Don’t Take Chances With Your Business’ Online Presence
Your domain name is like the deed to your property, except in this case it is your business’ online presence, as well as its headquarters on the Internet. Castlewood Studios has helped scores of businesses of all kinds sell products and services online, and over the years we’ve battled time and time again with issues related to lost, expired, or forgotten domain names. Sometimes we could help our clients regain control, but other times even we couldn’t do anything to help, and their businesses lost revenue and resources as a result. In an effort to help your business avoid such costly mistakes, we’ve put together a list of five things you need
We recently needed to form an entirely new company from scratch. Being entrepreneurs, and having limited spare time, we needed a way to do it as quickly and efficiently as possible. In the end, we were able to do everything, from verifying our business’ name to obtaining a tax ID to registering with the Secretary of State, all in one afternoon.
Of course, you shouldn’t create your own LLC in one afternoon unless you’ve already put in a great deal of time and thought. That said, we’d like to show you it’s actually much quicker and easier to form an LLC than you might think. We’ve laid out our experiences below in hopes that it helps others interested in forming an LLC understand the process, and to show just how quickly and easily it can be done.
Image courtesy of stockimages at FreeDigitalPhotos.net
How Much Do Your Customers Cost?
On average, how many people visit your store, website or place of business without buying anything? How much time and effort must you spend on each new prospect before they become a client? Once they become a customer, how often will they buy, and how much? How long will they continue to buy from you? How much does it cost you to win a new customer over, or to keep an existing one?
As a small business owner, you must know the answers to these questions in order to make intelligent marketing and advertising decisions. Before you spend valuable time and money trying to attract new clients, you’ll first need to determine how much it will cost to actually acquire them. Not only that, but you’ll also need to calculate the average lifetime value (or income) that new client or customer will ultimately generate. Why? Because understanding how to effectively focus your marketing and advertising dollars could make the difference between cost-effectively attracting new clients or foolishly squandering precious resources.
Although accounting may be your least favorite thing about running a small business, there are a few simple mathematical rules you absolutely must understand to be successful in the business world. These rules are used time and again, and influence decisions that might drastically affect your business.
One of the most important mathematical formulas for businesspeople to understand is how to calculate return on investment, or ROI. Having a firm understanding of how return on investment works could save your project or business untold money and time, and possibly make the difference between success and failure.
If you’re trying to decide how to price your product, or wondering how the process of marking-up an item works, read on. You’ll learn about how cost is determined, why some items sell for so much more than their cost, and how you can decide the best price to sell your product for.
It’s sometimes hard to see how items are priced. Sometimes the cost to the final buyer is much more than for the retailer that sold it. Some prices are marked up hundreds, or even thousands, of times more than they cost to the seller. How can an item bought for so little sell for so much? Is it because sellers are greedy, and want as much profit as possible, or is there another reason?
Sometimes greed does indeed influence the price a product sells for, but often, items must be marked up so sellers can make a profit. While some sellers artificially inflate their prices to take advantage of their clients, most successful merchants know that exploiting the people they depend on for their continued existence is a poor way to run a business, and charge only as much as they need to cover their costs and make a modest profit.
Have you ever wondered what to charge for your products? Charge too much, and nobody will buy. Charge too little, and you won’t make enough to continue selling products. But finding the sweet spot when pricing your products is hard. So how can business-people determine how to price their products or determine how much to mark them up?
Find Your Cost First, Then Your Selling Price
When deciding on a price for you product, or how much to mark something up, the most important thing is determining how much your product costs you. If you pay $10 for the supplies to make a single gift basket, you may think your selling price shouldn’t be much higher, but don’t forget; you also have to add in any other factors that increase your costs. For example, how much electricity do you use to assemble each basket? How many labor hours does each require, and how much does that cost you on average? Finding a price to sell your product for is much easier once you know where every penny spent in the process goes, and what it goes for.
Starting a simple small business is very much like a roller-coaster ride. It has many ups and downs, twists and turns and sometimes heart pounding excitement. It is definitely thrilling and scary at the same time. In the midst of hundreds of things to do for a new start-up, one can get lost in unnecessary tasks or even lose track of the important things. In order for start-up founders not to lose their sight on important things, it is imperative to have a business plan. Even if that business plan is on a napkin or a single sheet of paper.
Business plans are like roadmaps or blueprints. They provide start-up founders with a direction, and necessary information to form correct action plans to use at different stages of the business.
Many business books and business scholars talk about why you need a business plan and how to go about creating one. The rule of thumb seems to be to ask the creator to predict the future and to create a five-year plan describing everything that will happen in detail. However, a lot of successful start-up founders today will disagree with this approach. Simply because five years is too long to create a definite and certain plan (see “How To Create a One Page Business Plan“). This approach just doesn’t take ‘uncertainty’ into consideration.
Many people have a problem with accountants’ jargon and often get confused between the terms “profit margin” and “markup” which are often bandied about freely or used interchangeably. Although these two terms are used to express different things, they are also, in fact, two different ways of analyzing the cost and profit of a product or service in your small business .
Let’s explain in simple terms.
Say you bought an item for $50 and could sell it for $100, doubling your money. In this case your markup would be (the difference between selling price and cost price) divided by the cost of the item and multiplied by 100 to bring it to a percentage.
ie ($100 – $50) = $50(difference). $50(difference) / $50(cost) = 1 x 100 = 100% (here “/” stands for divide)
Your markup was then 100%.
When you look at the profit margin on that sale, that would be (difference between selling price and cost price) divided by the selling price and multiplied by 100 to bring it to a percentage.
Starting a small business can be one of the most rewarding and fulfilling things that you ever do, or it can turn into a huge nightmare if you let it. You greatly increase your chances of success by having a simple one page business plan created as your starting point.
There is an old saying that has proven itself over and over again and it is especially true in the business world. The saying goes like this “If you fail to plan, you plan to fail”. Having a simple business plan is like having a road-map, guide or cheat sheet to help you get from where you are today to where you want to be some time in the future.
If you are planning on starting a multi-national major corporation, then you will benefit from having a full-blown 20 page business plan that outlines your companies strengths, weaknesses, market opportunities, marketing strategy, mission statement, competitor’s strengths and weaknesses, etc…
However, if it’s just you or just a couple of people working together, then a one page business plan is really all you need to get you started.
This one little step can mean the difference between starting a business that never actually achieves any real level of success or starting a business that eventually becomes hugely successful.
1. Find a Need & Fill It! (Blah, Blah, Blah!) You have heard this a million times before, but it is the core, the root, the foundation of any business. Business is about serving people’s needs. The more people you help, the greater you are rewarded. It is not about doing what you love. Although if you can accomplish both, then that’s great. But as catchy and simple as this phrase is, unfortunately there is a little more to it.
One of the biggest problems people have when starting a business is what I call “Dedication Justification“. Justifying what they want to do by concocting some need that really does not exist for their product or service. Dedicated Hobbyists and Artists are notorious for this. For example, Let’s say you are an artist and want to start a business selling other people’s creative works as well as your own. So you convince yourself that there is a real need in your town for great art. The only reason more people in your town don’t buy art is that there is no place to purchase great art. Guess what? Chances are you are lying to yourself and you don’t even realize it.