Small Business Resource » Profitability

SBI! – Niche Research

admin — Fri, 09 Mar 2012 06:07:39 +0000

Too many non-SBI! sites start without profits being “built into” the process from DAY 1. It all begins with the right process. Content Traffic PREsell Monetize is the underlying, logical and powerful process that capitalizes upon the fundamental realities of how people use the Web. C T P M puts you on a solid, profitable business foundation.

Brainstorm It! is SBI!’s powerful keyword brainstorming and research tool. It helps you verify that your site concept has acceptable profit potential. SBIers are saved from making that common fatal error. With Brainstorm It!’s help, they know they are on track, right from the start. Brainstorm It! also helps you to find topics related to your niche that will pull in traffic and generate income.

Niche Choose It! is your final decision-making tool. It uses a complex decision-matrix theory that makes choosing the best niche for YOU simple… and flawless.

Choosing your best site concept is not always as obvious as you might think. Brainstorm It! and Niche Choose It! show you the best path for your particular business, reveal some surprises, and help you make the right choice.

Monetize It! helps you choose the best monetization options for your site concept. Creating a diverse monetization mix will help you maximize your site’s profitability and ensure long-term growth.

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What Are The Best Pricing Practices For Small Business During An Economic Slowdown?

admin — Tue, 21 Feb 2012 18:08:14 +0000

In an economic slowdown your pricing is determined by factors like input cost of production or distribution channel cost etc. ….. which are primarily working on market factors. Generally one should be working on a reactive strategy of open price …. which allows for revision in product pricing over a shorter time period instead of quarterly or yearly market driven slashes or increases.

The important consideration is to try to maintain sales, even if some of them yield marginal or no profit (i,e, break even). In other words, so long as you are covering your costs, particularly fixed costs, then there is value in doing so.

However, unless you wish to become the low-cost leader going forward, then this low pricing may create a precedent which customers expect to continue, and it also may devalue the brand.

So pricing strategy must be decided carefully, with all things considered, including unintended consequences. And it may be better to have various incentives rather than simple price cuts in order to sustain sales.

In the article “Pricing in an Inflationary_Downturn”, McKinsey recommends the following actions:

-Watch for sudden shifts in price structure
-Adjust to changing customer needs
-Monitor customer-level profitability
-Update price sensitivity research

Many companies across the nation are on the verge of closing their doors and some have already started liquidating their inventory. This can be a great time to create opportunity for your business. Here are a few items to look at:

Item 1: Renegotiate Your Vendor Pricing:

Go to your current vendors and request price decreases due to the economy. You may be able to receive your inventory at a fraction of your old rates because of the risk of your vendors losing their business. Most agreements can be negotiated when financial conditions are more abundant ….. so this provides the perfect opportunity to turn the financial crises into an opportunity for your company.

Item 2: Create A Customer Loyalty Program:

Many companies started slashing prices to attempt to drive additional business to their company. However in researching the response of the consumers you may find them upset because if those prices were always available why did they not get them before. So you may consider creating a customer loyalty program ….. send a letter and give fliers to every customer saying that you want to retain them as a customer and are now rewarding them with a % off by signing up. What this does is make it look like you are giving an additional perk instead of cutting all your costs.

In any environment, it’s a best practice to price based on your customers’ willingness to pay. To the extent possible, strive to understand if and how your customers’ willingness to pay has changed and also how able you are to meet those customers’ needs relative to your competition. Unless you have a sustainably lower cost business model, you’ll want to avoid competing on price as a price cut is very easy for a competitor to copy but leaving you both with lower margins in the process. The airline industry comes to mind.

Are you in a position of relative strength? If so, that might allow you to innovate, differentiate your offering, and improve your value proposition based on shifting customer needs, thereby taking market share without necessarily changing your price.

If you find that your customers’ willingness to pay doesn’t cover your costs, you’ll have to re-examine your business model.

Keep in mind that there would be different answers for a lot of different situations. First of all strategies may be different in B2B than in B2C. Within each type the following factors will play an important role:

1. Company strategic posture – what you want out of the situation: sail through? Take advantage? Weaken competitors? Portray as socially responsible? Etc.
2. Financial strength/leverage available.
3. Brand positioning
4. Relationships with customers
5. Distribution leverage
6. Product category in terms of price elasticity
7. Cost cutting advantages available.

You should consider the above and more factors before determining how to price during a slowdown.

The only thing I would add is to caution that:

1.Understanding price sensitivity in the current climate is critical – price decreases may not have the expected effect and that’s an expensive mistake.

2. Be aware of potential changes in your value proposition as the market changes. Your product may now be perceived in a different way and the value you deliver will still be the ultimate driver behind what you can charge.

3. Price is a key positioning statement, not just a piece of simple mathematics. Think long and hard about how a price change will be perceived by your customer and the long, as well as short term effects a price change may have.

In the end cutting the customer’s price just for the sake of cutting their costs isn’t the answer. Lower your costs first ….. ensure your product/service maintains “value” …. and focus more on customer loyalty/retention.

Copyright © 2009 Small Business Resource

What Are The Best Pricing Practices For Small Business During An Economic Slowdown?

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Why Inventory Control is Essential to Profitability

webkriti — Tue, 04 Oct 2011 14:12:54 +0000

Imagine that you are running a business that appears to be doing extremely well on the books; sales are at an all-time high and demand for your products is through the roof. Since your records indicate that production costs are low, you’d expect to be earning a decent profit. And yet, it seems that you are hemorrhaging money. But where is it all going? If you’re not practicing inventory control, you could be losing a lot of money due to waste and theft. For this reason, amongst others, it is important to implement a system of tracking your inventory, including manufacturing materials, products, equipment, and even office supplies. Without inventory control, you can easily lose money hand-over-fist and not realize it until it’s too late.

The best place to start is with a waste assessment. Without this essential report, you could be losing a lot of money in a variety of areas. Not only could materials in a factory be going to waste, but items around the corporate office could also be disappearing due to negligence and a basic lack of tracking. Of course, a waste assessment will also allow you to discover where time is being wasted, although this can’t technically be termed as “inventory”. Once you know where money is going down the drain you can start implementing a plan to track your assets.

Processes that require individual employees to take responsibility for what gets used are a good idea, and having the staff in place to enforce these regulations isn’t a bad move, either. In short, you need to take some measure of control over the situation. For example, employees should be required to sign off on samples and promotional items, rather than just taking them “as needed”. Delivery of materials should be rigorously documented and logged into a tracking system and then both materials and finished products should be securely stored. In fact, you should consider using a system of bar codes or labels to scan and track these items more diligently.

And the same can be done in an office setting with equipment and other assets. Although you certainly don’t need to put a tracking label on every pen or pencil, you should have a monitored supply room that tracks what employees are checking out. Theft of small items may not figure into your big picture, but you’d be surprised how fast the cost of these supplies can add up. And you definitely need to make sure that computer equipment and furnishings aren’t going out the door and into employee homes.

For this reason, it behooves you to get some kind of asset software to track the many areas in your company where waste or theft could be occurring. These programs will not only allow you to print out barcodes and set up a system to scan employee badges for item checkout, it will also allow you to track and get reports on all of the assets and ongoing costs of maintenance and repairs associated with them, including a calculation of the depreciation of inventory over time. When you’re attempting to control your inventory in order to cut back on financial losses and increase your overall profit margin, you really can’t do better than setting up company-wide software to do the job for you.

Sarah Danielson writes for www.redbeam.com the leading provider of barcode and data collection software.

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Keep Your Business Thriving by Choosing Ideal Telephone Systems

admin — Thu, 07 Apr 2011 13:43:21 +0000

It’s easy enough to figure out the route to take where a personal phone is concerned. The advent of the iPhone ushered in an entire new generation of can’t-live-without-it technology in the form of smartphones. The choice became simple: get a smartphone or fall behind. Unfortunately, when it comes to your business phone system, the choices are more complex. That’s largely because there are multiple choices in the technological platforms available for business landlines. To avoid falling behind due to a lack of awareness of the options, here’s a quick overview of some aspects of the telephone, which remains an excellent way to communicate with clients.

Ideal Venue
While the Internet has provided a new way for customers to communicate with businesses, the phone remains the most ideally situated device for maintaining a personal feel with the client. Nothing cheers up a customer quite like hearing a live voice on the other end of the phone, able to respond to varied inquiries. From discussing account overcharges to asking about policy options, customers often prefer to have a person available to help talk them through their questions, rather than feeling baffled at what answers they can pull from a website.

The purchase of business telephone systems is thus quite important. There are several considerations included in the contemplation behind which system to purchase. Don’t forget to think about these important telephone-related topics when deciding the best route to travel.

Factors to Consider in Telephone Systems
Future anticipated business growth. A six-line system may work today, but if your business is growing rapidly, it’s wise to plan ahead. No business owner likes to incur extra costs, because that works against profitability. But so too does being short on phone service, as is covered in ‘features’ below.

Features. Your business may only require the ability to handle a few incoming calls, or it may require more complex functioning such as a routing system, messaging on-hold, caller id, or voicemail for those important briefs that just can’t wait for an available operator. Determining the precise mix is more complicated than merely deciding that having a ‘few incoming lines’ is sufficient. Even a small pizza shop can benefit from having voicemail, as hungry customers faced with a busy signal, placed on hold, or otherwise mis-handled, may well dial up the next pizza parlor on the alphabetical list. A hungry stomach shouldn’t dictate whether or not you retain a customer; your phone service selection should do this.

Support. If your phone system goes down, it’s as devastating as a brown out – you’re potentially losing customers one by one as the minutes tick away. Customer loyalty is a thing of the past. Today’s consumers demand, and receive, far more white glove treatment than they did in the past, and they expect it. Why? Because anyone that doesn’t offer premium service is replaced by another outfit that might offer the same product or service for a lower cost, or with a friendlier, faster customer service representative. The customer’s interpretation of business quality is determined by their very few points of contact. If one of those is unreliable, today’s customer is likely to deem the entire business unreliable.

Maintaining Reliability
A support network is vital to keeping your systems online and ready for business. Additionally, they can answer questions that you’ve got, whether that involves expansion, competing offers for telephone services, or programming and installation questions.

Perhaps more than one option fits the bill for your company’s telephone system needs. Only you can know such a thing, but it’s easier to determine following a demonstration and clarification of the options. While the route to take regarding personal phone use seems clear, don’t let baffling telephony options keep your business from excelling.

Article by BuyerZone. BuyerZone is a leading online service provider that connects buyers and suppliers for a range of services and equipment such as office phone systems.

How to succeed at owning and running a leisure business

admin — Wed, 06 Apr 2011 11:56:22 +0000

If you are planning to buy and run a leisure business such as a gym or nightclub, you will need to do some homework and research into what is an extremely competitive market and invest a great deal of time and effort into your business plan. It is wise to consider starting your leisure business, whether a gym or a nightclub, with someone who already has a great deal of experience, particularly if you have little practical experience yourself.

The health and fitness and nightclub sectors can be extremely lucrative if you take great care over your business plan and make sure you are providing the leisure business the area you have chosen truly requires. Conduct research within the area, identify possible competition and perhaps even try a questionnaire within the busiest shopping area to gauge what the local people want through some solid market research.

A strong business plan is vital. Write in a number of business scenarios to show your bank that you have given due consideration to all eventualities. Highlight the key ideas you feel will boost profitability. Be ambitious, you will need to be to succeed, but make sure everything you propose you can realistically achieve. You will have to thoroughly convince your bank that your leisure business, whether a gym or nightclub, will be commercially viable in your chosen location.

When it comes to looking at clubs for sale, you will need a clear idea of the type and size of space you will need. For example, if you want to run a large nightclub you may be looking for a premises which incorporates a bar on one side which opens early and allows people to drink before moving on to the nightclub next door later on. This kind of nightclub is becoming increasingly popular, so it might be wise to search for an existing club with this set up which may be open to an offer.

Likewise, buying an existing gym and health centre is worth considering, as setting one up from the ground up with new equipment and workforce is extremely difficult and expensive. There are also franchises to buy into, another option worth considering. Make sure the gym is in a highly populated area, preferably near a shopping centre, university or a particularly white collar area, as business professionals are shown to use gyms more regularly.

You must decide upon the demographic you are looking to attract and then advertise to seize their attention. Do you want to attract professional weight lifters or have your gym a more family-oriented space? Perhaps you can cater for both at different times. Nevertheless, use the local press and local business partnerships to advertise your gym and any promotions.

Likewise, decide whether your nightclub will be for students, over 21s or hardcore clubbers. Again, different nights of the week can cater to different demographics. A university night complete with advertised promotions can be very lucrative. Once again, use the local press and local business partnerships to spread the word.

Good luck for your new venture!

Rachel is a freelance blogger on a variety of business topics, including buying and selling a business.

How to manage small scale business borrowing

webkriti — Mon, 31 Jan 2011 13:15:23 +0000

Borrowing for businesses can be a tricky, and often counterproductive process. The loans process can involve potential land mines, and frequently ill-advised financial moves. As a matter of fact, most cash loans are better options than some of the borrowing options for businesses.

Business borrowing- No joke

Business borrowing involves commitments that businesses need to take very seriously. The classic case of business failure is a loan which suffocates revenue and imposes serious effects on business capital. Small scale borrowing isn’t quite in that league, but it can do significant damage if not well managed.

Small scale borrowing has a few built-in problems. The most significant is that borrowing, by definition, includes instant outlays and spending. The choice of borrowing source and the terms of the loans have to dovetail with financial plans.

There’s also a potential bottom line situation: Loan commitments can directly affect profitability, particularly businesses engaged in a lot of different areas of commercial activity. It’s actually possible for borrowing to derail a financial plan, even if it’s well within spending parameters. If business goes backwards or experiences losses, the financial commitment remains, and even a relatively small loan can cause problems.

Borrowing and financial plans

Most forms of small scale business loans can be seen as potential lines of credit. Lines of credit aren’t like fast loans or other short term loans. There are serious potentials for major increases with any line of credit, simply because any line of business credit, even in small scale lending, always include these options. Lenders, after all, make money on the basis of increasing borrowings.

That constitutes a problem of itself, and a built-in risk. Businesses, particularly if trying to develop and expand new business, tend to use loans as the cash cow to fund these moves. A small scale loan may need to be expanded to take on more staff, pay for promotions, and in many cases simply for running costs.

That’s a formula for real disasters. The extra financial commitment can play literal havoc with business models, and what used to be a small scale loan becomes a major issue. That situation must be avoided, quite literally at all costs.

Business loans in practice

Business planning and business models are basic mechanisms of good business, and with good reason. Financial plans are directly tied in to these models, and borrowing, naturally, affects them.

To be managed effectively, loans have to be nailed down in terms of all aspects of terms, timeframes and payments:

The costs must be clearly identified and measured against results.
Interest obligations need to be quantified.
Effects on budget have to be clearly assessed.

This is also a significant administration issue. Borrowing needs to be managed efficiently and any expenditure issues have to be monitored. What’s required, particularly in cases of a line of credit with extensions, is a tracking system.

This is basically a financial reporting mechanism, used to ensure no blowouts in spending, but also relates directly to the business budget in many cases. Every part of any business loan must be managed efficiently, and risk managed defensively at all times.

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Giving Your Online Business a Successful Start

admin — Mon, 01 Mar 2010 01:57:00 +0000

By TJ philpott

If you’re looking to start an online business there are 3 big decisions you’ll need to make first in order to give your business a successful start. Obviously much consideration will need to be given to variables such as startup costs, equipment needs, and even your own skill sets. However before you even get this far you will first need to decide upon 3 very important areas of your new business that are much more fundamental in nature. In fact your success will rely heavily upon the decisions you make in these areas.

Let’s quickly review these 3 key areas below:

Choose Your Business Model

There are many varying business models from which you can choose when starting an interest business. You can sell physical products, digital products, membership sites, or even coaching programs. Whatever you select be sure it’s a match with your skill sets and personal preferences. This will only make the long hours you spend developing the business more enjoyable.

Choose Your Niche

The niche or market you choose is one of your most important decisions and should be done with careful and accurate research and consideration. Ideally you’ll want to select a niche that is of personal interest to you while also demonstrating good profit potential.

Research is the only way you can determine profitability in any niche but if you’re serious about being successful this step should not be a problem.

Develop an Online Marketing Strategy

Once you’ve determined your business model and the niche you want to enter the next step will be deciding upon an online marketing strategy. There are numerous advertising techniques you can choose from but your choice here will be determined by how applicable a particular technique is to your niche. You’ll also want to consider your budget and personal preferences and talents

In order to start an online business you obviously want to carefully plan your actions and make the right choices to insure a successful start. Remaining realistic about your startup costs and how your skill sets match up with what your new business will require allows you to focus more on the unexpected variables. Ultimately however your success will be heavily influenced by the choices you make concerning your business model, market, and marketing strategy.

Starting A Network Marketing Business

admin — Thu, 18 Feb 2010 23:04:00 +0000

Network marketing has become a huge business opportunity nowadays. If you want to start a business with full intentions of having success, network marketing is for you. It’s important though, that you consider a few things to get you a good plan and vision for this marketing business you want to start. Here are ideas to consider:

Does the Shoe Fit – Does starting a network marketing business seem like it fits you? In trying to make a profit for yourself, you’ll want to study things out first. Understand the product and service that you’ll be selling, inside and out. You shouldn’t force yourself to learn a product that you don’t have interest in. You want there to be passion between you and your product that you’ll sell through your network marketing business. You want the shoe to fit, or else you don’t want to get into this at all.

What will your commission be – Paying off commission rates to your downline needs to be understood. This means you have to take the time to figure out all the calculations and figures, unless of course you hire an accountant. Now, another factor to consider is profitability. You may have an idea in your head of your total commission you’ll earn each month. But when it comes to paying all the commissions at a certain rate, you won’t be getting as much as you thought. When offering your commission rates to prospects, your going to want to have real expectations to offer them.

Recruitment – A big responsibility you’ll have with your own business is the recruitment of prospects to form your down line. These people will be the ones selling your products and services. You will want to be good at recruiting and understand how much work it will take. You can learn the recruitment process by looking into well-known companies and seeing how they do it. This will help to implement some of these ideas into your own system.

Proper Training – Every person is not going to have the same vision in mind as you do. Make sure that you will have a network marketing business training strategy that will help turn your prospects into a powerful down line that will easily understand your process as well as the products that they are offering to the end-consumer. This makes it vital to have a good training program to use over and over, if indeed, it is successful in turning your down line into powerful sales people.

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How can a SEO consultant help me

admin — Sat, 31 Oct 2009 15:02:00 +0000

The goal of an SEO consultant is to ensure more searchers visit his site and therefore ensure its placement in the first few search results. An SEO consultant may target different kinds of searches, including image search, local search, and industry specific vertical search engines.

It is indeed a decision of gargantuan proportions when it comes to hiring an SEO consultant for your site. Make sure that you look into the pros and cons of hiring an SEO consultant for your site. Many an SEO consultant provide useful services for website owners. Reviewing the content and structuring the website, online campaigns, regulating the keyword search and expert opinions are a few services that a competent SEO consultant can provide you with.

If it has been on your mind to hire an SEO consultant, the early bird gets the best worm. A great time to hire a consultant is of course when you are at the thresholds of a site redesign, or planning to launch a new site. That way, both you and the SEO consultant can sit around the site and make sure it is designed to be search engine friendly. Nevertheless, even an existing site can be putty in the hands of a magician of an SEO consultant. A consultant increases keyword density, keyword proximity, keyword prominence, keyword inclusive heading tags and keyword inclusive page titles.

An SEO consultant has the potential to extract large amounts of traffic from the search engines, and further build brands and create profitability. see also..

What Criteria Should Be Used To Measure Whether A Business Is Successful??

admin — Tue, 26 May 2009 00:56:00 +0000

A business is successful if it meets the goals of the business owner. It may or may not not be successful by my measure of success – net profit, competitive advantage, equity growth, efficiencies etc., but I don’t matter in this equation.

A business owner may want enough to live on, low stress and plenty of flexibility while another may want to build a business to pass on to the next generation. Different goals – each having different measures of success.

Every business owner has his or her own goals, whether they be free time, or short-term income, or long-term wealth, or whatever that may be. The same is true for investors ….. some may be happy with more cash flow and less capital appreciation, and others may want to sacrifice cash flow in order to get a saleable asset, while others may want to be influential in a particular industry. I spoke a little while back with an investor who wanted to put a good sum of money into a luxury food product basically to get access to hot clubs. All of these people can be successful, but they may not all be the right partners for each other.

Of course, from the outside, if you’re looking to acquire or partner with a business, then you have your own criteria for success. Those are the ones relevant to you at that given time. It may be worth it to partner with an unprofitable firm that nonetheless has good access — that firm may be successful from your measure of needing access. Or you may want to buy a company that has great customer loyalty, slim margins, and poor technology — your measure of the success you need to add to your current success may be that customer loyalty, not profitability.

The key thing is to describe success for yourself before you start the business, look at buying companies, or search for partners; that way, you know you’re measuring success by something meaningful, and not buying into someone else’s description of success.

To simplify an answer …. a business is successful if it meets the expectations of the owners. If you are fulfulling your mission and vision then you are a success – PERIOD!

Whether you are a success to OTHERS, is a whole ‘nother question. Basically, you compare the company to others in same industry, size – so apples to apples – on basis of revenue, margins, DSO, cash flow – any & all of the financial ratios that you are most comfortable with and understand.

Personally, I prefer trend analyses to see where they are coming from, where they are at, and project where they are going – then evaluate against like companies to determine how “successful” they are.

The easy answer is:

1) Are you making a profit?
2) Are you happy?

If you answer yes to both 1 & 2, the your business is successful.

Basically I’ll say this. You set your own criteria and benchmark it by what you want, not what others think is a good thing. If you don’t in all honesty know the definition of what success means to you (your/biz), give it a LOT of thought quickly, then write in down NOW before another day has passed. Otherwise you will forever walk in uncertainty over whether what others told you ever really suited you at all.