Starting up your own business – segment your market and focus on specific targets

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A group with traits in common at Disney Sea, Tokyo Japan

When starting up your own business, you may think that the whole world is your stage but if you are smart, you will want to play to specific and well targeted audiences who share a one or more vital characteristics in common. 

There are at least six common ways to segment your market.  Which one (or more) might be appropriate for you will be a matter of your specific opportunity, your research and your identified demand:

Segment your market by:

  • Age
  • Income
  • Gender
  • Lifecycle
  • Geography
  • Specific pre-condition

Segment by age

As people age, their needs change.  Consider accommodation needs!  Young single people seek to rent accommodation, but a decade or so older with a spouse and children, they seek to buy a family home.   As the children leave home they may be in the market for an investment house and, when they reach old age, they seek long term aged care living.

Segment by income

Income segmentation is used by many retailers of lifestyle goods.  In general luxury products are aimed at the more affluent segments of the market, regardless of their age or gender.  Motor cars are an example of this.   Basic models are aimed at middle income earners, while the more prestigious and luxury models are aimed at higher income earners.   This is not to say that age, gender and lifecycle segmentation does not occur simultaneously.

Segment by gender

Gender segmentation is commonly used in the clothing, cosmetics, personal care and magazine industries.    Another example is the motor vehicle industry.  Just think of some of the ways that cars are presented in advertising – utilities and tray-backs for blokes and tradies, strong colours and powerful engines for young males, fuel efficient cars for families and small, easy to park town cars for females.

Segment by lifestyle

Lifestyle segmentation is used by retailers and wholesalers of holidays.  The adventure backpack holiday that might appeal to young single people probably won’t appeal to the majority of people in their 50’s and 60’s who are more likely to go for a comfortable and safe group tour or buy a caravan and tour the country.

Segment by location

For some products and services, it makes a big difference whether you live in the country or in the city.   Farm equipment for example is more likely to be sold in country areas where there are farms.  They are simply not required in the city although they might be displayed there on occasions, or the sale made through a city based corporate office.

Segment by a specific pre-condition

It might be the case that you are providing a service to a market group that requires a pre-condition.  In my case, as a business coach, it is a pre-condition that you own a small business or be considering starting up your own business to be a likely customer.  If you are in the car or boat accessories business, then only those people who own a car or boat (or are thinking of buying one) are of interest to you.

If you seek startup advice or a powerful online business presence when starting up your own business visit http://garyweigh.com/business-startup

Until next time!

Gary

Starting up your own business – Research! Don’t assume

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I couldn’t stop researching the Salmon Shop in Granville Island markets, Vancouver CA

It is a common problem when starting up your own business to assume that consumers want to buy the very thing that you have to sell.  Most people do it but it is a very dangerous assumption to make.

You may have had an incredible light bulb moment where your business future became clear to you in a flash of light, but your great idea must first be converted to a saleable product, and that product must be supported with a reliable service offering.   You must also think about what your prospective customers are hoping to achieve by buying from you.  Are you solving a problem for them?

It is a truism in business that “More small businesses lose customers because of poor service than bad products.”  What consumers demand these days is more than your bare product.  All consumers expect you to be reputable and ethical but depending on what you are doing, they also demand:

  • Technical information
  • The chance to ask questions
  • A fair refund policy
  • A guarantee or warranty
  • Ongoing education
  • Regular contact
  • Periodic review
  • Automatic upgrades
  • And the list goes on …

But above all, consumers want the experience that your product and service promises, even though you may never explicitly promise it.  You may have the most technically sound product but it still might fail to deliver on an emotional level.  While you are thinking ‘technical’, they are thinking ‘lifestyle’.

Consider a wedding as an example!  The bride and groom want their wedding day to be the most happy and memorable day of their lives.  It is an experience that they are buying.  Gowns, dresses, suits, flowers, cars, church, reception, music, food, drink, cake and photos are some of the products commonly involved, but without extraordinary service from each of those suppliers, and some deft coordination, the experience could easily turn out to be a nightmare.

The key to understanding the length and breadth of consumer demand for your product is to do some research rather than assume.  In other words, “do your homework!”

Where to start?  Well your future customers are currently buying from others at the moment.  Those ‘others’ will soon be your competitors.  So have a good hard look at what they are doing and how they do it.  Learn from your competitors, especially the ones who are doing it well.  Understand their success factors!

There is a wealth of information on the internet.  And it is free.  Just search on any topic and you will find websites, blogs and discussion forums galore.  Most of your competitors will have a website.  Back it up with some mystery shopping.  Industry associations also have a lot of industry specific information, some of which is free.  In Australia, the Australian Bureau of Statistics (ABS) has a lot of information, most of which is now free.  There are also many free resources provided by State and federal governments that offer encouragement and incentives if you are starting up your own business.

If you seek startup advice or a powerful online business presence when starting up your own business visit http://garyweigh.com/business-startup

Until next time!

Gary

Starting up your own business – get up close and personal

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Lunchtime up close and personal at Kiyomizu Temple, Kyoto Japan

If you are starting up your own business, it is not enough to simply open the doors and assume that customers will somehow find out about it and start buying.  Although you may have the best top small business idea, it just doesn’t work that way.

Those who do realize that you exist will often have some concerns about your newness.  They may not take you seriously.  Will you survive?  Will you be around for a long time?  Do you know what you’re doing?  Will you do the job properly?  Are you trustworthy?

Time in the market may speak volumes about your tenacity and long term intentions however you can’t afford to wait months or years before people are happy to give you a go.  You need to short cut that process so that customers develop faith within your time frame and start buying early.

So it is not a time for you to wait for people to come you.  Your business strategy implementation must include ‘customer attracting’ strategies need to be active rather than passive and personal rather than impersonal.

The assumption that all internet marketing strategies are impersonal while all bricks and mortar businesses are personal is a fallacy.  Everyone knows of at least one bricks and mortar business that has less personality and customer interest than the bricks that houses it, just as there are plenty of online businesses with personality that focus on building quality relationships with their customers.

With the incredible growth of online social networking, the internet is fast changing its impersonal image.  So if you want to get up close and personal on the internet, think about sending out your messages in multimedia – words, pictures, video and audio.  For example:

Consider an interactive blog platform instead of the traditional static billboard in cyber space

  • Become an authority site by writing and posting original articles on your site and then distributing them to other relevant sites and article sites that may pick them up
  • Reach out to the vast YouTube audience by making and uploading your own video content.  All you need is a camcorder.
  • Think about imaginative pre-sale promotion, consistent post-sale follow up and account maintenance activity.  It works just as well online.

If you are starting up your own business and you are looking for more top small business ideas then stay tuned.

If you seek startup advice or a powerful online business presence when starting up your own business visit http://garyweigh.com/business-startup

Until next time!

Gary

Top small business ideas – money saving ideas

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Chili's restaurant in beautiful Banff, Alberta, Canada

I would like to share with you some more top small business ideas.  These are money saving ideas to keep in mind during your business strategy implementation phase:

  • Negotiate rent free periods on leased premises
  • Buy second hand furniture and equipment to start
  • Prioritise your spending so that you put more into areas that the customer sees and less into areas that they don’t see.
  • Review your need for advertising.  It can take a long time to find out what works and what doesn’t and you can chew through a lot of money in the meantime.  This is an area of enormous waste in many businesses, both small and large.  Small businesses however have much less capacity to get it wrong.
  • Advertising is generally passive and impersonal form of marketing.  Try getting out there and becoming more interactive and personal.
  • Use online printing services (e.g. Vistaprint) for stationary and marketing materials. It is great for testing campaigns because you can get small amounts of material at low cost and some products and services are free.
  • When starting up your own business, shop around on your merchant services because you may find some big savings.  A fraction of a percent on practically every sale will add up over time.  Also make sure that you are charged a flat fee per transaction (rather than a percentage) on debit cards.
  • During business strategy implementation, not everything goes according to plan.  Start a ‘Grow from our Mistakes’ book where everything that goes wrong, that loses time or money, or causes customer inconvenience is recorded.  Write a few lines about what happened and when; the estimated $ loss and how it was fixed.  This serves two purposes.  Mistakes are assigned a dollar value and when recorded, very few mistakes are ever repeated.  The key to a successful Mistake Book is to keep it low key and not make it the subject of an inquisition, otherwise people will cover up mistakes.  Over time, it can become a valuable book of solutions – i.e. this is the way things are done around here.
  • If you are starting up your own business and you are looking for more top small business ideas then stay tuned.

If you seek startup advice or a powerful online business presence when starting up your own business visit http://garyweigh.com/business-startup

Until next time!

Gary

Starting up your own business – a budget is pure gold

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lunch on a budget at the world famous Japadog stand in downtown Vancouver

by Gary Weigh Business Coach Mentor

Before you actually start up your own business and embark on your business strategy implementation, I want to talk about the incredible value of creating a budget for your proposed venture.

Let’s say that you sell a line of home-made jewellery at $20 a piece and your gross profit percentage is 45%. That means for every item sold, you will have $9.00 left over after paying the cost price ($11.00) to buy or make that item.

If you sell 20 items in a day, your total sales for the day will be $400. The cost to buy or make those 20 items will be $220 (i.e. $11 x 20), and you will have $180 (i.e. $9 x 20) left over to pay for all your other business costs – i.e. your overheads. In simple terms, your overheads are those expenses that don’t relate directly to the buying or making of your product; but they are necessary to run your business.

If you didn’t have any overheads, then the $180 per day (calculated above) would be your profit. But of course, you will have other expenses to pay. Even if you work from home, you will have telephone, internet and other communication costs. You will probably have some stationary and some promotion / advertising costs. It is also likely that you will incur part of the cost of running a car. And don’t forget that your own time and labour is not free. You must pay yourself just as you pay other people.

These are just a few typical expenses, but if they happen to average out at $180 per day, then you will not make any profit. (Think of profit as your investment or entrepreneurial return for taking a risk). In fact, you will be at your breakeven point – no profit, no loss! From here you can make a profit (or increase profit) by:
• Increasing the number of sales you make each day
• Increasing the price of each item (but that might result in less sales)
• Buying or making the jewellery at a cheaper cost price
• Cutting back on your overhead expenses.

So before you begin starting up your own business, you can gain some idea of revenue, direct product costs, overhead expenses and likely profit. It is called a Business Operating Budget, because it relates to the ongoing business operation.

Before you get to business strategy implementation (the operating stage) you will firstly need to spend some money to set up your business (e.g. fit-out, furniture, equipment and website). You can create a budget for this too. It is called a Business Setup Budget.

Keep your two budgets separate so you don’t mix one-off set up purchases (e.g. office furniture) with regular ongoing operating expenses (e.g. monthly phone bill).

By setting all of this on a spreadsheet (e.g. Microsoft Office Excel), you can change the important variables and test the result (on paper at least). You can try various levels of price, volume, product cost and overheads. This is called ‘What if’ analysis. By doing this, you can create a business with a level of spending and a bottom line to suit your purse. It’s part of planning your own business.

If you seek startup advice or a powerful online business presence when starting up your own business visit http://garyweigh.com/business-startup

Until next time!

Gary

Gary Weigh – a short introduction

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Click to listen to short introduction from Gary
To all of you who harbour the small business dream, turn on your speakers, get to know me and use this blog as part of your business education.

Gary

http://www.garyweigh.com

Top small business ideas – business storytelling

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Make sure that you're still telling the same business story when it is translated into English

by Gary Weigh Business Coach Mentor

As you plan your business strategy implementation, remember the magic of stories. Business storytelling ranks up there with the top small business ideas. Stories build families and communities. They build emotional connections and it is well known that people buy largely on emotion rather than logic. Stories build faith but only if the story becomes real for the listener personally. Once people make your story their story, you have tapped into the powerful force of faith.

Can you remember when you were a child and one of your parents read you a story at bed time. Remember how it fired your interest and imagination. In business, a good story is more valuable than a thousand words of information and techno-babble.

When Anita Roddick, founder of The Body Shop, was asked why she chose skin care, she replied: “Because it’s storytelling. In every group I have spent time with, women will always corral around a well and tell stories about the body, birth, marriage and death. Men only have conversations or memories about their first shave. But women will always use the body as a canvas, a playground. ”

Traditionally, good stories become better in the retelling. It is the stuff that myth and legend is made of. The Anita Roddick story (below) is a great example. Although she died in 2007, her legend lives on. That is why leaders and successful merchants tell stories. They know that stories captivate attention and allow the listener to connect on an emotional level. Stories are remembered forever, whereas information is largely forgotten by the end of the day.

People, with whom you have made a story connection, become more relaxed, more interested in what you have to say, and have fewer objections. There is a much greater chance that your audience will reach the same conclusions as you and enlist in your cause. In other words, they like you and trust you and have concluded that they will buy from you.

There are many types of stories that you can tell to get your business message across. For example, your business storytelling can be about your self and your journey, the origin of your innovative product line, or you can share your vision and values. Make it an integral part of your business strategy implementation. But please – make it short; make it interesting and, above all, make it honest. Oh and one last thing – don’t let your inner demons tell the story unless you can also tell the story of how you overcame them.

For more top small business ideas visit Gary Weigh, Business Coach Mentor at http://www.garyweigh.com

Until next time!

Gary

Starting up your own business – you need friends in business

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This restaurant in Kyoto needed friends in business to help with English translation

Building a small business is difficult to achieve all by yourself. You need friends in business as well. Indeed you can be self employed and put in a 10-hour day contracting your labour and expertise. But that is not building a business. It is buying a job. While you continue to do nothing but sell your own time, you place a limit on your income because there are on 24 hours in a day and seven days in a week.

Building a small business is a leveraging process that requires many inputs – human and otherwise. As your business grows, you move away from doing everything to orchestrating everything yourself. When you reach your ‘solo’ capacity limit, you can only create more time and capacity by engaging the services of other people.

If you don’t grow as demand continues to grow, you either turn away customers or cut corners, thus sacrificing product quality and service in an effort to keep up. It is at this point where the downhill slide to failure begins. It is also at this point where you are working under considerable pressure and stress.

To survive, you have no choice but to move your small piece-meal operation out of your back bedroom into an environment of improved efficiency where you can make more products in less time to fill your ever increasing orders. Of course this requires a commitment to additional resources and to a higher level of expenses, usually at a time where you are not brimming with cash.

Try to solve the lack of people problem before starting up your own business. Don’t launch alone. Gather a few helpers around you. Look to friends and family. You are seeking help to get you going. You aren’t necessarily looking for a full time commitment. In most cases, people will lend a hand if asked and if they are able.

Another point worth remembering is that every helper you find is an inbuilt marketer. If they believe in you and what you are selling, they will tell everyone they meet. It is a lot easier for your friends in business to recommend your business than it is for you.

For more tips on starting up your own business visit http://www.garyweigh.com

Until next time!
Gary

Top small business ideas – when starting up your own business from home

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Home office space - simple and functional

There are a number of things to consider when starting up your own business from home.  Here are six top small business ideas to think about when setting up from home:

1. Find a quiet work space

Whatever you are doing from home usually requires quiet time to focus and concentrate.  So the room you select should be the quietest or most remote space on your property.  It should also be a dedicated space.  An office by day and a bedroom by night won’t work for very long.

2. Consider your fit out

The fit out of your home office space will largely depend on the nature of your business and whether you will be meeting clients there?  I work from home but have a purpose built separate office at the back of the house.  It is good enough to receive visitors but I rarely invite people there, preferring to meet at a local coffee shop.  I find that coffee shops are generally warm and inviting and certainly more congenial and more relaxing for clients.

3. Hire local facilities

For those bigger ‘meeting & greeting’ occasions, check your local area for meeting rooms, conference and catering facilities.  Generally these facilities are used so rarely, it is cheaper to rent by the hour or day, even for office based businesses.

4. Shut out distractions

You must find ways to make a definite and solid transition from home to work.  It is important to minimise distractions.  This is not easy with children and a television.  Going to work in your pyjamas is a not the way to get yourself into a good head space for work.  Tripping up and down the stairs to and from the refrigerator every 15 minutes is also something to avoid.  I make the transition by getting dressed for work, leaving the house via the back door and arriving at my dedicated office about five seconds and six steps later.

5. Check with Council

Whether you can operate legally from your home depends where you live.  Every local Council has its own view on what they will allow by way of a home business.  Some encourage home businesses while others are very strict.  The most common considerations include traffic, parking, unsightliness, noise and signage.  It is important that you check the rules in your area with your local Council. 

Here is an extraordinary example:

The guy who lived next door to me a few years ago bought a new house and moved away but retained the house next door as his work premises.  He was an accountant.  The one or two visitors he had on any day parked comfortably on his large driveway and he had a very small sign by his letterbox, the purpose of which was to let clients know they were at the right address.  He was the quietest neighbour I have ever had, until one day a rival accountant who lived down the road but had offices elsewhere, dobbed him into the Local Council.  His business was shut down.  He sold the house and moved his business to commercial premises.

6. Tax considerations

A frequently asked question when starting up your own business is whether you can claim all or part of your home office expenses as a tax deduction.  You should check with your accountant because there are a number of rules surrounding this area.  One of the downsides to claiming home business expenses in Australia is that the extent to which you use your home as an income producing premises, you ultimately sacrifice part of your ‘principal place of residence’ capital gains tax exemption when it comes time to sell your home.

These top small business ideas are brought to by http://www.garyweigh.com

Until next time!

Gary

Business strategy implementation – to partner or not

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This brand new business in Kyoto temporarily partnered up with two Maiko (appentice Geisha) to promote their products

At business strategy implementation time, the question of whether or not to take on a partner can arise for a number of reasons.  The most common include:

  • A shortage of cash at critical times such as startup and expansion
  • Loneliness or lack of confidence
  • A previous relationship that is appropriate to continue into business
  • A strategic need for a long term skill set

When starting up your own business, taking on a business partner is another way of saying that you want to give away or sell ownership of your business, together with a proportionate share of future profit and eventual sale of business proceeds.

It is common to hear of people who consider offering e.g. a web designer a share of their business in return for a website.  This is a big mistake to make.  At the outset your business has little or no value so it appears as if you are trading nothing for a service worth a couple of thousand dollars.

It seems like a good deal at the time.  However, when your business succeeds and grows, it will become the most expensive website on earth and a source of great regret for you.

One of your goals when starting up your own business should be to preserve as much ownership as possible.  If it’s absolutely essential to trade your equity to achieve short term goals, then consider a basic buyback option agreement that you can exercise later at your discretion (talk to your lawyer).

If you set out a valuation method (talk to your accountant) then you effectively put a future price on your equity and it enables you to buy back ownership of your business.  Do the math first because it could cost you more to put the agreement in place than it does for the service cost you are trying to avoid.

Partnerships, including company co-directorships, add another level of complexity to your fledgling business.  A person who knows nothing about your business could suddenly be playing a big part in your business strategy implementation.  They may not share your vision, passion or values.  They may force your business in a totally different direction.

It is for these reasons that partnerships have historically been a major source of conflict in business.  I have seen many businesses fold and disband over the years because the partners couldn’t agree on the time of day, let alone the important direction and management decisions.

If you do enter into a partnership for a strategic purpose, you should seek legal advice in regard to a partnership agreement or a shareholder agreement, whichever is appropriate.  You should also consult an accountant in regards to a valuation formula for buying and selling equity.

The goal of a written agreement is to clearly set out the rights and obligations of each partner and, amongst other things, how to deal with disputes, changing circumstances in the future, new partners, exiting partners, and sale of equity.

For more business strategy implementation tips visit http://www.garyweigh.com

Until next time!

Gary