Choosing the Best Location for Your Business

Someone emailed me today and asked the question:

Where would you chose to open a high end retail store? In a: (a) high income, low population area; or (b) low to mid income, high population?

My response was: I'll open the high end retail store where my target market lives. And since this is a high end store, then the ideal location would be the high income, albeit low population area.

Assume that you will open a Tiffany & Co. store., which sells high-end jewelry, diamond jewelry, engagement rings, and relatively affordable silver jewelry (if you consider $400 sterling silver necklace cheap). One effective strategy of this store is to focus on higher end jewelry, with the price of their gemstone jewelry averaging at around $3,400.

If you open this store in a low income area, who would buy the $21,125 Tiffany Swing double drop diamond necklace? Instead the bulk of the sales will be the $170-$400 silver jewelries, or what is called "aspirational sale" from products with "accessible price points." Aspirational customers are those who cannot afford the $2000 Tiffany diamond earrings, but will stretch their budget enough to be able to buy the $200 Tiffany silver earrings -- in order to say that they own a real, genuine Tiffany. So the strategy of focusing on higher end jewelry goes pfft.

The choice of location really depends on where your target audience can easily be reached. An internet cafe would do well around college campuses or even tourist destinations, but will not work for a small rural farming town with so very little customers. Or a ski sporting supplies store will work well in ski resort towns and destinations, but not work on the beach.

Know your target audience, find out how best to reach them, determine how they can be reached, find out the stimulus they need to purchase your type of products, and then choose the location where this market can be reached easily.

Do you agree?

When the Going Gets Tough

The stock market fell today to its lowest level in nearly two years. Many investors scrambled to sell after a spate of bad news.

It's the same sense of panic and dread if your business is failing and you are running out of money. You are getting deeper in debt. You can't even afford to buy needed supplies, pay your rent for an office or mortgage for your home. Bills are starting to stockpile and creditors are starting to knock on your door. Employees, if any, are starting to panic and leave you. Worse, your bank just called that they are putting a hold on your savings/checking account (your last money!) until you pay your business loans. It's a free fall, with each day you seemingly worse off than before.

So what do you do?

I've never been personally in this situation, but I have talked to some entrepreneurs who've been in the same exact predicament. With one step away from declaring bankruptcy and closing the business, finding a loan (or new loan) to ease the financial pressures will be very tough. Here are their recommendations:

1. Understand why you are having this problem. If your bucket is leaking and has holes all over, you can't stop the leaking by simply plugging in every hole. You need to replace the bucket!

2. Get help in terms of grappling with the situation and finding the right strategies to do. Sometimes you need a fresh set of eyes to help you see the real picture -- flaws and all. You can consult your mentor, or even a close friend. Who knows, you may have an acquaintance who have been a CFO and willing to help struggling entrepreneurs like you! Or check with free resources in your community such as the Small Business Development Center or similar mentorship programs.

3. Bite the bullet, no matter how painful. The solution can be anything -- revamp your marketing, restructure your loans, rethink your product, or even fire your husband as your general manager! Whatever it is, it will bound to hurt

Any ideas?

Maximizing Your Price in a Soft Economy

Establishing maximum value for your price is never easy. In today's volatile economy, it's even more of a challenge. For most companies, costs are increasing, yet the ability to pass them along to the customer is fraught with numerous roadblocks. The customer's response to a price increase is rarely positive, with the usual line of objections that go along with it. In addition, there are the concerns that a competitor's price may undercut yours or that the customer may choose to go down a different path instead of buying from you at all. As big as these issues are, they pale in comparison to the number one roadblock to maximizing your price point: the confidence of the salesperson.

The main reason why companies do not capitalize on their potential revenue is because their salespeople do not have the confidence to ask for and receive the highest price point. If a salesperson is secure in what they are selling and in knowing how the customer will benefit from their products/services, then they will be confident in asking for and getting the desired price point. The problem is that many times the salesperson lacks confidence in at least one of these areas, resulting in their inability to make their sales quota.

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Maximizing Your Price in a Soft Economy

Common Mistakes in Starting a Business

I've previously written about the common mistakes of startup entrepreneurs in the article Top 10 Home Business Mistakes. However, it is also interesting to see what other authors and experts consider as the most common mistakes small owners make:

Maria De Lourdes Sobrino, Founder and CEO of Lulu's Dessert Corporation and the author of Thriving Latina Entrepreneurs in America considers the following as the most common mistakes made by Latinas:

1. Lack of focus
2. Inadequate financing
3. Ignoring a problem
4. Not delegating
5. Inconsistency with product or service quality
6. Not understanding your competitors
7. Unwillingness to work hard

CNNMoney.com considers the following as 5 deadly mistakes when starting a business

1. Too little cash
2. Thinking small
3. Skimping on tech
4. Underestimating the importance of sales
5. Losing focus

Microsoft Small Business Center lists 7 biggest mistakes of business startups

1. Driving a fire engine without a route.
2. Selling way too cheap
3. Starting a business just for the thrill of it.
4. Clueless about marketing
5. Being a pal instead of a boss
6. Blowing through your capital.
7. Overlooking your loved ones.

Different lists, but basically the same ideas. Let me know if you have any favorite lists of small business startup mistakes.

Hiring Sales Representatives to Market Your Business

One way to increase sales is to build a sales force for your business using independent sales representatives. An independent sales representative or manufacturer's representative sells the products of several different companies.

Before you go out and find a sales rep for your business, here are some steps to consider when hiring sales representatives to market your products or services:

• Analyze if you can afford to hire a sales representative now. The first question you need to be asking is whether you have the budget to hire a sales representative now.
• Determine the sales process. What is the sales process of your business? How will order and fulfillment be done? A sales representative selling through home parties will require different process if you are using a drop shipper or if sales is done mainly through cold calling on the telephone.
• Think about the best way to present and sell your products. You will be providing the sales reps with detailed instructions on how to sell your products. Should the products be sold in a party setting? Should it be sold on a one-on-one basis? Then prepare your sales manuals and detailed instructions.
• Decide on the compensation structure for your sales representatives. You can use a combination of salary and commissions or salary plus bonus. Commissions usually are based on the amount of sales, whereas bonuses may depend on individual performance, on the performance of all sales workers in the group or district, or on the company’s performance. An attractive compensation package can attract the right type of sales representatives your company.
• Find the right sales representatives. The right representatives can make or break your company. You need to start thinking about your hiring process – what types of candidates you need to look for, what skill sets they need to possess, and where you can find them. Your sales reps must have good skills in prospecting, presenting and closing the sales. They should be motivated and hungry to sell more and more of your products. As for the contract, here's a sample sales representative contract that you can use for your business.
• Be ready to train the sales representatives. You cannot just tell your sales reps to go out and start selling. You need to help them run through the sales process detailing how best to sell your products. A sales process defines the steps necessary to successfully close a sale, from cold calling to closing, and of course, the customer retention strategy that follows a sale. Give them the spiels they need; it is important that your sales reps are informed and knowledgeable about your products.
• Find the right candidates for your sales positions. Do not settle for mediocre sales representatives. Ask for referrals from friends, family and acquaintances, particularly those who have had similar selling experiences. Advertise in appropriate publications and websites, such as Craigslist and other local publications.
• Create a sales tracking and performance monitoring system. Use technology to help you track the performance of your sales representatives. Check out Customer Relationship Management (CRM) systems to help you understand the effectiveness of your sales representatives, as well as help the sales representatives become more efficient. Examples of CRM for small businesses are Salesforce.com http://www.salesforce.com and Microsoft Dynamics CRM Online
• Make your long-term plans. If having sales representative is the best option for you, you need to start thinking of the long terms plans for your business. How many sales representatives do you want? Will you need a sales manager? What geographical areas do you want to be covered? How will you expand to other geographical areas?

To find sales representatives, here are some resources that you may want to check out:

• Association of Independent Manufactures
• Bureau of Wholesale Sales Representatives
• United Association Manufacturers' Reps.

When Payment Never Comes: Options for a Small Business Owner

We are in business to provide customers with our products or service -- and get paid in return. But what if the customer does not pay? How should we collect on the payment? What are our options.

According to the book "The Law (in Plain English) for Small Business," we basically have three options:

1. Do Nothing. If the amount is small enough, collecting the payment may be too much of a hassle compared to the amount to be collected. Of course, not collecting on the payment means you also need to stop dealing and servicing the customer.

2. Hire a collection agency. Collection agencies will cost you, but they will do the work of running after the deadbeat customer. Some will charge you a commission (as high as 50%) based on the recovered amount. Others will charge you a fixed fee, while some agencies will charge you an upfront fee in exchange for lower percentage of the collected amount. Be careful though that the collection agency follows the federal and state rules and procedures for collecting payments; otherwise, you can get in trouble for their misdeeds.

3. Sue the non-paying customer. If the amount to be collected is large and the customer failed to respond from previous efforts to collect the money including formal demand for payment, then you can file a lawsuit against the customer. You can file a case in a small claims court or in a conventional court.

eBay Selling Tips: How to Achieve Higher Detailed Seller Ratings

I've been selling on eBay for years, though mostly on-and-off in the last couple of years. eBay has mostly been my "sideline" allowing me to indulge in my twin passions of collecting (and selling) vintage postcards and pearl necklaces.

However, much as I love the extra income I get from eBay, it's extremely hard for me to find the time to prepare my listings and handle the sales process. Plus, I never really fully recovered from the closure of my favorite eBay auction management software Timbercreek's Sold!.

Last spring, eBay made a number of changes, including detailed seller ratings. Achieving higher ratings mean benefits such as greater visibility in search results, membership to the PowerSeller program, and eligibility for PowerSeller discounts on final value fees.

An eBay rep contacted me this weekend to discuss tips on how to improve my seller ratings, and here are the tips she gave me:

• Let your buyers know that you are accessible. Mention your preferred contact method in your item description and state how quickly buyers can expect a response. Let them know that you are reachable if, for any reason, they are not satisfied with the transaction. Be available to answer questions before and after the listing closes.
• If you sell internationally, you can use Skype to help facilitate communication with international buyers with free member-to-member calls.
• If you get certain questions about the items you sell often, such as questions about your return policy, you may want to create Frequently Asked Questions (FAQ). You can create custom questions for your buyers to see when they click the "Ask seller a question" link.
• Also consider setting up a self-service knowledge base to automate the process of answering buyers' questions. When buyers make inquiries via the "Ask seller a question" form, they will be redirected to the self-service knowledge base, where they'll be able to find answers to their questions. Alternately, some knowledge base services automatically respond with an appropriate answer when buyers ask questions.
• It's important to keep the communication going even after listings end. We suggest that you notify buyers when items have shipped. Letting buyers know that items have shipped will avoid a situation where they leave you low ratings prematurely.
• You may also want to include a note with shipped items that restates your sales policies for added clarity. This also serves as a good reminder to buyers about your policies.
• Once payments have cleared, don't forget to leave Positive Feedback for your buyers. Leaving positive Feedback first will help you initiate good relationships. Remind your buyers to give you high ratings if they are satisfied with the transaction.
• Finally, treat your buyers with courtesy and consideration. At times you may have to deal with difficult buyers who seem impossible to please, but it's always a good policy to be patient and communicate in a professional manner.

Starting a Website: Build a Broad Authority or Niche Site?

Someone posted a very interesting question in Yahoo Answers: when you start a website, should you build a broad authority site, or a smaller niche site? The asker wants to know the impact of the size of the website in terms of search engine optimization as well as potential revenues.

Personally, I would go for a broad authority site, as it has the best potential for huge traffic as well as higher revenues. But there are a number of pros and cons for each approach, and here are some of them:

BUILD AN UMBRELLA SITE

Pros:

• can grow to become an authority site, which means great search engine rankings for a wide variety of keywords
• can be a one-stop destination of target audience where everything they need is on one site
• if you lose some keywords, the site still has hundreds of other keywords
• huge traffic potential
• faster to get links as other sites are more likely to link to this big site
• depending on the business model, a broad authority site would be easier to monetize and can give potentially higher revenues

Cons:

• requires more resources to create, develop, and grow
• when you get hit with a search engine penalty, your entire business falls

NICHE SITE

Pros:

• easier to create, develop as it has a smaller scope
• allows you to dominate a segment, especially if the field is hard to crack with lots of authority sites

Cons:

• limited traffic
• hard to grow and get traffic
• to earn more, you need to have more of these smaller sites

For years, we've followed the broad authority website approach, and it works great for our business model (advertising). It is easier to attract advertisers to the site, and even using third party ad programs such as Adsense yields extremely good results because it is harder to be smartpriced, it has more diverse keywords, and traffic is better.

BUT -- we got hit by a Google penalty 3 year ago, and lost 80% of Google traffic. That hurt big time, so we are adding other smaller niche sites to at least provide some backups for the main site. So while it is good to have a broad authority site, never put all your eggs in one basket!

What Should be the Topic of Your Website?

I meet a lot of folks who want to start their own websites, but are stumped with the very basic question: "What should be the topic of my website?"

The topic and focus of your website is a result of a number of factors:

What is your objective for creating the website? A website for personal expression is vastly different from a website created to change the way people do things. A website where you are happy to communicate to others your thoughts is different from a website where you aim to earn a million dollars (or more). A website where you share your knowledge is different from a website where you want to see people connect to each other. Your focus and goal will dictate the topic of your website.

What are your interests? After defining your objectives, you can use your interests as a way to narrow and select the topic for your site. If you want to earn money on the Web and you have an interest in pets, you can start an online pet accessory store or advertising-based pet care information site. If you want to attract a huge number of users and you love networking, then you can create the next-generation social networking website.

What are your skills and resources? The level of complexity of your website will depend on your skills as well as the size of your pocket. If you want a social networking site that can earn millions for you, yet you have no tech skills to program and design the website, and you've got no money to hire programmers and designers, then your website will remain just a pipe dream. If you can't do it yourself, you need to have creativity to find the resources to enlist the help of experts to create and design your website.

What is your business model? If your goal with your website is to earn money, then the topic needs to lend itself to earning money for you. If you plan to monetize your website via contextual advertising such as Google Adsense, then you need to choose a high paying topic that attracts users that are responsive to ads.

You can gain more insights on how to decide on the topic of your website from the article "7 Steps to Successful Web Site Development"

How to Select the Right Business Partner

In some instances, a business you want to start can only be achieved if you partner with someone else.

It can be because you need more capital to augment your resources, or you need someone with capital while you provide the knowhow and skillset. Sometimes, the right partner can round up all the necessary elements needed for the business to succeed (e.g. you're good in programming but needs someone who does marketing well).

Then of course, the question is: how do you select the right business partner?

Some start out as friends and decide to work on the business together -- bringing either stellar results or disaster that even breaks up the friendship. Others come in when they are in a relationship, such as a husband-wife partnerships. Still there are some that enter into a partnership because one heard what the other plans to do and wants to get into the action.

They say that two heads are better than one -- but only if those two heads are right for each other (otherwise, it will be a nightmare to work with the wrong partner). The worst thing you can do is to enter into a partnership without any preparations, only the best of intentions and eagerness to start the business with a partner.

Here are some factors to consider when choosing a business partner:

• Start the partnership right by having the legal documentation prepared, including what happens when one partner wants out. The legal documentation including buy-sell agreement, partnership agreements or even incorporation agreements should clearly spell out your roles and responsibilities, address the question of what happens when one or both wants to pursue other opportunities or even leave the partnership. You can also set the parameters on critical decisions such as bringing in a third partner or raising financing for the business.
• Choose someone whose work habits and attitudes complement with yours. In fact, experts advice that you actually ask your potential partner for a resume including references -- and call those references. It may be awkward considering you'd want to start the partnership on the right foot, and the potential partner may see this as a sign that you do not trust him/her. But would you rather know that this person cannot work well with anyone BEFORE you start the partnership, or only after you've started and you constantly clash with the person?
• Discuss the exit strategies -- at the start. Before you start, sit down with your partner and discuss how you want to get out of the business. Are you looking to leave the business in 5 years? Do you want to transfer ownership or sell the business to another person? Or are you looking to find venture capitalists and help bring the business to a successful IPO?
• Agree to disagree. At some point, there will be disagreements -- from simple decisions such as office decor to big decisions such as acquisition deals. You need to learn how to deal with the disagreements at the onset. You can agree to proceed forward only if you both agree, or discuss mechanisms on how to resolve disagreements.
• Find a partner who can push you yet provide the perfect balance for you. It is better to have a partner with that provides complementary skills, instead of someone who mirrors you and have your same skillsets as you. Find someone who shares your strategic vision to avoid conflict down the road. Since you will be working with this person closely almost every day, find someone who you'd actually enjoy having around.

Also check out the article "The Seven Cs : Partnership Danger Signs" for more information on how to choose the right partner for you.

What Makes an Effective Email Subject Line?

Online Marketing Daily has a very interesting article on the best length of email subject lines.

According to the article, Alchemy Worx examined 250 million messages sent out for the last 2 years and found that

"open rates climb when the subject lines are in the 50-character range or 80-character range. But, perhaps counterintuitively, they fall in the middle when the length is 60 or 70."

The best open rates are those with 50-character subject line touting a "powerful" offer (30% off Spring Getaway flights to Florida on Delta) or those with a longer 80-character-plus line description (Find out Secrets to Spice up your Barbecue this weekend and all Summer Long and enter to win a New Weber Grill.)

If you use email marketing, it may be a good exercise to try to replicate the results of this study. You may not have sent 250 million emails (!), but look at the open rates of your emails and analyze he characteristics of the subject line of your emails with the best open rates:

• what were the topics of the emails with the best open rates?
• how many characters were the subject line?
• what day of the week were the emails sent?
• what time were the emails sent?
• any other common factors that emails with the best open rates share?