It is fair to say that small businesses are the backbone’s of most national economies. An Article by Inc.com dives into the numbers and as of the 2010 Census, there were 27.9 million small businesses registered in the United States, compared to just 18,500 companies of 500 employees or more. Included in that total figure are sole proprietorships (73.2 percent), corporations (19.5 percent), and franchises (2 percent). 52 percent of small businesses are home-based. The most important thing to note? 99.7 percent of U.S. employer firms are small businesses.
That is a significant number of businesses, and by consequence, a large amounts of job creation and economic stimulation. As a caveat, let’s keep in mind that the majority of these numbers come from the 2010 Census, or from the Office of Economic Research’s 2012 study–which are considered the most accurate numbers reflecting the state of jobs and business in the country. Being that we’re coming up on 2015, it’s likely that these numbers have undergone some adjustment since then.
However, the Small Business Administration indicates that America’s small business economy is growing along with the rest of the recession recovery. Although small businesses may be growing at a slower pace due to lending challenges, that disparity has not been enough to tip the scales. Facts are still facts, and small businesses are still the backbone of the U.S. Economy.
According to an Entreprenuer.com article:
- Small businesses create 75 percent of the net new jobs in our economy.
- Small businesses pay more than 44 percent of the nation’s private payroll.
- More than 50 percent of the U.S. private gross domestic product is generated by small businesses.
- Almost 97 percent of exporters are small businesses.
So how do these small businesses succeed?
The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.
– Bill Gates
This article talks about the benefits, and implementations needed to systemize your operations.
There are also so many applications that can link to each other to create a seamless business operation. For example, Invoicely allows for easy invoice management.Zapier, is really really cool. It connects over 500 applications to easily automate workflow. You create Zaps that link popular apps for example TypeForm to Google Sheet integrations… the possibilities are endless.
This can all be linked to a point of sale (POS) or point of purchase (POP) which is the time and place where a retail transaction is completed. It is the point at which a customer makes a payment to the merchant in exchange for goods or after provision of a service. And companies like Square have this to a science. All you need a smartphone!
For a specefic example, marketing automation continues to change the game. The most prominent being Marketo, that allows for a dashboard of apps from email remarking to landing page optimization. Read this Forbes article about the best software to use!
Check out this HBR video to see if your business qualitfies for an automation renovation
2. Sell you stuff online- eCommerce
Have you heard of the drop ship model? Lets ask Shopify:
Dropshipping is a retail fulfillment method where a store doesn’t keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer. As a result, the merchant never sees or handles the product.
The biggest difference between dropshipping and the standard retail model is that the selling merchant doesn’t stock or own inventory. Instead, the merchant purchases inventory as needed from a third party – usually a wholesaler or manufacturer – to fulfill orders.
Less Capital Is Required – Probably the biggest advantage to dropshipping is that it’s possible to launch an ecommerce store without having to invest thousands of dollars in inventory up front. Traditionally, retailers have had to tie up huge amounts of capital purchasing inventory.
With the dropshipping model, you don’t have to purchase a product unless you already made the sale and have been paid by the customer. Without major up-front inventory investments, it’s possible to start a successful dropshipping business with very little money.
Easy to Get Started – Running an ecommerce business is much easier when you don’t have to deal with physical products. With dropshipping, you don’t have to worry about:
- Managing or paying for a warehouse
- Packing and shipping your orders
- Tracking inventory for accounting reasons
- Handling returns and inbound shipments
- Continually ordering products and managing stock level
Low Overhead – Because you don’t have to deal with purchasing inventory or managing a warehouse, your overhead expenses are quite low. In fact, many successful dropshipping businesses are run from a home office with a laptop for less than $100 per month. As you grow, these expenses will likely increase but will still be low compared to those of traditional brick-and-mortar businesses.
Flexible Location – A dropshipping business can be run from just about anywhere with an internet connection. As long as you can communicate with suppliers and customers easily, you can run and manage your business.
Wide Selection of Products – Because you don’t have to pre-purchase the items you sell, you can offer an array of products to your potential customers. If suppliers stock an item, you can list if for sale on your website at no additional cost.
Easy to Scale – With a traditional business, if you receive three times as much business you’ll usually need to do three times as much work. By leveraging dropshipping suppliers, most of the work to process additional orders will be borne by the suppliers, allowing you to expand with fewer growing pains and less incremental work. Sales growth will always bring additional work – especially related to customer service – but business that utilize dropshipping scale particularly well relative to traditional ecommerce businesses.
All these benefits make dropshipping a very attractive model to both beginning and established merchants. Unfortunately, dropshipping isn’t all roses and rainbows. All this convenience and flexibility comes at a price.
Low Margins – Low margins are the biggest disadvantage to operating in a highly competitive dropshipping niche. Because it’s so easy to get started – and the overhead costs are so minimal – many merchants will set up shop and sell items at rock-bottom prices in an attempt to grow revenue. They’ve invested so little in getting the business started so they can afford to operate on minuscule margins.
True, these merchants often have low-quality websites and poor (if any) customer service. But that won’t stop customers from comparing their prices to yours. This increase in cutthroat competition will quickly destroy the profit margin in a niche. Fortunately, you can do a lot to mitigate this problem by selecting a niche that’s well suited for dropshipping. We’ll discuss this more in Chapter 4.
Inventory Issues – If you stock all your own items, it’s relatively simple to keep track of which items are in and out of stock. But when you’re sourcing from multiple warehouses, which are also fulfilling orders for other merchants, inventory changes on a daily basis. While there are ways you can better sync your store’s inventory with your suppliers’, these solutions don’t always work seamlessly, and suppliers don’t always support the technology required.
Shipping Complexities – If you work with multiple suppliers – as most drop shippers do – the products on your website will be sourced through a number of different drop shippers. This complicates your shipping costs.
Let’s say a customer places an order for three items, all of which are available only from separate suppliers. You’ll incur three separate shipping charges for sending each item to the customer, but it’s probably not wise to pass this charge along to the customer, as they’ll think you’re grossly overcharging for shipping! And even if you did want to pass these charges along, automating these calculations can be difficult.
Supplier Errors – Have you ever been blamed for something that wasn’t your fault, but you had to accept responsibility for the mistake anyway?
Even the best dropshipping suppliers make mistakes fulfilling orders – mistakes for which you have to take responsibility and apologize. And mediocre and low-quality suppliers will cause endless frustration with missing items, botched shipments and low-quality packing, which can damage your business’s reputation.
Is It Worth It?
As we initially warned, dropshipping isn’t a perfect, stress-free way to build a successful business. The model has some definite advantages but comes with a number of built-in complexities and problems you’ll need to be able to address.
We’ll be examining these problems – and how to best address them – in future chapters. The good news is that with some careful planning and consideration, most of these problems can be resolved and need not prevent you from building a thriving, profitable dropshipping business.
So thanks to giant eCommerce platforms like Shopify, Wix, or Square Space. You can literally drag and drop an online store together in seconds! All within seconds. This is very important.
Customers continue to look online first for their shopping needs
3. Online Presence
In a connected world, companies must target consumer’s micro-moments. What is a micro-moment? It is every time someone consults the web (most likely Google) for answers. The “Where should I eat”, “Where do I buy..” are moments companies must take advantage of. As the increase of information, and need for immediacy continues to define this generation, the likelihood of having “loyal” customers is slim.
So how do we capture today’s consumer? Well there are many online tools, but the most prominent is the wealth of Google tools available. Google is an assembly line, you can use their tools, and out pops results (or to be technical, ROI).
Here are some tools:
Or if you want to test the responsiveness of your mobile site, try optimizing it usingGoogle’s Mobile-Friendly Test! Just play around with Google Developer products, you will be amazed how cool the products can be!
OR if you want to assess your domain’s makeup via CName, DNS records etc. Try this cool Google Developer tool! Or you can technically audit a web application or website’s HTML, or CSS through Chrome Developer tools than can be initialized here.
These are just some of the many tools available, that can all be managed on the go from your phone
4. Customer Relationship Management
Investopedia kills this explanation:
Customer relationship management (CRM) refers to the principles, practices and guidelines that an organization follows when interacting with its customers. From the organization’s point of view, this entire relationship encompasses direct interactions with customers, such as sales and service-related processes, and forecasting and analysis of customer trends and behaviors. Ultimately, CRM serves to enhance the customer’s overall experience.
With the growth of the Internet and related technologies, customers are concerned over the privacy and safety of their personal information. Therefore, businesses need to ensure the storage and analysis of their customer data has the highest levels of protection against cyber criminals, identity theft and other breaches of security.
5. Do you research!
Try some of these analytical approaches so you are prepared to make your next decision:
Your business doesn’t operate in isolation. In this analysis, write down on a sheet of paper 6 headings: Political, Economic, Social, Technical, Legal andEnvironmental.
Under each category, list all the factors that affect – or have the potential to affect – your business. For instance, a “political” factor with implications for your business may be a new funding policy related to your clients. An example of a “technical” factor would be the emergence of a new technology that reduces your operating costs.
To use this tool to help develop your business strategy, your starting point should be selecting and prioritizing a handful of factors according to their current or future impact on your business, along with your ability to respond to them.
2. Why Analysis
All businesses have problems. The successful ones recognize the causes, and prioritize the solutions strategically. You can use this approach to solve your, and some of your customer’s problems.
“Why analysis” takes a single problem and identifies the root causes. You can question each answer produced by your analysis up to five times to determine core problems. Then, you can prioritize the core problems according to impact and remedy. This simple example illustrates the reasoning:
- Problem: Slowing Sales
- Why are sales slowing? Because of a lack of quality sales staff.
- Why is the quality of sales staff lacking? Because of inadequate training.
- Why in the training inadequate? Because the sales manager is overworked.
- Why is the sales manager overworked? Because there are too many customer issues outstanding.
- Why are there too many issues outstanding? Because there is no after-sales process.
In reality there will be multiple problems and causes. Solving a few key root causes will have greatest strategic impact.
3. Strategy Canvas
The Strategy Canvas asks you to identify the main factors in your current product or service offering that create customer value. For instance, a plumbing business may include price, time to respond, residential service and environment technology as factors. For each factor rate your product or service from 0 to 10. Now, do the same for key competitors or substitutes (such as DIY) and use the same factors.
Your customer value strategy is about changing and redefining your offerings strategically. Start the process by eliminating or reducing some of the factors to reduce costs. You can improve some factors and add new ones to create better customer value. The Strategy Canvas requires a lot of thinking time, collaboration and research, but the results can really set your firm apart.
Others to Tools to Consider
The previous are just a selection of strategy tools you can use in your business. You may want to look at other tools such as SWOT Analysis, Porter’s 5 Forces, the Business Case, the Osterwalder Business Model Canvas, the GE Business Screen and the Balanced Scorecard.
Turning Analysis into Action
Good strategy describes what you are going to do, and when and how you’re going to do it, along with the expected costs, efforts and rewards. As a business owner with limited resources, your strategy must recognize your ability to implement and fit with your values.
By setting aside a few hours of strategic planning time every month, you may be making the best possible investment you’ve made in your business yet.