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How to Succeed as a Small Business Owner

January 6, 2008

Hands down, the easiest way to succeed in small business is to offer a product or service people want and to have no competition. The first part is obvious - if you don’t have something people want, no one will pay you. The second part, though, can be tricky… how do you eliminate or at least reduce the number of competitors you have? You may be thinking, “I’m a dentist (or a lawyer or a financial planner)… there are thousands of people who do what I do. How can I have no competitors?

The answer is simple: think of a small, well-defined market niche within your field and specialize. Think of it… doesn’t a neurosurgeon make more than a general physician? And isn’t it easier for him to attract patients? It is far better to be the big fish in a small pond than to try to succeed as a small fish in a big pond with many competing fish (some of whom will have better credentials, be more established and have bigger advertising budgets). In the big pond, it is likely you’ll be eaten alive. In the small pond, however, you’ll not only survive, you’ll thrive.

Specializing is one of the best ways to truly set your business apart from the rest and it makes your marketing infinitely more effective.

If you’re a dentist, could you specialize in sedation dentistry, so your patients undergo treatments completely pain-free?

If you’re a lawyer, could you focus on helping injured people who were victims of drunk drivers?

If you’re a financial planner, could you specialize in offering planning services to recently divorced individuals?

Note that some of these specialties may not require any additional training… what’s important is how the potential client views you as being able to relate to her particular needs.

If I’m divorced and I need financial planning, you would be the one I’d choose, even if what you do is really not much different than any other financial planner.

Having a specialty business makes it much easier to define what your Unique Selling Proposition is and who your Market is. With a defined Message and Market, your use of Media becomes much more cost efficient, targeted and effective.

Specializing was the Key to Success in Our Small Business

My wife and I are both optometrists, but when it came time to start our own practice, we chose to go a different route than usual. Instead of opening your run-of-the-mill optical, we chose to specialize.

We decided to specialize in geriatric optometry and, to narrow our niche even further, we chose to provide our services only for residents of nursing homes and assisted living facilities.

Once we made this decision, our marketing choices were easy.

We built our practice primarily through an attractive package promoting our services and the benefits they provided. We mailed this package to the administrators of nursing homes and assisted living facilities in our area.

We soon found ourselves swamped with requests for service because we had only one competitor - an eye doctor who visited a few nursing homes, but didn’t provide eyeglasses for the residents.

Because we did offer eyeglass services as well as comprehensive eye care, we became the provider of choice in our region.

The result: We’ve successfully been in practice for over ten years and have generated over two million dollars in sales.

Best of all, we never wasted any time or money advertising in places like the Yellow Pages. After all, we knew who our Market was, where they were and how best to reach them.

The same would hold true for your business. For the easiest way to succeed, consider promoting yourself as a specialist to eliminate, or reduce, your number of competitors.

Written by wwipdotcom · Filed Under Business Tips | Leave a Comment 

How To Understand Income On Your Income Statement

January 6, 2008

This mid-month statement will overstate income and understate expenses. For instance, if your business records most of your sales in the first 7 days of the month but does not record expenses till after the 20th of the month.  The periods are usually stated in monthly, quarterly, or annual terms. 

An income statement a.k.a.  A mid-month statement can misrepresent the data.  Profit & Loss, is a summary of income received and expenses reported during a stated period.

Income can be subcategorized by type of sales. For example a fish store could have: Freshwater Fish, Saltwater Fish, Equipment, Tank Supplies, and Food. Breaking down income this way at the end of the period helps the owner look at her Income Statement and know the dollar total of each type of sale. Another tool is to know what percentage of your sales come from new customers versus existing customers.

One common mistake is to track income that is not earned by selling your business’ product or service in the income section of the statement; e.g. sales of assets, loan deposits, or tax refunds. Loan deposits are tracked on the balance sheet. Other income generated from other business activity such as gain on sale of assets and tax refunds is reported at the bottom of the statement after expenses in the area reserved for non-operational income.

When is a sale really a sale?

A cash accounting method records the sale when the customer pays. An accrual method records the sale at the time the customer order is confirmed. Payment is handled separately on the balance sheet against the receivable generated from the sale. Why is this an issue? The accrual method attempts to match a sale’s income with its expenses to better determine if the sale was profitable. Cash accounting tracks sales and expenses as they are paid by your customer or you making it harder to determine if the sale was profitable.

When printing out your P&L use the feature (within software) called percent of income. What this does is divide each account for income and expenses by the total sales for the period. Monitoring this percent allows you to compare periods regardless of the amount of the income or expense. For example, if sales for the month are 50,000 for January and your payroll is 10,000, then 10,000 divided by 50,000 equals 20%. This translates to: for every dollar of sales you spend 20 cents for payroll. The next month your sales are 40,000 and your payroll is still 10,000. 10,000 divided by 40,000 equals 25% or for every dollar of sales you spent 25 cents for payroll. You can see how knowing the percent of income can be a valuable management tool.

Written by wwipdotcom · Filed Under Finances | Leave a Comment 

Making Time to Draft Your Small Business Marketing Plan

January 6, 2008

Make time to draft your marketing plan.  This relieves any unnecessary ’spur of the moment’ trial and errors that you will regret later.  We live in a busy world and finding enough time for everything, if you are running your own business, becomes a real challenge. 
There is a return on your investment for making time to draft a marketing plan.  When the days become busy is when you really need a well researched plan to follow.  If it is a small or home based business, where you don’t have much back up in the way of competent staff, then running and marketing your business becomes a blur of confusion. 

Below are five reasons that will get you started.

1. Compels you to think about your business.

The biggest advantage is that it forces you to sit down and think about your business. What is your current situation in regards to customers, marketing activities, and ROI? Who is your competition and is there anything going on in the environment that can change how you do business? What are your goals for the next week, month, and year? Without a plan you will not know how to get from now to then. Begin to understand what resources your small business will need to meet those goals etc.

2. Creates Organization.

The second advantage is that a small business marketing plan organizes all your marketing activities you plan on using. This will eliminate those costly and ineffective last minute decisions. You know what you are going to do to market your business over a set time frame.

3. Decide how and where to spend your marketing dollars.

By developing a marketing plan you will have to decide on how and where you are going to undertake marketing activities. Think about money, time, and any other resources you will need to carry out your marketing objectives before you take action. This ensures that you do not over spend your budget.

4. Plan when and where to begin your marketing tactics.

A marketing plan will outline details about when you initiate your marketing objectives and tactics. Most businesses have cycles when there are busy cycles and slow down periods. While drafting your plan you will decide if you want to increase your marketing activities to generate sales in quiet periods? You will also have thought about if you would be able to handle the increased demand if you marketed aggressively during busy periods?

5. You’ll know what you want to achieve.

The marketing research you did for your small business marketing plan will ensure that you know the return on investment you expect your marketing activities to achieve. To analyze the actual campaigns you will put mechanisms in place to measure the results against expectations.

The return on investment you will receive by drafting a marketing plan is peace of mind about, and organization of, marketing activities. You will have information that helps you make better decisions, you will know your competition, business environment, your customers and potential customers, and you will increase your bottom line. Take the time to draft your small business plan to save you time to run your business and ensure that your business prospers.

Written by wwipdotcom · Filed Under Business Opportunities | Leave a Comment 

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