Author Bio: Jasika Adams is a writer with a passion for writing on emerging technologies in the areas of human resources, startups and business management. she is a talent acquisition manager currently associated with Index Time Clock. In her free time, she loves to play with her kids and reading mystery books. Continue Reading
This week’s guest post comes from Steve Piorro and discusses how to use content marketing to your brand’s advantage. Continue Reading
Today’s post will be super quick and super focused: it’s a discussion of the absolute best productivity personal management tool out there, follow-up then.
I’ve done a few posts about productivity tools and tips and I have mentioned some of the tools I use to keep me on track but today I want to go into detail on the one that is, in all honesty, the number one key to a lot of my career success. FYI, this is not an ad, I’m not being compensated in any way for this post and haven’t even had any contact with follow-up then besides using the tool, but I seriously love the service and just wanted to share with all of you.
Follow-up then is an awesome email tool that lets you pull emails out of your inbox and have them come back in at a specified future time or date. I am an inbox zero gal and my whole life is organized around my email, so this is life-changing. If you’re not an inbox zero person, this likely isn’t quite as amazing, but it’s still a great tool.
To begin using follow-up then, all you have to do is send an email to whenever you want your email to come back to your inbox at followupthen.com. For example, this morning I got an email reminder to renew my website hosting but it doesn’t have to be done for a month, so I don’t want to deal with it now. I do want that email out of my inbox though, so I simply forward that email to email@example.com and that’s it. It will pop back into my inbox in 3 weeks and I can deal with the renewal process then. It’s amazing.
I do the same if I need to remember to follow-up with someone on something I’ve asked them to do. So, for example, I might shoot an email to someone on my team asking them to create a draft one-pager for a program we offer and I need to remember to make sure it happened by Tuesday of next week. I would add firstname.lastname@example.org to the bcc of the email I send to the employee and then that email will pop back into my inbox next Tuesday morning reminding me to check on the progress. It’s as simple as that.
Plus, unlike other similar services, which I have talked about before, follow-up then doesn’t have a limit on the number of reminders you can set so you don’t have to worry about exceeding any limits on the free plan and then having to pay. They’ve also been adding some awesome new features like short codes that will make a reminder pop into your inbox every day until you mark it complete. It’s honestly the best tool in my toolkit and I would really struggle to be as on top of everything as I am without it.
Okay, that’s it. I told you it would be short and sweet. I just don’t want to keep kickass tools that can help other entrepreneurs to myself so I wanted to share. This one is integral enough to my workflow that I thought it deserved its own post instead of being lumped into another list of tools.
Followupthen is one of the tools I have in my productivity arsenal, a tool within a 4 step process to get more done in less time. If you could use some help accomplishing what you need to get done more quickly, grab my guide: 4 Steps to Improving Productivity. Click here to get the guide for just $1 and start getting more done faster right away.
Today I want to talk to you about defining your customer segments so that you can improve your marketing.
One of the things I talk about A TON with all of my clients is being very clear on who your ideal customer is so that you can target your marketing only to that ideal customer. This not only improves the power of your marketing messages so that you’re more likely to convert potential customers but also allows you to be more deliberate about where and how you market so that you can spend less money overall by not wasting time, energy, and cash on marketing to people who are not your ideal customer anyway. If you’re not sure what an ideal customer is, check out my post on precisely that.
What generally happens when I start having these conversations with clients, however, is that they’re not able to narrow down to just one ideal customer group. Now, it’s perfectly acceptable to have more than one target customer group. It is not okay to be lazy and just say you have a bunch of ideal customer groups because you don’t want to figure out who your ideal customer really is. Remember, this isn’t who will buy from you, this is who is the best customer you can hope to get – they’re interested in what you offer, they get a lot of value from it, they’re easy to deal with, they’re repeat customers, they spread the word about you, they’re not always asking for a discount, etc.
So, let’s say you feel like you have 6 groups of people that might be your ideal customer. You need to prioritize so that you can make the best use of your limited marketing resources so you have to rank those different customer segments and Customer Development Labs has come up with a quick and dirty tool for doing just that.
You definitely want to click the link to see their full post, but here is the basic overview:
Make an Excel spreadsheet where list each of your potential customer segments as a column heading and list market size, pay for value, and accessibility as row headings. Now, give each potential customer segment a ranking from 1 to 3, with one being the lowest and 3 being the highest, for each of the categories. Market size is how many people out there fall into this customer segment or category. Pay for value is how much someone in that category will pay for the value you’re offering them. Accessibility is how easy it will be for you to get in front of them. Then you multiply the 3 scores for each category together to get a total score and use that total score to rank the priority for each customer segment.
This will pretty quickly give you an idea of where you probably want to focus your marketing resources. Now, this doesn’t mean this will turn out to be right. You might start going after whichever customer segment got the highest score and then find out they’re really not as desirable as you thought, and that’s fine. The tool isn’t designed to give you the gospel truth about who your ideal customer is; the goal is to quickly move you from hypothetical to actual testing while still keeping you focused on your likely best customers.
If you’re an aspiring entrepreneur, the best thing you can do for yourself is to just get started. Pick up my business planning ebook here to be guided through the whole business planning process for less than $5. More of a video person than a text person? Click here to try my ecourses instead.
I know it’s not quite time for another post but I am sending another guest post your way. While I don’t have any background in franchises and don’t work with clients who operate franchises, I know that some of you are interested in them, so I have a guest post from Aaron Hiddleston on the topic:
According to a report by International Franchise Association, franchise small businesses will continue to grow at a rate that exceeds the non-franchise business growth in 2016. This type of business shows great capability to provide new jobs (3.1 percent growth in jobs in 2016, to be precise), especially for families and first-time business owners, across all business sectors. Big franchises, such as McDonald’s, require liquid assets of at least $750,000 and thousands more for construction and equipment. Still, there are other franchises that are more affordable and offer the same small-business owner satisfaction. If you are searching for one of those, and think that you can manage in the pre-established system of a franchise, here are some great choices within every budget.
Commercial Cleaning Service
Business facilities are often in need of cleaning service, and they do not want to hire additional staff for that job. That’s why they make arrangements with professional cleaning companies. Since office cleaning can be sensitive due to the potential damage or loss caused by cleaning staff, managers tend to be very choosy when hiring cleaning staff. Owners of a trustworthy franchise, like Jan-Pro Franchising International a service that started in the distant 1991, will have no such problems. You can purchase this franchise along with the uniforms, equipment, starter supplies and training for $3,100.
Image credit: http://www.procarepropertyservices.us/yahoo_site_admin/assets/images/commercial-office-cleaning.4295353_std.jpg
When it comes to starting a fitness business you should be aware that the female consumer is the driving force of today’s market. It’s no wonder then, that some of the most successful fitness franchises of all time are meant for women (Fit4Mom, EnVie Fitness, Get in Shape for Women…). There are a number of different cost-effective fitness franchises for ladies to purchase, and some of them can be done without a gym/exercise room. Baby Boot Camp, a stroller fitness program for new moms is definitely one of them. The total price (including one-time franchise fee) is between $4,800 and $10,200. Another interesting franchise is Jazzercise, a dance-infused aerobics which costs between $9,000 and $38,000.
This one will never get old – people have to eat, don’t they? Opening your own restaurant or bar can be quite a daunting task, especially when you consider what happens after the opening when you need to convince people to come and to visit regularly. A franchise will always have faster success in that. Food franchises are usually more expensive than the others, but you can find some like Chester’s Chicken for a price of under $25,000. Another growing segment of the restaurant business is juice. The consumers are more interested in healthy industry of smoothies and juices, so if you want to tap into this market, you can start with Juice It Up (initial investment between $10,000 and $25,000) or Jamba Juice with the same fees. If you want to start a restaurant franchise, you might want to consider experts to design commercial fittout that will be aesthetically pleasing and encourage productivity.
Image credit: http://www.what-franchise.com/images/uploads/article/Advice_on_running_a_successful_food_franchise.jpg
With the rapid aging of the baby boomer population around the world, there has been a growth in demand for quality elderly care services which resulted in large number of senior care franchises for sale. This is a job that can be done without any company’s facilities, so it is also tempting for people who want to start their business. Some of the most successful franchises in this area are Home Instead, Comfort Keepers, and Visiting Angels, and their fees go from $67,000 to $136,000. There are some more affordable options such as Hallmark Homecare which costs between $13,900 and $26,900.
Accounting and Taxes
No one likes to do their own taxes, and if you know your way around numbers, this might be just the right job for you. Accounting and tax operations are tasks that many of the companies are outsourcing, so if you are good at what you do, you can never run out of business. There’s a large number of accounting franchises and their prices will vary depending on the company itself, and the size of the office you choose, as well as the equipment and furniture. Liberty Tax Service will, for instance, require a total investment between $57,800 and $71,900, H&R Block from $31,505 to $148,700, while Tax Centers of America will cost franchisees between $20,300 and $63,550.
In the end, when choosing the franchise, you should count in various different factors, such as the kinds of work you enjoy, the hours you’re willing to work, and whether you prefer to remain behind the scenes or work directly with customers. Profitability is also an inevitable factor in this story. Some general rules are to stay clear of fields that are overcrowded to avoid too dense competition, to offer a relatively well-known brand name, and for the franchise to meet your demands regarding the requirements for investment and incomes.
Arron is architecture student and DIY enthusiast from Sydney. He enjoys browsing the web in search of fresh ideas about residential moving, storage, cleaning, clearance, waste removal, recycling, gardening, landscaping and home maintenance issues. Loves: all things spicy, barbecue, winter vacations. Doesn`t like: bad manners and narcissism.
We’re back with another guest post this week. This one comes from freelance writer Melissa Lang:
No matter what size of business you run, every business needs a company logo. When considering changes or rebranding to your original logo think about what it currently says to customers that have no prior experience with you. The big question is, how likely are you to engage with a brand that had a poorly designed logo?
A small business typically needs a logo more than an established brand. Your branding style has the ability to connect with your customer, and your company logo design is a representation of your brand.
For that reason, a great logo should subconsciously influence consumers to believe that your business sells great products. Show your customers your high standards of business with an enticing, quality logo and it is sure to build a connection quicker.
SMALL BUSINESS LOGO DESIGN ADVICE
“Symbolize and summarize.”
Logo Designer, Saul Bass created some of the world’s biggest businesses branding from Kleenex to American Airlines. He believed that a logo should send a message to consumers, even at a glance.
Do you believe that first impressions count? Truthfully, Business owners only really have one chance to make a good first impression and this is why so many rebrand. If you are running a small venture, an impressionable logo design could be a great way to catch your future customer’s eye whereas a poor design could damage your businesses reputation make consumers distrust you from the start.
There is a lot of work behind the logo design process and it should not only look attractive but it should show your business’ personality from just one look. It should also be transferable and useable across multiple mediums. There are lots of things to consider, but firstly have a look at our logo design tips, to gain some inspiration for your design:
HIRE A PROFESSIONAL LOGO DESIGNER
Remove all personal connection between you and your business logo design. The colours or images you love may not fit in with your business’s needs. By hiring some assistance, a professional they will be able to tweak the design from your imagination for business use. A professional logo designer’s perspective will take a more systematic approach to your design than an amateur would as they will break the process into:
- final design
CHOOSE COLOUR WISELY
In a study by ColourCom, it was proven that colour can increase a brand’s recognition by a huge 80%. Every colour has a different meaning, by telling your logo a bit more about your brand’s personality they will know exactly which of the following colours to use:
- Red: signifies passionate, high energy and demands a call to action. Brands who use red: Red Bull and Virgin.
- Blue: portrays trust and stability, often used by banking and finance brands. Brands who use blue: RBS and Facebook.
- Yellow: stimulates optimism and positivity. Brand who use yellow: IKEA and Macdonalds.
- Green: Often used to symbolise nature, recycling, and wildlife. Brands who use green: Whole Foods and Green Peace.
- Purple: Effective when used for luxury and calm. Brands who use purple: Cadbury and Hallmark.
DON’T BE AFRAID OF CHANGE
Has your business evolved and you would like to show this in your logo design? Social media brand Instagram have done just that. In recent years Instagram has expanded and have added several new additions to their brand. They created a new design that would reflect how the diverse way consumers are now telling their stories, not just through text and image but through video and collages. Ian Spalter, Instagram’s head of design believes that:
“Brands, logos, and products develop deep connections and associations with people, so you don’t just want to change them for the sake of novelty”.
Therefore, it is important to consider the needs and desires of your customers before you rebrand your logo design. Deciding to change your small businesses logo can be risky but changing to a professional logo design could freshen up the appeal of your brand.
LOGO DESIGN AND THE ART OF SIMPLICITY
“I strive for two things in design: simplicity and clarity. Great design is born of those two things.”
Lindon Leader, The FedEx Logo Designer hits the nail on the head with this statement. Any professional Designer should know when to close the design and accept that sometimes, less is more. Overworking your design shouldn’t distract you from other elements of your business.
Minimalistic design is becoming more popular for corporate organisations and millennials are starting to declutter their company logos. MasterCard is the most recent example of a brand which has stripped back their logo.
Creative Review claims that their “radically simple design that could only work for a brand as well-known as Mastercard” but there are many benefits of using a simple logo for a smaller business.
BENEFITS OF A SIMPLE LOGO
Clear: Sometimes a company’s purpose can get lost in a busy logo design. Your small business should create a logo which future customers can associate with your brand. By keeping your logo simple you are keeping it targeted. The message your small business will be sending out will be clean and clear.
Memorable: Think about it this way, what would you find easier to remember – one sentence or one paragraph? The fewer elements there are on your logo design, the easier it will be for your customers to remember, think McDonalds and Coca-Cola! These may be larger organisations but they have barely touched their logo designs – proving that simple can be just as effective.
Understandable: Consumers connect better with designs that they can understand. If a consumer can describe your logo it makes your business more accessible and familiar. This will also be beneficial if your consumer is trying to recommend your brand, as they will be able to describe it.
Convertible Across All Media: The simpler the design they easier it is to publish across different media. Consider how your logo will look on anything from print, web, stamps, material, signs, transfers etc.
PROFESSIONAL LOGO DESIGN
Your logo is an extension of your brand just like your e-commerce website or physical business space. It is true that Humans respond better to images than they do to text and can process visuals 60,000 times faster than plain text
This shows the importance to small businesses about having a professional logo design which uses great imagery and typography. A visual identity creates a familiarity between your company and the customer.
Make sure your logo design strengthens your brand and supports your business’ message. There are lots of great logo designer’s out there that can design something that is both eye-catching and unique for your small business.
Melissa Lang is freelance writer from Glasgow, Scotland. She is currently working for Repeat Logo and has a keen eye for all things design.
You’ve got a great new idea for an e-commerce website business. Investors have given you the green light and you are good to go.
Next on your to do list is to give your chosen digital agency the nod and your new world beating website will be given the development go ahead.
Are you missing something? Is there something they didn’t tell you?
Open Source software may be “free” as in “given away” but out of the box it needs a ton of work to customise and make it look like the beautiful creation you envisaged it to be.
That Takes Time…And Time Is Money
A typical Magento developer on the top of their game charges out at around $100 per hour. And there’s no advantage in paying out at the cheaper end of the market because at $20 per hour it will take five times as long to get to the finished product.
Hot developers are in demand and do stuff very quickly. In a market where constant change is invariable you need to get to market as fast as possible to start repaying your investors.
When Boo.com collapsed in 2000, with it went £80m of investors cash. The original dot com bubble claimed many victims and this was one of the most high profile.
Lavish offices and thousands of staff on the payroll meant that the company swallowed four times the original seed fund of $30 million.
They had the right idea but the wrong implementation and we are still learning the lesson today.
Ready, Fire, Aim!
The list of internet businesses that have pivoted from their original idea is eye opening:
Did you know that Twitter began life as “Odeo”?
The idea was to let people subscribe to podcasts but when iTunes got established the founders could see the writing on the wall. Odeo morphed into Twitter. Now it’s worth around $10 Billion.
Facebook started as “Facemash”
A “Hotornot” image comparison website. Now it’s worth over $334 Billion.
Instagram was originally a location service…
Where you shared your pictures and “hung out”. Today’s Value? Around an eye watering $35 Million.
If anyone of these bright ideas had run out of investor cash before they transformed from an ugly duckling then they wouldn’t be around today.
With hundreds of thousands of e-commerce stores all vying for attention your focus should not be on developing a new e-commerce solution that drives the competition into submission.
It should be on using your available resources to develop marketing techniques that outsmart them.
Using Customer Experience Tools
For example User Replay is a service that allows you to replay user sessions on your e-commerce website and identify the reasons for abandoned carts or other event based metrics.
Kana delivers software that enables users to take control of their browsing experience and makes online interactions more effective.
There are many more customer experience tools available to delve into the mind of your buyer and implementing any one of them will put you way ahead of the competitor that chooses to focus most of their energy and resources on developing e-commerce software.
It’s for that reason that online website builders are beginning to be taken seriously.
The combination of a scaleable hosting solution together with proven reliable architecture mean that there is far less risk to take onboard.
Development is quicker and far more cost effective than traditional website building techniques.
There is no point in reinventing the wheel.
Online website builders like Shopify, Bigcommerce, and, more recently, Lemonstand have an approach to e-commerce website development that can give you results far superior to standard digital agency output and at a fraction of the cost.
Here are some of the advantages to be gained by building your next e-commerce store “in the cloud”:
By creating your website using the latest in Content Delivery Networks (CDN) you will be building in a secure and robust environment that will scale as you grow.
There is no need to employ server specialists to monitor your own servers and deal with the endless upgrade cycle of the LAMP (Linux, Apache, MySQL, PHP) platform. It’s all taken care of for you.
Perhaps one of the biggest reasons for being afraid of using a mass e-commerce platform is that you’ll end up looking like everyone else.
Most e-commerce providers have around eighty responsive templates for you to choose from and they are all highly customisable using simple website development techniques.
In fact the latest templates from Lemonstand use Open Source libraries that make development of your own custom look and feel a breeze.
Third Party Integration
When online website builders first came to prominence they were clunky and difficult to use.
Now, instead of trying to incorporate every feature into their design they use integration with third party “best of breed” solutions by default.
The monthly fee charged equates to what you would pay for a decent server to host your Open Source solution. What you save by managing it yourself is lost in maintenance and hosting fees.
Giving You Back Your Most Valuable Asset – Time
If you are paying developers to produce a custom e-commerce solution then they are using up your time bank. Time is not infinite. We only have so much of it to use before our work is done.
It’s far more preferable to begin with something that does the job and evolve it as you gain customer feedback. Using customer experience tools will show you where to invest wisely.
Building your e-commerce solution “in the cloud” allows you to take advantage of the very latest in hosting technology and build quickly on “barebones” e-commerce technology.
You don’t need to sink large sums of money into website development to start taking orders quickly freeing up cash to spend on customer experience analysis.
Tony Cooper has been building e-commerce websites since he first discovered the Internet in 1999 and has worked for several successful internet startups.
Now he runs a website dedicated to e-commerce website builder reviews and associated tools to help the startup entrepreneur.
You’ll find all the information you need to build a successful e-commerce website at Storebuilder.co.uk
Today is a quick and somewhat quirky episode, but it’s a really unique tip I want to share that might help you make better business decisions.
I’m a bit of a Freakonomics addict. While I still run this business, I have also started working as the Director of Entrepreneurship at the Chicago Urban League and I need something to keep me entertained during my commute. That something is usually the Freakonomics podcast.
On a recent episode, they were talking about the value of learning a foreign language so they were discussing some really interesting research that showed that when people think and talk in a non-native language, their emotional connection to whatever they’re thinking or talking about is lessened. So, when people hear the word love in their native language there is a different reaction in the brain than when they hear it in another language, even if they speak that other language excellently. People were also more likely to take calculated risks if they were asked if they wanted to do so in another language – they wouldn’t be as influenced by the typical human fear of loss outweighing potential for gain and were more likely to assess the probability of outcomes and make a decision based on that probability.
So, if thinking and talking in a non-native language makes people less emotional and more able to think clearly and logically, this is an amazing tool for the business world! Whenever you’re having trouble with a decision, think through it in your second language and you’ll be more likely to make a logical decision. I know this sounds silly, but this could be huge! Anything that can help you to avoid psychological traps that can lead to poor decisions – like falling victim to the sunk costs trap or a fear of loss or a fear of missing out – is something that can make a HUGE difference in your success is business. I am going to start trying to think through all of my tough decisions in Spanish instead of English and, hopefully, it will help me make better ones.
Now, if you don’t speak any other languages, this can’t help you. Unless maybe the decision you’re trying to make is whether or not you should learn a second language.
If you’re an aspiring entrepreneur, the best thing you can do for yourself is to just get started. Pick up my business planning ebook here to be guided through the whole business planning process for less than $5. More of a video person than a text person? Click here to try my ecourses instead.
Guest post this week coming to you from Cassie Phillips of Secure Thoughts. Here’s Cassie:
There is so much that goes into creating a successful business—proposals, investment, content, marketing—that very often the considerations given to online privacy are somewhat less than they should be. Preventing disaster from striking is a practice that is left, far too often, to the last minute, as most business owners don’t believe it matters to them until it actually happens. For the less tech-savvy amongst us, the intricacies of setting up a functioning online security system may seem a little overwhelming, so it’s easier to ignore it until it becomes a significant problem.
However, when dealing with cyberattacks, if it has become a specific problem, then it is already too late. Fortunately, with a bit of research and insider information, it’s easy to gain an understanding of what is meant by privacy, how it is important and why protecting yourself and your company really matters.
The online threat continues to grow alongside our virtual and digital lives. As many businesses take to the internet to sell, share and promote, they are becoming frequently exposed to cyber crime.
There are many types of malware designed specifically to take down businesses and countless malicious hackers who are constantly searching for opportune moments to steal your data and personal information, so failing to take these threats seriously is a terrible decision for your business.Whether you’re facing a traditional “denial of service attack,” in which the server is overloaded in order to bring down your site, or you fall victim to the newest, prolific, nasty threat, ransomware, it’s bound to be a disaster for you and your company.
Many people fail to consider the repercussions of an attack until after it’s happened, but a breach of your website could be a disaster for your reputation. Many cybercriminals are aiming to collect details in order to commit identity theft and, if you or your customers end up falling victim, then getting others to have faith in you and what you’re offering may become nearly impossible.
Similarly, if your website itself looks as if it’s suffered an obvious infiltration, customers will avoid your domain in order to protect themselves. It isn’t just a case of fixing some coding or changing your password; if it becomes apparent that you haven’t put successful privacy practices in place, the name and face of your business could be tarnished forever.
When it comes to securing your business, your own privacy is equally as important as anything else. As the owner, the amount of company data you store makes you the perfect target and by logging into the site via your admin panel you put your company website at risk if you fail to protect yourself. General good computing practices, such as having an up-to-date firewall and security suite installed are essential.
Similarly, it’s worth investing in storage encryption to protect customer details and business data. If you’re working on the go, be sure to use a Virtual Private Network (VPN) to protect yourself on public networks as these notoriously unsecured connections can be a hot bed for hackers. Using a VPN will encrypt all your traffic between your device and the internet and will allow you to browse securely. It’s also important to be stringent with your passwords; ensure every one is unique and complex to reduce the chance of infiltration.
Your Company’s Privacy
When considering your business’ privacy, it’s worth remembering that showing your customer base that you have a good security system in place is just as important as actually protecting yourself. Customers are extremely quick to leave websites and businesses that they don’t trust, so making sure you present a secure face is important.
One great way to do this is by using a secure sockets layer (SSL). These online add-ons encrypt traffic between the server and the browser and are one of the most common protection protocols worldwide. The SSL symbol has become so widely recognized that showcasing the badge on your site will immediately instill trust in users.
Another important privacy point to consider for your business is in payment transactions. Although using third-party companies, such as PayPal, automatically increases your customers’ privacy, those who want to handle their own direct debit payments should be sure to complete a PCI-DSS compliance test. Through this test, the Security Standards Council assesses your privacy systems and works with you to help improve them.
Although many business owners feel that creating a good, working, initial privacy set-up is all that it takes to ensure successful online security, this is far from the case. Internet privacy is an ongoing practice, and as the face of the digital world is constantly changing, the threats and ways we deal with them change along with it; therefore, it’s important to stay up-to-date and knowledgeable about potential threats. There are many websites and blogs that regularly post about new possible attacks so by doing the research you can stay ahead of the game.
More specifically, regularly updating all of the programs you use is also important. This is because new security holes are being discovered and exploited by hackers and, subsequently, companies release software updates with patches to resolve the problem.
Other good practices include enforcing strict password rules to any subscribers or members of your websites and using monitoring software to pick up on any suspicious activity or traffic.
Online privacy is extremely important for any business, but it doesn’t have to be overwhelming. By taking these simple steps, you can easily start to protect yourself and secure your company. If you have any more tips for fellow business owners, then be sure to leave a comment below!
Cassie Phillips is an internet security specialist and blogger. She is delighted to share these tips with you and hopes that you will seek out more information on the matter to keep yourself and your company safe online.
Today we’re talking about the value chain and how important it is that you understand where whatever you offer falls on that value chain.
The value chain is essentially a list of your product’s stops along the production and distribution cycle with each stop being a place where someone adds value. For example, a silk scarf may start off with the silk worms themselves weaving the raw silk, which would be stop 1 and then move to a silk refiner where the raw silk is spun into silk yarn, which would be stop 2. From there, the silk yarn would be dyed at stop 3 and then woven into fabric at stop 4. Finally, it would be sewn into scarves and packaged for sale to distributors, which would be stop 5, who would then sell the completed scarves to retailers at stop 6 who then sell those scarves to the final consumer.
Each stop along the value chain is a place where someone adds value, hence the name value chain. Some stops add more value than others and give the controllers of those stops better profit margins. In order to most effectively plan your business, you need to know where your products and services fall along the value chain.
So, for each of your products or product lines you should:
- Identify the complete value chain of the product from the very initial components all the way through to the final consumer.
- Identify which stops on the value chain add the most value in the eyes of the consumer.
- Identify which stops along the value chain provide the highest profit margins.
- Identify where on the value chain your company falls.
Once you’ve done that, think about whether you’re located at the right spot on the value chain and if you may want to adjust your offerings slightly to improve potential profitability. If you’re located somewhere on the value chain where margins are slim, think about whether that’s where you really want to be as you move forward with building your business. Maybe you want to eliminate certain services completely or maybe you want to add more to generate better margins.
Taking the silk scarf value chain example from earlier a bit farther, if you currently spin the raw silk into silk yarn but you discover that those who dye the silk yarn generate huge profit margins, you may want to consider consolidating those two steps and spinning and dying the silk yarn. This is called vertical integration and simply means that a company is taking over multiple steps on the value chain and combining them under one roof. This is one way that companies may expand in the future, but even startups should consider where the best place on the value chain to be is and set up shop there to begin with.