Thursday, October 2, 2014
New Image Consulting, LLC
Starting a business is not an easy task. A good entrepreneur understands what it takes to start a business and make it successful. Poor business planning will usually result in a failed attempt to own a business. So why spend all your time and money at attempting to run a business if you are not going to do it correctly in the first place?
There are many reasons why a new business will fail; however, there are major key factors that will stop a business dead in it's tracks if the business owner does not know how to properly start a business. So do you have what it takes to start a business and keep it going?
1) The most important piece any potential business owner should have before starting a business is a solid, detailed, and realistic business plan. A business plan takes a business owner through steps to ensure a business will succeed. A business plan gives you an idea of the who, what, when, where, and why your business is a good idea and what it will take to grow.
2) The second most important piece to business is money!!!! Starting a business is usually expensive. Start up costs can range in the thousands and until a business is profitable, a good business owner will need to make sure he or she has enough start up funds to keep the business going. Many businesses fail within the first few months because they run out of money. Understanding how much money you need to get the ball rolling and keep it going is very important and a fundamental piece in the business plan.
3) The third most important piece to business is marketing. Without a solid marketing plan, your business will fail. There are three major components of marketing. The first component of marketing is understanding your brand, demographic, geography, and strategy of your market for branding and reach. The second component of marketing is advertising. Advertising includes traditional methods of advertising (radio, television, newspapers, direct mail), new age marketing (websites, social media marketing, and SEO), and marketing materials (business cards, fliers, graphic design, and other materials) to brand your business. The third component to marketing is sales (sales people, ecommerce sites, etc...).
When I speak to business owners about marketing I often here "I don't have time to market or sell my business", "I don't need marketing because I have a location", "I cater to a lot of people, nothing specific", "I don't have money for advertising", "I rely on word of mouth", "I use Facebook and Twitter to get the word out", or "advertising doesn't work". As a professional marketer, when I hear people give me excuses on why they do not have a solid marketing plan, I laugh. How on Earth do you expect your business to grow if you do not invest time or money into marketing your business?
Have you ever heard the saying from the movie Field of Dreams, "If you build it they will come?" This is not the case in business. Just because you rent a building and put up a sign, does not mean people will come flooding in your door by the thousands. And just because you start a Facebook page or profile and friend 500 people, does not mean you are successfully marketing your business. As a matter of fact, most people on Facebook will NOT pay attention to what you have to say or offer unless you properly market your business on Facebook.... which takes time, money, and know how! Remember, when I say marketing that means materials as well (like I said above in advertising). You need marketing materials to present your business. If your business does not have a website, logo, business cards, fliers, etc.... then you better find a way to accommodate for that. And for traditional and new age advertising methods.... just look at advertising this way... if big box companies and corporations like McDonald's, Coca-Cola, and Wal-mart spend millions of dollars a year on advertising, don't you think you should do what the big boys do? There is a reason they are that big and there is a reason why they spend money in branding and advertising. Advertising is designed to bring your business customers which turns into cash flow. So why would you say no to that? Now I'm not saying you need to spend a million dollars in advertising, but you will need to spend advertising dollars according to your marketing plan and budget.
All businesses who understand marketing and advertising will invest in branding. You may wonder, just how much money should you invest in your business, and this is an excellent question. A large company like Wal-mart has to stay large. When they put together their marketing budget (marketing budgets are normally annual budgets) they have to factor in how much return on investment they will get for the money they spend. Because they are so big, they have to invest in the millions to stay where they are. However, for a company just starting out (that does not have millions of dollars to advertise) overspending in advertising would be silly. If you cannot afford it or if your company is not big enough to keep up with the demand that advertising will create, then you have a problem. So I tend to recommend spending anywhere between 10-20% of your gross sales for an advertising budget (this may vary depending on your cash flow, overhead, and costs to keep the business open). This includes your marketing materials. I like to tell my clients that if you are projecting to hit $100,000 in sales for a year, $10,000 is a good amount to spend on marketing and advertising. JUST REMEMBER that marketing and advertising is supposed to be a good return on your investment. Do not sink your money into advertising that does not work or make sense for your company. For example if you are a lingerie shop and your key demographic is women, do not advertise on a sports channel (unless you are trying to target men specifically).
Even if you are starting a home based business like Avon, Mary Kay, or Pampered Chef, you need a marketing campaign and a plan of strategy for growth. If you do not have start up money to properly market or advertise your business, then you may need to get your sales on and use gorilla marketing tactics. What is gorilla marketing? For a lack of a better word... sales. Gorilla marketing is when you put your most comfortable pair of shoes on and go door to door with fliers and products in hand and sell to consumers. Is it hard? YES!! Will you hate it? YES!! But if your business is that important to you and you do not have money to start a business, then this is a great way to get cash flow.
Speaking of gorilla marketing and sales, sales is a major component of marketing. Believe it or not, sales and marketing go hand in hand. Sometimes you get people who are sales heavy and sometimes you get people who are marketing heavy. What does it mean to be heavy in sales or marketing exactly? Well true marketing people are the creative thinkers and dreamers. These are the people who understand branding, strategy, statistics, design, media buying, etc. Sales people think more along the lines of money and closing deals to generate revenue. However, they go hand in hand. Without the ideas, understanding, and marketing knowledge from the marketing people, sales people may not have the materials and understanding needed to sell a great product or service to the right demographic of people. Also if your business in an internet based ecommerce business, you need marketing strategies like SEO to get people to your website so you can sell product. It's a circle because they need each other. Without marketing there is no selling, and without selling (cash flow) there is no marketing (or business). If you are not a sales person but own a business, you may need to hire a sales person to sell for you. But what if you can't afford to hire on a sales person? Well that's simple. Sales people are usually driven by money. Create a commission plan and pay the sales person based on what they sell. That way you are able to pay them as your business grows. The more they sell, the more money they make, and so does your business. It is a win-win (as long as you have a dedicated sales person willing to make sales).
4) Understand your operating goals and objectives is important! Businesses will fail if you do not follow your business plan. Why create a business plan if you do not intend to use it? I get it, as a business owner you will get busy. It is easy to put things aside while you are working. Unfortunately letting goals and objectives fall through the cracks will break your business. "In your planning process, create goals and objectives for your business. Break down goals and objectives by quarter – in other words, identify all of the things that must be done during the first quarter, the second quarter, the third quarter and the fourth.
Examples of specific goals could be for each month; revenue objectives, profit objectives, numbers of new customers, specific marketing and operational activities, etc, (R.H Williams, 2014)".
5) Finally be prepared for ANYTHING!!! Business is ever-changing and you must be ready for the positives and negatives that may lie ahead. For example, if you have a newspaper write about your business and all of a sudden you are so busy you can't keep up.... have a plan for that. OR if your business is moving right along, picking up speed and suddenly sales STOP. Be prepared for that. Know your business and KNOW YOUR INDUSTRY! You should know as a business owner busy months and slow months. You should know what products are best sellers and what products will sit on a shelf for months. You should know the ins and outs that make you the expert of your industry, otherwise don't be in that industry.
I could keep going on for pages discussing business methods, the dos and don'ts, and the whys and why nots. This is a good start to your success as a business owner. If you need more information, then don't hesitate to ask!!
Check out my website at www.newimageconsultingcs.com for more updates, stories, and information regarding business and what you can do to successfully run a business.