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Your EnterQuest Bulletin - 2 February 2005
| Thought for the week: "The secret of success
is to know something nobody else knows." Aristotle |
In this week's issue:
- how
to avoid falling into the business plan "trap"
- presenting
your price
- your
fire safety obligations
- website
shopping trolleys - keeping customers on the right track
Weekly stir
How
to avoid falling into the business plan "trap"
When you start up a new business, or are preparing to start one
up, it's extremely easy and tempting to fall into the trap of producing
a business plan that will delude everyone it's aimed at, including
yourself.
The problem
here is that people get carried away with the story about what they
are going to do with their business, and make a load of wild and
pie-in-the-sky projections about how much revenue and profit they
will generate along the way.
Depending
on whom you are talking to or dealing with, there will be many different
factors to consider when producing your business plan. However,
here are seven real world principles you should stick to in your
start up business plan, whatever the situation or purpose.
| 1) |
Define your business purpose as clearly and succinctly as possible.
Express this in factual rather than fictional terms, making
it obvious to someone who hasn't come across you before, exactly
what your idea or opportunity is. This principle should apply
whether you have a brand new concept that will fill a market
gap you've identified, or a tried and tested business idea that
you believe you can also turn into a success.
|
| 2) |
Describe how your idea relates to your market, why it is such
a great opportunity at this time, and why you believe a particular
group of people or other businesses will buy your service. This
is one of the most important parts of your plan, and unfortunately
the part that is generally missing altogether.
|
| 3) |
Explain how you are going to make your business different from
your competitors, or why you think it is totally unique and
doesn't have any competition at the moment.
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| 4) |
Provide an assessment of the risks that your business will
face and any factors which could prevent your idea from working.
You must be completely honest about this, as every single new
business start up has risks and serious hurdles in its way.
When referring to these risks you must also describe how you
will go about minimising or dealing with them.
|
| 5) |
Explain why you think you are going to be able to make your
new venture a success. Describe the specific skills, expertise
and knowledge you possess or can easily access that relate to
the business or market you want to enter. What exactly are the
qualities you possess that you believe will enable you to pull
this off and exploit the opportunity you've spotted?
|
| 6) |
Make sure you can convince everyone that matters that your
idea is feasible. In other words, if asked the questions, can
you confidently claim that you've got sufficient start up capital
to do it, enough time and commitment to do it, and the right
contacts, business network, and sources of professional advice
to help you through the difficult first year of trading?
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| 7) |
Keep everything in your plan realistic. Too many people who
start a new business become obsessed with how much money they're
going to make and how quickly they will do it. What you need
to do is set realistic goals that you ought to be able to achieve.
Otherwise what's the point? Who are you really trying to kid?
The sensible approach for the vast majority of people is to
start small and think smart. Aim to keep your new venture moving
forward in small, but from your point of view, significant steps. |
Marketing
tip
Presenting
your price
Perhaps
the only thing that's more important than setting the right price
for your product or service is how you present that price. The key
is to compare your price with something that your customer perceives,
in relative terms, to be of much greater value.
The following
six techniques use the compare/contrast method to give the perception
that your price is not only fair, but is also a very good deal.
1)
Volume method
Imagine
you're selling a 7-day course on how to stop smoking. Using this
method your copy would read something like this: 'You'd need 12
months of personal smoker's rehab counselling to get the same amount
of coaching that you'll find in this course'.
Suppose
you are selling taxation consulting. You could say, 'In just one
session you'll learn how to save more in taxes than you paid last
year to the Inland Revenue'.
With
this method, the product or service you're giving your customers
is compared to a much larger quantity, which has the effect of making
your price seem like a deal of much higher value.
2)
Monthly instalments
Offer
to allow your customers to pay low monthly instalments, rather than
one hefty price, then emphasise the monthly instalment price in
your advertising. This gives the perception of a low price, and
appeals to customers who want your product or service but can't
afford to buy it in one go.
3)
Individual value comparison
This
method takes each individual component of your offer, places a value
on it, adds it all up for a total and then compares it to the asking
price.
For instance,
if you were in the hotel business you might say this: 'Your luggage
carried to our shuttle service (value £3), a swift shuttle ride
directly to your hotel (value £20), your personal assistant to help
you carry up your baggage and get settled in (value £10), premium
movie channels for your viewing pleasure (£12), a relaxing overnight
stay in your personal suite (value £189), and a hearty breakfast
in the morning (£15) - a total value of over £249 is yours for only
a small investment of £99. You save £150!'
4)
'Most-some-but'
This
technique is a simple competitor comparison that gives the perception
of rarity or exclusivity.
Example
1 - Nail salon
At most upmarket salons you'll pay £50-£100.
In some popular salons you may pay as little as £35-£40.
But our special low price is just £19.95.
Example
2 - Jewellery shop
Many jewellery shops charge £200-£300.
Some jewellers will offer specials as low as £99.
But, during our privileged customer sale, you only pay £67.
This
method is used to dramatise the discounts or low price that you
offer compared to other businesses in your market.
5)
'Reason why'
If you
charge a very high price or a very low price, it may be hard to
believe by customers who are used to paying a certain price. Telling
the customer why the price is so high or so low helps to reconcile
the price discrepancy and helps them accept it as reasonable.
For example,
you could explain that because you over-ordered on your last stock
take, you are now overstocked. So you're clearing out the excess
at lower prices in order to sell everything in time.
6)
The price ending
How you
end your price has more to do with human psychology than practicality.
Here are some tips on how to end your price to appeal to customers'
emotions.
- For
prices up to £10 use endings such as £0.99 rather than £0.95.
Customers' reactions are the same for both price points and the
£0.99 earns you four more pence.
- For
prices from £10 to £100 the best ending to use is £0.95 rather
than £0.99 because the £0.99 is seen as a 'greedy' price.
- For
prices greater than £100 it's better to present your price in
whole pounds rather than pence. It's a cleaner look.
- Pricing
for professional services should be in whole numbers such as £150
rather than £139.95. It's more professional and promotes dignity
and confidence in your fees and rates.
Read
more about pricing your product or service in chapter 17, 'How to
price your product or service for maximum profit', of the UK Small Business Marketing
Bible, where you can also find hundreds of ideas, tips and techniques
for increasing sales in any small business.
Legal
tip
Your
fire safety obligations
According to the Fire Protection Association, how many small businesses
suffer serious fires every year?
a) 800
b) 1,250
c) 3,275
d) 30,000
No matter
how small a business is, as soon as it starts to employ people it
will have to take health and safety regulations a lot more seriously.
The correct
answer to the above quiz is d). 30,000 small businesses go up in
smoke every year. Two pieces of legislation on fire protection are
particularly important:
- The
1971 Fire Precautions Act imposes different standards on businesses
depending on the number of employees they have on their premises.
One of its chief requirements is for premises to hold a valid
fire certificate.
However,
small businesses don't need a fire certificate unless they have
20 or more people on the premises, or 10 working in a place other
than on the ground floor. There are exceptions to the rule, however:
hotels and guest houses sleeping more than six people, including
staff, must apply for a fire certificate. Those with beds above
the first floor, and businesses dealing with certain highly flammable
substances or explosives must have a certificate regardless of the
number of employees.
- The
Fire Precautions (Workplace) Regulations 1997 put greater responsibility
on employers for the welfare of employees in the event of fire.
There
are very few exemptions from the Regulations - indeed, they apply
to any business that employs two or more staff. The Regulations
place certain responsibilities on you when considering fire safety
in your workplace. These include:
- Doing
a risk assessment of possible fire hazards and taking steps to
reduce the risk.
- Making
sure fires can be detected quickly, for example by installing
a smoke alarm.
- Providing
fire-fighting equipment, and making sure it's properly maintained.
- Training
staff in what to do in the event of a fire.
- Making
sure the premises can be evacuated quickly (ideally within two
and a half minutes) by keeping escape routes and exits clear,
signposting them clearly, and providing emergency lighting.
In most
cases, local fire authorities are in charge of enforcing fire safety
legislation and carrying out inspections of businesses applying
for a certificate.
The following
links provide more advice and guidance on your fire safety obligations:
Our UK
Red Tape BUSTER offers
hundreds more factsheets, FAQs, scenarios, and the latest updates
on legislation.
IT
tip
Website
shopping trolleys - keeping customers on the right track
Businesses with online stores regard shopping trolley abandonment
- when a customer decides for some reason to give up halfway through
the purchase process - as a serious problem. And rightly so; some
surveys put the proportion of abandoned online transactions at over
50%.
But often,
abandonment can be avoided. The following tips can help you to minimise
it:
- Make
it clear from the very beginning how people can pay. Credit card?
Debit card? WorldPay? There's nothing more frustrating than reaching
the last payment stage and realising that your card won't be accepted.
- Add
up individual purchases and postage or packing costs and give
customers the grand total as soon as they go to your checkout
page. Don't present them with a nasty surprise at the last moment.
- Make
the payment process clear. Tell customers how the transaction
will happen, and when they've finished, tell them what has happened.
Preferably twice, once on your website and once by e-mail.
- Keep
the whole process as simple as possible; this will speed things
up and stop customers becoming impatient. Don't add fancy java
or flash that could slow the process down for customers with older
browser versions installed on their PCs.
- Make
sure customers can go back to any stage in the process by showing
the path in numbered steps (known as 'breadcrumbs') at the top
of the page. And if they do go back, they shouldn't lose information
they've spent a lot of time typing, such as their name and address.
Your cookies should be set to save non-secure information after
each stage.
- If
you sell overseas, show the equivalent figure in the customer's
currency - making it clear that it's an estimate of the amount
they will pay when their account is debited.
These
tactics will help reduce abandonment. If you do have a persistent
problem, try to work out where the sticking point is and see if
there's anything about your site that could be changed. Remember,
each abandonment is a lost sale.
New business idea
Each week we provide
you with summaries of some popular or emerging business ideas in the
UK.
Here
is this week's idea:
Just one word
Regularly
improving your vocabulary is not just about learning a new word
and its meaning. It will improve your general knowledge and make
you feel and act smarter in all sorts of personal and business situations.
Do you know what 'insidious' means?
a) dangerous
or menacing
b) dull or bland
c) essential
d) impossible
Answer
at the end of the Bulletin.
Did
you know?
Don't
be fooled by bogus mailshot
The Health
and Safety Executive (HSE) is warning businesses to be on their
guard for bogus mailshots from a firm calling itself the 'Health
and Safety Registration Enforcement Division'. The mailshot in question
demands that you pay upwards of £100 in order to make sure you're
complying with the law. If you receive any suspect correspondence
of this type, the HSE advises that you report it immediately to
them or the police.
Practical
health and safety tool
The HSE
has also launched a web-based tool to help small businesses gauge
their health and safety performance. The Health and Safety Performance Indicator was developed with
the input of other key small business representatives, including
the Small Business Service (SBS) and the Federation of Small Businesses
(FSB). The idea is that it will help you give insurance firms an
accurate assessment of any improvements you've made in health and
safety.
There's
a demo
of the tool online. After spending some time exploring the tool,
we reckon it's pretty comprehensive - we also like the fact that
whenever the tool refers to a specific aspect of health and safety,
such as manual handling, you can get a jargon-busting, practical
explanation simply by waving your mouse over the word or phrase
in question.
US
report shows importance of search engines
According
to researchers at America's Pew Centre, 84% of Internet users regularly use search engines,
with the average user spending around 43 minutes a month searching.
The research also found that search engine users are very loyal,
with 44% tending to stick to only one site, such as Google or Yahoo.
Interestingly, the researchers also discovered a lack of understanding
about sponsored ads: only 38% of respondents were aware of the difference
between paid for and unpaid listings.
Worth
a visit
Keep
up to date with Flickr
The new
Flickr online photo service
offers users the opportunity to upload, store and organise digital
photographs. You can use it to post camera phone shots to a blog,
as well as to comment on or add descriptions to other users' photos.
The site, currently in beta version, offers handy tools and features
that explain how the photos can be used or shared, and is a useful
resource for anyone who has ever wanted to post or find a photo
for a blog or discussion forum but isn't sure how to go about it.
Guru.com is a directory
of freelance professionals working in hundreds of different business
sectors, from web designers to legal experts. It's a US site, but
can be used wherever you're based. Businesses can read the profiles
posted on the site to find and contact the right person to carry
out temporary work for them, and aspiring freelance contractors
can use the site as a springboard to get work by posting details
of their skills and experience.
Worth
a read
This
book explores the subject of how some people can make important
decisions in the blink of an eye, while others find the process
much more difficult. It offers practical tips on honing your natural
instinct and intuition in order to improve your ability to think
on your feet, solve problems and make confident decisions. Check
out:
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Blink, by Malcolm Gladwell
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Just one word answer
The answer is a).
Insidious means dangerous or menacing.
Spyware
is particularly insidious, as it will infect your PC without
your knowledge.
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that we guarantee never to sell or give your e-mail address to anyone
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Good
luck
The
EnterQuest Team
This
information is meant as a starting point only. Whilst all reasonable
efforts have been made, the publisher makes no warranties that the
information is accurate and up-to-date and will not be responsible
for any errors or omissions in the information nor any consequences
of any errors or omissions. Professional advice should be sought
where appropriate.
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