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Make Sure the Price is Right

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If your goal is to build a thriving and sustainable business entity (and I know that it is), it’s imperative that you determine the right price point for the goods and services you sell. Establishing the most advantageous price range is an element of your marketing strategy. That means your pricing strategy must align with both the brand identity and market position occupied by your products and services and also be acceptable to target customers. Understand where your company is—and where you want it to be—in terms of perceived brand value. Do you consider your company to be a discount option, middle-road, or a luxury option?

Pricing is integral to business profitability and a cornerstone of business success. Experienced business owners and leaders agree that a pricing strategy can make or break a company—set prices higher than what customers care to spend and sales are lost; set prices too low and revenue potential is not achieved.

Surely, you’ve noticed that pricing has been a sensitive topic over the past few years, as inflation that (allegedly) topped out in 2022 caused the prices of numerous goods and services to rise as business owners sought to protect their profit margins from increases their organizations faced for the raw materials, acquisition costs, transportation and other expenses associated with bringing goods and services to market.

Unfortunately, readers of this post—mostly, Freelance consultants and SMB owners—often lack the financial cushion to withstand all but the briefest periods of economic adversity. Enterprise companies and other well-capitalized entities are better equipped to absorb both the rising costs of product production or acquisition and customer push-back associated with higher retail prices. Instead, the “little fish” are squeezed between inflated business costs and customer reluctance to accept price increases. Their reluctance may stem from budget cuts that inhibit B2B sales and in the B2C sector, the problem can stem from wages that may not have kept pace with inflation. Both scenarios can lead to prospects who second guess their need to spend and result in shrinking sales revenue.

As was discussed in last week’s post, being in business is all about solving problems, is it not? In order to survive, companies large and small must at least generate enough revenue to cover operating costs. Increasing the price of your goods and services might make you nervous; it may appear that you’ll lose a customer or two and that is worrisome. Keep in mind that customers are aware of inflation. They also understand that you are in business to make a profit. Optimizing your pricing strategy is the best defense. Offering a simplified version of your products or services can perhaps be an attractive option that may allow you to retain price-sensitive customers.

Calculate production/ acquisition costs

Let’s start with the math: (Price – cost) x quantity = profit. Before pricing your products or services, you must calculate the time and money you spend to obtain or create them. Tally the costs of each item purchased and each hour spent to produce, acquire, or create each product or service that you sell. So, if you purchase at wholesale products that you resell, calculate the costs of buying and shipping those items. If you manufacture the products yourself, or outsource the production/manufacturing, calculate the costs of the materials, manufacturing expenses, employee wages and the time you devote to production tasks.

Likewise, if your business is based in the knowledge economy—maybe you customize business strategies, or you create sales training workshops that you present in video classes—to the best of your ability, calculate the number of hours spent designing your intellectual property and assign an hourly rate to yourself so that you can determine the wholesale cost of your work (keep in mind that you’ll bill your clients at retail).

Once you’ve confirmed the amount spent on obtaining or creating your products or services, you will have discovered a vital piece of financial info—the break-even point, which represents the minimum selling price required to cover the costs you’ve invested to obtain your products and services. For info on pricing tools that might be useful for your business entity, click: https://www.symson.com/blog/best-competitive-pricing-tools

Benchmark against key competitors

Both industry statistics and the pricing habits of key competitors can provide guidance when evaluating potential pricing strategies. Within each industry, there are typical standard mark-ups and profit margins that are recognized as normal ranges. This info can help Freelancers and SMB owners to first, understand if their product/ service acquisition or development costs are too high or low relative to the typical selling price range and also where, or if, their selling prices fall within the typical price range for that product or service.

Further confirmation can be gained by investigating the pricing of two or three direct competitors, to discover an upper and lower price tolerance for your customers and identify a pricing sweet spot. In other words, for products similar to what you offer, if you discover that the most expensive competitive price in your market is $300 and the lowest is $100, that’s a convincing indication of the price range your customers accept and you can therefore confidently price your offerings somewhere between those values, guided by your production or acquisition costs and your company’s brand identity.

Emphasize value, not price

Benchmarking the pricing of certain competitors can be instructive but you should avoid copying what your competitors do. Competitive pricing intel is best utilized as guardrails that help you discover a price range that your customers can be expected to accept. Believe that your products and services can stand on their own merits—that is, the value your brand delivers. Your company and its products and/or services are more than just a price tag, more than a commodity.

Too many Freelancers and SMB owners attempt to win customers by being the cheapest game in town. This mindset nearly always leads to underpricing—undervaluing— your products and services and your company as well. When you choose to primarily compete on price, it is unlikely you’ll ever preside over a thriving entity. It’s much more likely that you’ll be trapped in a race to the bottom as you compete with those who are willing to undercut your price whenever necessary. According to spellbrand.com, “by being the cheapest or lower priced, you attract the wrong customers. You attract customers who make decisions based on price and not value.” Leave the price wars to Walmart and focus instead on how much customers might be willing to pay once they understand the value associated with your organization.

When you compete on value, you will attract and interact with prospects who respect you, your professionalism and abilities, and your company. The moment you decide to emphasize the value, you will attract those ready to invest at the level of service or product you can deliver. 

On that note, along with a thrifty vision of your product or service to attract price-sensitive prospects, develop also a VIP up-sell category in each product or service that you provide because there are always customers willing to invest in the very best you offer. Including a premium option of your products and services is a quick way to add even more revenue to your business income streams. When you are playing the long-term game as an entrepreneur, you want the best.

Thanks for reading,

Kim

Image: LazingBee

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Differentiate and Dominate

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Here’s a question—what’s the recipe for a secret sauce that will persuade a prospect to become your next client? How wonderful it would be if you could walk into your pantry and pull those ingredients off the shelf. Lived experience tells me that the X-factor of the secret sauce is the client’s gut feeling of your ability to do the job. The interview questions, info in your resume and bio, the references submitted on your behalf by colleagues you’ve worked with have but one purpose and that is, to convince decision-makers you are uniquely qualified to seamlessly produce the project deliverables needed.

That may not seem like a steep hill to climb but in our increasingly competitive marketplace, search committees regularly meet with candidates who appear to be highly capable and able to produce the deliverables. Some may even seem as if they’d also be a joy to work with. The good fortune of being presented with a group of extraordinary candidates ought to make a search committee’s job easier but oftentimes, the abundance of talent only complicates matters. When everyone looks like a winner, how does the committee recognize who deserves the blue-ribbon?

That this is a problem may not be immediately obvious because risk is always inherent in independent employment. Still, the Freelancers and other business owners among you may have become uncomfortably aware of the need to be more resourceful, resilient and agile than seemed necessary just a few years ago. Could it be that while many candidates are impressive, they are for some reason seen by prospects as a commodity and more or less interchangeable?

The topic has captured the attention of researchers at top consulting companies, including Accenture https://www.accenture.com/us-en/insights/song/accenture-life-trends . Differentiation emerged as a viable strategy to distinguish you and your company from competitors and help increasingly jaded search committees to see you as an expert who, if nothing else, can be trusted to make them look good by hiring you. So your task is to find a niche expertise that fits your brand, is adjacent to your current offerings and that prospects value enough to pay for.

The right niche expertise can make you stand out from competitors and sidestep the dreaded commodity label. If you choose well, your niche expertise will generate enough billable hours to enable you to become a big fish in a small yet lucrative pond. So, the next question is, how can you differentiate your skill set to become more valuable and positioned to dominate a money-making niche market and simultaneously remain true to your brand identity?

Know the customer, know the brand


As always, comprehensive knowledge of your target customers and deep understanding of your brand and its impact on customers will make you feel confident enough to:

  • Recognize a market-worthy expertise that both fits your brand and will persuade prospects to pay you to provide
  • Create and carry out the strategies that entering the niche market entails

Whatever you choose, you’ll be most successful by making a data-driven decision that is based on relevant metrics. Most of all, you must verify that the niche you’d like to enter is capable of grabbing the attention of prospects, making you seem like a more worthy and exceptional candidate and also has the ability to let you generate sufficient revenue to make it worth the work it takes to enter that market.

Also, be sure to research the need for professional experience and/or educational credentials that will allow you to be seen as a credible and trustworthy expert in your new field. Make a plan to acquire whatever certification is needed. Moreover, if there are upcoming conferences or other programs that pertain to your niche expertise, plan to attend and network with colleagues and prospects (if in attendance).

Finally, update your website, social media platforms, business card, inbound and outbound marketing strategies and tactics to announce and support the introduction of your niche expertise to current and prospective buyers and other stakeholders and begin to build trust in what may be perceived as a new competency for you. Competitive intel as regards key words and messaging should be helpful.

Thanks for reading,

Kim

Image: Living Color Garden Center Fort Lauderdale FL

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Confronting the Competition—Do You Scrutinize Or Ignore?

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Business owners and leaders expect that competition will be a factor in their marketplace. The most successful among them have learned to not fear competition but instead recognize the hide-in-plain-sight gift that competition reveals—we can make money here! In fact, experienced business owners can even rely on the presence of competitors to help them discover a potentially lucrative customer segment for their line of products and services. But the question remains—when confronting the competition, what course of action would a smart business owner be wise to follow? Does it make more sense to closely monitor the activities of key business rivals or is it smarter to be a contrarian and take scant notice of competitors’ activities?

No matter how you choose to look at it, you will look— competition demands your attention. Even declining to closely follow and respond to competitors is an action that requires both thought and decision-making. Some people say that competition will bring out either your best or your worse. Whether you go head-2-head with an ambitious competitor or avoid a showdown and decide to play to your strengths instead, competition will test your mettle. Information—your company’s Key Performance Indicators, the results of customer surveys, industry sales trends and even the appearance of a social media meme that somehow influences your marketplace—is your best ammunition but how you use that resource is your decision. Let’s look at both possible responses.

The benefits of monitoring the competition

  • You may need to stay on top of things When you plan to carry out a mission-critical initiative—expanding into a niche market or launching a new product or service, for instance—then any key moves made by either direct or indirect competitors will be of keen interest to you. Your launch timetable may need to be adjusted, for example. When there’s a lot on the line, it is imperative that you closely follow all significant competitors, so that you’ll be apprised of any activity that might impact your strategy. Take steps to gather the intel that will allow you to respond decisively to an unexpected challenge.
  • Identify key competitors Conduct enough research to determine your top four or five competitors. Visit their website and social media sites to learn how they communicate with customers and also to refine your thoughts about your organization’s ideal customer. You can also get insight into the depth of customer loyalty, the power of the customer experience they offer and the strength of their brand—all qualities that you may want to incorporate, or avoid, at your company. Keeping an eye on certain competitors can make doing business better for you.
  • Learn from competitors’ mistakes Even if your product or service is poised to rock the marketplace, it’s a good idea to remain humble and prepare for what might go wrong. Business history is filled with examples of products that were expected to become The Next Big Thing and instead, they tanked. Allow yourself to learn from the failures and successes of others (check out competitors that have something in common with your own entity, rather than a multinational). It would be a useful exercise to discover the keywords that propelled them to the top of an internet search (Google Alerts is a great tool for keeping on top of this) and the content they post that attracts sizeable traffic and shares?

Don’t stress out over the competition

It’s often a given that a business owners and Freelancers will to some extent follow the activities of one or more direct and/or indirect competitors. It’s usually considered good business to be somewhat familiar with the solutions that your prospects may have used to resolve their challenges and achieve objectives. With that competitive info in mind, you can create realistic and more effective talking points that can win new customers.

Still, close monitoring of your competition can potentially become too much of a good thing; the strategy may at some point result in diminishing returns. It’s useful to cultivate a certain awareness of what leading competitors are doing and who their clients are but ultimately, the type of products and services you provide, your method of delivering those products and services and the customer service and experience that your company presents are the value that personifies your brand and attracts loyal customers. When your response to the competitive landscape guides you to have confidence in your company’s vision and mission and perfect the delivery of what your customers value, you’ll always be positioned to rule the day. Find inspiration in the pointers below.

  • Optimize use of resources Obsessively researching and tracking competitors requires time and energy that may not produce a convincing return on investment. It is prudent to direct valuable (and often limited) resources to factors and events that you can control, rather than attempting to influence that which is beyond reach—that is, the behavior of your competitors. You may discover that adapting your products and/or services to better anticipate and meet the evolving preferences and priorities of your customers and prospects. As well, seek ways to improve your customer service protocols as you enhance your customer experience.
  • Focus on customers not competitors The majority of your marketing focus should be on your target customer groups. Conduct demographic and purchasing history research to update your basic customer knowledge and use the intel to ensure that your marketing tells the story that resonates with customers and prospects because it addresses what they value, want (or will want) and what they’ll pay to have it. Moreover, researching your target customers inadvertently reveals a lot about competitors and what it takes to stay ahead of them.

Taking a balanced approach

As with so much that we do in life, finding the middle ground and achieving balance proves to be the most pragmatic and successful approach. When you remember what is most important you can then set your priorities, direct your resources and become more efficient and successful when managing your business.

  • Your Brand Is Your Competitive Advantage Monitoring the competition should be the second priority behind promoting your brand and delivering what customers value. For service businesses, brand reputation and positive word-of-mouth are among the most powerful competitive advantages. That’s what drives referrals, good reviews and leads to more sales revenue. That’s what you want!
  • Competitive Intel Analyzing competitor’s is the core of competitive intelligence. While 99 % of your business’s day-to-day should be delegated on your own core business development, monthly or quarterly competitive intelligence sessions might be allotted to investigating what your significant competitors are doing. It will be your choice to either respond in kind, or emphasize your corresponding strengths and attempt to prevail that way.
  • Google Alerts You’ll cast a wide net and achieve operational efficiency in your competitive intel research when you automate the process and let the results come to you—and that means setting up Google Alerts as a component of your quest to monitor competitors. Set up by industry keywords, competitors’ names and business names or branded product or service and let Google serves up nearly all the info you’ll need. In the meantime, you can focus most of your time on nurturing and promoting your brand in ways drive home the core mission and positioning.
  • Segment Your Time 80/20 One way to keep the time you spend on each of these essential business functions that teach you how to better regard both customers and competitors is to recognize that once again, The 80/20 Rule, formally known as the Pareto Principle and developed in 1896, will guide the division of your attention and resources. From a pragmatic perspective, it will make sense to spend 80 % of your time working on expanding your brand and enhancing other aspects of your business—operational, financial, marketing, tech—and 20 % of your time researching competitors. Developing goals and an action plan for competitive intel could be very useful and will encourage you to focus and streamline your research efforts.

Thanks for reading,

Kim

Image: © Cary Chu Photography. Jousters at King Richards Faire in Carver, MA September 17. 2023

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3 Ways That Competition Works for You

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When you operate a business, competition is a fact of life. It’s only natural to be unsettled by the thought of competition—it could put me out of business!—but in fact, the presence of competitors in your marketplace sector is a good sign, better than you think. If you adjust your perspective and dial back your (understandable) fear, you’ll learn that competition can pay dividends. You have to know where to look.

To make competition work for you, begin by identifying your principal direct and indirect competitors. Direct competitors offer products and/or services very similar to what your entity provides; indirect competitors offer “Plan B, ” products or services in a different category altogether but which your target customers perceive as an attractive alternative. For example, a box of chocolates and a bouquet of roses are indirect competitors for Valentine’s Day gift giving.

B2C business owners can easily ID and research competitors who operate either a physical location or e-commerce site by running a key word search and browsing competitors’ websites. You can also follow-up and visit storefronts, to check out the location and the merchandise and say hello to the owner (or the manager). B2B business owners can likewise conduct a key word search and visit the websites of direct and indirect competitors who operate in your geography (or beyond). You can evaluate the products and services catalogued on the sites, but meeting your B2B competitor peers will probably take some effort. Most work from home and even if an office is maintained, it would be inappropriate to drop in without an appointment. Your best option is to look for competitors at business association meetings and other networking events.

It’s good business to benchmark two or three of your most successful direct and indirect competitors and learn the secrets of their success. Some of what they do might work for you, too! Read on to learn how you can turn competition into a win for your entity.

Barometers of marketplace potential

This insight is only an estimate and is not based on metrics specific to your organization but as a rule, if businesses similar to your own are doing well in your marketplace, it’s indication that your venture could also do well. That local competitors are thriving is convincing evidence that there is money to be made.

Remember, though, that many factors contribute to building a successful business and in the B2B sector that would include influential relationships and strength of reputation, access to decision-makers and the ability to consistently meet or exceed client expectations. Another factor is market saturation—established companies may be doing well, but is there enough demand to allow newcomers to prosper?

How you can succeed

Not only are competitors your canary in the coal mine of marketplace potential, another useful dividend that competitors offer is teaching you to become a more astute business operator. So as you study the websites of your main competitors, pay attention to the descriptions of direct competitors—products and services that resemble yours—and indirect competitors—products and services that offer a credible alternative to what you sell.

Furthermore, make note of the calls-to-action you see—which are especially clever and compelling?, the blog or newsletter archive, scheduled speaking engagements—what are the topics and who is the host organization?—and the client list. Those operating in the B2C space can browse the websites of competitors (or visit a local store) and inspect the products and services offered, note the pricing strategy, assess any add-on and up-selling deals and even see the available payment options. In either the B2B or B2C space it will also be instructive to tour the social media accounts—which platforms are used?— and witness how competitive brands interact with customers.

It’s best if you don’t simply copy everything your competitors do. Every business is unique, even amongst direct competitors. If something looks like an intriguing possibility for your venture, test for effectiveness and optimize for your target clients and brand.

You are also advised to resist the urge to compete on price, unless your competitive intelligence shows that your prices are significantly higher than the amount charged by two or more competitors for a similar product or service. It’s tempting to cut prices to gain market share, but it’s a strategy that seldom works in the long run. Aiming to under-price competitors can only put you in a race to the bottom and that’s not what you want. Particularly in the B2B sector, focus on demonstrating and articulating value as you position your products and services in a premium tier.

Cooperate and collaborate when necessary

Now to be seriously counterintuitive, the most savvy and pragmatic Freelancers recognize that it is not a given that competitors are destined to be your adversaries. Assuming that there will always be a certain amount of hostility between you is shortsighted and could possibly cause you to lose out in some way. While you may never trust certain competitors, it’s nevertheless a good idea to be strategically cooperative when necessary. Ideally, there will be enough trust and respect that allows you to build alliances, cooperate when necessary and, in some cases, even collaborate with selected competitors (while observing boundaries, of course).

You never know what the future will bring—the time may come when it’s mutually beneficial for you and a competitor to align professionally and do a little business.  For example, if a policy or piece of legislation is expected to have a strongly positive or negative impact on your industry or working environment, it would be a compelling ice-breaker if you were to reach out to certain competitors and propose that you join forces to oppose or endorse pending legislation that could affect your livelihood.

Don’t be shy about engineering an introduction if you are fortunate enough to encounter one (or more) of your competitors at a chamber of commerce or other meeting. Your competitive intelligence strategy is to be friendly and ask for an exchange of business cards, so that you’ll have contact info. Getting to know your competitor colleagues as individuals is good business. You never know where those relationships might lead.

Thanks for reading,

Kim

Image: © The Walt Disney Company. Snow White and the Seven Dwarfs the animated movie produced by Walt Disney Productions and released by RKO Pictures in 1937. Based on the 19th century German folk tale published in Volume I of Grimm’s Fairy Tales (1812) by the brothers Jacob (1785-1863) and Wilhelm (1786-1859) Grimm of Hanau, Germany.

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Getting Clients: The Reboot 2020

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For us freelancers to find reliable, long-term clients is a job unto itself and not an easy one. We have no choice but to invest thought and time into showing prospective clients and those who might refer us to prospective clients why we could be the best choice for providing the solution(s) for their problem.

To get ourselves inspired and off to a running start in the New Year, let’s review how we might best package and promote ourselves and our services to prospects, potential strategic partners and referral sources and update how to stand out and appear highly competent, trustworthy and an overall good hire for the Next Big Project.

KNOW YOUR NICHE

It can be so tempting to not want to limit ourselves to a specific niche, but the truth is, “If you’re talkin’ to everybody, you’re talkin’ to nobody.”
The biggest mistake that Freelancers make when going out on our own is that we try to be all things to all people. But when we create a niche, we can more effectively express what we do for our clients and how those clients benefit. That helps those who know and trust us to make referrals on our behalf. A clearly defined and easily described niche service or product is also easier to market to potential clients, because the message is easy to articulate and understand.

GETTING CLEAR ON CLIENTS

Getting clear on your niche and how we serve our clients is only step one. The real magic happens when we learn to consistently communicate in a way that resonates with target client groups. Speaking their language makes all the difference. Do you want to stand out to prospects? Know your ideal client!

It is to our advantage to be clear and concise about whom we can help and why. Tell (don’t sell) the story and talk just like you’d talk to a colleague. Embody the tone and attitude of one who cares, who understands their pain and can help them. Paint the “after” picture, i.e., the picture of their future after working with you. Offer credentials and tell client success stories that speak to their unique needs and concerns. In short, be all about your client.

INSIDE THE CLIENT VIEWPOINT
Christy Geiger, founder of Synergy Strategies Coaching and Training in Austin, TX https://synergystrategies.com/, says that one of the most difficult challenges in marketing is to identify and articulate one’s unique value and then sell that value to prospective clients.

Christy recommends that we flip the message and describe our service fromthe client’s perspective. Rather than presenting a list of self-promoting attributes that paint you as Mr. or Ms. Wonderful, discuss instead how your expertise ensures that clients are able do what they need to do and achieve goals and objectives.

MARKETING CREDIBILITY

As a Freelancer, the best way to stand out from competitors is to build your marketing around our credibility. Content marketing is very useful for this mission. Produce content that will help both bring visibility to your products and services and it help to establish you as an expert in your industry.

KNOW YOUR COMPETITION

Research others who provide products and/or services similar to your organization. What do they offer, what do they charge (if you can determine that)and how do they differentiate themselves in the marketplace? Then, ask yourself what could be realistically portrayed as valuable differences between your operation and those of your closest competitors? How might you be able to successfully distinguish yourself, your business practices, your qualifications, your products and/or your services and how might you persuade clients that these attributes make you the preferred provider?

CASE STUDIES

When clients hire us Freelancers, we expect that there will be a “discovery phase,” when they check us out—visiting our LinkedIn profile and social media presence, finding and reading articles we may have written and media quotes or features, for example. They’ll visit our websites and peruse our client list to find out who (else) they know who’s worked with us. To verify our work ethic, they may have a good talk with the referring party, if that was how the parties were introduced, or they may just call one (or more) of the clients on our list and discuss the quality of the results of the deliverable.

Freelancers can help both ourselves and our prospective clients reduce by sharing two or three well-written and descriptive case studies that demonstrate what we do, how we do it and the (exceptional!) results that we produce.

EASY TO DO BUSINESS

We Freelancers wear many hats. We’re the Chief Marketing Officer, the Vice President of Product Development, the Director of Sales, the Comptroller and company President. Our products and services may be excellent, but we would be advised to employ business practices and customer service protocols that make it is easy for customers to access what we have to offer. Setting up online purchasing or appointment booking, returning inquiries promptly and following-up as promised make a big difference. If customers have to jump through hoops to work with us, they will go elsewhere.

Thanks for reading,

Kim

Photograph: Steve McQueen (1930 – 1980), the “King of Cool,” in The Thomas Crown Affair (1968).

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Guiding Light: Your Business Plan

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Business plans and email marketing have something in common. The two stalwarts have often been declared dead by so-called experts, yet both continue to demonstrate value to current and aspiring business owners. Despite the naysayers, business plans are the foundation of business success, for the unavoidable reason that many new businesses fail.

Of the 400,000 companies started in 2014, 44% had failed by year four and just 18% of first-time Entrepreneurs were able to launch and sustain a successful entity. As the saying goes, “No one plans to fail. They just fail to plan.” Don’t let that be you, Dear.

The primary reason for aspiring Freelance consultants and Entrepreneurs to write a business plan is to test assumptions about the viability of the business idea against credible information that reveals the likely demand for the product or service and customer groups that have the money and possible motive to buy those products and services. The potential viability of a business is revealed in factors such as the size of the market (i.e., those with money and motive to buy), the founder’s access to potential customers (a big factor in B2B and B2G sales), competitors who sell an identical or similar product or service (are they thriving or just hanging on?) and the amount of money required to set up shop and start doing business.

A second compelling reason to write a business plan is to develop strategies that provide a roadmap, or blueprint, that will guide the founder as s/he builds and launches the venture. Confirming target customers, identifying possible niche markets, choosing the pricing strategy and the sales strategy; creating the financial plan, the operations plan, a realistic business model and selecting the most advantageous legal structure will also be thought through in advance of the company launch.

During the process, the founder will make discoveries that may persuade him/her to refine certain aspects of the products and services intended to be sold, or adjust perceptions of who the ideal customers will be. This information may have the power to substantively improve the venture’s chances of success and sustainability.

A third reason that motivates aspiring Freelance consultants and Entrepreneurs to write a business plan is the need to seek financing for their venture, whether the funds will be used to launch or scale the company. The financing source may be a bank or credit union, a micro financing organization, private investment (friends and family), or even self-financing. Those holding money will use the business plan to make funding decisions, so founders would be wise to develop a realistic financial blueprint that projects three years into the future, as well as a credible marketing plan that accurately defines target customer groups and identifies key competitors.

In sum, a powerful business plan needs to be three-dimensional, so it distills lessons from the real world and allows the founder(s) to test and when necessary revise assumptions. This ongoing process will give the business the highest chance of success while also increasing your credibility with investors, your team and most of all, yourself.

Thanks for reading,

Kim

Image: © Ubisoft Entertainment SA, artist’s rendering of the Lighthouse of Alexandria. The lighthouse stood on the island of Pharos, guiding ships as they entered the harbors of Alexandria, Egypt on the Mediterranean coast. The structure was built during the reigns of Ptolemy I and II, c. 300 – 280 BC. With a height of over 330 feet, the lighthouse was so impressive that it was named one of the Seven Wonders of the Ancient World. Now lost, the lighthouse was a welcomed navigational aid for over 1600 years.

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Factors to Include When Planning to Launch a Business

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In a recent 7 day span, I was invited to judge two pitch contests for entrepreneurs who had successfully completed a 13-week business plan writing workshop presented by a woman-centric business incubator and business development center that has operated in New England for 25 years (and is also an SBA affiliate). The entrepreneurs were either in start-up or scaling (i.e., expansion) mode.

I was excited to be a judge and privileged to meet nearly two dozen forward-thinking, focused, resourceful and determined women who expect nothing less than success and are taking decisive steps to bring it about. Based on the business concept pitches I heard, I encourage those who are evaluating whether to launch a business venture to include the following information:

  • Name and describe your product or service and the problem(s) it will solve
  • Identify your best customer groups and explain why those customers will pay for your product or service
  • Identify your primary competitors, list the competitive advantages that your product/ service possesses and explain why customers will prefer your offerings
  • Create a business model that outlines how you’ll acquire customers, where and how the product/service will be delivered and how the business will make money
  • Explain why you are qualified to make the proposed business successful
  • Develop a business strategy and marketing plan that includes:
    • sales and distribution strategy
    • pricing strategy
    • product positioning strategy
    • branding strategy
    • content marketing strategy strategies
    • social media strategy
    • PR and advertising strategy
  • Detail the business pre-launch and launch (start-up) costs
  • If investors or borrowing will sought, present a (realistic) break-even analysis and 24 month revenue projections (P & L and cash-flow)
  • Detail the potential investor return and the loan payback schedule

 

Thanks for reading,

Kim

Photograph: Launch of the Hubble Space Telescope April 24, 1990

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Is Your Idea a Business or a Dead End?

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Ha! So you think you have an idea that you can parlay into a good business, whether it’s a cutting edge technology or a tried and true formula, like a car wash.

Regardless of the industry that you’d like to enter, there is a more or less standard checklist of factors you should consider before investing your money, time and hopes. Before fantasies of entrepreneurship carry you away, do yourself a favor and answer these questions first. You’ll know how to proceed from here, whether it means that you meet with the Branch Manager at your bank to learn about business financing options, or you take a trip back to the drawing board.

1. Who are the target customers and what is the size of the market?

Define your market demographic. Who will pay to buy what you plan to sell? Is this a product or service that is growing in popularity, or maintaining its broad appeal, or is there a shift in customer preference on the horizon as those who would be your customers learn about a new choice that may persuade them to switch to The Next Big Thing?

In addition to demand for your intended product or service, are there enough customers in your location to support the business? By the way, how are your competitors doing? Do they appear to be thriving?

2. What is the problem that target customers want to solve or avoid when they do business with companies like your proposed venture?

Understand the back story of why customers would buy the solutions that you plan to sell. What is it that they’d like to achieve or avoid? One calls a window washer when the windows are dirty because clean windows demonstrate the owner’s desire to protect and enhance the value of his/her home.

3. How are target customers meeting their need today?

What businesses would be your primary three or four competitors? What factors persuade their customers to do business with them—a convenient location, exceptional product variety, discount pricing, the right relationships?

What advantage can you offer that customers might be drawn to—more convenient hours of operation, for example? Can you provide a product or service that meets a need that is valued but not currently addressed?

4. What is your solution (product or service)?

Describe your proposed product or service. You should be able to easily and clearly describe (and sell) your product. Develop an off-the-cuff sales pitch, record your delivery of it, then listen and evaluate. Would you buy this product or service?

5. How will you reach your customers?

If your business is B2C and requires a physical location, can you afford to set up shop in an area that potential customers will visit? If your business idea is B2B, do you have a plan to access customers and referrals? If your plan is for e-commerce, how will potential customers learn about your website?

6. Do you have the credibility and credentials to do business in this industry?

Especially if you plan to enter the B2B sector, be certain that your education and experience will command respect and trust. If obtaining certain licensing, certifications, or an educational degree is vital (even if not required), investigate the process, plus the time and money involved.

7. Do you have the funding to launch the business?

Research the expected business start-up costs and think objectively about how long it might take you to start making sales you can live on.

Pay your bills and get your credit score. Build up your savings. Whether you expect to self-finance, ask to borrow from friends, family, or your retirement account or apply for outside funding, you will need a lump sum of cash on hand when you launch a business.

Thanks for reading,
Kim

Photograph: Financial District, Boston, MA. Kim Clark, September 23, 2018

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Update Your Competitive Intelligence

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At any point in the life of your business, it’s wise to update your competitive information. Depending on the type of enterprise that you operate, refreshing your competitive info can be as easy as taking a 30 minute walk around your neighborhood and making note of new businesses that are preparing to open. Reading local newspapers is also useful, since there is frequently mention of new stores and restaurants that are scheduled to open.

Your customers can be excellent sources of competitive information as well, in particular if your venture draws primarily from customers who live or work in the immediate neighborhood, and that’s another reason why you, business owner friend, want to develop good relationships with customers.

B2B service providers don’t have it so easy when it comes to obtaining vital or actionable competitive information, I’m afraid. The problem is, there’s often no way to know the identities of competitors. Everyone who offers services similar to what your organization offers, everyone who works with clients of a similar profile ($1 million or less in annual revenue, $1 million to $10 million in annual revenue, and so on) and everyone who submits a proposal for an assignment on which you’ve also bid is a competitor. It’s nebulous, to say the least, but nevertheless I encourage you to find ways to extract relevant competitive data from every available source.

Reading your industry and other business journals and joining a networking or skills development organization tailored to your specialty is probably the most effective way to confirm which services that clients you want to work with are requesting most often as well as the services they may request in the future.

It won’t hurt to create a more or less formal Competitive Analysis document (an Excel spreadsheet will work nicely) for your information, so that you can review and update as desired. In your Competitive Analysis spreadsheet you can identify your direct and indirect competitors and perhaps choose to focus on four or five, maximum. If you can learn enough to evaluate their strategies and determine their strengths and weaknesses in comparison to your business, so much the better, but it’s more likely that you’ll only be able to document the products and services they offer and check out their client lists. If you see ways that you can rename or repackage one or more of your own services in the hopes of making yourself more marketable, then by all means go for it.

Another compelling and potentially actionable reason to perform a Competitive Analysis is to enable yourself to evaluate what makes your products and services unique in ways that appeal to clients. It’s especially important for B2B service providers to articulate any distinct competitive advantages you have over the competitors you’ve identified.

Furthermore, you can refine your data and clarify the picture by grouping competitors according to how directly they compete against you. It may be helpful to ask yourself questions that will serve to further describe your competitors. These questions include:

1. Who are your top three direct competitors and how busy are they?
2. What services do competitors offer that you don’t and vice versa? What might that mean to clients?
3. Can you assess your competitors’ strengths and weaknesses?
4. In which media outlets do competitors advertise and how frequently do the ads run?
5. What other types of marketing do your top three direct competitors do?
6. What potential threats do your competitors pose to the marketing of your products or services?
7. Do you see additional opportunities for marketing your products and services, in terms of new customer groups, niche markets, or reconfigured service packages?

Pricing is also a big factor in competitive information and once again, B2B service providers are at a disadvantage when it comes to obtaining pricing information about competitors. However, there is a way to gain insight into the pricing of similar services in different parts of the country by checking out the bidding prices listed in the U.S. Government contracting system MOBIS. See “view catalogue” on the far right. Choose a company and click. Scroll through and find pricing info for that company.

MO
BIS

Thanks for reading,
Kim

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Competitive Intelligence: The Role of Social Media

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To those who think you know all the ins and outs of using social media, fasten your seat belts.  If you created a LinkedIn profile at the turn of the century, started out with MySpace and later jumped to Facebook, became an early adopter of Vine and now work Snapchat, I have news for you.  Social media platforms are not just one-way PR broadcast channels that let you tell the world how brilliant and popular you are.  You can (and should) do some of that, but there is more.

Maybe you already do more?  You regularly use social media to encourage comments from customers about their experiences when doing business with your company.  You understand that social media is a two-way street.  But, still, there is so much more.

Social media can be effectively used not only for inbound and outbound marketing, but also for keeping tabs on competitors.  Social media is ideal for gathering competitive intelligence that can make you a smarter marketer, salesperson and business owner.  Here’s how.

First, determine who your competitors are, something that’s not always easy and obvious for B2B service providers.  Discover who your competitors are by meeting them.  The most efficient method to meet your competition is to join a professional society, where you’ll meet fellow accountants, life science marketers, event planners, etc., or join one or more chambers of commerce.  In four or five visits, you’ll meet a good cross-section of peers who do what you do, or something very similar.

Make it a point to talk to these people. Get to know them somewhat and exchange business cards, for they are not your enemy.  In fact, they can probably give you some valuable advice.  You should be willing to share a pearl or two of wisdom with them in return, as long as you don’t give away any proprietary information.

Once their business cards are in your possession, the second thing you’ll do is set up Google Alerts, so you’ll receive notice of their company’s print or online mentions, at no charge.  Whatever your competitors choose to publicly announce, you’ll quickly know.  It will be so enlightening to have the PR of competitors delivered directly to your inbox.

You’ll learn who will keynote at a conference, who will moderate or serve on a panel, who’s released a new product or service, who gets quoted in local or national press, or who will teach as an adjunct professor this semester.  Discover who’s quoted you, or if there are sites linking to your website or blog.  Monitor the content marketing of competitors (e.g., blogs and newsletters) and assess the perspectives and even the expertise of those whom you’re working against.

You can also receive alerts for your own company, to reveal what others are saying about your enterprise.  You’ll learn whether you have supporters who give you compliments in newsletters or blogs, or if someone is undermining you on social media.  Use competitive intelligence to shape your response and support your reputation management.

Regarding the successes of competitors, there’s no mandate to imitate what they do and that’s all to the good.  Be yourself.  But what you learn may inspire you to take, or not take, certain actions based on information you’ve gleaned from the three or four competitors you select to follow.  Set up a Google Alerts account to track key words and phrases and you’ll be happy that you did.

You might also try Hootsuite, a paid service, and use it to search podcasts and webinars by topic and engage in social media listening, for less than $20/month.  The primary role of Hootsuite is to allow users to write posts and manage all of their social media accounts from one site.  Those who are active on multiple platforms find Hootsuite very convenient.  Plus, the analytics reports included with the service reveal which of your social media tactics and strategies are worthwhile and which need rethinking.

Finally, if you can budget $80/month, then take a deep dive into your competitors’ content marketing activities with BuzzSumo.  Examine which content is getting traction for competitors, the shares competitors’ content receives and how your company’s content stacks up in comparison.  It’s possible to receive an update each time selected competitors publish content and you’ll also be able to compare the overall performance of your company’s content with that of competitors.

Thanks for reading,

Kim

Image: His Master’s Voice (1898), starring Nipper the dog, by British painter Francis Barraud. In 1901, the painting became the logo of what would eventually become RCA Victor.  EMI, JVC and HMV (His Master’s Voice) have also owned the logo rights.