use a recruiter.
Interview your top candidates. Set up a consistent process for interviewing. This allows you to evaluate candidates fairly. Interview questions fall into two basic groups:
Applicant experience, skills, and qualifications
Applicant character and goals
Obviously, steer clear of questions related to race, gender, religion, etc.
Also, have questions prepared for references – if you will be checking them.
Prepare a formal job offer letter for the candidate you choose. Specify the wages, benefits, and conditions for employment in this letter.
If you’re running a background check on the new hire, let them know. Give the applicant a copy of the background check if you decide not to hire them based on what you learn.
When you do make your first hire:
Make sure you have an employer identification number (EIN)
Set up tax records
Get insurance for the employee
Print off any posters that are required by law
Topic 2 – The most beneficial time to make that first hire
Hiring, like any other expenses, is an investment in your company. Like all investments – you want a good return. Knowing when your small business should hire employees is tough. Especially if it’s the first employee. The information below will help you know when the time is right to make a hire.
When To Hire New Employees: Smart Tips for Growing Your Small Business
Hiring too soon is a drain on cash flow. Hiring too late is a drain on resources.
The right time to hire is when there’s enough work for the employee and when your small business has the financial capacity to manage the additional costs. Don’t forget the “hidden” costs – insurance, training, etc.
There are some important questions to ask yourself before you hire your first employee.
First, how volatile is business in general and cash flow in particular? Having to let someone go when things get slow is inefficient. Consider temporary employees or contractors if you don’t have enough work to keep an employee consistently busy.
Second, is the employee necessary to grow the business? Would they have essential skills you don’t? Or, can they critical tasks you don’t have time for?
Third, will your finances support the hiring of an employee? Employees are expensive. The costs (time and money) start rolling in before you even read your first application/resume. Additionally, wages only make up a portion of the total costs. Not having enough cash to make payroll can be catastrophic.
Finally, are you prepared to deal with the “details?” There are many employment laws that you will have to familiarize yourself with. Additionally, you’ll need to document and retain records pertaining to time worked and wages paid. Then, there’s also a plethora of safety regulations that will need to be followed.
What advice would you give to a small business owner about hiring their first employees?
User Aleksandr Volodarsky advised to only hire for routine tasks, to begin with. This frees you up, as the entrepreneur, to focus on the most important tasks – increasing sales and revenue.
He also recommends that you create a guide for the new hire to refer to. Since these tasks are routine, this should be relatively simple and will help ensure that the new hire does things the way you want.
Finally, he suggests that you start off by hiring a freelancer. This will help you fine-tune the job requirements and will keep costs manageable until you’re certain that you need a full-time employee.
User Jamie Van Cuyk emphasizes preparation along every step of the hiring process. This includes:
Preparing an exact job description
Researching where your ideal candidate might be looking for a job
Clarifying what skills you’re looking for on a resume/application
Preparing questions to ask ALL interviewees
Preparing for a new hire’s first day and onboarding
Finally, Mike Schoultz looks at things from a slightly different perspective. He answers the question by stating what he looks for in terms of employee qualities. These qualities include:
How do restaurants keep track of inventory? Video summary
Inventory is a pain. Especially in a restaurant where ingredients are constantly being consumed.
Don’t fight against the nature of your business. Schedule inventory counts when it will be easiest for you and your employees. For instance, during downtime and when inventory is at a minimum.
Whatever you do, don’t skip this important task! Keeping an accurate inventory is key for meeting customer demand and maximizing your restaurant’s profit!
If any of those responsibilities are cumbersome or are disproportionately time-consuming, it might be tempting to stop doing them. Or at to least stop doing them correctly.
While they’re all important tasks, inventory control might seem like one of them that you can skimp on. Maybe it’s too much of a pain in the butt? Or, maybe it seems so simple that you handle it halfheartedly.
If that’s the case, hopefully, this video and post will help you identify some best practices to tighten up your inventory control to help your restaurant’s bottom line.
Implement smart restaurant inventory policies
Organization will make your restaurant inventory control much, much easier. So, if you are a naturally organized person, then you have an advantage here. If not, I would advise you to do your best to implement some of these organizational principles. You’ll be glad you did.
One way you can organize is by breaking your restaurant up into different inventory areas. For instance:
Also, you hired employees so that you could accomplish more than you could by yourself. Don’t hesitate to use these assets when it comes to inventory control. Three trusted people handling inventory control will likely make the job more than three times easier.
Whatever accounting costing method you decide to use for your restaurant inventory is up to you. But, when it comes to actually pulling and consuming inventory, I would strongly recommend that you use the First In, First Out of (FIFO) method. This helps ensure that spoilage is minimized.
Consolidate inventory as you go. This will save space, leave room for new deliveries, and reduce the clutter at your restaurant. Doing so, along with disposing of expired inventory, should make this teeth-grinding task quicker and easier.
Count and record restaurant inventory
“How hard can it be to count?” you might be thinking. “I run a successful restaurant, I’m no idiot.” And, right you are.
You know how to count. But, have you ever considered when to count? There are two answers to that question.
The first thing to decide is how often to count. Daily? Weekly? Monthly? I wouldn’t suggest that you do it any less frequently than monthly. Things are liable to get out of hand if you wait that long. How often to count depends, in large part, on the amount of inventory you carry. If you carry a lot, then you should probably count more often.
One thing to consider is when you receive most of your deliveries. Ideally, you’ll be counting shortly before that, so that you can minimize the amount of counting you have to do.
The other thing to consider when deciding when to count inventory is what part of the day should you do it. That answer is easier. Counting inventory before or after operating hours will save you a lot of hassle.
Finally, make sure that you count using consistent units of measure (UOM). You don’t want to count something in gallons one week and ounces the next. Also, no matter how often you count, no matter what UOM you use, make sure to update your quantities on hand in your software. Even if that software is just a spreadsheet.
Look up restaurant inventory costs
Now that you know your inventory quantities, it’s time to address the other side of the inventory value equation – the unit cost.
Food costs are very volatile. Plus, ingredient usage can be hard to track. Therefore, it’s probably best to use your last purchase order cost. This should be pretty accurate if you’re counting your inventory on a fairly frequent basis.
Using your last purchase order cost will help ensure that your inventory value and cost of goods sold (COGS) is accurate.
Looking up costs after every inventory count will also help you stay on top of changes. You’ll have a better intuition about what’s eating into your profit or helping your bottom line from an ingredient standpoint.
I know you didn’t get into the restaurant business to count and to look up costs. Again, utilize help from your staff where you can. COGS is a huge driver of restaurant profitability, so it pays to manage this stuff carefully.
Cost and usage of every ingredient
Staying on top of your food costs will help you make sure that you’re pricing appropriately and staying profitable. Speaking of costing and pricing, again I would suggest you check out my Why Spreadsheets Are Your Restaurant’s Best Friend templates. Specifically, the Food Costing worksheet. On it, you can scale recipes up and down and get a suggested price based on the cost and your desired markup percentage.
Understanding your costs and the profitability of every dish you serve will help you make smarter menu decisions. You’ll know what to promote more and what to drop off your menu.
You certainly don’t have to use my worksheet, but utilize technology to the fullest extent practical. You’re busy as it is, so take every advantage you can get to work more efficiently and effectively.
Finally, staying on top of inventory quantities, costs, and usage will help you be proactive in catching instances of theft and loss. If you’re not managing these things, then you can probably see how theft and loss would easily slip through the cracks.
Keep an eye on restaurant inventory
Excess inventory is a problem for every business. But, restaurants in particular. Over-ordering inventory takes up valuable space and it’s a waste of money. Even if the inventory gets used in a restaurant before it expires, it’s still like sitting money on a shelf. Money that you could be used to earn an ROI elsewhere.
Money that is tied up in excess inventory could be used to buy ingredients that you are consistently running out of and are losing sales on. Or, it could be used to hire more staff. Staff that could help you count inventory!
Taking consistent inventory counts and tracking usage will also help pinpoint and deter theft. Unfortunately, dealing with potential theft is just a part of running a restaurant. Everybody likes food and a lot of people like alcohol. Therefore the risk of theft runs higher for restaurants than it might for other businesses.
POS software and other technology can help
Tracking inventory is nobody’s idea of fun. But, by staying on top of it you can avoid inventory catastrophes which everyone agrees are downright painful.
So, get all the practical help you can by utilizing software or spreadsheets. Be sure to do your homework on any software you’re looking to pay for and get the training that you and your staff need to use it effectively. In many cases, especially if you’re a smaller restaurant, relatively simple spreadsheets might make more sense than specialized software. They take a little bit to set up, and they’re not foolproof. But, they are almost 100% customizable.
Restaurants, like all other businesses, strive to get as many benefits as they can for the costs they incur. Remember, though, that cost can also be measured in time. Keep that in mind when considering software tools to help you work more efficiently and effectively.
Questions about restaurant inventory
How can I manage all my inventory in my restaurant?
The fundamentals of managing inventory in a restaurant include consistent inventory counts, keeping track of costs, and understanding usage. Get buy-in from your employees to help with these tasks and utilize software tools to manage your restaurant inventory efficiently and effectively.
How much food inventory is lost due to spoilage at the average restaurant?
It’s estimated that 4% to 10% of food in restaurants is lost to spoilage, theft, or waste. With food cost making up approximately 30% of a restaurant’s total cost, excess waste can really hurt your bottom line. Therefore, it makes sense to learn about and implement policies regarding smart inventory management.
What are the best mobile and tablet apps for restaurant inventory?
One app you might try out is called Fishbowl. Fishbowl is a software tool built to connect to QuickBooks Online. This is nice because your inventory control will tie directly in with your accounting software.
To be clear, I have not tried Fishbowl. I cannot speak, personally, to its effectiveness. However, it did appear to be well-reviewed. So, I think it would be worth checking out if you’re looking for a mobile or tablet app besides spreadsheets.
What is considered inventory for a restaurant? Video summary
Inventory information is only useful if it contains critical data. Having access to your restaurant’s most important information will help you make smart decisions for your restaurant.
Actual inventory levels must be consistently physically counted and compared to amounts listed in the software. Corrections in the software must be made if there is a discrepancy.
Many restaurant software tools will help to keep track of inventory. However, if they don’t, you can’t neglect this task. Even if they do, periodic inventory counts are still necessary.
What should a restaurant inventory list look like?
There are five fields that are critical for a restaurant inventory list.
These fields are:
Item
The name of what’s being counted
Unit of measure (UOM)
A consistent quantity that will be used for counting and costing
Quantity on hand (QOH)
How many UOM the restaurant currently owns
Item cost
Don’t count in one UOM and cost in another
Extended cost
QOH × Item cost
The total value of the inventory
Additionally, you can include other fields in your restaurant inventory list if appropriate. For example:
Category
Meat, vegetables, raw, prepared, etc.
Location
If you have more than one
Any other classification that helps you manage inventory
The restaurant inventory list
Fill out the critical fields for every item you own. If you must, it is okay to use multiple lines for the same item. The pivot table functionality of the spreadsheet can handle it.
Your restaurant’s POS (and other types of) software might be able to help with inventory management. It depends on the software functionality. Some software will track inventory usage. Your accounting software might track purchases too and may keep running inventory levels.
Not every piece of software will keep track of waste, spoilage, and other losses, however. Therefore…
Cycle counting of restaurant inventory will still always be necessary. This ensures that your inventory counts are accurate and you can meet demand and avoid waste.
Employees play an important part in inventory management. Consider giving them an incentive for accurate inventory counts. Explain to them the importance of accuracy.
When cycle counting – maintain a consistent schedule and stick to it! Inventory items with high turnover should be counted more frequently.
Finally, remember to track waste and food loss. Particularly if your software does not. During the hustle bustle of the workday, it may not be possible to accurately measure wasted quantities. Do your best to estimate them. Inventory amounts will be accurately adjusted next cycle count.
Utilize the Food Waste spreadsheet on the Why Spreadsheets Are Your Restaurant’s Best Friend workbook (download above). Also, take advantage of the other spreadsheets in the workbook including:
Scheduling template
Vendor order sheet
Daily prep list
Inventory control
Food/recipe costing
Food waste
Sales per day
More considerations regarding your restaurant inventory list
Only consumable items that you use to prepare food should be included in your inventory. Not every asset should be included here. Things such as flatware, cookware, glassware, etc. are not inventory.
It’s important to keep accurate records for these assets, but they are not inventory. Inventory is what you sell to your customers.
Again, make sure you’re using a consistent UOM for your inventory items. Use whatever is easiest to track. Whether it be Lbs, Gal, Oz, Cans, Cases, Flats, whatever – just stay consistent. Doing so will ensure that costly errors in counts and valuation aren’t made.
Food costs are rapidly changing. So what cost should you use?
Your POS or accounting system might track costs for you. If so, great. If not, it might make sense to assign a standard (expected) or average cost to inventory items.
No matter what inventory cost you use, make sure you’re relieving inventory on a First In, First Out (FIFO) basis. E.g. use your oldest inventory first, assuming it’s fit for consumption, of course. No other industry has to wrestle with the issue of spoilage more than the restaurant industry. So, do what you can to avoid needless waste of inventory and dollars.
Again, at the risk of beating a dead horse, make sure your costs reflect your UOM.
Finally, one of the primary benefits of managing your restaurant inventory is that you can measure inventory days on hand. In order to do so, you must keep track of inventory usage on a daily basis.
Inventory days on hand = inventory on hand ÷ average daily usage. Assuming that you are meeting all of your customer’s demand (not running out of stock) then the lower your inventory days on hand, the better.
Questions about How Do I Make a Restaurant Inventory List?
What challenges do restaurants have with managing inventory?
Spoilage is one inventory problem that the restaurant industry is particularly prone to. Many inventory items, by necessity, have an extremely short shelf life.
Accountability is another. With so many different individuals handling and recording inventory, it can be difficult to ensure that QOH in your software matches reality.
Finally, running out of inventory can hurt customer service for a restaurant more than it can other industries. While other businesses can put an item on backorder for a customer – restaurants can not.
These are just a few. There are many more unique challenges that restaurants face in managing inventory.
How does one manage quality control and inventory control smartly in a restaurant for an owner who lives in another city?
Most importantly, it is critical to find employees that can be trusted to manage inventory smartly. Also, while you want every employee to use best practices when it comes to inventory management, you’ll probably want to have one trusted individual who will have ultimate accountability.
Which is the best software for inventory control in a restaurant?
There are a lot of options out there. However, a piece of software called Restaurant 365 seems to be pretty well regarded. I’ve never used it myself. So, I can’t attest to its quality. In my brief searching, though, I never saw any negative feedback. Pricing will run from $250 to more than $450 per month per location.
Spreadsheets are also often recommended. They take some work to get set up, but one major benefit is the ability to customize them to your needs. Feel free to download the inventory control spreadsheet above and check out the Why Spreadsheets Are Your Restaurant’s Best Friend post and video.
“How do I write a marketing plan?” Start by looking internally at your unique selling proposition and your pricing. With that foundation, you can be proactive and confident in your advertising, sales, and distribution strategy. All the while, you’ll want to be mindful of what the competition is doing so that you can copy what works and avoid what doesn’t.
An annual marketing plan and the marketing section of your business plan are essentially the same things. They’re both a plan of action for making more sales and bringing in more revenue. The latter is written when you’re getting ready to launch your business. The former can be written at any time; but, ideally, would be reviewed and revised at least annually.
The first thing to address in your marketing plan is your unique selling proposition (USP). This is the foundation of all of your other marketing.
Next, the focus will turn to pricing. Pricing has an enormous effect on revenue. In fact, if your small business’s pricing is on point, that can probably make up for other shortcomings in your marketing plan.
With those issues addressed, you can now turn your focus to other activities that will directly impact customers. Specifically, your sales/distribution and advertising/promotion. Your business’s sales and distribution plan will involve direct contact with the customer. Conversely, your business’s advertising and promotion plan will be comprised of more indirect interactions with your prospective customers.
While working through the sections of your marketing plan, it’s critical that you refer to quality market research. When you were drafting your business plan, you probably had extensive market research handy. If you don’t have up-to-date market research at this time, I think it would be beneficial to brush up on that before writing a marketing plan.
What is a unique selling proposition (USP) in marketing
Of course, your business is no exception. My advice, when considering your unique selling proposition, is to think about what your business is good at. What’s the one thing you do better than anyone else? It can be anything, even if it’s not an activity that directly affects customers.
If it’s an activity that doesn’t directly affect your customers, think about the second and third-order effects of that activity. Surely, you’ll discover that activity ultimately benefits customers in one way or another. Every activity that takes place within your small business (should) revolve around your customers. After all, they’re the ones that drive revenue. Without revenue, you wouldn’t bother doing any of those activities.
In addition to clarifying what’s unique about your company, you’ll want to revisit your products and services to solidify what benefits they provide your customers. Benefits are the reason that people buy products and services. make sure you’re not listing features during this exercise.
Customers don’t buy a saw because it can cut wood. They buy a means to get a board that’s exactly the right length. This is a good illustration of the distinction between the features and benefits
With a firm grasp on your USP and the benefits of your products and services clearly in mind, reviewing your pricing strategy should also be easier.
What are your competitors’ unique selling propositions?
Now, it’s time to think about what it is that your competitors do best. Nobody is the best at everything and everybody is the best at something. Even your less-than-stellar competitors have something that they do very well.
In a perfect world, your business would serve as much of the Total Obtainable Market as you wanted. As it stands, you’ll probably have to wrestle a share of that market from your competitors. Therefore, it pays to know what you’re up against.
Understanding your competitors’ unique selling propositions will help you with sales in particular. When leads and prospects bring up your competitors, you’ll be able to acknowledge what they do well. This will convey authenticity. You’ll also be prepared to counter with why your unique selling proposition makes your products and services a better fit for the customer.
What are pricing strategies in marketing?
Pricing is a tricky subject. Many entrepreneurs fear that if they price $.01 too high, they’ll not make any sales. Alternatively, it always nags at them that they may not be pricing high enough and therefore leaving revenue on the table.
To complicate matters, pricing is very subjective to customers. Presented with the same price, one customer might think a product or service is outrageously overpriced. Another might consider it a bargain.
How much you decide to scrutinize pricing is up to you. However, I always suggest that if you’re weighing different price points common to go with the higher price. You can always improve your sales tactics and it’s easier the lower prices via a promotion than it is to raise them.
Also, though I don’t advocate for pricing strictly on the basis of costs, it is important to understand your costs so you can be certain that you’ll meet your margin goals. Therefore, this is also an excellent time to make sure your costing is accurate.
What are your competitor’s pricing strategies?
Just as with the USP, you’ll want to reflect upon how your competitors price their products and services.
Think about how their pricing lines up with their USP. Does it make sense? Do you have any competitors that always insist on competing on price? Yes, that can be frustrating. But it also likely means that they don’t have much of a marketing plan.
In turn, maybe you can further distinguish your business while they fall back on the only trick they know – lowering their prices. As a result, your business will strengthen and theirs will weaken.
How will advertising be used in your marketing plan?
Your USP will give your advertising focus. It allows you to deliver a consistent message to prospective customers. The number of avenues that you can use for marketing is almost limitless.
If you’ve been in business for any amount of time, then you probably have some experience with advertising. This is a good time to “play Battleship” – so to speak.
What I mean by “play Battleship” is – think about what’s worked well for your small business, and expand upon that. Once a particular opportunity has been fully exploited, you can change your medium, message, or any other variable until you get another hit.
When you get another hit, only make small tweaks until that opportunity is exploited. And so on…
Don’t let your marketing stray too far from your target market, however. Your entire business is built around your target market. A target market can grow or change over time, but that’s a longer-term undertaking. Advertising can be more flexible and nimble.
A thorough analysis is worthwhile here. While, yes, there is such a thing as branding and it has its value, advertising should provide you with a good (and quick) return on investment. Hold your advertising, and yourself, to high standards. Advertising is expensive and you don’t want to be throwing those dollars away.
Analyzing competitive advertising
This might be the easiest part of the marketing plan to analyze what your competition is doing. After all, the point of advertising is to get as many eyes on it as possible.
That being said, it’ll be damn near impossible to know what your competition’s ROI is on their advertising. However, being an expert in your industry, you’ll probably know effective advertising when you see it. So, when it comes time to play Battleship again, you’ll have a good idea of where to start.
How will sales compliment your marketing plan?
Marketing turns people unaware of your product or service into leads and prospects. From there, it’s the responsibility of the sales organization to turn leads and prospects into customers.
Credit: pinterest.com
Not every business will employ direct salespeople. However, keep in mind that any employee which has contact with customers is a defacto salesperson. Make sure that these people are adequately trained and are not leaving sales on the table.
You can’t fix what you can’t measure. So, be sure that you have the means to measure your conversion rate along the entirety of your funnel. Also, are your people properly incentivized to make sales? Obviously, there’s no law that says you can only pay incentives to salespeople. Paying a commission or a bonus is a variable cost that can have a high return on investment.
Speaking of costs, consider your costs tied to sales. Be wary of fixed costs. With high fixed costs, you’re starting in a hole. You have to reach a certain volume in order to break even.
If you’re confident that high volumes can be achieved, then that could be okay. If you’re not as confident, or your business has a high amount of financial leverage (debt), then you should probably steer clear of high fixed costs.
Performing a competitor sales analysis
Obviously, it’s difficult to know what your competitors’ cost structures are. Do they have heavy fixed costs or mostly variable costs? If they’re a high-volume competitor, hopefully, their costs are mostly variable. Conversely, if they’re low volume, you should hope that their costs are fixed.
You’ll have to work with whatever information you can gather. It’s probably easy enough to discover if they pay their salespeople commission, and how much that commission is. You can probably also get an idea of what kind of sales training they offer.
The point here is to get an idea of where your small business stands in terms of its potential for sales success. You want to balance between being someone that the best salespeople want to work for, and your own bottom line.
What is your distribution strategy?
Making sales is great. But if you can’t get the product to the customer, what’s the point? Not to mention the negative goodwill and customer dissatisfaction that comes with distribution interruptions and delays.
Customers don’t want to give you money just so you can make a hassle for them. They expect your customer service to be such that they don’t have to stress over getting the value that you promised them.
Authenticity, timeliness, and redundancy are the name of the game here. Communicate with your customers clearly, make it a priority to get the product or service in their hands, and have a back-up plan.
Obviously, utilizing the power of the internet opens you up to markets you wouldn’t have otherwise had access to. This is an opportunity that comes with a lot of competition, however. So, if you plan on selling via the internet, you had better specify elsewhere in your marketing plan how you’re going to stand out from the competition.
Finally, don’t forget to factor these distribution costs into your pricing analysis. They’re, more or less, direct costs so they should be easily allocated.
Your competition’s distribution strategy
By now, you get the point. You want to look at what your competition is doing and decide what strengths you should emulate and what weaknesses you should avoid or exploit.
If your competition places some of the burdens of distribution on their customers – that’s something that you want to highlight in your sales, advertising, and promotional efforts. That is, assuming, that you don’t do the same.
Also, if you can put a distribution strategy in place that opens up a larger market than your competitors, then the likelihood that you can better them will increase significantly.
How do I write a marketing plan?
Hopefully, clarifying your unique selling proposition and fine-tuning your pricing will lay the groundwork for your advertising, sales, and distribution to be successful. Additionally, by keeping a close eye on your competitors’ marketing strategy, you can put your small business in a position to gain market share. Hell, you might even know their marketing strategy better than they do by the time you’re finished.
What this should translate into, is the maximization of sales and revenue for the coming year. That, along with effective cash management, will put you in a position to not only grow your small business’s earnings but to also take advantage of any other opportunities that present themselves.
