10 Tips For a Successful Small Business Startup: Marketing Firms
By Fleur Revell from one of Auckland’s top marketing firms Impact PR, 10 Tips For a Successful Small Business Startup: Marketing Firms – running a successful small business is full of traps and pitfalls. Trial and error can be a costly way to learn so take five minutes to read some tips from someone who has been there.
To be a big business you have to think and act like one – but not right away. As advised by one of the top marketing firms in Auckland, NZ – A conservative approach to starting a small business is highly recommended and a smart way to iron out any initial teething problems. These ten-tips will help provide the know-how for giving your business a head start.
1. Dynamic planning is key to the success of any start up business– you must understand your end goal from the beginning. Everything you do must contribute in some way to that goal. You cannot foresee all opportunities and issues that may present themselves in the early stages of your business’s life – planning must be completely adaptable so that you can take advantage of new opportunities which are created and include contingency planning to accommodate unexpected issues which arise.
2. Suppliers – It’s great to have strong relationships but as a general rule having at least one alternative supplier is a good idea. It insulates you from out of stocks and gives the supplier an incentive to continually add value to your relationship.
3. Approach the most respected customer first. Once you have knocked them over, you can use their name to sell into some of the smaller customers – it gives your new product/brand credibility. Most retailers are risk averse but will trust a successful player in the market if they stock the products.
4. Overheads – The temptation when you get into a small business is that you will spend on ‘nice to haves’. You can manage your profitability by managing your overheads. It’s good practice to review your overheads every 6 months – break down each cost centre and look for ways to reduce this overhead. This can be as simple as switching phone companies for cheaper tolls – your biggest savings may well come from multiple overhead categories rather than just one big one.
5. Distributor vs your own sales force vs ‘hybrid’ model? Using a third party distributor may seem like an easy option for increasing your outlets in a short space of time but often your products can get lost in a catalog of many. Ensure that the distributor and their sales team are incentivised to sell your product, sufficiently well educated on it and have clear sales targets in place. Alternatively consider a hybrid model where you can retain sell direct to some of the most lucrative customers. No one will sell your product as well as you can and this will ensure you manage your workload and maximise returns from this group of customers.
6. Bad debts can kill you in the early years. Make sure your customers sign a credit application form which allows you to recoup debt recovery costs. Although tempting, don’t trade with anyone who has not signed the form – invariably those that don’t are the ones you will have trouble with. Take credit cards as payment – you may lose around 3% margin to Visa or Mastercard but the reduced credit risk makes it well worth it –the admin costs of chasing slow payers is high even if they eventually pay. Credit card numbers can be kept on file and charged at the time of purchase – the purchaser will get their credit terms via their credit card and you will get your cash upfront.
7. Another way to improve cash flow is to purchase everything you can on credit card. It give you the maximum credit terms plus air miles which add up rapidly with business purchases. If possible use up the suppliers standard credit terms and pay with the credit card on the last day – you can get 60 days credit on purchases. Just make sure the card is paid on the day it is due to avoid high interest charges.
8. Open an online store. Although some wholesale customers may not like the concept, it is more accepted these days and as long as you are generally selling at recommended retail you should not have too many issues. Online stores means you can have national/international distribution immediately, it improves your cashflow, gives fantastic margins, advertises your product, and provides a convenient outlet for clearing expiring or out of season stock.
Tip: The online store can also be used for retailers to make orders via a login which provides them with a different pricing level.
9. Watch for burn out. Building a business from scratch is hard work. In time you may lose the energy and drive you had when you begun. Aim to have an exit strategy in place at least a year out from when you sell the business – you’ll need this time to minimise your overheads and maximise sales to ensure the business looks its most attractive to a perpective buyer looking back at the past year.
10. Marketing costs can be expensive for a start up and are often trial and error. Advertising works on high frequency which can be very costly if mistakes are made. Consider public relations from great marketing firms to get you started as this can often stretch a small budget a lot further.