The way Richard Branson starts businesses is very simple – that is why it works so often.
He looks at an industry where the market participants have accepted that the current way is the way this industry works (complacency). He goes and finds the most profitable part or sector of it, makes it better and focuses on the on that niche to establish a strong base before moving deeper into the industry.
That is how anyone can start a business! It is much easier and less risky – since you do not have to worry about the market and you are often surrounded by over confident competitors.
Think about Skype, sometimes the calls I make are very good and sometimes very bad and anything in between. In other words you can’t say their service is perfect!
Most of the calls you make are free anyway and the calls you pay for are very cheap – above all Skype is convenient. I’m sure most people feel the same way about it, as there is a hell of an uproar when the service goes down.
Calls from traditional telecoms are perfect (well, most of the time anyway), but expensive and not very convenient at all.
Peter Hinssen, in his book “The New Normal” writes:
The perfect is the enemy of the good, especially if the good is cheaper, faster, or more convenient.
I agree – Skype is the perfect example of a “good enough service provider”, beating the “perfect” telecoms at their own game.
PS. Let’s hope Microsoft does not try to make Skype “perfect”, mind you that would be a first, IMO.
I’m sitting here waiting for my flight to the US to depart and I’m flying with Richard Branson’s Virgin Atlantic. I’m thinking back a few decades to when it was I heard the name Virgin or Richard Branson for the first time.
I remember listening to him when he was asked why he started Virgin Atlantic and his answer was something like this: ‘I looked at this business and decided I could do it better and cheaper.’
While it was not just that simple, for instance he only serviced the most in demand routes like London to New York (another good business move), for me it shows the most basic, most powerful of all business models and his entrepreneurial spirit and motivation – ‘I can do that better and make money doing it!‘
He does not do what I have done all my business life, push the envelope with new technology. Far from it, he looks at mature business sectors and looks at how to improve the service/product, finds a niche (London-New York) and gets a foothold, makes it cash-flow positive and then builds on that success. AND he makes it look easy.
Only easy it is not, there have been numerous failures. Each failure helps him to be even better next time around.
Virgin, as a business group, is truly upper class when it comes to overall business model success. Look at it – Make it better – Maybe fail, then learn from it – Move on – Do it again.
Which business sector could you improve to become an Upper Class Virgin?
Do you know why people buy your product or service? There can only be two reasons, either it makes them feel good or it helps them to solve a problem. It can be argued that some products do both, ether individually or both at the same time.
The feel-good factor is an intangible property and is very subjective – what may make you feel good, may leave me uninterested. It can be a tricky sell or an easy sell, depending on how you feel about the product.
“
Dollarization:-
Work out what your product/service is worth to your customers in your competitive environment!
On the other hand if you provide a solution to a problem, you can always put a price on it, not any price, but the optimal price for your product or service. Solutions in this context come in two forms, the chance to make a gain or the avoidance of damage and loss.
If you look at the value of the product to your clients and compare your products to your competition, you will arrive at the optimum price to sell – that is “Dollarization”! It will help you to make a sale by making informed pricing decisions and being able to communicate those to the potential buyer – it will remove much of the subjectivity from the sales process.
What are your products/services worth and how would you tell me?
Design your product or service and get it out to customers. Don’t be coy about it, tell people you just designed it and then let them critique it. They are not insulting you, if they are critical – they are helping you – you should be thankful.
Redesign your offer according to the critique, you will end up with an enhanced offering and hopefully with your first customers, your former critics. They may not only be your first customers, but also your first product evangelists. Remember they are now emotional stakeholders in your product, since you incorporated their ideas.
Scale – focus on customer care and satisfaction to grow a healthy business!
Whether you are currently running a small business that you are looking to expand or you are running a ‘lifestyle’ business to suit you and your family growth and reputation are imperative. Even if you are not looking to grow your business in the traditional sense, growth of your brand is still necessary to ensure a regular customer base and the ability for your business to provide you with the income and lifestyle you want.
Is it a flawed concept of growth that means that some small businesses, which are not looking to expand think that any opportunity that facilitates growth is not for them. To the contrary, I believe that growth, in terms of expanding your business’ reputation, building customer loyalty and finding new customers, is essential to any business – whether you are looking to expand in to new markets or become established in your niche.
Aggressive growth strategies are not necessary for the majority of lifestyle businesses, but what is necessary is customer service, word of mouth and online presence in order to safeguard the future of your business.
In order to ensure that your small or lifestyle business offers security for you and your family customer service is your most powerful weapon – it is customer service that will not only keep loyal customers coming back, but also spread the word about your business. Even if you are not looking to expand your business this is vital to ensure regular and consistent turnover; it is much easier to apologize to customers when you are busy, than it is to hunt for customers when your turnover is flailing.
Even if you are not looking to expand your business you should still have a plan in place in order to allow your business to develop in to a reliable, secure business that you, and your customers, can rely on.
If you are undecided about the benefits of selling your product via a catalogue then this list may help.
-
Raising Awareness - Although it is not as spectacular or has as far a reach as traditional advertising methods, catalogues are a good way of letting the public know that your product exists
-
Low Risk – You have very little to lose from being in a catalogue and many firms do not even charge you to list your product
-
Less Packaging – There is no need to have attractive expensive packaging to compete on shop shelves. Simple plastic bags and plain boxes are sufficient
-
Credibility – If your product appears in a catalogue alongside other successful products it raises credibility. Strong catalogue sales can also open doors to being featured on television home shopping networks
-
Manageable Growth – A catalogue will only take a small quantity of your product to begin with and will order increasingly larger amounts once it has been shown to be successful
-
Product Line Not Required – You are not at a disadvantage for only having one product to sell, whereas large stores prefer to stock a line of products from the same manufacturer
-
Easier to Compete – The catalogue market is a level playing field where both small startups and large corporations sell their products
-
Market Testing – You can experiment with placing your product in niche catalogues in order to fine tune your marketing strategy
-
National Exposure – You are not limited by geographical barriers and your product could potentially be viewed by millions
-
Lucrative Returns – The catalogue market is still extremely successful and if your product is a hit you could generate a lot of revenue for your start-up. Use this money to expand your business and to eventually get your product sold commercially in stores
If you are not sure whether your product is appropriate for selling on a mailing list, here are some useful criteria to check:
-
Easy to Understand – The value of purchasing your product is immediately clear
-
Unique – It is unlike anything else on the market
-
New – It has only recently been released and needs exposure
-
Problem Solving – It has a new solution to an everyday problem
-
Simplistic – It only has one main function and solves the problem entirely
-
Aesthetically Pleasing – It is nice to look at and will display well in catalogues
-
Durable – It will not be easily damaged during shipping
-
Year-round Appeal – It is not a seasonal product with limited appeal
-
Safe – There is no foreseeable danger to consumers
-
Wide Appeal – There is a sizeable target market for the product
-
Quickly Manufactured- There is no long production process involved
-
Affordable – Sub $100 products sell best in catalogues
-
Mailing – Standard size products are easiest to ship in bulk
-
Patented – You need to have some sort of copyright to protect your idea
Sometimes it is a good idea to go back to basics if you want to evaluate what you are doing or achieving in you small business. Much time in a business is spend thinking about marketing, PR, sales and customer care issues, how to make them more effective for our customers and easier to use. But have you asked yourself lately why you need to worry about that?
In short, there are three motivations why you should be doing all of this:
- Acquisition of new customers;
- Re-activation of existing but dormant customers;
- Retention of existing and active customers.
If you remind yourself of these three reasons when you thing about any activity in your company. Even a change in your payment terms should be considered with these three reasons in mind. How will it effect my customer acquisition, will it help to get some old customers to order new product or service from me, is it likely to drive some existing customers away?
Customer focus may very well be the most important aspect to your success with your home business or your freelance work. Creating barriers is something you should only do towards your competition, never towards your customers or prospects.
How is what you do today going to help you with these three goals? — ST.
Recently I ordered services and was very happy to have found a supplier. We had agreed prices, scope and timescale of the project. Later I received the contract by email and started reading it. Everything seemed to be as agreed, until I got to the payment terms. There I found an unusual insertion:
We will charge 2% extra for PayPal payments.
Te motivation is quiet understandable, Paypal will charge you 2% to process your inward payment. But should you really charge your client extra for this? I would think not, since this is a great business turn-off. More business is lost through little charges here and there, it generates the feeling in the buyers mind of hidden charges. While at the same time the buyer will wonder why he/she should pay for the suppliers bank charges.
I was given options to send a cheque or pay by bank-transfer. This makes the whole situation even worse, since you would be inclined to send a cheque, which would take weeks to clear through the banking system – this was a international transaction. You would certainly not use the bank transfer option since it would cost even more. The whole problem was no made easier by demanding stage-payments.
It seems to me the solution here is to increase your prices by 2% and don’t talk about it, or enquire before hand which payment method should be used. One needs to remember that getting payed is of the utmost importance for any small business, so PayPal seems a good way to go in this instance.
Look at your payment terms and do not create unnecessary business barriers. — ST.
