For a small business, having a great website can work wonders for your image. It can make you look bigger or more professional than you really are. For a small business there are 2 types of websites that you would consider setting up. The first is an online store to complement your sales force. The second type is an online community which interacts with your customers and gets them involved in your brand. Typically larger businesses utilize both on their web page.
Before starting any planning with your site you must decide on your domain name. If you are servicing a specific country you would be looking for a local domain such as in Australia you would be looking for .com.au. One mistake I made was that I named my domain after my business. Even though this is great and builds a brand, it offsets some of the other benefits. I would recommend using Google's Keyword Tool to find keywords with traffic that relate to you and get this in your domain.
My brand name was a generic name which did not represent what I did. So people were not actively seeking or searching that name. However a lot of people were searching for my key products. If I had my key products in my domain name it would have helped with my website getting more traffic in search engines. The reason being is I would have had a lot of links to my site with the anchor text relating to my products which would have boosted my rankings.
Once you have picked a name I would encourage you to get your site up and running as quickly as possible. The reason being is search engines take 6-9 months to fully index and trust your site. As your site gets older it will become more trust worthy in the eyes of the search engines and outrank a newer site because of this.
You must also keep freshening up your site with new pages and content. This will give customers (and search engines) a reason to keep coming back to your site. For organic rankings in search engines the main things you will need to be aware of are the structure of your site, keywords, content, inbound links and up time.
In regards to hosting your site it is recommended having it located on a fast server in the location you are serving. If you have faster load times for your customers it will reduce your bounce rate. It will also give boost your rankings in the eyes of search engines.
There is no magic formula to getting your site right the first time. However one thing you must ensure is that you have a system or structure which allows you to add or change content easily. Relying on other people or companies to do this in the long run will be more costly.
Tuesday, March 30, 2010
Friday, March 26, 2010
Getting A Grip On Financial Budgeting
Being a small business entrepreneur, two of the most important things I put an emphasis on are cash flow and financial targets. In your start-up stage (the first 2 years of business) you will more than likely be focused on increasing revenue and minimizing costs. However as you hit the growth stage you will find your revenue is high but also your expenses and material costs have jumped. In this post I will talk more about how to budget with planning tips that I have learned from my mistakes.
The biggest problem you will have when you are small is that you will not have enough people in your business. In my business when we started there was only my partner and I. I was put in charge of sales, accounts and budgeting. The mistake I am starting realize are the person who is in charge of sales cannot also be in charge of forecasting and budget review. Their job is stressful with a lot of work. The workload on top of budget planning and reporting can make your view biased.
Therefore someone not involved in the sales process should check over all financial reports and match this up to the organisations financial budgets. This person is a third party to the sales process. At the end of every month they are also not worrying about starting their next month with a bang with revenue. A person in sales core job is to worry about hitting their financial targets. The great thing about this is it does not need to be someone with an accounting brain, it only needs to be someone with common sense who is not actively involved with the sales side of things.
The things I would be looking at as my core job was sales would be solely on revenue. However someone focused on just budgeting will look at everything. Besides revenue they will look more closely at the cost of goods sold and expenses every month. As your business shifts from the start-up to the growth stage what you will find is that there are a lot of holes in the costs to your business. It can be easy to find ways to plug these holes and shave anywhere between 10-20% of your expenses and material costs from month to month. Some ways you can do this when you are large enough are asking simple questions such as:
Can we buy our stock in bulk for a discounted rate?
Can we shift to a different freight company with cheaper rates as we are shipping out more goods then when we started?
Can we batch services together with one company for a lower rate?
Do we really need certain expenses?
Getting a grip on your budget planning is stressful but is not as complicated as it sounds. You need more than 1 person involved to do this reduce the risk of a biased view in all budgeting. It is also important to note that financial budgeting should be checked over at the very least monthly to ensure you are on target and that there are no nasty shocks awaiting you at the end of the financial year.
The biggest problem you will have when you are small is that you will not have enough people in your business. In my business when we started there was only my partner and I. I was put in charge of sales, accounts and budgeting. The mistake I am starting realize are the person who is in charge of sales cannot also be in charge of forecasting and budget review. Their job is stressful with a lot of work. The workload on top of budget planning and reporting can make your view biased.
Therefore someone not involved in the sales process should check over all financial reports and match this up to the organisations financial budgets. This person is a third party to the sales process. At the end of every month they are also not worrying about starting their next month with a bang with revenue. A person in sales core job is to worry about hitting their financial targets. The great thing about this is it does not need to be someone with an accounting brain, it only needs to be someone with common sense who is not actively involved with the sales side of things.
The things I would be looking at as my core job was sales would be solely on revenue. However someone focused on just budgeting will look at everything. Besides revenue they will look more closely at the cost of goods sold and expenses every month. As your business shifts from the start-up to the growth stage what you will find is that there are a lot of holes in the costs to your business. It can be easy to find ways to plug these holes and shave anywhere between 10-20% of your expenses and material costs from month to month. Some ways you can do this when you are large enough are asking simple questions such as:
Can we buy our stock in bulk for a discounted rate?
Can we shift to a different freight company with cheaper rates as we are shipping out more goods then when we started?
Can we batch services together with one company for a lower rate?
Do we really need certain expenses?
Getting a grip on your budget planning is stressful but is not as complicated as it sounds. You need more than 1 person involved to do this reduce the risk of a biased view in all budgeting. It is also important to note that financial budgeting should be checked over at the very least monthly to ensure you are on target and that there are no nasty shocks awaiting you at the end of the financial year.
Thursday, March 18, 2010
Starting A Home Based Business
When I started my business, I started it from home. There were 2 reasons for this. The first was that I was bootstrapping my cash flow so I needed to minimize expenses. The second and more important reason was that I did not know where I wanted to take my business so I wanted to feel out the market before making more of a commitment.
This was one of the best decisions I made as I was able to make mistakes (or what I also called lessons) on a smaller scale. Starting from home you can make yourself look like a bigger business than you really are. You can do this with the use of a great website. The good thing about a website is that you can project any image that you wish. You can also dictate how you do business. You can sell solely via your store and use your home for customer service and sending out goods. Or you can use your website to organise appointments to go out and see potential customers while your office is at home.
With my printing company we were in a different predicament. We had to produce each order so we needed a fair bit of space. So we took out 4 rooms in our home. However we had a 12 month goal to move out into our factory which we did. We also knew building a website with proper content would take months so in the mean time we tried to get work via word of mouth.
One thing I learned during this time is I went out to see every client that I could. This was a 'lesson' I learned. The reason for this is I realized I was wasting too much time doing this. However at the start every customer counted. Now my approach is to filter my ideal customers from customers that might waste my time. So when starting out it is important to project yourself more to the kind of customers you want as opposed the ones which will waste your time. This will probably mean you will need to find a way to target larger corporate customers from home. If you can do this your lower expenses will make such projects more profitable.
The one thing I regret when starting a home based business is not getting the focus for my business right from the start. Today is two and a half years since our business moved from home, but the focus of what we do has shifted since being at home. If we knew three years ago what exactly our business would do in the future then we would have expanded differently.
For entrepreneurs looking to stay at home with the business, this can be a lot of fun. I have seen small businesses customized their home to suit their business. The great thing about working from home is you can easily leave work early if it is quiet. However a major pitfall is you may get complacent and lethargic with your hours when you should be working hard.
We have found though that since moving from home we have been more focused on the business with less distractions. On my drive home I am more easily able to stick off from work. However for those starting out or looking to stay at home I highly encourage this as you are reducing the risk of your business failing.
This was one of the best decisions I made as I was able to make mistakes (or what I also called lessons) on a smaller scale. Starting from home you can make yourself look like a bigger business than you really are. You can do this with the use of a great website. The good thing about a website is that you can project any image that you wish. You can also dictate how you do business. You can sell solely via your store and use your home for customer service and sending out goods. Or you can use your website to organise appointments to go out and see potential customers while your office is at home.
With my printing company we were in a different predicament. We had to produce each order so we needed a fair bit of space. So we took out 4 rooms in our home. However we had a 12 month goal to move out into our factory which we did. We also knew building a website with proper content would take months so in the mean time we tried to get work via word of mouth.
One thing I learned during this time is I went out to see every client that I could. This was a 'lesson' I learned. The reason for this is I realized I was wasting too much time doing this. However at the start every customer counted. Now my approach is to filter my ideal customers from customers that might waste my time. So when starting out it is important to project yourself more to the kind of customers you want as opposed the ones which will waste your time. This will probably mean you will need to find a way to target larger corporate customers from home. If you can do this your lower expenses will make such projects more profitable.
The one thing I regret when starting a home based business is not getting the focus for my business right from the start. Today is two and a half years since our business moved from home, but the focus of what we do has shifted since being at home. If we knew three years ago what exactly our business would do in the future then we would have expanded differently.
For entrepreneurs looking to stay at home with the business, this can be a lot of fun. I have seen small businesses customized their home to suit their business. The great thing about working from home is you can easily leave work early if it is quiet. However a major pitfall is you may get complacent and lethargic with your hours when you should be working hard.
We have found though that since moving from home we have been more focused on the business with less distractions. On my drive home I am more easily able to stick off from work. However for those starting out or looking to stay at home I highly encourage this as you are reducing the risk of your business failing.
Saturday, March 13, 2010
Bootstrap With Your Cashflow
When starting a business you need a few kinds of capital which are financial, expertise and human resources. People forget what money buys for your business and that is time. If you have a lack of financial capital when you start-up what it will do is take longer for you to reach your goals. Bootstrapping is what occurs when you have a lack of financial capital as you leech of your cashflow month by month to build on other areas of your business.
I went through the process of bootstrapping to fund my printing business. What I found when utilizing this technique is that planning is the most critical thing. I am not talking about detailed business plans but rather budgeted cashflow reports and statements of financial performances. With these you will know in what months you will come into some cash. More importantly it will also tell you in what months you might need to find cash from somewhere.
Knowing when your slower periods occur are vital. For example a business such as mine drops off over school holidays as less people are at work. So this means a month over summer, the easter break are less busy. However midyear to Christmas is our busiest period. So I know in my slower periods to try and conserve some capital in this time to re-charge for the busier periods.
In those busy periods you can put away some cash towards funding important areas of your business such as machinery or new product lines. However you must also ensure you do not go overboard with purchases and ensure you have a big enough 'war chest' to get through the quieter months.
Not having cash in your busier periods is detrimental as well. In some business models you might get paid 30-90 days after completing an order. However you will need to fund this order right until you get paid. Therefore businesses with a prepaid model have more of a chance with succeeding with bootstrapping. The reason for this is that they are exposed to less risk from getting paid from debtors.
When it comes to bootstrapping remember cash is king. Your frame of mind should be that a job is not locked in until you have received payment. Some entrepreneurs get caught up in how their financials look month by month. However at the start-up to growth stage, their main focus should be ensuring there is enough cash coming into the business' bank account.
I went through the process of bootstrapping to fund my printing business. What I found when utilizing this technique is that planning is the most critical thing. I am not talking about detailed business plans but rather budgeted cashflow reports and statements of financial performances. With these you will know in what months you will come into some cash. More importantly it will also tell you in what months you might need to find cash from somewhere.
Knowing when your slower periods occur are vital. For example a business such as mine drops off over school holidays as less people are at work. So this means a month over summer, the easter break are less busy. However midyear to Christmas is our busiest period. So I know in my slower periods to try and conserve some capital in this time to re-charge for the busier periods.
In those busy periods you can put away some cash towards funding important areas of your business such as machinery or new product lines. However you must also ensure you do not go overboard with purchases and ensure you have a big enough 'war chest' to get through the quieter months.
Not having cash in your busier periods is detrimental as well. In some business models you might get paid 30-90 days after completing an order. However you will need to fund this order right until you get paid. Therefore businesses with a prepaid model have more of a chance with succeeding with bootstrapping. The reason for this is that they are exposed to less risk from getting paid from debtors.
When it comes to bootstrapping remember cash is king. Your frame of mind should be that a job is not locked in until you have received payment. Some entrepreneurs get caught up in how their financials look month by month. However at the start-up to growth stage, their main focus should be ensuring there is enough cash coming into the business' bank account.
Wednesday, March 10, 2010
What Price For Your Hourly Rate?
Calculating your pricing guide is an important part of your venture. Your hourly rate can dictate how profitable your venture will be and how much you will take home at the end of every week. What price you go for will depend whether you are a service or product based business.
If you are a service business this is fairly easy. You can calculate the total number you operate your services such as typically this is a 40 hour week. In these 40 hours you must account for all of your bookkeeping, advertising and other admin hours on top of the hours you can allocate to providing your service. As a general rule of thumb you should at least increase your intended hourly rate by about 400%. So say you want to earn $1000 a week in a 40 hour week, your hourly rate should be around the $100 an hour mark. In a 40 hour week you may spend 10-15 hours doing admin work and travelling. On top of this you will have other overheads and expenses. That is why tradespeople tend to get paid a lot more. However if you are really busy this rate gives you room to employ other people and make a mark-up. This also covers you while you are in your quieter periods.
Your pricing guide if you are a business with a product is different. With this sort of business you first need to work out your product cost. Then on top of this you need to work out all of your overheads including labour. The great thing about this is by calculating your unit costs and gross profit per product, you can calculate your breakeven point for an indicated price point.
From past lessons being the cheapest is the very dangerous. It will devalue your brand and give you less room to increase your prices in the future. You will also rely on doing volume which is not easy to maintain if the correct systems are not in place. From what we have seen from the GFC is that being cheap when you are not pushing large volumes will kill your business.
On the other hand businesses and ventures which value themselves and focus on providing a greater service to their customers can afford to increase what they charge. By knowing the capacity of what your business can handle can also limit to how high you can charge. At the beginning when testing your market you can afford to try pricing models. However once your brand is built doing these changes is not so easy so be weary.
If you are a service business this is fairly easy. You can calculate the total number you operate your services such as typically this is a 40 hour week. In these 40 hours you must account for all of your bookkeeping, advertising and other admin hours on top of the hours you can allocate to providing your service. As a general rule of thumb you should at least increase your intended hourly rate by about 400%. So say you want to earn $1000 a week in a 40 hour week, your hourly rate should be around the $100 an hour mark. In a 40 hour week you may spend 10-15 hours doing admin work and travelling. On top of this you will have other overheads and expenses. That is why tradespeople tend to get paid a lot more. However if you are really busy this rate gives you room to employ other people and make a mark-up. This also covers you while you are in your quieter periods.
Your pricing guide if you are a business with a product is different. With this sort of business you first need to work out your product cost. Then on top of this you need to work out all of your overheads including labour. The great thing about this is by calculating your unit costs and gross profit per product, you can calculate your breakeven point for an indicated price point.
From past lessons being the cheapest is the very dangerous. It will devalue your brand and give you less room to increase your prices in the future. You will also rely on doing volume which is not easy to maintain if the correct systems are not in place. From what we have seen from the GFC is that being cheap when you are not pushing large volumes will kill your business.
On the other hand businesses and ventures which value themselves and focus on providing a greater service to their customers can afford to increase what they charge. By knowing the capacity of what your business can handle can also limit to how high you can charge. At the beginning when testing your market you can afford to try pricing models. However once your brand is built doing these changes is not so easy so be weary.
Tuesday, March 9, 2010
How To Say No To Customers
When starting my business the one thing I tried to do was accommodate every potential customer and say yes we could help them. This brought some needed revenue to my start-up. However the downfall was that over time I was finding that I was wasting time on certain jobs and was actually losing money. So I quickly had to learn how to say no.
Let me break it down for you. A normal typical business works a 40 hour week. A small job may be worth a small amount to you however may take 3-4 hours to of man hours to fulfil. To some this will be worthwhile, however those 3-4 hours may be better spent trying to attract the larger more profitable work.
What I have found is that by saying no to those smaller and unprofitable customers, I have attracted a lot more of the customers I want to my business. This has increased my revenue, profitability and gave me more of my weekends back in my early days.
Now saying no to customers can be challenging when you have a carrot dangled in front of you to potentially boost your bottom line. But you can make saying no easier by using the following strategies.
Firstly, if a customer is asking for something similar to what you do but not your core business you can refer them to a company that specializes them in that. Your customers will appreciate it as it will save them time and get them a more specialized service.
Another strategy you can use is just to over quote and make a project or job worth your while. If the client says yes then you can palm this off to another company and make a mark-up. Typically customers are savvy and will get multiple quotes or know when something is overpriced. Caution with this method though as you can damage the perception of your brand.
My favourite and typical response to customers is to say no and this is not what we specialize in and then explain exactly what we do. By doing this I can confuse the public about exactly what my brand is about.
However you may be in a situation where you have said yes to a customer and do not want to keep going ahead with a certain product with re-orders. The best way to handle this is to find another supplier that can do this at a similar quality and price and hand your customer off to them. You also need to explain that you are discontinuing that product or service.
Saying no particularly when you are coming out of the start-up stage can be beneficial to your business. It can get you focused on the work you can do. By adopting this over time you will find that more of the customers you want to deal with will come to your business and you will see less of the customers that waste your time.
Let me break it down for you. A normal typical business works a 40 hour week. A small job may be worth a small amount to you however may take 3-4 hours to of man hours to fulfil. To some this will be worthwhile, however those 3-4 hours may be better spent trying to attract the larger more profitable work.
What I have found is that by saying no to those smaller and unprofitable customers, I have attracted a lot more of the customers I want to my business. This has increased my revenue, profitability and gave me more of my weekends back in my early days.
Now saying no to customers can be challenging when you have a carrot dangled in front of you to potentially boost your bottom line. But you can make saying no easier by using the following strategies.
Firstly, if a customer is asking for something similar to what you do but not your core business you can refer them to a company that specializes them in that. Your customers will appreciate it as it will save them time and get them a more specialized service.
Another strategy you can use is just to over quote and make a project or job worth your while. If the client says yes then you can palm this off to another company and make a mark-up. Typically customers are savvy and will get multiple quotes or know when something is overpriced. Caution with this method though as you can damage the perception of your brand.
My favourite and typical response to customers is to say no and this is not what we specialize in and then explain exactly what we do. By doing this I can confuse the public about exactly what my brand is about.
However you may be in a situation where you have said yes to a customer and do not want to keep going ahead with a certain product with re-orders. The best way to handle this is to find another supplier that can do this at a similar quality and price and hand your customer off to them. You also need to explain that you are discontinuing that product or service.
Saying no particularly when you are coming out of the start-up stage can be beneficial to your business. It can get you focused on the work you can do. By adopting this over time you will find that more of the customers you want to deal with will come to your business and you will see less of the customers that waste your time.
Thursday, March 4, 2010
Start A Business As Quickly As You Can
I am often asked for tips about getting into the business. The one recommendation I always make is that if your are going to start a new business then do it now. There are several reasons for this.
Firstly the best market research is actually made by trying to sell your product to your market. The best business plans are backed by evidence. Plus by actually trading you will find what works for your business. You might also listen to customers and find a new avenue for your business which you did not think of to begin with. If you can spot this early you can build good foundations for the future of your business.
Also business registrations take time. Trademarks for example can take months to register. So even if your business is not trading you can get your trademark, business name and website address registered so you have all bases covered when you’re ready to start.
Speaking about your website, you need to get out of the sandbox if you want to get listed on Google. A lot of businesses now rely on their website bringing free traffic via Google’s organic searches. However Google ranks a website also by its age. In its first few months it will also place it in what it calls its sand box. In this time it will monitor a new site and find out what it is about from the content in the site and who links to it. So in this time you need to add content to your site and try and get links.
When getting quotes and speaking to suppliers, sales reps tend to spend more time with existing businesses instead of yet to be formed businesses. The reason for this is that if you are committed to a business then in the eyes of sales reps there is the potential of you starting with them. They tend to brush off customers ‘thinking of getting into business’ as the likelihood of them really getting into business isn’t certain until they do it. This way you can have more honest and open conversations with potential suppliers.
So here are some important reasons why you should get into business as quickly as you can in some way even if it is small. As you start trading you will more than likely you will start small. But with the right strategy your sales and growth will snowball larger into the future.
Firstly the best market research is actually made by trying to sell your product to your market. The best business plans are backed by evidence. Plus by actually trading you will find what works for your business. You might also listen to customers and find a new avenue for your business which you did not think of to begin with. If you can spot this early you can build good foundations for the future of your business.
Also business registrations take time. Trademarks for example can take months to register. So even if your business is not trading you can get your trademark, business name and website address registered so you have all bases covered when you’re ready to start.
Speaking about your website, you need to get out of the sandbox if you want to get listed on Google. A lot of businesses now rely on their website bringing free traffic via Google’s organic searches. However Google ranks a website also by its age. In its first few months it will also place it in what it calls its sand box. In this time it will monitor a new site and find out what it is about from the content in the site and who links to it. So in this time you need to add content to your site and try and get links.
When getting quotes and speaking to suppliers, sales reps tend to spend more time with existing businesses instead of yet to be formed businesses. The reason for this is that if you are committed to a business then in the eyes of sales reps there is the potential of you starting with them. They tend to brush off customers ‘thinking of getting into business’ as the likelihood of them really getting into business isn’t certain until they do it. This way you can have more honest and open conversations with potential suppliers.
So here are some important reasons why you should get into business as quickly as you can in some way even if it is small. As you start trading you will more than likely you will start small. But with the right strategy your sales and growth will snowball larger into the future.
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