Author: Min Tang

Categories
Entrepreneurship

Pricing Strategies For Small Businesses

One of the first lessons I learned when I started my business is that setting prices, especially for a service business, is quite difficult, especially when you’re essentially charging for your ideas, backed mostly by your reputation.

When it comes to pricing, there are many important factors to consider, such as sales channels, cost of goods, and competitor pricing. But, just as important is how well you know your target audience and how much they value what you offer.

Here are five pricing strategies to keep in mind as you grow your business.

1. Understand Your Market Price

Correctly pricing your product or service starts by determining the market price—the current price your product or service can be bought or sold. An economics professor will tell you the forces of supply and demand influence market price. The price at which quantity supplied equals quantity demanded is the market price, and because supply and demand are fluid, market prices change quickly. Factors such as employee wages, world events, and natural disasters all impact market price. Just look at how the recent pandemic disrupted the supply chains and affected food pricing on dairy, meat, and fish products.

Start by researching market trends in your industry, market demographics, and supply and demand. Check with your industry trade association—they should have valuable information for members. Also, Google Trends is an excellent resource about popularity trends over a specific time period. Risk Management Association (RMA) Annual Statement Studies are available at libraries or online and provide benchmark financial ratios for businesses in over 370 industries.

2. Cost of Goods Sold (COGS)

Calculating the direct costs of producing a product (COGS) ensures you are not pricing your product too low or too high. Include the cost of materials, equipment costs, utility costs to run equipment, shipping costs, and labor directly utilized to create the product. You then add other factors to that total to establish a profit margin. Research what the average markups are for your industry. When pricing a service, look at standard industry practices, plus market prices.

3. Sales Channels

Pricing also depends on your sales channel (or channels). Sales channels are how products and services are distributed to the customer, such as:

  • Business-to-business (B2B): Selling products or services directly to other businesses.
  • Business to consumer (B2C): Selling products or services directly to consumers or stores.
  • Distributor: Selling to a wholesaler or distributor who then sells to retailers.
  • E-commerce: Selling online.

4. Competitor Pricing

The amount your competitors charge for the same or similar products and services is a vital factor in your pricing strategy. Should you charge less, more, or the same? If you’re just starting, it’s difficult to charge more than your competitors unless you are offering something genuinely unique. In that case, you can take customer value into consideration (more on value later). Finding out the competitions’ prices is as easy as a quick internet search, but there are other factors to consider when comparing competitor pricing:

  • What sales channels do your competitors use?
  • How large are the companies? How many employees do they have?
  • Where are your competitors located? How many locations do they have?
  • What are your competitors’ branding strategies? Do they position themselves as high-end or low-cost leaders?
  • How do the features and benefits of your competitors’ products or services compare to yours?
  • What are your competitors’ pricing strategies? Do they offer bundled services or products for a discount? A subscription or member plan?

5. Understand What Customers Value

To define and measure customer value, you need to look at a product or service in terms of the benefits (technical, economic, social) a customer receives in exchange for the price they pay. Therefore, by this definition, lowering or raising prices does not change the value offered—instead, it changes the customer’s incentive to purchase the product or service. Part of your pricing strategy should be to note all the ways your products or services offer value, whether it’s solving an accounts receivable issue for your business client or satisfying a demand for vegan cookies. Understanding your value also contributes to your marketing strategy as you tout your value points to the market.

Keep an Eye Out for Reasons to Adjust

As market trends change, it’s vital to consider whether your pricing needs to change also. Make sure you continuously monitor customer demand, the sales and pricing of your existing competition, and any new market entrants. Revisit your product or service’s value elements, as well. Then, when you’re ready to invoice customers, let Bill.com take care of the details and help you get paid faster so you can spend more time helping customers and clients.

Pricing Strategies to Help Grow Your Small Business [Small Biz Trends]

 

Categories
Operations

Flexible Workplace Investment Sets To Grow

A specialist operational partner working with landlords providing flexible workspace has secured £1m investment for its expansion.

Spacemade, which has over 100,000 sq ft of workspace in Leeds, London and Bristol, has secured funding to support its growth as COVID-19 restrictions continue to ease.

Founded by Jonny Rosenblatt and Dan Silverman last year, Spacemade specialises in helping landlords to provide flexible bespoke workspace to businesses.

To date, the firm has delivered seven workspaces across the UK, including a workspace in London Fields, a collection of private offices on The Strand, the repositioning and expansion of a prime building in the heart of Leeds city centre, a coworking space in Fitzrovia and a neighbourhood workspace in Queen’s Park.

Dan Silverman, Spacemade co-founder, commented: “We’re thrilled to have these investors on board and this milestone for Spacemade comes at a watershed moment for the flexible market.

“As we emerge from the pandemic the provision of flexible space is going to increase substantially as businesses demand increased flexibility, however, it will increasingly be building owners providing it directly, enabling a much closer relationship with their customers.

“This round of fundraising is a clear vote of confidence in a new model of operation for the coworking sector and the increasing role agile workspaces will play in occupational strategies and decision making post-Covid.”

Spacemade co-founder, Jonny Rosenblatt, added: “It’s clear that businesses need flexibility and a perfectly operated workspace. Our approach is very different to the existing cookie-cutter model.

“Each one of our spaces that we operate for landlords is unique for its specific target customer, but part of a much larger network of spaces. Operational real estate is all about scale and this fundraise will help us accelerate our plans.”

Flexible workspace specialist secures £1m investment for post-COVID growth [Bizdaily]

Categories
Human Resource

Does Meetings Kill Productivity?

Meetings take up a lot of time and contribute to the expanding workday. Learn how to make them more productive.

Have you ever sat through a meeting and said to yourself, “What a waste of time, I could be getting my work done”? If your answer is yes, you are not alone. Meetings take up an ever-increasing amount of employees’ and executives’ time, which has been a contributor to the expanding workday.

While meetings can be a useful strategy and process for sharing work progress and connecting with others, excessive and poorly run meetings can have a significant negative effect on productivity and employee motivation. Research has proved this over and over again, and there’s a chance we’ll all need to run successful video meetings for the foreseeable future.

What research says about meeting productivity

In a report by Harvard Business Review, more than 70% of the 182 senior managers surveyed agreed that meetings are unproductive and inefficient. Respondents said meetings keep them from completing their own work (65% ), come at the expense of deep thinking (64%), and miss opportunities to bring the team closer together (62%).

A study conducted by Beenote showed that lack of participant preparation (28%), lack of team communication (20%), time allocated is not observed (17%), lack of follow-up tasks (25%), and lack of minute keeping (13%) are among the top problems with unproductive meetings.

Beyond reduced productivity, excessive meetings can even pose a health threat. According to Public Health England CEO, Duncan Selbie, sitting in meetings slows down metabolism and reduces the body’s capacity to regulate its sugar and thus blood pressure. These effects can lead to obesity, diabetes, cancer, and even death.

How to make the most of your meeting time

It’s probably unrealistic to think about scrapping meetings altogether. However, significantly reducing both the frequency and amount of time spent in them could increase employee satisfaction and productivity. Here are 10 ways to facilitate more productive meetings:

1. Try a walking meeting.

Consider having walking meetings rather than sitting down. Walking meetings can be a benefit for participants’ health. The previously mentioned Beenote survey found that meetings are most meetings last between 30 minutes and one hour. If you are walking at an average 20 minute per mile pace (about 2,000 steps per mile), that could result in an extra 3,000 to 6,000 steps per meeting.

Since 60% of surveyed participants said they have meetings several times a week, this could result in some serious overall health benefits. Additionally, employees may save some personal time after work that they otherwise would have spent walking anyway, improving their work-life balance.

2. Set strict time limits.

Your employees’ time is valuable, so limit the length of the meeting to one hour, or less, if you can. And end the meeting on time, even if the agenda topic is not completed. When you set strict time limits, employees can better plan their workday around the meeting, with the expectation that they will be released from the meeting on time. Additionally, this will force meeting planners to condense their agendas to only the topics that really matter.

3. Create and distribute a meeting agenda ahead of time.

Have a clear agenda distributed in advance that announces the goal of the meeting and anticipated outcomes. Ensure the agenda has a limited number of action and discussion items. This meeting agenda will help keep the meeting on track and can help you stick to your anticipated time limit.

4. Decide on clear, assigned action items for after the meeting.

No one wants to attend a pointless meeting that accomplishes nothing – yet this happens all too often. Ensure there are specific and actionable follow-up tasks to decisions made at the meeting, including who is responsible and accountable for each item. This clarity will help bring purpose to your meeting and will put your organization in the best position to succeed. Creating after-meeting action items will also help prepare employees for the next meeting, since they will be able to report on their progress or findings.

5. Send follow-up information and details.

If several important details are being discussed during the meeting, make it clear to employees that you will be distributing the information after the meeting. This will free employees from taking detailed meeting notes and allow them to better engage in the discussion. After the meeting, don’t forget to actually send the follow-up information.

6. Don’t hold status update meetings.

A common phrase heard around the office is “That meeting could have been an email.” Avoid unnecessary meetings by being tactical about the types of meetings you are hosting. Do not use meetings for updates or information dissemination that can be handled by other methods, such as email.

7. Start on time.

Always start the meeting on time and don’t allow participants to take part after 15 minutes. Also, do not spend time updating late arrivals on what they missed. If you form a habit of starting meetings on time, employees will create a habit of joining meetings on time. This keeps the meeting on track and helps you stay within your designated timeframe.

8. Put a cap on the meeting size.

Smaller meetings encourage more employees to participate, so it is a good practice to limit the number of people involved in each meeting. While maintaining between seven and nine participants may be ideal, your meeting cap will ultimately depend on your team size. A good way to keep meetings small is by only inviting the necessary parties to attend. Uninvited employees will appreciate fewer meetings, and those who attend are likely to benefit from a more productive meeting.

9. Give people an out.

Allow employees the right to decline their attendance without penalty. If the meeting is critical and attendance is mandatory, you can emphasize the importance of the meeting. However, if an employee has prior engagements that take precedent, work with them to find the best solution.

10. Keep the conversation moving.

If you are the meeting host, control the discussion by not letting individual participants dominate the conversation, or repeat what has already been said. You can also examine other ways to share content in meetings, including alternatives to brainstorming, presentations, and the use of media and technology.

Why Meetings Kill Productivity (and What to Do About It) [Business.com]

Categories
Business Trends

Why Responding To Online Reviews Is Crucial 

Find out why you need to respond to all your online reviews – not just the negative ones.

Would you do business with your own company? If you searched for your company by its brand name and added the word “reviews” at the end, would you be happy with what people are saying?

Competition is fierce in today’s digital age, with nearly every business claiming the best products and services and touting fantastic customer service. How, then, do people decide which company they’re going to do business with?

The answer is customer reviews, which can be managed with online reputation marketing. Notice that I didn’t say online reputation management. Managing your brand’s reputation is essential, but marketing it is also critical to the success of any business.

To improve your online reputation marketing efforts, you can start simply by responding to all your existing customer reviews – including your positive reviews. Sadly, this is one of the most neglected and underutilized online reputation marketing strategies around, yet it’s one of the easiest to execute. Here’s how to respond to positive reviews.

How to write a response to a positive review

When responding to a positive review, you can easily fit these steps to your company’s personality and brand:

  1. Write your response sooner rather than later. A response to a positive review will appear more meaningful and genuine if you deliver it quickly. You don’t have to respond mere minutes after the review is published, but don’t wait more than 24 hours.
  2. Address reviewers by name. When Sarah H. leaves a positive review, don’t just start your reply with “Thanks for your review!” Start it with “Hi, Sarah!”
  3. Continue with gratitude. After you address the reviewer by name, move on to simple gratitude. Your response should be something like “Hi, Sarah! Thanks so much for your enthusiastic review.”
  4. Address the reviewer’s key points. If Sarah’s review says that she loves your accounting company’s thorough tax preparation tips, acknowledge that point. You can usually acknowledge all the reviewer’s positive feedback in just one sentence.
  5. Offer discounts or rewards. While this is optional, offering discounts or rewards in your responses to positive reviews can encourage customer loyalty. If you do include these offers, it should be near the end of your response.
  6. Keep it short by ending here. Responses to positive reviews shouldn’t be long. You can be genuine and grateful with just the above, along with a final “thanks” or another expression of gratitude at the end. Don’t forget to include your name at the end too.
  7. Share your positive reviews. After you respond to the positive review, share it on your company’s social media feeds. You can also add positive reviews to your website’s testimonials page.

An example of how to respond to a positive review

Given the above tips, this might be an appropriate response to a positive review:

Hi, Sarah! Thanks so much for your enthusiastic review. We’re really happy to see that our thorough tax preparation tips and advice have made a difference for you. Feel free to remind us of this review the next time you use our services for 20% off! Thanks again for choosing us. –[Your name]

Why you should respond to positive reviews

Now that you know how to respond to a positive review, here are five reasons why you should respond to every single customer review.

1. Let the world know you care about every customer, not just the ones who complain.

As you research a company and read its reviews, you’ll hopefully see some positive ones. Suddenly, you discover a negative review, and that’s when the business finally decides to take the time to respond. The business is rewarding someone’s negative comments with its time and attention, instead of replying and showing appreciation to all the customers who took the time to share a positive review of the business.

What does it say about your business when people see positive reviews ignored, but then see a lengthy response to a bad review? It says your business cares more about your reputation than about your customers and their experiences.

That’s the real difference between reputation management and reputation marketing. The business is managing a negative review, instead of marketing its brand using all the reviews. If you thoughtfully respond to all your online customer reviews, you can market to your existing customers and attract new customers as well.

Here’s a tip about replying to positive reviews: Don’t just respond with a simple “Thanks!” or “We appreciate you.” Instead, personalize your response where appropriate and possible, showing your customers you took the time to compose a sincere and meaningful reply. You might think that you can’t afford the investment of time to respond to all reviews. However, when you invest the time, it will provide you a positive ROI.

2. Increase the lifetime value of your customers.

When you respond to your customers’ reviews, you have the golden opportunity to market to your existing customers. Did you know that when you respond to a customer review, the customer will know that you replied? Most review platforms notify customers when the business responds to their review. This is an easy way to make your existing clients feel appreciated, and they are much more likely to become repeat customers.

Too many business owners and entrepreneurs are so focused on acquiring new customers that they ignore their existing ones. A customer will be more inclined to do business with you again and refer you to new customers when you express your gratitude publicly to their positive review.

3. Enhance your SEO efforts.

Every time a customer reviews your business, whether positively or negatively, it’s your opportunity to provide additional SEO value for your business. Search engines like Google, Bing, and Yahoo crawl the internet to find new information so they can provide the most recent and relevant content for their users. When you respond to each customer review, you can add context about your customers’ experience with your business.

Let’s say that you are a plastic surgeon in Maryland and a happy patient just posted a glowing review online. You could reply, “Thanks for the great review! We are constantly striving to be the best cosmetic surgeons we can be. I’m so grateful you chose our practice. If you need help or have any questions, call our Maryland office anytime. Remember, you also have my private cell phone number and can reach me anytime, 24/7, if it’s urgent.”

Note the keywords “best cosmetic surgeons” and “Maryland” in the reply. This is additional relevant content that will enhance the SEO value of that review page, especially for your local business listing on Google. Google specifically states in its help system that reviews can improve your listings’ visibility in its results.

Don’t overdo it with the keywords in your replies, though. Otherwise, Google and other search engines may penalize your listing, and you could offend your client or patient if they feel like your response isn’t authentic. Remember, these responses are public for everyone to see. The good news is you can add to, edit or update your replies at any time.

4. Protect your business reputation with trust and transparency.

When you fail to implement a reputation marketing system in your business, you leave yourself vulnerable to attack. If you neglect your online reputation, all it takes is one or two bad reviews to cripple your business.

However, if you’re actively marketing your brand reputation and requesting online reviews, you can drown a few negative reviews in a sea of positive reviews. Today’s consumers are well educated; most people know that you cannot please 100% of the people 100% of the time. Your competition likely has a negative review or two as well. The key is having dozens or hundreds of positive reviews to outweigh the negative ones. When you combine positive reviews with personalized responses to all your reviews, you create a strong fortress around your brand’s reputation.

When people see dozens of positive reviews and an occasional negative review, they are likely to discount the negative review – especially if the business has replied to all the reviews with honesty and transparency. People understand that companies make mistakes and can even empathize with them in certain situations. It’s critical if you or an employee make a mistake that you own it and take responsibility. People will understand and forgive you if you craft appropriate and thoughtful apologies to your negative reviewers.

Many times, it’s your responses that will attract new customers to your business. When they see you responding to all your clients and observe how you handle difficult situations, most people will trust you to do a good job – and to do the right thing if you don’t.

5. Attract new customers who post reviews.

About 78% of consumers trust online reviews as much as personal recommendations. That’s why it’s critical to implement a reputation marketing strategy that helps you develop trust with your prospective customers.

As you earn more reviews for your business and consistently reply to them, prospective customers will see why they should choose you over your competition. They will see that you care about all your customers. As a result, more people will trust your business, and you will become the clear leader in your marketplace.

When you invite your new customers to share reviews about their experiences online, simply remind them why they chose your company. The odds of your new client posting a review online are good, since it was customer reviews that attracted them to your business in the first place.

How to handle negative reviews

Most entrepreneurs and business leaders make every effort to satisfy and please the customer. However, no matter how hard you try, sometimes it just doesn’t happen and your business is forced to address a negative online review. When that happens, it’s crucial to consult people you trust who have legitimate business experience and acumen before you respond. The last thing you want to do is reply in an emotional state of distress or anger.

Instead, think of how you can reply in an authentic and meaningful way without compromising your integrity. Let’s face the truth: Some customers will try to sabotage your business to get free products and services or simply to get attention. Don’t let this happen to you. Stay true to your core values, and do your best to reply in a professional and thoughtful manner.

For example, one of my company’s clients found a negative review that labeled his chiropractic clinic as “another cattle-in and cattle-out operation.” Ouch! The business owner wanted to share a fun and lighthearted response and wasn’t afraid to repel people if his message didn’t resonate with them. After careful consideration and discussion, he decided to create a video response using a humorous yet authentic approach and posted it on Facebook. Remember, it’s OK to have a sense of humor in business, as long as you are genuine and sincere.

He got thousands of views and lots of positive feedback from the business’s Facebook fans. However, this reputation marketing strategy could have backfired if the business did not have dozens of five-star reviews. This is why every entrepreneur must be laser-focused on building a five-star online reputation for their business and brand.

Why Responding to All Your Online Reviews Is Critical [Business.com]

Categories
Operations

How To Handle Non Paying Clients?

Contracts, lawyers and collections agencies are a few places to turn when you have clients who won’t pay their invoices. Even better is to prevent the problem in the first place.

When you do business with a client, you expect to be paid for your labor, product or services. But what happens when those payments are late – or don’t come at all? It’s a question that comes up often. Fortunately, there are steps you can take to handle and even prevent the problem.

Preventing non-payments

Chasing a non-paying customer is often a messy process, so it’s best to avoid the issue altogether by taking the following precautions.

1. Research your client.

If you’ve never worked with a client before, do your research and find out who you’re dealing with. Google their name, ask your contacts if they know anything about your new prospect, run credit checks on them, and, for business clients, see if there are any complaints against them on sites like the Better Business Bureau.

“Most non-payments can be prevented or severely minimized by screening the customers in advance,” said Jocelyn Nager, president of legal firm Frank, Frank, Goldstein & Nager. “Thanks to all information available on the internet – especially the court records, notice of liens and more – most often you can run a risk assessment on your own … and the possibility of non-payment should be reflective of your tolerance for risk.”

2. Have a contract.

No matter if the client is your best friend or one of the most respected business leaders in your industry, always have a written contract in place. The contract should address these legal concerns:

  • Payment schedule: e.g., 40% deposit, 40% milestone payment and 20% upon completion
  • Terms: e.g., payment either 30, 60 or 90 days after the invoice is sent
  • Preferred payment method: e.g., checks, credit card or PayPal
  • Scope: the exact work you are expected to complete
  • Deadline: expected completion date
  • Late payment policy: the amount charged if an invoice is not paid on time

It’s essential to get all details in writing so you don’t face issues down the road. For instance, if your client is aware they owe fees for overdue expenses, they’ll be less likely to flake – and if they do, they’ll be forced to pay interest. But if you fail to set up a contract, nothing is guaranteed.

“Often when assisting clients who are being charged interest, late fees, or legal fees, I will ask the company for anything in writing and signed by my client that permits them to do so,” said Thomas J. Simeone, trial attorney and managing partner at Simeone & Miller LLP. “When they cannot do so, I explain that interest and fees are not part of the contract and therefore are not allowed.”

Don’t set yourself up for problems that are easy to avoid. You can find service contracts for free and online.

3. Ask for a deposit.

If you ask for a portion of the payment upfront, you’ll absorb some of the hit. Asking for a deposit or retainer is common for freelancers when they negotiate with clients and will help cover the expenses or time that you already put into a project.

According to Tina Willis, owner of Tina Willis Law, the amount you should ask for depends largely on the industry. If workers in your position do not typically charge retainers, consider installment fees, which are paid as you complete certain parts of the job.

“That way, you are less likely to do way too much work before getting paid, or realizing that you are never going to be paid,” Willis said.

4. Offer early payment discounts.

For large invoices, your customers may be more likely to pay in full (and sooner) if you offer discounts for early payment. For example, if you file a $10,000 invoice due 30 days after receipt, then you can offer a 3% discount ($300) if your client pays within 15 days. You can also stagger your early payment discount by taking this discount down to 1% ($100) if paid between 15 and 30 days after invoicing.

5. Allow payment in installments.

If slightly delayed client payments won’t drastically interrupt your cash flow, installment-based payment plans can create a middle ground for you and your client. For the $10,000 invoice example, you could offer a payment plan of $5,000 within 30 days and then one $2,500 payment each 60 and 90 days after the invoice, which can maintain your cash flow while easing the client’s burden.

6. Charge late fees.

To incentivize timely payments, list the late fees and their effective dates in your invoices. Alternatively, you can send your client a new invoice with added late fees after a certain period of no payment. If you retroactively add late fees, warn your clients first.

How to Handle Non-Paying Clients [Business.com]