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2008 Issue 7
Drumming Up Business During
Slow Times
Making Your Cash Work For You
Sketching Out The Competitive
Landscape
That's A Wrap
 
Drumming Up Business During Slow Times
Every economy and every business has its ups and
downs. The trick to weathering the storms
successfully is to be prepared for them.
Reactivate Dormant Accounts
The quickest and easiest way to do this is to
sit down with your list of past customers, call
them, say hello, and see what's going on. Don't
make this a hard sell call, just a reminder that
you have done business before and you are
interested in working with them again. You don't
have to ask for work directly but when you end
the conversation you might say something like, "Well,
it's been good talking with you. Keep in touch,
and if there's anything I can ever help you
with, don't hesitate to give me a call." If
you are uncomfortable about phoning, send an
email, or perhaps a letter, flyer or brochure
that mentions new products or services and
includes testimonials from other customers.
Provide Superior Service To Current Customers
When business is slow you want to do everything
you can to hold on to your existing customers.
The best way to hold on to them is to give them
not just their money's worth, but more than
their money's worth. Now is the time to go the
extra distance, give that little bit of extra
service that can mean the difference between
dazzling them and merely satisfying them. The
best protection against a downturn in business
is an active list of delighted customers.
Have Existing Customers Drum Up New Business For You
It’s probably fair to say that the customers
you’re currently dealing with associate with
like-minded people - people who are in a similar
income bracket, have similar interests, hobbies,
and buying habits. And therein lies your
sleeping giant. A referral system can harness
this giant by encouraging existing customers to
refer these people to you. If it’s true that
most of your customers are happy with your
business and the products and services you sell,
then it follows that most would be quite happy
to refer you given an easy way to do so, such as
displaying your brochures in their business.
Slow times also provide the opportunity for more
active networking, looking for opportunities
that may only present themselves when talking to
people.
Plan An Ongoing Marketing Campaign
Slow business presents an opportunity to
increase the amount of your time spent on
prospecting for new business. During a lull in
business you need to make this extra effort to
attract clients or customers, follow up on leads
and close sales. What types of marketing work
best in slow times? Use a combination that
includes direct marketing (email promotions,
sales letters, self mailers, postcards, special
offers) plus low-cost/no-cost visibility
enhancing publicity techniques (press releases,
articles, speeches, booklets, seminars,
newsletters). Avoid costly image building
marketing such as large space ads, slick
corporate brochures, expensive annual reports
and other marketing communications that can
drain your budget without producing sales.
Add Value To Your Existing Services
In a slow economy customers are more concerned
with price than ever before. Actually, their
real concern is making sure they get the best
value for their money. You can win new customers
and retain existing ones by enhancing your
services and providing your customers with more
value for their money. For instance, if you are
selling a commodity item you could add value by
offering faster delivery than your competitors.
Or a wider selection. Or easier payment terms.
Or a better guarantee. There is no need to give
away the store and promise an excessive amount
of extra service. The extras you provide need
not take a lot of time or cost a lot of money.
Keep Busy By Working ON Your Business
A slow period in your business is a good time to
busy yourself with internal projects that will
improve the business, such as developing a new
marketing strategy, making technical
improvements to an existing product, auditing
and improving your customer service procedures,
revising your newsletter or website, or any of a
hundred things that you couldn’t find the time
for previously. Now you have the time. So do
them.
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Making Your Cash Work For You
These days, your money has to work for you.
Tracking cash flow is important but getting the
most out of the cash that comes in requires
shrewd decisions about how to invest it. It’s
not always easy to determine which area to put
it into for the best overall result to your
finances.
Let The Cash Sit In Your Account
Not the most effective use of cash. Returns are
usually low so any cash that does need to be put
aside for specific projects such as future
expansion should be moved to a higher yielding
investment. When determining where to invest
this cash, first determine how much risk you are
willing to accept, and secondly, how easily the
investment can be converted back into cash
should a more opportune way of spending it come
up.
Invest For The Future
Regularly moving a percentage of your deposits
into a retirement fund will prevent the money
from dribbling away into other uses and provide
you with a more secure future.
Spend Cash On Expenses
Retaining the necessary cash reserves for
day-to-day operations and emergencies is
necessary but the way in which it is done can
make your cash flow situation and your life
easier. Make provision for taxes by regular
contributions to an estimated tax account.
Transfer a percentage of funds from your main
account into a payroll account to ensure the
funds are there to pay employees and to
facilitate record keeping. Keep cash available
for the longest time by holding off paying bills
to near their due date unless there is a
worthwhile discount for paying earlier.
Purchase Assets
This is a wise choice since it promotes business
growth. In reality two factors influence the
choice. First, there may be a number of assets
that could be purchased and you need to estimate
which will provide the best return on the
investment; secondly, the return from purchasing
the asset must be better than that available
from any other form of investment. Your
accountant can show you how to use a financial
tool called net present value (NPV) analysis to
compare the expected investment and return on
different projects to see which one offers the
best profitability. You may find that your best
investment is, in fact, the stock market or a
money market fund.
Pay Off Debt
In general, since interest rates run higher than
almost all after-tax return rates on
investments, it is a better decision for a
business to pay down debt whenever possible to
avoid the difficulties that come with servicing
it. There is no investment risk involved and
paying your debt usually doesn’t involve any
additional fees. When paying existing debt it is
better to pay a revolving line of credit rather
than an installment debt. This retains your
borrowing potential when the need for additional
debt occurs.
Return The Cash To Shareholders
While it is tempting for the entrepreneur to
take the money as salary or a bonus, or return
it to other shareholders, often the more prudent
choice is to reinvest the funds to help propel
business growth. Returning cash to shareholders
is a last option when there are no good assets
to purchase, debt and expenses are at reasonable
levels, and there are no high yielding
investment opportunities available.
Cash management is essentially about putting
every dollar that comes in to working in the
most productive way it can for you. Inefficient
cash management practices can lead to a build-up
of non-productive cash or its disbursement in
sub-optimal ways. Selecting the most efficient
way of using cash involves an awareness of what
is available along with the opportunity costs
and trade-offs associated with spending it on
one thing rather than another.
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Sketching Out The Competitive Landscape
For anyone trying to grow a business, one of the
necessary tasks is to map the competitive
landscape and continue to keep tabs on how
things develop in it over time. With a good
understanding of the competition facing your
business you’ll be able to spot and exploit
opportunities as they develop. Ignoring the
competition or letting success lull you into a
false sense of security could mean nasty
surprises further down the road. The following
points can help you start developing a strategy:
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Identify your competitors: Your competition
includes anything that could draw customers away
from your business. For example, for a movie
theater, other cinemas represent a direct
competitor. But there are also a number of
indirect competitors that need to be
outmaneuvered as well. These are businesses
after the same customer dollar as you. For the
movie theater, cable TV networks, DVD rental
stores and even online movies all represent
competitors.
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Be a customer: Take yourself to your
competitor’s and play at being a customer.
Testing a competitor’s ability to serve you will
reveal much about their business practices. And
don’t stop at asking about things—test them out
by buying something. It’s the only way to gain
first hand experience with the company’s
products and customer service.
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Talk to your competitor’s customers: Why do they
buy from your competitors? Is it because of the
quality of the product or service, the price,
the location or the customer support? What do
they dislike about the company? What do they
wish that company would provide? Could you
provide it?
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Use the internet: You can also learn a great
deal about competing businesses simply by going
to their website. Check out how they arrange
their pages and navigation, what information
they offer, how easy they make the purchasing
process and so on.
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Attend industry conferences and trade shows:
Your competitor’s representatives will be
pounding their chests about their products or
services. Take advantage and familiarize
yourself with their product offerings,
strategies and how they sell themselves.
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Be aware of the potential for new competition:
The competitive landscape can change fast these
days. A national chain may not have entered your
region yet—but what if it does? Likewise,
companies that don’t currently compete with
yours might shift their focus and pit themselves
against your business.
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Assess the competition’s goals: A competitor
trying to increase its market share might lower
prices; a company attempting to increase profits
may cut costs; and a business that wants to
accelerate sales growth might kick off a
marketing campaign. If you know your
competitor’s goals, you’ll be better able to
anticipate their strategies.
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Check public filings: Companies are obliged to
disclose various pieces of information to
government agencies. Such disclosures are
required to undertake public offerings, receive
building permits and register for patents or
trademarks among other things. Many of those
filings are public record and contain
information about the company’s goals,
strategies and technologies.
Gathering information about your competitors
will show you where you lag in the competition
stakes and can suggest ways in which your
company can match, and beat, them.
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That's A Wrap
While the advice of the sage is not to judge a
book by its cover, that isn’t how customers look
at the goods they are presented with in-store.
Packaging plays a large part in the buying
decision, so one of the easiest ways to generate
sales is to make your packaging more
attractive. Packaging does more than just
protect your product in transit from factory to
outlet – it markets your product. Here are some
hints on how to use packaging to the best
advantage.
Use Packaging To Engage The Customer’s Attention
Packaging can make a product stand out from its
surroundings on the retailer’s shelf and get
noticed. The power to draw attention operates
through the aesthetics and obtrusiveness of the
package design. Carefully consider the colors,
fonts and font sizes used on the packaging.
These are what initially attract and engage the
consumer.
Packaging can be made to look larger by using
the right colors and simple, bold design work.
You can pick up some useful ideas from checking
how competitors package their product.
Considering the role packaging plays in grabbing
the consumer’s attention and encouraging sales
the advice of a graphic artist is a worthwhile
investment.
The shape of the packaging can also be used to
make the product stand out, but there is a trade
off —retailers may refuse to stock awkward
shaped packaging that doesn’t stack securely,
that is difficult to process at the checkout or
that simply consumes too much of their valuable
shelf space.
Ensure Packaging Connects With The Customer
The average consumer spends just 2.6 seconds
making a decision whether to pick up your
product or not, so your packaging needs to be
targeting the right audience with the right
message. Are the buyers primarily male or
female? Do they come from a younger or older age
bracket? Are they likely to be time poor or
shoppers with time to spare?
Different demographics have different purchasing
hot buttons. For some the ‘environmentally
safe’ or ‘reusable container’ label
will do it. For others it will be the amount of
fat in the product, the guarantee of product
security or maybe even the ease of opening the
package. General social trends drive consumer
preferences and the savvy packager keeps abreast
of these trends so they can change labeling,
package design and packaging materials to appeal
to changing interests.
Packaging can be designed to evoke an emotion in
the customer so as to give the product an aura
such as exciting, sexy, or whimsical. The
graphics on the package can be used to place the
product in a particular lifestyle setting that
appeals to the target demographic.
Let The Packaging Inspire Confidence In The Product
For some products, a picture of the item on the
packaging really is worth a thousand words. It
can overcome some of the uncertainty in the
decision to buy by letting the consumer see just
what it looks like. The package is also the
place to display your product's guarantee.
Many items claim ease-of-use as a selling point.
Others come as easy-to-assemble DIY kits.
Consumers will be more convinced of these claims
if they can see for themselves just how easy the
setting up or construction will be. Even if
what's on the outside only outlines the more
detailed instructions inside, or gives an
assurance that it is easy to install or operate,
it will provide a degree of reassurance for the
customer.
Packaging can present an impression of the
quality of the product inside, regardless of
price. Packaging with faded lettering or colors,
amateurish design work or strange typeface,
outdated graphics, and cheap construction convey
an impression of low quality or poor value that
reflects on the product itself.
Design The Package To Provide A Sense Of Security
A whole raft of laws regulate the design of
packaging of potentially dangerous goods such as
flammable materials and medicines. Meeting the
technical specifications is of course mandatory.
Another influential class of laws that affect
packaging relates to labeling and cover
information from the weight, to chemical
constituents, to place of origin. This
information provides the consumer with a sense
of security about the product. The clever
marketer may find that some of this information
represents a hot button for particular consumers
segments and is worth emphasizing.
The package around a product is a lot more than
just a container to hold and protect it. For
smaller manufacturers the package may represent
the most prominent advertising vehicle they have
for their product. It can also be their only
means of combating products that have been given
greater shelf space or are more easily
recognized brands. Well crafted packaging is a
marketing tool of first rate importance—your
‘silent salesperson’.
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