Small Business Lessons for a Changing Market
Where do we go from here?
When the economy came to a grinding halt in 2020, small businesses had to adapt quickly or go under. Fortunately, the economy rebounded quicker than projected, even though consumers are still spending a good amount online instead of in person. So how do operations keep up with this changing marketplace? Here are a few on point business strategies.
Plan strategically (even if you are a really tiny operation or side hustle)
If you haven’t created a strategic plan for your business, or if it’s been a while since you revisited it, now would be a good time to do so. This roadmap will detail the current status of your operation and the direction you want to take it in. A strategic business plan is essential when talking to a bank about a loan or line of credit, applying for a grant, or other pandemic related funding opportunities where you might need to explain the nature of your business.
As part of the plan, make sure and define goals and objectives that contribute to the growth and success of your small business—do you want to grow larger, add staff or increase sales? How will you get there? Keep in mind there may be more curveballs coming before we see the end of COVID-19. Flexible thinking, including considering doing things a totally different way, will open your mind to new ideas. Here’s an example.
Our local gym closed at the beginning of the pandemic. Besides retooling and offering classes online, they reached out to local businesses to offer customized online programs for their employees working from home.
The goals you set should be broad and general—the “what.” Objectives are narrow and specific—the “how,” and there can be a few of these per goal. Here’s an example.
Goal: Increase sales by 10% in the first quarter of 2022.
- Solicit 10 referrals from past clients by X date
- Follow-up with an email invite to company quarterly educational event
Miro, a digital whiteboard company started by the founder of LinkedIn, offers an easy and free strategic plan building template that is very good. If you want to move on to managing the goals and objectives you set, project management leader Asana has a free version to get you started.
Branding: What’s in a name?
All types of companies need a mission and purpose, not just nonprofits. This is the “Why” of your business plan. Like goals and objectives, the mission is short and broad and the purpose is more specific on how you carry it out.
If your business has gone through a major shift during the pandemic, is the mission, and even the name of the company still on target? Naming or renaming a company is hard. So, if your business has gone in a different direction, consider registering a DBA (doing business as), and keep the original name for legal filings. When choosing an alternate name there are a few things to consider. Try to pick a new short name that is relatable to your business, i.e. Rover.com is a pet sitting and dog walking business. Don’t choose something hard to spell or that uses alternate spelling, and avoid using your own name unless you are the brand, such as a professional public speaker or comedian. Remember, you will use this name or some form of it as a website address and on social media.
Similarly, logos can be hard to come up with. They should also be simple, fit within a round shape for online use, and be readable when viewed very small. Try Fiverr- an online marketplace for creatives where you can get graphic design services very affordably.
If your business name doesn’t fit anymore, you can always change it. Just remember, the more established your brand, the harder this is to do.
Identifying and targeting your customers
It is important to identify your customers to be able to market to them effectively. Your customer base may have changed over the pandemic, or at least how you reach them.
Demographic data for your particular industry- the gender, age, income level, etc, is often available on the internet. Try Googling it. You can further define demographics from your client base through observation or information you collect.
Identifying target markets will help you decide how to appeal to each segment.
Perhaps you notice most of your customers are women 30 to 40 years old. How can you appeal to younger or older women? Which new age group would represent the larger market? That would be the primary focus.
Here’s an example of target marketing. McDonald’s target markets are children, teenagers, and young urban-dwelling families. They reach these target audiences by offering PlayPlaces & Parties, the Arch Card (reloadable cash card), free Wi-Fi, Happy Meals that include toys such as Marvel Studios characters, special promotions, and clever ad campaigns. Decide what incentives or features appeal to your targets.
Review your finances and redo your annual budget
An accurate annual budget is important because it allows businesses to set priorities, goals and spending caps. Accompanying financial statements track where you are financially and allows for more effective long-term planning. No matter how small your small business is, update your budget to know where you stand.
First, review and categorize income and expenses from the past year (or take this information from profit and loss statements if you have them). Look for expenses that seem abnormally high or revenue that is low and determine what can be done to remedy them. Trim unnecessary expenses. Fixed costs like rent and insurance can potentially be negotiated or changed.
In creating your budget, don’t count unusual or one-time expenses or revenue you don’t expect to have in the upcoming year. But do try and forecast changes. For example, if you hire a sales professional, your revenue should go up from the additional sales, but you also will spend more on payroll and other related costs. Even if you are still in recovery mode, try and set aside a contingency fund for unexpected expenses.
Keeping track of finances
There are so, so many small businesses and solopreneurs that do not use financial software. They find themselves in trouble because they really are flying blind and have no idea of the health of their business. Quickbooks is the best, most universal choice for businesses that intend to grow, but the cost can be a little daunting to start. Many banks offer free financial tools with a business checking account. Another option is Quicken, a scaled down version of Quickbooks. This software can help you track income and expenses, set up a budget and run financial reports for a much lower low monthly cost.
If you are not yet familiar with how to create and read financial statements here is a great free learning resource.
A survey from Tech.co found that 80% of small business owners say COVID-19 has hurt their businesses. Yet marketing is often overlooked, especially when times are tough. However, a solid online presence is necessary now more than ever. According to a Nextdoor survey, 72% of members believe they will frequent local businesses more often after this crisis. But many are still concerned about being in public when a variant strikes. Here are suggestions for a minimum small business digital marketing plan for 2022:
- Website: Ensure you have a decent, fully functional updated WordPress website, optimized by mobile viewing. If you don’t have one or can’t afford one, WIX is a low cost alternative where most people with good tech skills can build and manage a website themselves. You should include a page to sell products or services, a blog, and a contact capture feature. Capture contacts with a value proposition (free guide when you sign up for your newsletter, etc.)
- Social media: Facebook still has the largest reach. Demographics skew older. Instagram skews younger, and campaigns can easily be combined through the Facebook (Meta) Business portal since both platforms are owned by the same company. Target a minimum of two posts a week, and apply a small ad campaign budget to boost your posts to your target markets.
- E-newsletters: For professional looking newsletters you send out by email, MailChimp has the best ease of use and competitive cost (including free for its lowest tier).
- Here is an easy way to pull it all together: Create two monthly blog posts on your website. Cross post this content to Facebook and Instagram (these are your two monthly social posts). Use snippets of these same posts in your e-newsletter. Posts link back to your website where you capture the lead and make sales. This is a basic marketing funnel.
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How to gain business
How do you get, and more importantly, keep customers?
When you want to find the best source for a local product or service, what do you do? Ask someone! Asking for referrals is one of the most effective ways to grow your business. The people you know, personally, professionally and through business associations, volunteer activities or school, are some examples of your sphere of influence (SOI). Your opinion holds some weight in your sphere, making these contacts a critical source of referrals and repeat business. Be happy and proud to share your businesses successes with your sphere (but not too boastful). When appropriate, ask your sphere for referrals. Don’t overuse the privilege.
Excellent customer service is important, even for small businesses. The best customers are the ones you already have. They stick around longer than new customers; they spend more and are a substantial source of referrals. So how do you get, and keep customers happy?
- Ensure your business phone and email is answered pleasantly and efficiently
- Resolve issues quickly
- Put in extra effort when needed (return that call after 5pm)
- Keep clients informed on timelines and progress
A contact relationship management (CRM) system will help track conversations and related tasks, but also details about the customer, like their birthday. You don’t know how many times I’ve heard, I can’t believe you remembered my birthday. “Of course, because you are special to us” (and our software reminded us). You can start by using a spreadsheet instead of a CRM. Any organized system to keep track of customer details will do.
Be flexible and follow business trends for your industry closely as we navigate these changing times.