Business Advisor

E commerce

2012-03-04T13:14:00.001-08:00

E-commerce is the practice of advertising, buying and selling products or services over the Internet. It is the logical extension of most Internet marketing efforts. E-commerce benefits many business owners by providing them with the ability to offer their products or services worldwide and the ability to compete with larger companies.

Since customer activities and transactions are managed electronically, e-commerce also provides business owners with a wealth of information that is unavailable offline. For example, online retailers know the number of customers viewing each product in the store and the percentage of viewing customers that purchase. This information can be used to determine appropriate inventory or to suggest popular items to like-minded customers.

From a business owner's perspective, the process of selling online is very similar selling offline. It requires researching your business plan, creating a store, promoting your business, receiving customer payments, delivering products, and providing after-the-sale support.

Who is Your Target Customer?

2011-12-14T13:47:00.000-08:00

Do you know precisely who your customers are? You may know many of them by name, but do you really know what type of people or businesses they are? For example, if you sell to consumers, do you have demographic information (e.g., what are their average income ranges, education, typical occupations, geographic location, family makeup, etc.) that identifies your target buyer?

What about lifestyle information (e.g., hobbies, interests, recreational/entertainment activities, political beliefs, cultural practices, etc.) on your target buyer?

This type of information can help you in two very important ways. It can help you make changes to your product or service itself, to better match with what your customers are likely to want. It can also tell you how to reach your customers through advertising, promotions, etc.

For an obvious example, a company that sells athletic shoes may know that its typical customer is also a sports fan. Thus, if it can build shoes good enough to be worn by professional athletes, it will have a convincing story about quality to tell. It can also benefit by using well-known athletes as spokespersons in its advertising, and by placing advertisements in sports magazines where its customers are likely to see them.

How can you refine your understanding of your own customer base? We suggest that you look at the issue from two angles:

■niche marketing — identifying the heavy users of your product so you can direct your marketing efforts more precisely to those users
■segmenting the market — dividing the existing market up into sections or segments that may become new niches for your business

What's Your Unique Business Idea?

2011-12-08T13:35:00.000-08:00

Intuitively, or based on sound research, you believe your business will succeed because you are doing something different from some or all of your competitors. The first test of any business, small or large, is its uniqueness when compared to its competitors.

Now, that doesn't mean you can't borrow a good idea from some other company and build a successful business around it. For example, every town needs a certain number of dry cleaning operations, and most of them look very much alike. However, if you examine the more successful dry cleaners in your area, you'll notice that each one tends to emphasize and promote something special. It may be lower prices, faster service, better cleaning, a drive-up window, or more frequent coupons in the local shopping news.

Some of these business owners undoubtedly borrowed their ideas from other companies they've dealt with, or promotions they many have noticed when traveling in other cities. The point is, successful businesses find ways to make their products or services stand out from the crowd, or at least the crowd in their immediate geographic area.

If your business provides a product, sources of uniqueness can range from pricing, packaging, distribution method, or feature differences, to the mere perception of a difference that may or may not exist. For example, granulated white sugar is difficult to differentiate from one supplier to another except in pricing, packaging, or amount of advertising. But white sugar substitutes like aspartame (e.g., "Nutrasweet brand") or saccharine (e.g., Sweet 'n Low brand) have important product feature and benefit differences that help determine consumer purchase decisions.

There are two main issues to consider here:

■How is your business different? Can you express it in terms of a concise statement, known as a "unique selling proposition" or USP, that will form the basis for all your advertising, promotions, sales communications, and other marketing activities?
■Is this a difference that customers appreciate, so that they'll prefer or even seek out your business's offerings rather than your competitors?

Are Your Assets at Risk

2011-12-01T15:05:00.000-08:00

Every business owner needs a comprehensive asset protection plan because owning and operating a business can be risky. For example, businesses may default on open accounts with vendors, or default on mortgages or other secured loans from banks. Further, many of these debts may be personally guaranteed by the owners. Potentially, owners or employees may commit negligent acts while carrying out company activities.

Moreover, consumers may bring claims for injuries suffered due to the sale of defective products, or claims based on unfair and deceptive business practices, which could produce a financial settlement. Also, claims by employees, such as wrongful discharge and sexual harassment, are on the rise. These risks could bring about financial disaster for business owners, resulting in the loss of both business and personal assets.

A comprehensive asset protection plan, which can be designed based and can prevent or significantly reduce these risks, and insulate business and personal assets from the claims of creditors. Unfortunately, many small business owners are unaware of these principles, or simply misunderstand them.

Beyond avoiding these exceptions, much more should be done to protect personal and business wealth. For example, most business owners mistakenly believe that assets within a corporation or LLC are automatically shielded from liability. However, most business owners face the greatest risk of liability from business transactions, and not personal dealings. Therefore, the business entity's assets, which can be significant in a successful operation, are exposed to the greatest risk of loss. Yet, a corporation or LLC can be structured, funded and operated so that the business's assets are not exposed to liability.

Further, personal and business assets can be placed in protected categories and thus out of the reach of creditors, so that, even in a worst-case scenario (e.g., a judgment in a major lawsuit or a bankruptcy filing), there will be limited or no loss of assets. This can be accomplished through state and federal exemption planning, and through the use of asset protection trusts.

Exemption planning is a very important part of an asset protection plan. In fact, in some cases, it may shield the majority of your assets. However, once serious financial problems arise, it's often too late to transfer unprotected assets into exempt categories. The planning must be done beforehand, or you run the risk of having your transfers treated as ineffective or even fraudulent by the courts.

Your exempt assets can usually include a residence; pension plans; wages; annuities; and various categories of personal property, including household goods, tools of the trade, and motor vehicles, among other things. Many categories of exempt assets have dollar caps. Moreover, the exemptions and the caps vary widely from state to state.

What Can A Business Plan Do For You

2011-11-23T13:49:00.000-08:00

Many people think that the only reason to develop a business plan is to convince potential lenders or investors to provide financial backing. This view is a little short-sighted, however. A well-developed plan can serve as one of your most important management tools. A good plan will provide a blueprint and step-by-step instructions on how to translate your idea into a profitably marketed service or product.

Remember that no two business plans will look alike. There are a number of key considerations that will play an important role in shaping the content. These considerations include whether you're writing the first plan for a new business or business opportunity, or a plan that updates or supersedes an already existing plan.

Obviously, your business's position in the life cycle will have a significant impact on the type of planning that's needed. An ongoing business might require a plan that relates primarily to a new market that it wants to enter, or a new product that it wants to introduce.

Communicate your Vision to Employees

2011-11-17T12:16:00.000-08:00

How often do you talk to your employees about organisational strategy?
You should aim to formally communicate strategy at least once a month. Make it meaningful and relevent, seek your employees input and thoughts to generate enthusiasm and buy-in.

This can be achieved by way of staff meetings, intranet emails, open door policy, employee manuals, employee forums or a myriad of techniques all designed to engage your employees.

Having all levels of your organisation on the same page removes the possibility of communication and motivation fragmentation.

How Healthy is your Business?

2011-11-10T12:16:00.000-08:00

Jack Welch knows how to win. In 1981 he became GE's youngest Chairman & CEO. When he left GE, the company had soared from a market value of $14 billion to over $410 billion at the end of 2004. The following the number 1 selling business book was ironically "Winning" by Jack & Suzy Welch.

The 3 most important indicators Jack alluded to that got right at the heart of business performance were employee engagement, customer satisfaction and cash flow. Employee engagement refers to actively establishing with your employees how they feel about the strategy and direction you're taking your business in.

Growth is the key to long term sustainability. This relies on customer satisfaction and actually involves you visiting or discussing face to face with your customers what their view is of your business: its strengths and weaknesess and how it best can serve their needs.

Cash is king or should I say positive cash flow rules supreme! It does not lie because remember actual real cash flow tells you the true condition of your business. It give you a sense of position and the ability to manoeuvre. Cash flow assists you to control your business's destiny.

The key is to always adopt a strategic approach to business performance and to do that you focus in on the very few indicators that go to the guts of business performance.

M. Kelly Greer