You have this wonderful idea for a new business. Whether it is making, promoting or distributing this fantastic and new product or service the same 3 ground rules always apply.
YOU think your idea is the answer to other people’s needs BUT does your chosen market agree ?
WHO else is offering a solution to this notional need ?
HOW does your idea differ or add value to the existing solutions
There is no benefit to you in making a product or designing a service that other people do not value
There are thousands of new patents issued every year for tremendous products that satisfy a problem identified solely by the inventor. The vast majority have no commercial future because the market place doesn’t experience or value the problem as greatly as the inventor. There are far too many people who loose substantial amounts of money pursuing dreams that have no commercial worth. The most important step every business must take before investing in detailed research and development is to find out what the proposed market thinks of your idea and what else is on offer
Draw a rough sketch of your new product, or a simple schematic of your service. Then make direct contact with several professionals in your chosen market place as well as and ask them what they think of your idea. You can protect your ideas through Copyright protection where appropriate. Or in seeking professional advice most businesses will be happy to sign a simple non-disclosure agreement. Your business idea should be summarized in a single paragraph at this stage
Specifically you need to ask them;
Do they acknowledge or recognize the problem/need you have identified ?
Do they know of any other businesses offering a solution to this need,
who are they,
where are they,
how much does it cost etc.
What do they make of your proposal ? And how can you improve on your concept
Be prepared for people to dismiss your idea. This will happen when you eventually come to sell the idea anyway, so get used to rejection. Write down or record ALL the answers to your questions
Do not simply ask friends and relatives what they think of your proposal. These people will most often WANT you to succeed. But YOU NEED appropriate and dispassionate insight into your proposed market
List all your answers, write them down and review them ALL, including the negative responses.
If the overall answers are ambiguous, ask more specific questions.
If the bulk of the answers are negative – abandon your idea now.
If the bulk of the answers are positive – proceed to the next stage
Negative answers are your wake up call. They can avoid years of frustration, the cost of lost homes and broken relationships. Another idea will come along. This is not about being defeatist, it is being realistic and pragmatic. You learn and live to invest in another dream, another day
Positive answers from potential customers should be kept secure. These will most often be your first customers once you get to market.
Stage 2: Having hopes, dreams and aspirations is fantastic, commendable and significant. Equally essential are the facts about your proposed customers. As you begin to develop your product or service and before you risk greater sums of money bringing this to the market it is vital that you identify where your potential customers are located. It seems so logical and yet each year thousands of people launch businesses and locate them in the wrong place. Budding entrepreneurs find themselves taking retail premises at the wrong end of town or where there is poor parking because they have not researched the footfall for their chosen market. I see manufacturers setting up in locations far from their customer base because of apparently cheaper rents elsewhere. I see internet companies that need to send out physical stock in locations that add cost and inconvenience to their couriers thus raising their cost base. At this early stage in preparing to launch your new business it is essential that you are rigorous in researching exactly where your customers are located. Please don’t simply follow the herd and set up where other similar businesses are already located because this results in; • Increased competition on your specific customer footfall • Pushes down the unit sales price for you and the competition • Risks the failure of your venture when the existing competition has deeper pockets than you and embarks on a discount selling format to retain their market share. You can never be certain why the competition has settled in their location. You can be certain why you have chosen your location. Before you research your potential customer base clarify in a few words what you want to sell. In this way you can ask potential customers very simple questions to which the answer you seek should be either YES ‘would you buy this product in this location‘ or NO. My advice is to get wise about your potential customers and not rely on a single pathway to get your information. Do not get carried away with vague or generic numbers, such as the number of residents in a given area, or the number of members of a trade group or association. There is always an exceedingly high rate of attrition when using such data. 1. If you plan a local retail type of business try on-street canvassing in various locations around your preferred town. Vary the times and days of the week in order to gain a picture about the ebb and flow of customers in the different location. It will be too late if you sign a lease on premises in the wrong location and the rate of customer footfall doesn’t meet your needs. 2. Remember to use several different search engines when conduction internet searches and do not simply add the total numbers for each search to one another. Remember there will be a high rate of customer overlap on all searches. For example if you are looking for the number of plumbers in a given area to sell your new widget to, don’t simply add the number of plumbers in one trade association to the number of plumbers registered with the local authority. Far better to gather a specific list in say an Excel spread sheet and then drop each successive search into the same software so that you can eliminate duplications. MailChimp is a good route if you are going to canvas a wide market and eliminate duplications. There are many such products that are phone and tablet based for such work. 3. Do not ignore paper records. Yellow Pages, local authority records, libraries, magazines covering your interest areas from solar electrical engineering to cuddly pet ownership, all sectors have magazines where readership levels can be trawled for information on customers and competitors. Most importantly do not fall into the trap of asking such vague questions that the answers have no value. Too often budding entrepreneurs want their hopes and aspirations massaged. This is not the function of writing a Business Plan and conducting Market Research. You should be seeking the truth about the market potential for your business idea. Find the flaws in your ideas here and you can vary your offering to meet actual market needs. This extract is taken from my weekly blog on how to research and construct a meaningful Business Plan. All the information is FREE and will be FREE to download from www.JGID.com shortly. I believe that all knowledge that helps businesses progress should be available to all, FREE at the point of need. Thank you for reading this blog and please feel free to add any comments to the discussion.
You have this wonderful idea for a business and you have established there is a market need for your idea, however before you decide to invest your life’s savings and inflict yourself on the unsuspecting public.
3 words of cautionary advice !
From Australia to the UK I have found so many business owners in deep financial problems, some haven’t acquired the appropriate license to carry out their chosen trade. Others have begun business in the wrong trading entity and only realized when the tax authorities have slapped a huge fine on them. Still more have been subjected to raids on their premises because they failed to show they had the appropriate and certified skills. Whilst your business efficiency can be improved by the use of Business Management Systems such as JGID ( www.JGID.com ) your trade skills are market and trade specific.
This section for preparing your Business Plan covers the 3 sectors that frequently catch out the unwary entrepreneur, required skills, licences and the trading name. The specifics and links are for Australia, however, I can assure you it is very similar in France, the US, the UK, in fact most countries have strict rules governing these three issues.
Please remember ALL customers will typically assess your product or service within the following 3 parameters. Do you possess the;
Required skills, which means it is an essential basic trade capability.
Preferred skills, which means this is the professional standard most customers will expect.
Desired skills, which means you have the skills to satisfy specific market demands.
In most cases, especially in today’s market, you’ll probably need all or almost all of the required skills, plus at least half of the preferredskills in order to gain the work. If you have one or more of the desired skills, your chances are even better.
1 – Skilled Occupations List
If you are considering trading how do you know you have sufficient skill ? and,
how do you persuade potential customers you can do the work at the appropriate standard ?
The answer is really simple, check with your regional assessing authority directly to obtain a skill assessment. You can do this on line. The assessing authority will provide all necessary applications forms and associated information relating to the assessment. The Australian information is available for migrants but also existing citizens via the B.I.B.P. site
A skills assessment helps you find out if you have the necessary skills and qualifications to work in your nominated occupation. TheSkilled Occupation List provides a complete list of the relevant assessing authority for each occupation on the list, as well as contact details for these authorities. This is Australia specific at the moment. I will add more countries in a later posting.
A skills assessment should not be confused with licensing or registration. A skills assessment helps you to determine whether your skills and experience is relevant to meet national standards in your nominated occupation while registration or licensing means you hold a license or registration and have permission from the relevant authority to practice in that region.
For example, to work as a plumber in Australia, you must be registered with or obtain a license from a local authority in the state or territory where you want to practice as a plumber. In some cases, a successful skills assessment is also required in addition to meeting the licensing and registration requirements.
For further information about skills assessments, contact the relevant assessing authority. For questions relating to licensing and registration, contact the relevant registration body in your state or territory. For help with running your business most efficiently visitdev.snkeee.com.au/jgid.
2 – Certificates and Licenses
Australian Department of Education & Training
Registered Training Organization Finder
This tool identifies the locations where assessments are available for respective occupations. You should confirm which program is right for you, and whether you meet the eligibility requirements by using the TRA Pathfinder
Trades Recognition Australia is a skills assessment service provider specializing in assessments for people with trade skills, for the purpose of skills recognition.
They offer three options;
to assist you to find the right program,
to access detailed program information or
to progress a TRA application
Always remember that in this digital age where most customers have smart phones, customers will check you out before placing the business.
Don’t get caught,
Licensedtrades.com.au is Australia’s only comprehensive license checking website. They index over 47 licensing authorities and over 1 million trade professionals! So potential customers can do all their licensed trades checks in one place.
3 – Trading name
Do you need to register your business name
If you are using your own name – your given name(s) and/or initial(s) followed by your surname – as a business name, it does not have to be registered
you include other words with your name, such as Joan Smith Party Hire or John Smith & Sons
you are trading under a name that is different from your own name
you are operating a company (Pty Ltd) and want to trade under a different name to your company name.
Registering your business is important because
it prevents you from mistakenly using the name of another registered business, company or corporation.
It lets the public know who is conducting a business under the business name, and
allows you to open a business bank account under your registered name
You cannot use an unregistered business name, or a name that is different from your own name or company or corporation name
Business name or company name?
A business name (e.g. Acme Trading Services) is different from a company name (e.g. Acme Pty Ltd).
A business name is used by consumers to identify the company or persons behind a trading name.
A company is a separate legal entity from its directors and shareholders
Registering a company name prevents an identical business name or company name from being registered by competitors anywhere in Australia. If you want to operate your business as a company, you will need to register with ASIC
Your rights as a registered business name holder
Registering a business name only gives you certain rights over that name. For example, it does not:
give you ownership of the name or the exclusive right to use the name
stop another person from registering a similar name
prevent the name being registered as a trademark
prevent the name being used by someone that has already registered it as a trademark
protect you from legal action if the name of your business infringes the intellectual property rights of another (for example, a name which is a registered trademark).
Confused ? Design is not a solution, it is a step in the process of selling.
Design is a prediction concerned with how things ought to be, it aims to change an existing situation into a preferred one. It plays a vital role not simply in establishing how a product may look, but how it may perform to it’s desired function. As much scrutiny and rigour apply to the design of a service as to it’s efficiency and profitability. This is not a ‘big business’ concept. It has real consequences for the inexperienced sole trader or fast growing SME.
Product evaluation need to consider the product design and development process. Studies show this plays a crucial role in the product quality and performance. The product designers and business owners should attempt to predict the behaviour of a product and its users. The most innovative part of the design process is its conceptual phase in which most decisions are made. It is fundamental to understand that your products should manifest end users point of view, from initial concept to their distribution to the market place.
Product evaluation need to consider the product useability, this can be divided into different tasks. Task analysis is used to evaluate products and the user’s interactions with them and to assess their useability. In this context task analysis refers to overall user’s activity. The methods and techniques are different for specific applications such as workplace design, medical equipment design, interface design etc.
In order to offer the marketplace your new product or service it is imperative to ensure that your proposal will actually be used the way you intend it to be. Very often businesses face confusion when their product is ‘misused’ or applied in a way contrary to it’s original purpose; or a customer insists on the service being ‘specified’ for their market or company. This is particularly prevalent in the building and maintenance industries where major contractors ‘impose’ their work practices on suppliers and sub-contractors. The impact of failing to evaluate your product or service against the marketplace always results in unnecessary loss of profits and in far too many cases litigation or insurance claims.
The solution to avoiding these costly problems is to evaluate your offering before you bring it to market. User constrains should be included into the design project from it’s initial concept. In order to achieve the desired outcome the business owner or product designer must have the specific body of knowledge about proposed users and their behaviour, including ‘main contractor protocols’ etc.
The nature of the business project determines which kind of methods, strategies, knowledge and data are required for appropriate evaluation. For example:
Check published data; such as anthropometric tables, to see if there might be a problem between a user, your product or the environment. This can be particularly helpful when the user may be vulnerable, such as a child or an elderly or disabled person. If you know what size a user may be and what strength they may require to use the product, you can work out the consequences of them using it.
Ergonomic evaluation; reveal and anticipate problems. These ‘expert appraisals’ can be carried out using checklists that ensure that all aspects of the product and its use are considered. Expert appraisal can also be used before user trials to help work out the test method for such trials.
Investigate specific standards and general safety legislation that apply. Details of standards can be found from your local authority as well as trades bodies and associations.
Review accident statistics to see how relevant injuries are caused. Detailed analysis of accidents can help identify patterns of behaviour that, coupled with a particular product, lead to an accident. The chance of being involved in an accident depends on whether you realise that there is a hazard involved, whether you understand what it is, and whether you can do anything about avoiding it. Tables of accident data are collected by many authorities. In Australia try https://bitre.gov.au/statistics/safety/ or for international fatalities https://www.atsb.gov.au/media/32897/b20060002.pdf. The Home and Leisure Accident Surveillance Systems (HASS and LASS) and are available from the Consumer Affairs Directorate of the DTI in the Uk. There are many industry specific records for most developed markets worldwide. For example a large number of window cleaners, solar panel installers and decorators fail to secure their ladder tops to fixed eye-bolts and result in the second highest industrial accident records worldwide ! A little bit of advance planning and appropriate cost adjustment would reduce the amount of injury time, insurance costs and deaths in these industries.
Investigate complaints involving similar products ( especially from direct competitors ). People often report an incident with a product that was relatively insignificant, but it might otherwise have had serious consequences, and this can be useful information.
Carry out user trials with real, representative users. These are the most valuable source of information about a product’s performance and can provide the best quality of data to make a decision to change a design or make a new product. They typically involve watching people carry out a careful set of activities using the product. Alternatively consider using a home placement of products where your product is given to someone to use in a real setting for longer periods of time. In these cases users might have the product for 1 or 2 weeks so that a whole cycle of use can be studied. They might be asked to keep a diary of use during the time and report on any problems, or be given a series of tasks to do and report on. They will then be observed using the product at the end of the period, when they will be more familiar with its use. This can be more realistic than a laboratory based trial. Examples of products that might be tested by a home user trial are domestic appliances like kettles and vacuum cleaners, which are familiar to most people, and do not need to be installed.
Supervised user trials may be used where there are known safety issues, such as with garden compost shredders or lawnmowers. These trials are also good for giving people more tasks in a given time than they would normally get at home.
Where you are going to be offering a service, field trials may be the most appropriate and cost effective trial, though you must be sure to provide adequate insurance for such tests. Just offering a service free of charge to a new customer in the expectation they may provide business in the future does not constitute ‘evaluation’ and risks bankrupting your business before its gets running if you make a mistake. Site specific service evaluation requires your ‘prospect’ or ‘tester’ acknowledges the risk they are running in advance of the test.
When you have all this information about a product, then carry out technical tests to see what will happen when your product is misused in the ways that you have identified from field or placement tests. These will provide the answers to the ‘What if?’ questions. Technical tests can be used to simulate a real user experience. If used with data on strength and size, it is possible to test products in a similar way to how they will used in the ‘real world’. In many cases this is the basis for Standards, with an additional allowance being made for a margin of safety. In the case of dangerous products, or those known to have previously caused injury, it is clear that the only safe way to test is to do so with technical tests rather than endanger users in trials.
Instructions and warnings
It is very important to evaluate the instructions and warnings that accompany products. The content and appearance of instruction manuals and warnings is very important if they are to be understood properly. In the workplace, instructions and warnings reinforce what has already been learned through education, training and supervision. Obviously, at home, this is not available and users must rely solely on printed instruction manuals and warning labels. These often fail because they do not provide the right amount or type of understandable information.
You do not need to tell the user about obvious hazards, for example, that knives are sharp. But you must warn users of the non-obvious hazards of your product, both for its intended use and its foreseeable misuse.
There are three types of warnings that you can use:
Labels printed on the product,
Separate text in the instruction manual,
Highlighted messages throughout the instruction manual.
The main purpose of all warnings is to get users to behave more safely with products. To be effective, a warning must:
Be seen – it must catch the user’s attention by its design and presentation.
Tell the user about the hazard and how serious it is.
Tell the user about the consequences of failing to follow the instructions or of misusing the product.
Include further references to other sources of information about hazards.
Warnings are not an excuse for bad design. Warnings will not prevent a product being considered defective by law if the hazard could have been removed through proper evaluation and design in the first place.
The message is clear, design is not haphazard or driven solely by a desire to make a product stand out or be different from it’s competitors.
Dieter Rams Ten Principles of “Good Design”
Good Design Is Innovative : The possibilities for innovation are not, by any means, exhausted. Technological development is always offering new opportunities for innovative design. But innovative design always develops in tandem with innovative technology, and can never be an end in itself.
Good Design Makes a Product Useful : A product is bought to be used. It has to satisfy certain criteria, not only functional but also psychological and aesthetic. Good design emphasizes the usefulness of a product while disregarding anything that could possibly detract from it.
Good Design Is Aesthetic : The aesthetic quality of a product is integral to its usefulness because products are used every day and have an effect on people and their well-being. Only well-executed objects can be beautiful.
Good Design Makes A Product Understandable : It clarifies the product’s structure. Better still, it can make the product clearly express its function by making use of the user’s intuition. At best, it is self-explanatory.
Good Design Is Unobtrusive: Products fulfilling a purpose are like tools. They are neither decorative objects nor works of art. Their design should therefore be both neutral and restrained, to leave room for the user’s self-expression.
Good Design Is Honest: It does not make a product more innovative, powerful or valuable than it really is. It does not attempt to manipulate the consumer with promises that cannot be kept
Good Design Is Long-lasting: It avoids being fashionable and therefore never appears antiquated.
Good Design Is Thorough Down to the Last Detail: Nothing must be arbitrary or left to chance. Care and accuracy in the design process show respect towards the consumer.
Good Design Is Environmentally Friendly: Design makes an important contribution to the preservation of the environment. It conserves resources and minimises physical and visual pollution throughout the lifecycle of the product.
Good Design Is as Little Design as Possible: Less, but better – because it concentrates on the essential aspects, and the products are not burdened with non-essentials, it should stress purity, and simplicity.
This extract is taken from my weekly blog on how to research and construct a meaningful Business Plan. All the information is FREEand will be FREE to download from www.JGID.com shortly.
I believe all knowledge that helps businesses progress should be available to all, FREE at the point of need.
Thank you for reading this blog and please feel free to add any comments to the discussion.
It never ceases to amaze how often start-ups and existing businesses alike find themselves in a legal or financial wrangle because the owners have not chosen the appropriate legal structure for their business. If the structure is wrong, then insurance and licences are often found to be void. This is a common and costly mistake. Many business failures start with this issue, when owners find they cannot get paid for work done or cannot expand their financing to take advantage of a market opportunity. Banks, Courts and insurance companies have little compassion for owners who through negligence or sloth have failed to structure their business appropriately. If you construct a thoughtful and measured Business Plan you can reduce if not eliminate costly mistakes.
Reviewing the business structure as part of the annual revision of the Business Plan helps all owners maximise the efficiency, profitability and tax planning opportunities for their business.
This guide is based on the Australian and UK model, so please check the specifics if you are reading this elsewhere.
There are four basic business structures that represent most of the SME market. It is vital that the business owner understands the fundamental differences between them before registering for licences, trading names, bank accounts, ABNs, insurance, leases etc. It is possible and very common for businesses to change their structure over the passage of years.
Each structure has it’s strengths, weaknesses and separate legal status. I have chosen not to include Public Companies and Incorporated Limited Partnerships in this blog simply because these are structures most commonly used by larger businesses and joint ventures. Furthermore Trusts and Foundations are more complex legal entities than these pages allow.
• Sole Trader • Partnerships general • Partnerships limited • Private Company o Trusts & Foundations o Public Company o Incorporated Limited Partnerships..
I have provided links at the bottom of each section for you to check your situation with the relevant Tax Offices for Australia, UK and U.S.
Sole Trading; As the name implies is the simplest format to carry on a trading enterprise. However, it is important to recognise that all the financial liabilities reside in the owner. It means that the owner cannot separate the domestic assets from those of the business. It means that bank accounts and loans are secured against ALL of the owner’s assets, including the home, unless specific legal arrangements have been put in place them in a separate legal entity such as a Trust.
Benefits: • It is swift to set up. • Simple paperwork is required. • Costs for administration and accountancy are minimal. • Generally lower regulation thresholds. • The business owner can employ any number of people and make all appropriate tax calculations and payments for employees. • The owner is responsible for all insurance policies governing the business and it’s staff whether at the place of trading or elsewhere. • The owner can sign any and all contracts on behalf of the business. Disadvantages: • There is an unlimited financial burden on the business owner to guarantee all loans. • Responsibility for the impact of faulty goods or services provided through the trading activity rest entirely with the business owner. • Income for the business is treated as the owner’s personal income. • Tax reduction tools are minimal. • Insurance policies are restricted. • The business ceases immediately with your death, incapacity or bankruptcy.
Check the legal structure that best suits your business and your financial status via these Tax Office links : Australia – https://abr.gov.au/For-Business,-Super-funds—Charities/Applying-for-an-ABN/Business-structures/Individual-Sole-trader/ UK – https://www.gov.uk/working-for-yourself US – http://www.irs.gov/Individuals/Self-Employed
Partnerships General; Defined variously as a structured relationship between any number of people with the specific intent of running a business in common with the intent of making a profit. It is vital to understand that whilst partners can share in the workload and responsibility for running and administrating the business, all partners are increasing their exposure to unlimited risk. “All partners are jointly and severally liable” for all debts and liabilities incurred by the business. A Partnership is not a separate legal entity. It is important to recognise that all the financial liabilities reside in the partners collectively. It means that one partner cannot opt out from the liabilities of the other partners. It means that any claims for the impact of faulty goods or services reside in each of the partners. It is also vital to understand that any negative financial history and current status of each partner will reflect on and impact upon the business loans, leases, insurances and indemnities. Partners cannot also be employees of the business, instead each partner is an agent of the business. Each has the ability to sign any contract or obligation on behalf of the other partners. There is no legal requirement for one partner to inform any other partner of their signing a commitment or obligation on behalf of the partnership. Written Partnership Agreements are essential is assigning roles, functions and responsibilities, however, the underlying principle of shared liability cannot be contracted out.
Benefits: • It is simple to set up. • Repetitious but simple paperwork is required. • There is a shared management base and expertise. • The Partnership can access a wider range of capital and loans. • The business can employ any number of people and make all appropriate tax calculations and payments for employees. • The partners are jointly responsible for all insurance policies governing the business and it’s staff whether at the place of trading or elsewhere. • Costs for administration and accountancy are minimal. • Some tax planning advantages and schemes. • Generally lower regulation thresholds. Disadvantages: • There is an unlimited financial burden on each of the business partners to guarantee all loans committed in the name of the Partnership. • Responsibility for the impact of faulty goods or services provided through the trading activity rest entirely with the business partners. • Income for the business is treated as the partners’ personal income in proportion to the specification laid out in the written partnership agreement. • Insurance policies are restricted. • The business ceases immediately with any partner’s death, incapacity or bankruptcy and has to be re-formed, incurring legal and administrative costs. • A partner can abscond leaving all debts to the remaining partners. • There is joint responsibility for all business functions even where separate roles have been designed and designated to each partner. • Transferring ownership can be costly and time consuming. • Any partner can independently decide to dissolve the partnership. • Dividing Partnership assets including Intellectual Property and work in progress can be costly and time consuming.
Partnerships Limited; Limited Partnerships are most often formed to enable additional people to contribute capital to a business and share in the business’s profits. Most specifically the ‘limited’ partners do not share in the liabilities of the business. In order to avoid legal liability, limited partners are prohibited from any involvement in the management or running of the business. Limited partners have no legal authority to act on behalf of the Partnership. However, the business must have a minimum of one General Partner in order to trade. The General Partners share all liabilities as above. Written Partnership Agreements are essential in defining who are full partners and who have limited liability. Getting the structure set down is one thing, preventing ‘drift’ over time or when trading becomes more difficult has resulted in Courts frequently ruling that individuals have assumed management functions or controls to the extent they have ‘segwayed’ from limited liability to full partnership by default.
Here are the Partnership Tax Office links : Australia – https://www.ato.gov.au/business/starting-your-own-business/choosing-your-business-structure/partnership/ UK – https://www.gov.uk/set-up-business-partnership US – http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Partnerships
Company Private; A company is a business entity that has a separate legal existence from its owners. The owners of the company are known as members or shareholders. Its legal status gives a company the same rights as a natural person which means that a company can enter a contract, take on an obligation, incur debt, sue and be sued. Companies are managed by company officers who are called directors and company secretaries. Small business owners often use a type of company structure ( a proprietary limited company Pty in Australia), that does not sell its shares to the public and has limited liability. Larger companies that do sell shares to the public can still limit their liability. Benefits: • It is a separate legal entity. • The owners enjoy limited liability. • Tax rates are often lower than personal tax rates. • The company can employ any number of people and make all appropriate tax calculations and payments for employees. • The company is responsible for all insurance policies governing the business and it’s staff whether at the place of trading or elsewhere. • The company can assign and assume any contracts and liabilities. Disadvantages: • Some banks still insist on Director’s providing personal guarantees or debentures against company loans.. • Responsibility for the impact of faulty goods or services provided through the trading activity rest entirely with the company. • Income for the business is taxed separately from those of the Directors and shareholders. • Tax reduction tools are extensive. • Insurance policies are wide ranging. • The business continues after the death or incapacity of it’s Directors and shareholders. • Companies placed in Administration or Receivership lose all control over their former assets.
As companies are legal entities in their own right, there are additional and ongoing legal obligations that company officers must comply with under the legislation of the country within which they trade and/or are taxed. Failing to comply with these laws may result in formal regulatory action against the company and/or its officers.
Here are the Private Company Tax Office links : Australia – http://asic.gov.au/for-business/your-business/small-business/starting-a-small-business/small-business-starting-a-company/ UK – https://www.gov.uk/limited-company-formation US – http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Single-Member-Limited-Liability-Companies
This extract is taken from my weekly blog on how to research and construct a meaningful Business Plan. All the information is FREE and will be FREE to download from www.JGID.com at the end of September 2015. JGID produce a fully functioning Business Management Software that can be configured to grow with the scale of your business. From sole trader to a million dollar turnover, JGID business management software is aimed at increasing business efficiency, maximising profits and increasing the quality of life for it’s business users. We either succeed or you get 110% of your training and implementation fee returned. Now that’s a promise worth exploring. Just Get It Done, www.JGID.com I believe all knowledge that helps businesses progress should be available to all, FREE at the point of need. Thank you for reading this blog and please feel free to add any comments to the discussion.
Marketing makes your kite stand out from the crowd !
Marketing is fundamentally about the strategy of exciting interest in your product, service or company. Sales, is better thought of as thetactics you employ to achieve actual orders. It follows that without a clear strategy in place, gaining good margin sales will be increasingly difficult, time consuming and unnecessarily costly.
This article and the one following will look at Marketing; off-line this week and on-line next week. An examination of sales techniques will follow. A word of caution; please do not be too swayed by press articles announcing the death of conventional techniques like the Harvard Business Review (August 2012),”traditional marketing – i.e. advertising, public relations, branding and corporate communications – has failed”.
Whilst it is un-deniable that the internet and social media have surpassed anything the conventional marketeers laid claim to, it is also far more important to make marketing judgements based on your specific market niche, your customer profile and your product category etc. rather than blindly following market trends..
For most businesses a mix of on and off-line marketing strategies will support achievable and profitable growth. The off-line structure for marketing has successfully matured along the 1948 principles of the 7 ‘P’s; and if you carefully select the right combination of marketing across product, price, promotion, place, people, process and physical evidence, your marketing strategy is more likely to be a success.
Put simply, at best, marketing is about;
Broadcasting the features and benefits of your business it’s products and services to the widest potential market for those services. It is a general relationship; one to many.
It tells the story behind the formation of your business or the development of your product.
Marketing seeks to establish your brand value or unique product value to a wide audience.
It repeats the stories about your business in order to retain it’s value to the future purchaser or existing user, of your business’s products, it’s services and it’s ethos.
Marketing looks for; and tries to anticipate; trends in the core markets your business trades in.
Marketing is targeted, on-going promotion of all the positive features and benefits attached to your business.
Marketing is ambiguous and aspirational. It does not have to satisfy any specific demand that is the role of sales.
Sales is about;
Individual relationships with the specific goal of achieving a commitment to purchase or use your company, product or service. It is a specific relationship, one to one.
Sales leverages the features and benefits of your business for the commercial benefit of seller and purchaser.
Whether as a market trader or B2B service provider it is built on relationships between seller and purchaser.
Sales has a nurturing role, as ‘prospective’ purchasers are invited to appreciate the benefits of owning your product or using your service and paying for this entitlement.
It is specific in function, with a pre-determined outcome ie: a purchase.
Sales is the function of turning ambiguity and aspiration into a specific action by the ‘prospect’.
The role of sales is to take the features of your products and services and extrapolate the benefits of these features to meet the specific needs of the prospective customer.
Selling establishes the value to the user of your company, product and service and the cost of that transferred ownership.
There is still a role for direct printed mail delivered to householders and businesses. In fact latest figures from the 2014 retail industry survey reveal;
Australia’s leading retailers spend between 55-65% of their entire marketing budget on letterbox advertising.
54 per cent of recipients were more likely to shop with a retailer as a direct result of receiving letterbox advertising.
88 per cent of people aged 14+ who have received letterbox advertising in the last 7-days have read or looked into it.
74 per cent of letterbox advertising recipients are the primary shopper in the household.
Developing your marketing strategy, rests on identifying your overarching business goals (Strategic Aims see Part 1 Building a Business Plan), so that you can then define a set of marketing goals to support them. Your business goals might include: increasing awareness of your products and services. Building awareness of the uniqueness of your brand or establishing your business’s role in a specific industry.
Effective marketing starts with a considered, well-informed marketing strategy that is constructed from the results of your market research. A good marketing strategy helps you define your vision, mission and business goals, and outlines the steps you need to take to achieve these goals. Your marketing strategy will identify the most appropriate medium that reach and influence your potential or existing customers. It is a common mistake to try and impose a marketing messageor a format of communication on a prospective audience.
Good, effective marketing relies of a thorough understanding of your business’s position in the market; understanding how your products and services will actually be used and the specific medium most influential on your potential prospects.
Whilst marketing can be used to educate and influence an audience, it must not be confused with propaganda. The message must always be truthful as well as appropriate. Un-truthful content will always catch up with businesses witness this week’s share collapse of Volkswagen over the emissions scandal.
Your marketing strategy reflects and affects the way you run your entire business, so it should be planned and developed in consultation with, and reference to, all your market research. It is a wide-reaching and comprehensive strategic planning tool that you should use appropriately to:
describe your business and its products and services
explain the position and role of your products and services in the market
profile your customers and your competition
identify the marketing tactics you will use
allow you to build a marketing plan and measure its effectiveness.
Your marketing strategy sets the overall direction and goals for your marketing, and is therefore different from a marketing plan, which outlines the specific actions you will take to implement your marketing strategy. The marketing plan should have specific dates by which you intend to achieve identified goals.
When setting goals it’s critical to be as targeted as possible so you can effectively measure the outcomes against what you set out to achieve. A simple criteria for goal-setting is the SMART method:
Specific – state clearly what you want to achieve
Measurable – set tangible goals so you can measure your results
Achievable – identify objectives that are within your capacity and budget
Relevant – set objectives that will help you improve particular aspects of your business
Time-bound – establish goals you can achieve within the time you need them.
It is best practice to use your market research to develop a profile of the customers that you are targeting and to identify those needs that your business can satisfy.
The profile will reveal customer buying patterns, including how they buy, where they buy and what they buy. Your marketing strategy will need to be reviewed annually if not more frequently to reflect on new opportunities and identify aspects that are now irrelevant with your marketing message because the market or technology has changed. Your marketing plan will also need to be adjusted regularly to reflect these market changes.
Similarly as part of your marketing strategy you should develop a profile of your competitors by identifying their products, supply chains, pricing and marketing tactics.
Use this to identify your competitive advantage; what sets your business apart from your competitors. This will also enable you to focus and identify the strengths and weaknesses of your own internal processes and proposals; to help improve your performance compared with your competition.
I like to think of marketing as a pot of soup on the stove; it requires constant attention, regular stirring to maintain it’s appropriate consistency and mix of ingredients. Don’t be afraid to change your marketing plan where it does not show that it is achieving the goals you have set.
Listen and observe your chosen market at all times and avoid assuming the market will continue the pattern it has followed previously. ALL markets change and even the biggest companies get caught out where they take their eye of actual demand as opposed toperceived demand, witness the problems in the Australian mining sector this week.
This extract is taken from my weekly blog on how to research and construct a meaningful Business Plan. All the information is FREEand will be FREE to download from the end of September 2015.
JGID produce a fully functioning Business Management Software that can be configured to grow with the scale of your business. From sole trader to a million dollar turnover, JGID business management software is aimed at increasing business efficiency, maximising profits and increasing the quality of life for it’s business users. We either succeed or you get 110% of your training and implementation fee returned. Now that’s a promise worth exploring. Just Get It Done, www.JGID.com
I believe all knowledge that helps businesses progress should be available to all, FREE at the point of need.
Thank you for reading this blog and please feel free to add any comments to the discussion.
The reasons for constructing a thorough Business Plan for any commercial venture are to increase efficiencies and profits whilst reducing stress and losses. Continuing last week’s article about the significance and function of marketing for all businesses, and it’s associated though different role from sales; this article will give an oversight of the on-line opportunities.
Marketing is fundamentally about the strategy of exciting interest in your product, service or company.Sales, is better thought of as the tactics you employ to achieve actual orders. It follows that without a clear strategy in place, gaining good margin sales will be increasingly difficult, time consuming and unnecessarily costly.
Your marketing messages must convey more than just who you are and what your business does. It must communicate how the use of your products or services is or will be; meaningful, beneficial and enjoyable for the user/buyer. It must demonstrate something that is specific and relevant to the user. Simply being bigger, faster or louder than the competition is no longer enough. Marketing must demonstrate how your business can connect with the user in their world, with their perceptions, and meet their values.
Use of the internet and social media is part of this process of engagement with your market place. Just like printed hard copy off-line brochures or flyers, use of social media also has a cost, both in labour terms as well as monthly fees for software management such as InfusionSoft or MailChimp etc.
Separate cost justification for marketing isolated from strictly ‘sales’ costs is almost a ‘dark art’, in so far as the two functions of a well organised and efficient business should be practically inseparable; working in harmony. It takes clear, strategic and focused leadership from the business owners for this to work. Best practice shows that those businesses with a clear strategic focus, convey a clear, honest and appropriate message to their market.
In a revealing 2011 study of 600 CEOs and decision-makers,
73% said that their marketing officers lacked business credibility or the ability to generate sufficient business growth.
72% indicated they were tired of being asked for funds without being given any reassurance how this would generate incremental business.
77% were not interested in brand equity that can’t be directly linked to recognised financial metrics.
To me this report signalled a clear lack of strategic clarity at the head of the businesses and a lack of understanding that marketing can no longer be separated from sales. Marketing is a function of good management not a bolt-on excuse for a party at the race track or footie match.
Effective marketing starts with a considered, well-informed marketing strategy. To develop your marketing strategy, identify your overarching business goals, so that you can then define a set of marketing goals to support them. Your business goals might include: increasing awareness of your products and services, or entering a new market sector etc. A good marketing strategy helps you define your vision, your mission and outlines the steps you need to take to achieve these goals. It is a wide-reaching and comprehensive strategic planning tool that:
describes your business and its products and services
explains the position and role of your products and services in the market
profiles your customers and your competition
identifies the marketing tactics you will use
allows you to build a marketing plan and measure its effectiveness.
A marketing strategy sets the overall direction and goals for your marketing, and is therefore different from a marketing plan, which outlines the specific actions you will take to implement your marketing strategy. Your marketing strategy could be developed for the next few years, while your marketing plan usually describes stepped positions to be achieved in the current year.
On-line marketing will include all of the following;
A social media presence
It is no longer sufficient to just have a landing web page. The website must entice prospects to linger and learn more about your team, your values, your products and services. A functioning website:
should encapsulate the values, capabilities and concerns of your business.
It will seek to directly address the issues within your marketing strategy.
Any buttons or functions on the site should be limited to achieving your marketing goals.
Too many distractions and the site becomes a drain on your resources.
It should always include a button or link that encourages and enables visitors to leave their contact name, phone number and email address.
For many trades the site will act as a direct sales opportunity, so it should include the ability to order and pay on-line.
Apart from PayPal and Google pay, also look at Swipe for on screen secure card payments or PaySmart for regular payments such as monthly fees.
Your presence on social media should be governed by the same logic outlined above; it is the focus that is different. LinkedIn for example is great for locating and targeting specific people within your prospect companies, it is a professional and business orientated platform. If your market is consumer led or aspirational, look more closely at Facebook for one2many value positioning. Create a separate presence for your business and drive it’s activities in the markets you wish to trade in. Ensure you have a link that takes followers back to your website where they can leave their details if they are interested in your products or services.
Armed with prospect’s name and email and/or phone number, you have secured their permission to send them selective and targeted marketing or sales information thus:
Step one the marketing strategy,
step two the marketing plan,
step three the function built in to the website or social media platform,
step four the enquiry page leading to sales opportunities.
Content marketing involves creating content such as tutorials, email newsletters, publications, e-books, free reports, or blogs to educate new and existing clients in your area of expertise. If you structure these documents in a way they can be downloaded, once again the function allows you to capture the contact details of these interested prospects
Remember marketing is a function of well balanced management; it leads to sales opportunities for existing as well as new customers. It is part of the toolbox that form the basis of a well researched and implemented Business Plan.
I believe all knowledge that helps businesses progress should be available to all, FREE at the point of need
Thank you for reading this blog and please feel free to add any comments to the discussion.
A great many Business Plans fail to attract financial support from bankers, investors and potential customers because the owners have not truly understood the function as well as the concept of selling. Sales is not a process where one party tells another lots of ‘stuff’ about their product, service and company. Professional selling is far more a process of intense listening followed by persuasive dialogue that directs the prospect to establish the benefits they will reap from purchasing your products or services.
What the guru of selling Alfred Tack described as the “persuasive communication against resistance.”
One of the most frequently ignored fundamentals regarding Business Planning and forecasting is understanding successful selling techniques and processes. It starts from a benchmark of knowing your product or service in detail; and most importantly, understanding how prospective purchasers will see and value it; what is relevant to the customer in terms of it’s features and resultant benefits to the user. Some added confusion has arisen from the common mis-understanding of the 1940s American acronym USP. It is not a unique selling point ! the ‘P’ stands for proposition, meaning the entire sales proposal. Too often businesses have arrived at their markets with a different feature to an existing market offering and not understood why their apparent USP hasn’t been recognised, valued and purchased – D’oh !
In addition, there is much confusion regarding what makes a successful sales person. In the past 40 years I have directly trained just under 500 professional sales people. They have come to me from all intellectual and educational backgrounds. They have emerged from the ranks of the long-term unemployed to the legions of career sales people and sales management. They have spread the full cultural palette and have lived or worked in diverse economies; from communist Poland in the 1970s, socialist France, dictatorial Guinea, tribal democracy in The Gambia, class ridden democracy in the UK to urbane multicultural democracy in 21st century Australia.
Yet I have never met a successful ‘born sales person’. I know many people who can talk the hind leg off a donkey, and others who think they can bludgeon customers into submission; and many former ‘double glazing’ salesmen who sell product by staying in their prospect’s face for hours on end. The ‘war of attrition’ form of sales person – or ‘oxymoron’ figuratively and ironically. There is a vast chasm of difference between the amateurish thrusting of product in front of prospect’s faces and the professional approach that binds customer and seller in a long term and mutually beneficial relationship.
Good selling is about far more than exchanging your product or service for the highest yielding margin. The costs to any business of getting to that first purchase by a customer are very high; so it is an extremely wasteful tactic to pursue all sales trying to fleece the maximum yield from each sale. Customers caught by this tactic rarely return for a second purchase. The costs per unit sale to each repeat purchase diminish rapidly and should encourage sales/customer bonding. It should be a mutually beneficial transaction. In addition, happy customers who are nourished by the entire sales experience, feel wanted and special. They are the customers who will refer you on to others, reducing the costs of those on-sales too.
It therefore follows that unless the business owner understands selling and the ‘value proposition’ being put to their customers, they cannot forecast sales growth or volumes accurately. Planning returns to guesswork and fails to secure stable growth.
I have long argued there are 4 simple keys to understanding and planning sales. From these realistic forecasts can be drawn financial growth plans. Without achievable sales you only have a spending plan or ‘hole in your bucket’ as many bankers refer to unrealistic financial forecasts. These keys assume the business has carried out stages 1,2 and 4 in constructing the Business Plan and testing the product use with real users.
4 simple keys to successful selling KLAR : • Knowledge – understand and define your product or service into it’s constituent parts or features; size, weight, power, energy consumption, duration etc. Then extrapolate from each feature the potential benefits any user will gain from these features. It is important to recognise that customers buy solutions and experiences, buying is an emotional response to their need. The sales task is to address those needs, both actual and emotional to the perceived satisfaction of the prospective customer.
• Listen – prospects will commonly tell the sales person how they have previously used or experienced a similar item. They may offer anecdotal evidence of use by others. Delivery, aftercare etc all form part of the ‘offering’. Do not contradict the prospect simply clarify claims or statements that are not clear to the seller or are based on assumptions by the prospect. In trying to clarify their position the salesperson will identify more clearly the solution the prospect is seeking. Answer customer questions clearly, truthfully, directly and succinctly from the positive perspective, avoid agreeing to a negative viewpoint.
• Absorb – re-phrase the customer view and show you have understood and accepted the validity of the prospect’s perception by holding up the mirror to their statements. Enhance this empathy by describing your offering in terms of the feature driven benefits that directly relate to the customer’s statements. This allows the buyer to see the benefits of your proposition in terms specific to their needs and their values. This is an honest approach to problem sharing and solving that binds buyer to seller.
• Resolve – address the customer’s expressed concerns, do not challenge or attack the prospect’s values. Positive communication results in positive and predictable outcomes.
Sales forecasts must be based on achieving customer satisfaction. Remember, selling should be a dialogue of indefinite, continuous duration; not hectoring or a diatribe against existing products or providers. Realistic projections and rates of sale can then be calculated, entered into the financial models and be believable.
This extract is taken from my weekly blog on how to research and construct a meaningful Business Plan.
JGID produce a fully functioning Business Management Software that can be configured to grow with the scale of your business. From sole trader to a million dollar turnover, JGID business management software is aimed at increasing business efficiency, maximising profits and increasing the quality of life for it’s business users. We either succeed or you get 110% of your training and implementation fee returned. Now that’s a promise worth exploring. Just Get It Done.
I believe all knowledge that helps businesses progress should be available to all, FREE at the point of need.
Thank you for reading this blog and please feel free to add any comments to the discussion.
If you wish to write your own Business Plan and would like to use my FREE template with all of it’s guides and notes please PRESS HERE.
If you are based in Australia, running or setting up a business and would like a 20 minute FREE business mentoring session from me, then please email your completed or partial Business Plan to email@example.com together with your contact details and I will respond within 48 hours to book a screen share with you.
In addition, and if you want to be part of the growing JGID community, changing the way business is done and progressing to a zero pollution business model please follow me on LinkedIn ( Carl Ager ) for the latest news in our progress to launch the World’s first boat powered by sea water ! That’s right – NOT petrol – NOT Diesel – NOT coal – 80 tons of steel boat powered by a sea water fueled engine. We live by our motto JGID – Just Get It Done.