Marketing a business
So you've made the deision to become your own boss and have a go, "how hard can it be" you say. Lots of people are in business for themselves and seem to be doing well.
So you take a idea, hobbie or interest and look at turning it into a business. Now all you need are customers. Most small businesses when they start out sell to the circle of influence, their friends, family and a few referrals. Once this circle runs out, how do I get more customers?
These questions and many more we will try to advise you on how to do this and how not to fall into the traps that many small business owners make.
So you take a idea, hobbie or interest and look at turning it into a business. Now all you need are customers. Most small businesses when they start out sell to the circle of influence, their friends, family and a few referrals. Once this circle runs out, how do I get more customers?
These questions and many more we will try to advise you on how to do this and how not to fall into the traps that many small business owners make.
Who's your customer?
Before you spend any money on trying to attract new customers, you firstly need to identify who they are. What does this customer look like? If you are selling fashion clothing your customer is probably female aged 18 - 40.
On the other hand if you are installing gutter on houses then your customer is probably the family who live in the suburbs. The person who is most likely to make contact and influence the decision on the purchase is probaly the woman of the house.
You should get a clear picture of what an ideal customer looks like and what an average customer will look like. Once you know this you can then come up with a plan to market to them.
On the other hand if you are installing gutter on houses then your customer is probably the family who live in the suburbs. The person who is most likely to make contact and influence the decision on the purchase is probaly the woman of the house.
You should get a clear picture of what an ideal customer looks like and what an average customer will look like. Once you know this you can then come up with a plan to market to them.
Marketing budget
There is a rule of thumb on how much you should be spending for marketing. This is an average and may vary depending on the type of industry you are looking to go into, the amount of competition you will have and whether you are entering the market with a new product or just looking to create ongoing awareness.
As a rule you should look at spending between 8 and 15% of your forecasted turnover in the next 12 months. Most businesses are able to easily forecast the next 12 months of income based on the past 12 months trading but if you are a new business entering the market, or if you are introducing a new product or service and you have no historical data, you will need to create a forecast model. The forecast will consist of how many jobs you believe you can do and handle? What are your competitors doing?
Once you have this figure, you can work out how much to spend on marketing.
Example: You are a driving instructor, you can handle 3 jobs per day, but realistically you will probably only get jobs after school hours and on weekends initially. Your competitors charge $150 for a 90 miniute driving lesson and you think this is a fair price and should be used for this calculation. This is about 10 jobs per week at $150 each making a total of $1150 per week initially.
Over 48 weeks (you will probably want to take some time off) this equates to $72,000 per year. As you are new to the industry and you want to capture your fair market share, you have decided to spend 12% initially on marketing. This leaves you with a marketing budget for the next 12 months of $8640.
You should not expect to grow your business if you dont spend anything on marketing. Don't over commit yourself on your marketing budget. Use this formula as a guide and you will be on the right track.
As a rule you should look at spending between 8 and 15% of your forecasted turnover in the next 12 months. Most businesses are able to easily forecast the next 12 months of income based on the past 12 months trading but if you are a new business entering the market, or if you are introducing a new product or service and you have no historical data, you will need to create a forecast model. The forecast will consist of how many jobs you believe you can do and handle? What are your competitors doing?
Once you have this figure, you can work out how much to spend on marketing.
Example: You are a driving instructor, you can handle 3 jobs per day, but realistically you will probably only get jobs after school hours and on weekends initially. Your competitors charge $150 for a 90 miniute driving lesson and you think this is a fair price and should be used for this calculation. This is about 10 jobs per week at $150 each making a total of $1150 per week initially.
Over 48 weeks (you will probably want to take some time off) this equates to $72,000 per year. As you are new to the industry and you want to capture your fair market share, you have decided to spend 12% initially on marketing. This leaves you with a marketing budget for the next 12 months of $8640.
You should not expect to grow your business if you dont spend anything on marketing. Don't over commit yourself on your marketing budget. Use this formula as a guide and you will be on the right track.
Offer a varity of products and services
Not everyone is looking for the cheapest price. Not everyone is looking for the premium service. Make sure you have different options available depending on the client. Using the example above for the driving instructor, some people will be looking for the cheapest price and one or two lessons. Other people will want to spend 3 hours in the car and have months of lessons. Dont eliminate either of these opportunities.
When looking at pricing your products and service at different levels make sure that if you are promoting the premium product or service that the customer is aware of this and the value they are getting from this service. Most people are not looking for the cheapest price, they are looking for the best value for money. This is different for everyone.
When looking at pricing your products and service at different levels make sure that if you are promoting the premium product or service that the customer is aware of this and the value they are getting from this service. Most people are not looking for the cheapest price, they are looking for the best value for money. This is different for everyone.
"Why should I give you my hard earned money"
Like it or not, this is what everyone is thinking when they are making a decision to purchase. You need to distinguish yourself from your competitors. Are you the best, the fastest, the most experienced, the cheapest, the most professional? Whatever it is you need to make sure your clients are aware of this.
You need to come up with your own UVPS (unique value proposition for sales/services).
Most small businesses fail to differentiate their products and services from their competitors and usually it comes down to a fight as to who will cost the client the least amount of money. The only difference becomes price. If you are starting out or even if you have been in business for a while you probably lake the economy of scale that some of your competitors offer and will always struggle to win the price battle. In the long run this becomes unsustainable.
Remember your clients want value not always the cheapest price.
You need to come up with your own UVPS (unique value proposition for sales/services).
Most small businesses fail to differentiate their products and services from their competitors and usually it comes down to a fight as to who will cost the client the least amount of money. The only difference becomes price. If you are starting out or even if you have been in business for a while you probably lake the economy of scale that some of your competitors offer and will always struggle to win the price battle. In the long run this becomes unsustainable.
Remember your clients want value not always the cheapest price.
