Small Business Owners: Plan to Hit Your Profit Targets

To make a Profit, the business needs to focus, not on breaking even, not on survival, but on business profitability – literally, the ‘ability’ of the business to aim at and produce a specific dollar amount of profit as a percentage of projected gross income. Only when this is the clear business target is it possible to build a business that can deliver profit to the owner year after year. Only then can that business truly become an ongoing, revenue-producing asset for the owner. How is this done? How can a business become a profitable asset? Show me the Money! Most small businesses are inherently profitable. Depending on the business, a reliable profit of 10% to 30% of total annual sales already exists as the potential, ongoing profit return on investment of the company. But where is this Profit? Why is it so hard to see, let alone produce?

As a small business consultant for a major consulting practice, I was continually amazed at the number of small-to-medium sized companies operating with a ledger notebook and aluminum box for cash. I was stunned that the computer was used only for internet email, customer letters and office decoration. The accounting software (QuickBooks or Peachtree) was on the computer for tax purposes used by the accountant at tax time. As a consultant I was able to help the small business owners realize the most effective way to run a profitable business was to plan to be profitable. By getting the owner to understand that expenses and sales should be planned towards a goal and events controlled in such a manner as to yield the profit target. By not monitoring the profit and loss statement, the business events control the owners, and management cannot drive process and procedures toward profits. The accounting software packages were then set up to view each product by profit and loss statements on a monthly and annual basis. This allowed the small business owner the ability to react quickly to any deviations from its budgeted plans (cash falling through the cracks). The organization learns from the feedback it gets by comparing budgeted goals to actual results(revenue decreasing). Communication increased throughout the organization about employee expectations towards profitable goals.

Owners, when was the last time you updated your business plan, which is probably on your bookshelf where you placed it since you initially developed it. Now, don’t get bogged down in the document, just dust it off and use a red pen to ask your self the following questions:

Profit Planning: Budget vs. Business Plan

Has the management team updated the business plan to reflect current/future market industry ‘realities’?

Does my management team understand the ‘market intricacies’ of each product they sell and service in the business unit they oversee?

Does my management team understand the ‘customer’ product needs and wants they sell and service in the business unit they oversee?

Have you developed a profit and loss statement for each product? What are your sales revenue, direct costs, and overhead expenses for each product?

Have you benchmarked your Gross Profit margin against industry standards? Is it high or low?

How are your products sales trending? Quarterly? Is product cost percentage lowering as you sell more volume of products? If not, can workflow be streamlined.

Is my business making money? Do I have a simple profitable business model in place for every product?

Have you identified your bestselling product lines vs. your worst selling products? Select which product will grow your business?

Have your management team created action plans to meet planned product profit specific objectives and goals in target areas?

Employees/Operational Readiness

What is the current morale of the employees? Who will champion the ‘Profit Program’ that they can believe in?

What are the current ‘roadblocks’ to lowering cost and increasing throughput of products? Why?

What are the training needs of my employees to achieve profit goals? How will training improve business or morale?

Do the employees know what’s expected of them? How will they be held accountable for performance?

How will they be rewarded? Plan to give Incentives, increase Profit-Sharing, surprise Bonuses, spontaneous Intangibles?

Have your managers and supervisors set specific production objectives and goals in target areas?

Are my employees cross trained in key (growth products) production areas? Why not?

Do I have financial measurements scorecard posted in work area? Do I have relevant workflow processes posted in work area?

Do we have the best technology solution in place to reach profit goals?

Customers

Has my customer base changed?

Has my product/service offering changed?

How often/how many new customers have I obtained in the last year?

What product do my customers need to solve their problem? What services can we offer to provide convenience or can we lower product cost?

Are there any solutions outside the industry that will ‘wow’ the customer? Is the marketing strategy relevant to customer wants?

What is the company reputation to the customer? If low, how can we improve reputation and brand image to the market?

Do I know who my best customers are? What do they really want?

Do I have more/fewer customers? Why did they leave?

Who are the current ‘bad customers/clients’? Money Owed? Should I keep them or sell them?

Competitors

Do I have new competitors? Who?

Do I have more/fewer competitors? Why?

What are the current competitive threats to my business?

How are my competitors resolving the customer problem? Who?

What industry has the best innovative solution to address my customers need? Why? Applicable?

What technology is a competitive threat to my bestselling product?

Evaluate answers against the strengths and weaknesses of your business capability. Formulate your strategy according to the opportunity available in the marketplace. The game is to make money for the long term, not to see how many widgets you can ‘hide’ at the end of the month or play financial engineering games with the books.

Price Points

It is never a good idea to cut your price, even in tough economic times. If you do cut your prices, only do it for a limited time encouraging customers to “act now.” This should be a last resort effort.. The temptation to cut your price in tough times is great. Ask your management team ‘If we cut prices, how will you get the prices up when the tough times are over?’ Stay on the message. Your value doesn’t diminish in tough times. Why should your price go down? Businesses should focus more on customer satisfaction. By focusing on delivering more than you promise, you are putting the customer first. It reinforces their decision to buy.

Business Partners

Look for businesses that you can partner with to cross-promote your products and services while sharing the costs. For example, a laundry mat offers free detergent with each washer load and the free detergent is paid for by both the owner of the laundry mat and the supplier of the detergent. The price was not reduced, but there is a unique incentive for the customer with a specific start and end date, which will get the customer to “act now.”

Plan to profit with sales this year. Explore new markets, new prospects and new products and pitches. This year, the three Ps of marketing your business are: prospects, products and pitches. All three may need to change a bit to get you to a profitable year.

You can do it. Surround yourself with mentors who you can talk to plan for success. It’s amazing the difference it makes just talking through your ideas. Think of planning as preparing yourself for success with a clear profit picture in mind.

New Markets

As you review your business plan, ask yourself where else you can sell your product or service. Go back to those customers who have not bought from you in a while. Have a compelling reason for them to buy from you now, such as improved service, different products or greater customer satisfaction just to name a few. Does it make sense to enter new geographic markets? Have any competitors in that market left or ‘retrenched, waiting for better times’?

Update Your Offerings

After reviewing your business plan is it necessary to change or update your product or service offering? Will product or service changes or additions allow you to sell more to your existing customers? An “update” here could mean a redesign of your web site, starting a blog, joining a social network. Essentially any way you can expand your reach to potential customers. The reason newspapers across the country are closing is due to lack of readership. People are moving to the internet for their news and information… and to find your business!

Improve Your Pitch

Thoroughly understand your product and service and why someone should buy it from you. Use written testimonials from some of your satisfied customers.

• Tell your story in five minutes or less.

• Practice to perfect your pitch “before” the sales call.

• Listen well. Ask questions & really listen to the client’s needs and concerns.

The bottom line is practice makes perfect. Be a dedicated practitioner in client connection. You are the owner. Your time, care and connection in the sales process will bring results. In these times, you can be tenacious & focus on seeking out new opportunities which will pay huge dividends when the economy turns around.

Our nation is experiencing a recession and has been in a prolonged serious economic downturn in the past decade. According to Tom Reilly, MissouriBusiness.Net, “Seventy percent of today’s CEOs have never led a company in or out of a recession and 60 percent of today’s salespeople have never sold in tough times”.

On every championship team, great coaches must receive accurate information in order to adjust their strategy to win the game. To be a truly great small company you must operate from a core value of honesty toward strategy and profitability. Remember the old management adage ‘If it doesn’t get measured, it doesn’t get done’ and ‘Lost Opportunity’ (bad decisions) can close your business. Planning profitability is a proven business method that allows your business to measure whether its succeeding or failing, not smooth talking inexperienced senior executives, presenting the latest management theory of the month to the board.

Remember, Enron, WorldCom, George S. May International, Arthur Anderson and Tyco.

How to Start A House Cleaning Business In 7 Simple Steps

One of the main reasons people start businesses is to make money. For some it’s a blessing to make money doing something they love. I’m not saying that you have to love house cleaning in order to have a successful house cleaning business; however it would be a good idea if you didn’t hate it.

How much money you make depends on how big you want your business to be. It could be a one person operation where you set up at home and service areas close to home, or you could set up a commercial office and hire people to work for you.

Here are 7 simple steps to get you started on your own house cleaning business.

1) Decide exactly what kind of house cleaning services you will offer.

Here you decided what cleaning you will do, like making beds, vacuuming, mopping and waxing floors, dusting and so on. Also note what you won’t do, e.g. laundry. You can also decide to specialize, e.g. by cleaning carpets only, or cleaning suspended ceilings only.

2) Pricing your housecleaning service.

To have an idea of how to charge for your housecleaning service, use your competition. Check your telephone directory and the classified ads section in your local newspapers for cleaning businesses, call them up (pretend to be a prospective client) and find out exactly what cleaning services they offer and how much they charge. With this information gathered decide the best price to charge for your cleaning service.

3) Workout startup costs.

For this you need to consider, tools, material, transport, advertising, insurance etc. Write down a list all the tools and material you need, like cleaners, sponges, mops, carpet cleaning equipment etc. Next find out the cost of each item on the list and write it down next to the item.

Transport: you will have to estimate your costs here. You see it depends on where your client is located and your means of transportation to get to your client. (Having your own vehicle would be to your advantage).

Advertising: You can use free advertising (word of mouth) and paid advertising (classifieds, telephone directory ads etc). Phone calls to your local newspaper and the telephone company who publish your telephone directory will tell you the cost of placing ads.

Once you’ve gathered all this information, calculate your total startup costs.

4) Name your business.

Choosing an appropriate name for your house cleaning business is important. Here are a few examples I got of the internet, ‘Maid Brigade’, ‘All Shine Cleaning’, ‘White Glove Cleaning Service’. Please avoid using ‘Your Name Cleaning Services’. Using your own name as part of your business name is over done by many house cleaning businesses. Brainstorm and come up with a name that helps you stand out of the crowd.

5) Learn the zoning regulations of your community.

Check the city clerk’s Office or your local library for a copy for a copy of the zoning laws governing your community. Your reason for doing this is that some zoning regulations prohibit home businesses in a community.

6) Do a few free cleaning jobs.

Well you’re not actually doing them for free. You’re doing them in exchange for references (these add to your credibility for future paying clients and are invaluable). You can offer these free cleaning jobs to friends, non profit organizations in your communities etc.

7) Get your first paying client then get another and another and another and so on.

Tell everyone you know that you’ve started a cleaning business and place ads in the local newspapers. In the beginning you need to spend most of your time and money getting paying clients. However, the more clients you get the less time and money you spend on marketing and more time you spend on cleaning and making your clients happy.

This is just the beginning. Once you start making money take a house cleaning business course to help you better manage your business in terms of growth, accounting, taxes, insurance better marketing strategies and more.

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You have permission to publish this article electronically or in print, free of charge, as long as the bylines are included. A courtesy copy of your publication would be appreciated. fayolap@yahoo.com

Secretarial Services and Typing Services – Start-Up Cost

Here’s what you’ll need to start a secretarial business and provide typing services and what the estimated start-up cost is.

You can start your secretarial business and provide typing services with just a computer, printer, a few business cards, and a pack of paper. You can get additional equipment and supplies later.

  • A computer. Any computer will get you started. You don’t need a high-end computer for word processing. However, if you want to provide graphic design or web design services, then you’ll want to get the best computer you can afford. Cost: From $200 for a used computer to $300-$2500 for a new computer. You can find used computers in your local newspaper and specialized local computer publications.

  • Software: Most computers come with a word processing program. I recommend using Microsoft Word as soon as you can afford it because that’s what most of your clients will have. Cost: Check Microsoft.com for current prices.

  • A printer: I recommend a laser printer but many secretarial service operators and typists use an inexpensive inkjet printer. Cost: From $10 for a used inkjet printer or $400-$2000 for a laser printer. Get more information at Best Buy, Fry’s and other computer stores. Check websites of HP, Cannon and Samsung.

  • A desk. You can get a small computer desk or use a table. Cost: $30 and up. You have many choices for $100-$200.

  • A computer chair. Choose one that feels comfortable to you. The more expensive chairs are not necessarily the most comfortable ones. Check some office supply stores. Cost: $30-$200.

  • Office supplies. Supplies you may need include paper to print your clients’ work, printer cartridge, pens, paper clips, envelopes, a filing system, and a stapler. Cost: Check local office supply stores such as Office Depot, OfficeMax, and Staples. Or order their catalogs.

  • A telephone: I recommend getting a separate phone line from the beginning. Cost: Check with your local phone company.

  • Business cards: Printed business cards will look more professional than cards you print on your own printer one sheet at the time. Cost: $20-$200 for a set of 500 to 1000 business cards.

  • A business license. Cost: $20-$100 depending on the city and county.

If you already have a computer, a word processing program and a printer, your start-up cost is minimal. You can start your secretarial business and provide typing work with some basic office supplies and buy additional equipment or software later when a project requires it.

All the best success with your secretarial business!

Understanding the Supply Chain Management in This Corporate World

Profitable business is every entrepreneur’s ticket to real success. The entrepreneur’s career ladder always begins with an idea and then followed by selling that idea to the market. There is no shortcut to entrepreneurship. It is a continuous process. Every aspiring entrepreneur must learn, execute and study more the market that he wants to deal with. Selling products and services is business yet an entrepreneur has to exert more efforts in order to win and achieve the stability, profitability and dominance among competitors. The world of business is very challenging much more when business these days are beginning to welcome the modern marketing methods and systems of improving sales. Almost every company has its corporate office other than their main factory. Usually located on high rise buildings in major cities of every country, these offices aim to observe best practices on the Supply Chain Management (SCM) and as well as establish excellent Customer Relationship Management (CRM).

What’s Happening Inside the Corporate World?

We all know the rules of business. From the Chief Executive Officer (CEO) going down to the lowest rank employee in terms of job role, the primary goal of every company or corporation is to deliver products and services that will give satisfaction to the customers to the highest level. Work, jobs, projects, issues, problems, delays and brain storming sessions are in between these two business operation end points. Oftentimes, we observe from the top news on TV, the internet, the newspapers and the media press conferences that business critics, economists and market analysts are discussing the latest moves of the company CEO and top executives. One company acquires this company. Two companies merge together. Sometimes, it’s the bad news; a company files for bankruptcy. This is becoming a routine in the world of business or technically, the corporate world. Not all companies succeed. The competition is always there and it is always a challenge for every company to deliver their best moves in order to win the customers.

The Truth About Supply Chain Management

When it comes to the supply chain in business, there are three key performance indicators that dictate the game of winning and losing. They are the cost of products and services, the cycle time in delivering these products and services to the customers, and the quality that if delivered with excellence will make every customer happy. Supply Chain Management (SCM) is defined by Wikipedia as “the management of a network of interconnected businesses involved in the provision of product and service packages required by the end customer in a supply chain”. The meaning is clear; it has something to do with managing the customer’s needs. That is actually the purpose of entrepreneurship. The entire corporate world is battling for clients. And if we establish that link of one business operation to the other inside a company, there is no reason to say that they are not interconnected. Therefore, the failure of one process could mean the breakage of the chain and absolutely the failure to supply to the customers what they need at the right cost, at the fastest lead time and the highest quality.

SCM is About Winning the Market

We can relate SCM to the Law of Supply and Demand. The price of any commodity is dependent on the quantity produced and the quantity demanded. When a certain price becomes fixed on a given time, the competition among suppliers becomes stiffer because customers have the option to choose on where to buy the products or services that they want. The SCM is very much dependent on this law; reason why corporate executives always want their SCM team to be more sensitive to the movement in the market. Whenever there is a need for adjustment, it will be dealt with accordingly and timely until a final winning decision is made. This is why many companies and corporations invest a lot on acquiring best talents on SCM. Business analyst, financial consultant, and SCM specialist; their role is to help the company survive the competition and in whatever business way, win the market.

Excellent Supplier Relationship will Improve Profitability

One effective way of winning the market is to strengthen the company’s supplier relationship. In fact, this is always the starting point of every company’s SCM operation. From acquisition of raw materials, consumable items, new machines, or even services that will help deliver products and services to the customers, supplier will do it all for the company being their customer. If your suppliers are showing poor scores on these three key performance indicators, then it will surely affect your entire operation. Therefore, it should be your SCM’s goal of ensuring that suppliers are in line with your main business objective – profitability for success.

Top 5 Mistakes to Avoid in Choosing Legitimate Home Business Opportunity

Summary: As you continue searching for a legitimate home business opportunity, it’s easy to get confused. Save time and money and avoid these 5 common mistakes.

1) FIXATE ON THE PRODUCT

Lots of aspiring home business owners scour the internet looking for the perfect product to distribute. They endlessly assess opportunity after opportunity looking for the breakthrough formula, the hottest ingredient, or the secret weapon that will make the product irresistible.

Don’t get me wrong, quality matters. But if the product was the most important thing, then the company would have a robots distribute them rather than people.

A good product is only one ingredient in the success formula.

2) IGNORE TRAINING

Since products don’t distribute themselves, the extent and the quality of the training is key to your long-term success. From setting up business systems to understanding the fundamentals of marketing, the quality and extent of your training will be an invaluable asset that you can always leverage. Poor training will create poor results-and no profit.

Ever notice wonder how a successful home business owner can leave one company, join another and become a top producer all over again? The secret is that they have been trained to produce and reproduce results, no matter the product.

High-quality training will allow you to produce outstanding results that you can duplicate in any endeavor.

3) FOCUS ON PRICE AND FORGET VALUE

If you shop for a business based on price and ignore the value of the opportunity being offered, you will get stuck.

Top producers first and foremost focus the value of what’s being offered. That’s how they select which opportunity to invest in. Top producers understand that value is the measure of the benefit being delivered, and that’s how they evaluate the return on their investment. If a top producer recognizes that the opportunity has value, they will happily pay any price. Why? They have a clear understanding that what an opportunity costs is not nearly as important as the return on the investment and the benefit to them.

Top producers evaluate everything in terms of value.

4) CONFUSE SELLING WITH MARKETING

Selling is an art that very few individuals ever truly master. It can be done, but it is not a simple matter of walking up to someone and asking if they want to buy. Traditional “pressing the flesh” selling is inefficient for most newbies because it requires you to personally present the opportunity.

Marketing, on the other hand, is a set of skills that can be learned and implemented by almost anyone. Marketing puts you in control and enables you to attract leads and customers to your opportunity without high-pressure tactics that everyone hates.

Winners market opportunities and never sell anyone on anything. Ever.

5) NEGLECT MINDSET

Without the right mindset, neither great products nor infinite leads will create the success you desire. Your thoughts about everything-from your opportunity to yourself–are your single greatest asset in this industry.

Cultivate a winning mindset.

The Proven Benefits of Promotional Products As a Marketing Tool

Most advertising is based on repetition. No one listens to a single advertisement on TV, radio or even in print like newspapers and magazines. Business advertising is most effective when it is repeated and the same message is delivered to the target audience until it becomes subliminal. Sex sells. Humor sells. Drama sells. Endorsements sell. That is why almost all ads are created in one of those four formats. The message is usually that a product is better, will make you rich, thin or save you money. Promotional products do it more efficiently by providing your customers with something that they want and will use while constantly delivering your message.

Regardless of the size of your business, there is a promotional product that is just right for your message at an affordable price. Promotional products are a $19 billion dollar industry made up of thousands of economical items.

Every time your business gives away a pen, highlighter, USB flash drive, sports bottle, drinkware, tote bag, reusable sack, back pack or similar product it will be actively used; not just once, but over and over again. Each time it is used, your message is delivered right where you want it. This is known as cost per impression – how many times your logo or message will be seen for the same investment dollar. Promotional products are far and away the undefeated sales champion by this measurement. For a low, factory direct price, you can have your logo or message imprinted, engraved or silk screened on the product of your choice. That product will generate awareness of your business, build customer loyalty and create new sales. In today’s economy, it’s the one true business building method that everyone can afford.

Whether you are a new business trying to reach and build a customer base, or an established company introducing a new line or product, connect with your customers or just want to entice new sales, promotional products are the best media. Flyers, direct mail, newspapers and other print are hit and miss tools. Usually, they wind up in the garbage without making their point. Email blasts wind up in the spam bucket. Promotional products are active, usable carriers which are appreciated, not discarded as soon as possible.

Promotional products are an investment in your business and in your future. Whether it be promotional drinkware, custom USB drives, or imprinted tote bags, these items have been proven to be the most cost-effective way to get your message out to the masses. The right promotional product couple with the right target market can be a huge driver to sales. Marketing is all about keeping your company at the top of the consumer’s mind, which promotional products do each and every time they are used.

Classic Print Media Advertising – Will it Survive?

Print Media Advertising is not something new. There are two main products of print media advertising. One is publishing advertisements in newspaper and the other is publishing advertisements in magazines.

Newspapers come in many varieties. Some being small and only read in a few small cities, while others being published and read nationally. Trade news sheets and newspapers are also included in print media advertising.

If you are thinking about putting your advertisement in a daily paper, there are a few things that should be considered such as size, circulation and price.

Print media advertising rates and charges differ significantly. Daily papers have marketing price cards that are open and accessible on the internet. An advertisement in The Washington Post can range up to $100,000. The Wall Street Journal will range around $164, 00. The L.A Times will range about $70,000 and in Milwaukee it will range $15,000. All these rates are for a full page advertisement.

The benefit of the print advertising is that it is actually read at work or when possible people are trying to unwind and have some time off. We know that online sources have actually played a big role in reducing the amounts of ads published in newspaper and magazines. All the bulky newspapers that once were hard to read because of so many pages full of ads are now getting lighter and lighter. A lot of small papers no longer exist now and the ones that are left are working hard to survive in this aggressive market.

What internet is doing so different that is taking all the business from these magazines and newspapers? It could be the type of decision made by IDG. The decision is not just selling advertisements for whatever it has, but to benefit from the media’s various functions and began selling advertisements for some other new media properties.

Print media advertising is something that needs to be understood by the new business owners who want to be successful in their business. Whatever medium you use for your print media advertisement, whether it is through newspapers, magazines or internet, make sure you do your research.

Rethinking The Oil Change Business Venture

Annual quick lube survey, is it still viable?

I wish to comment on the Fast Lube Business and the annual survey done by Auto Laundry News, one of the few Industry Magazines for the car wash industry. In this 2001 survey, we see an increase on the number of locations out there. Yet the leader of the Industry is by far Jiffy Lube. We see variations on theme, but we can safely say that Jiffy Lube has adapted best to the American public and their desires when it comes to oil changes.

This survey showed the average customer would drive 5.7 miles to get an oil change. If 50% of the customers would drive 5.7 miles and 80% of the customers usually come from a three-mile radius to get a car wash, I see additional synergy. These car washes with oil lube centers are getting a further reach than the industry average. This is great news for those carwashes adding oil lube bays, but also it takes up space and if not marketed correctly it will not work. The survey was quick to show that oil change facilities do best in middle class areas, not high-end areas. They do poorly in low-income areas. This all makes sense. Free standing car washes were the most likely to have oil lube facilities on there properties. Interesting too is that minimum wage was not prevailing, normally the companies pay $8.00-10.00 per hour. Makes realistic sense and I believe good help starts in this country at $10.00 per hour in most metros and $8.00 hour in rural.

Only 23% of the fast lubes had a website. Only half had internet access in the locations. Average employees were 5 full time and 3 part timers. Luckily for the image of this industry 74% had specific uniforms. The average shop had 3 bays, not enough to do the volume if adequate blitz marketing and community based marketing were taking place. Average revenue was $32.00 per car. That is an awful lot of upselling since the average advertised price that I have noticed is around $19.99. Less than 30% were open on Sundays? Bad mistake since there is no time to change oil and wait in line for most Americans. Average monthly gross was $2,400.00 per month per bay?

This is shit, this is not even a viable business, these people are wasting their time. Think about it, you have cost of oil and filter too and labor? Forget that news. I question the viability of the entire oil change industry. The largest Jiffy Lube franchisee in the country with 180 units was de-listed from NASDAQ and so was another prominent auto care and lube company recently. I like the Kwik-Lube Company and feel they are doing it right, but also question the ROI of such an endeavor seeing these results and the cost to build the building and time to build it. One good thing that the oil lube bays have going for them is the up-sell, but as the consumer dollar gets tighter and the credit card debt gets higher and the fall out rates increase where will this extra impulse revenue and up-sell cash be coming form?

The Industry is still expanding and new entrants to the market place are hurting existing units and I question the saturation point, not on need, but on desire. No one wants to spend money on oil changes, they need to. People buy what they want, satellite TV and beer. Not what they need, so I see a frequency problem issue brewing and people waiting 5-6-7 thousand miles between changes. So I believe that if an oil lube bay is not already attached to another reason to frequent the facility it will soon be in desire straits. The survey also showed that 93% OF THE OIL LUBE BAYS USED ADVERTISING TO GET THEIR CUSTOEMRS? WHY? We do not advertise, word of mouth and happy customers advertise for us. There you go again more cost.

Also 60% of the surveyed said that competition was discounting. HMMM? You have labor costs that are high, frequency is down, new car technology on the horizon, cost of oil going to the big guys and throw in a price war? I see problem as the non-savvy operators leave facilities for sale and exit the market place. By eliminating the facility and going mobile with the existing customer base of let’s say a mobile truck repair business which can co-band and fleet services available you could beat these other companies since they running redline over saturations of mailer coupons and phone book ads and no web sites. Many companies are not watching the changing demographics at their locations and lease or property costs and unable to sell or borrow more due to their lousy profit margins. And what can you convert and Oil change bay into? Cover up the hole for a tire shop? What happens when Hydrogen cell comes and no one changes oil. Can you convert to filter type operation? Not really since often the tires and wheels are offset and will land the modular car into the lube bay hole. We have the solution and we can beat them in almost every aspect. Some consultants have said; “Bunch of dummies copying each other.”

Listen to this part of the survey, advertising dollars were spent on, here is where the respondents said they advertised; TV 15%, Direct Mail 51%, Radio 38%, Newspaper 35%, Bill Boards 18%, Yellow Pages 53%, other only 13%. Scary, all that costs money and everybody is running redline copying each other. This is what happens when people cannot think any longer and cannot adapt and do business at the speed of thought,

[http://www.speedofthought.com]

81% of respondents said they would honor competitor’s coupons? Whatever, why print them then. Let everyone else spend the money and take theirs? 80% said they have tried to use discounting to lure customers from other lube places to theirs. Boy this sounds like the carpet cleaning industry to me.

Breakdown in costs per job. 10% rent or property, 3% maintenance of facility, 26% labor, 30% materials, 4% utilities and many reported expecting that to double and some have already in the west experienced a tripling. Insurance 4% and that to expected to keep rising and some said 8%, Customer claims for damage 1%, this is in-excusable, Advertising 10%. Want to add those up for me. Why are they doing it?

Average new facility costs were; Land $206,000, Improvements $505,000, New equipment $36,000. WOW all that for little or no return? Average number of competitors within 10-mile radius? 36% said 3, 19% said two, 19% said 5, 7% said 5 or more. How can anyone invest this kind of money per location when we can build a couple of units for a total of $65,000 and nearly equal the number of potential vehicles to service? Also with AAA building oil change facilities and Wal-Mart getting into things, the competition will be bloody and that is a lot of money to invest in a business with an uncertain future. Not a good bet, if you were a betting man.

We are very much liking this Industry because we know things the Industry does not and we can slam them because they have missed the boat. We have seen a few companies which are looking into ways to change the oil on the water for yachts. What is even better is that they all missed the boat at the same time and are fighting on shore for a few little boats to get to the ship that is leaving the harbor. Who will survive this oil change war. The one who bests services the customer, they way the customer wishes to be serviced.

Markup – Pricing Your Services When Customers Want to Pay Less Than You Do!

After 35 years of running a marketing business, one thing still bothers me. Markup! It seems and has always seemed to be a concept of deceit: camouflaging the true price of your service in order to make a profit at the expense of your customer. And customers don’t like it one bit!

One need only glance at the daily headlines. “Obscene profits on Wall Street continue to miff the public.” “Oil company profits at record highs while the consumer is suffering at the pump.” “Big business profits outrageous during the never-ending recession.” The average person does not condone big profits in business when they are struggling to put food on the table, not to mention losing their homes to foreclosure.

So how do these businesses make such enormous profits? Price markup is one way. Charging customers more than they paid for what they are selling. Is that fair? As an accepted practice in business, it apparently is.

But in my experience with primarily small business owners, markup is a dirty word. My clients demand to know what I am paying for services I offer them. They don’t seem to mind paying me a fair rate (translation: a very low price) for services I provide from my own resources. This includes creative services like design, writing, composition, etc. of ads, websites, brochures, etc. However, if I am providing a service that involves an outside vendor for which I am being charged a price, my customers want to know what that price is and not pay a penny more for it than I do. Hence, no markup allowed!

That doesn’t give me much room to make a profit since the paltry charges for my creative services can hardly cover my overhead in this economy. But the ironic part of this is that the outside services I provide to my clients have also all been hit hard by current economic conditions, not to mention stiff competition, the changing business landscape and general hard times, forcing them to cut prices to the bone, making it virtually impossible for me to mark them up.

If I am buying printing for a customer’s brochures, my customer can get on the Internet and glance at the average prices being charged by hundreds of national printers, all of whom are bidding against each other for the limited printing business which still exists in this Internet age. So when my customer learns what price I propose to charge for his job, he can assess whether I have tried to pull the wool over his eyes and charge him some marked-up amount to make a profit on him.

Maybe he’ll let a small markup slide, but I feel like I’ve committed a crime against humanity, and suffer enormous guilt for doing so. How dare I deceive him into paying some minuscule markup just to pad my pocketbook?!! Where is the justification in that, he probably wonders, losing respect for me in the process.

Well, I can defend why we have markup. For one thing, it has taken me arduous research to find the best quality and price; hours of careful, knowledgeable effort to prepare the document to meet the parameters of the service I decide to use; a lifetime of business experience to be able to judge which printer to use and whether price should be the final determining factor in my decision; and finally, risk of job liability and client loss should the printer fail to perform his role satisfactorily. Yes, it’s my neck on the line, not my customer’s!

Time is money and everything I do for my clients takes my time, a lot of it. Isn’t that worth something? Apparently not, to most of my disgruntled clients, who are struggling on their end with the same disturbing circumstances! Almost nonexistent profits with increasing overhead. It’s not easy for anyone. So I don’t blame them for their suspicions and irritations. Yet, reality dictates that I must make a profit to stay in business.

While printing is one service that cannot bear a significant markup, there are plenty of others I offer which also are in the same boat. Mailing lists and mailing services! Domain registration and website hosting! Stock photography! Advertising!…to name just a few. These are all services which have so much competition for that coveted limited business that they in turn can only charge a pittance for what they sell. So there is virtually no room for me to charge a markup. Yet using such services requires endless investment of my time on behalf of my customers.

How? Let’s look at each one separately. My customer wants to reach a certain segment of the marketplace to present his offerings. I need to get him a traditional mailing list or perhaps an emailing list to approach that market. If the piece will be printed and mailed, I will have to strive for list quantities which will be manageable within his printing and mailing budget and offer a return on investment given expected response rates. So, with the help of a list representative, I begin the process of suggesting avenues to reach our goal by posing geographic limitations, industry sectors, commercial or residential targets, etc. This usually results in lists which are either too large to consider or too small to waste the effort on. So the process continues with parameters tweaked to try to come to a workable resolution.

In the case of stock photography, my customer and probably most of the world believes I will do nothing to deserve any justification for a marked-up price. Yet, there are hundreds of stock photo houses all with different ways to utilize their services, not to mention choosing from archives of rights-managed and royalty-free samples with strict regulations about usage and plenty of liability as the purchasing agent. And, what exactly are we looking for? Is my client an expert in assessing what kind of visual we need to present the right marketing image and communicate his message effectively? Usually not, which is why I am in the picture to begin with. Then, trying to access the available choices within a certain subject requires skill in proposing effective search terms, and concludes with having the aesthetic sensibilities and marketing savvy to wade through endless possibilities, narrow the search down to the few that can be considered the best to use…and then make that final choice, pay for it and download a huge file to work with effectively in his project. How many hours, days and years of my experience were tapped to perform this service? Countless! Yet, it is dubious I will be able to add any markup at all. And if I do, it will have to be infinitesimal!

And that doesn’t even take into account that most of my clients would rather try to take their own photos on less-than-optimal digital cameras or cell phones with poor resolution which necessitates that I perform digital enhancement services to try to correct a multitude of problems for which they expect I will not charge them anything.

Domain registration and hosting services? These are priced so competitively nowadays, companies are practically giving them away. (And in some cases… are!) Yet, the customers who need me to perform these services haven’t a clue about where to go, how much to pay, what is available, what they need, what is involved in the decision, how long it takes to perform the research, navigate the convoluted websites, set up the many aspects of each to implement them, keep them up and running all year despite problems with servers I have no control over, etc….but they are sure of one thing. Their friend or relative has told them that they are being overcharged.

Finally, traditional media like newspapers, magazines, radio and TV are eking out a living by the skin of their teeth, offering advertising rates so low they are embarrassing to divulge here. And unlike the domain businesses, they can’t even give it away. So much for the possibility of markup.

In articles I have read on markup, accountants have discussed the concept of “profit margin.” This involves applying a certain percentage to your cost in order to guarantee you will generate enough revenue to cover your overhead and net an acceptable business profit in the process. How neat.

In my reality, profit margin is a concept I’d throw out the window. I have to examine what prices the market will bear based on what my competition is charging and what my customer is willing (or able) to spend.

I have found that the best way to attract a new client into a long-term website relationship is to offer the domain registration and hosting for free for the first year because after that it is usually too mind-boggling for them to try to extract themselves from what has been set up, especially if they fear that the success of their website may be in jeopardy. But this may not work with every client and it is important to stipulate a multi-year contract so that they don’t opt out after the first free year.

I’ve also toyed with the idea of offering my creative services in conjunction with other services included as a package deal. But every client’s needs are different and they still compare whatever price I quote with a price my competition may have quoted whether we are comparing apples and oranges or not! And, as I’ve said previously, if any other services are expected, they want to know exactly what I am paying for those services.

You may ask why I let my clients push me around like that. When you are dealing one on one with a business owner who has confided in you about every aspect of his business in order to have you strategize marketing solutions for his benefit, direct questions about price sometimes become unavoidable. Since I don’t consider my clients my adversaries, I try to be as truthful as I can with them in order to build their trust in my judgment. Our collaboration and success together is the heart and soul of our business relationship. I cannot deny them the right to ask questions about cost. Even if they are my costs. They ultimately are our costs.

As for markup, I don’t like the way it makes me feel but if I can get away with it, I have to try to apply it in any situation that can handle it, as inconspicuously as possible, keeping my fingers crossed that no questions will come up. It is part of business survival that every business owner must use and therefore must understand. But to this business owner, it still seems deceitful and dishonest.

Newspaper Advertising Costs – 8 Factors To Consider

Calculating and comparing newspaper advertising costs can quickly get complicated. Once you’ve tracked down a newspaper advertising rates card, you’re then faced with the delightful challenge of making sense of it all. There’s no “one size fits all” to make our lives easy. Instead, newspaper advertising costs depend on a number of factors, some of which you might find surprising. To answer the question, “How much does it cost?”, the answer would be: “It all depends.”

8 factors that affect newspaper advertising costs (within the one publication) are:

  • type of ad
  • size
  • day of the week
  • section or lift-out
  • page position within a section
  • left hand side VS right hand side
  • colour VS black and white
  • annual spend/expenditure commitment

In this article, I’ll discuss the 8 factors that determine newspaper advertising costs in Australia. I’ll also provide an example of how much it would cost to place a display ad in The Courier Mail (a Queensland newspaper). As you’ll see, newspaper advertising costs can quickly add up. If you’re on a tight budget, as many of us are these days, knowing what most affects the cost, allows you to cut back where you can.

#1 Type of Ad – Display VS Classifieds VS Inserts

The first factor that decides the cost of a newspaper advertisement, is the type of ad. Most Australian newspapers offer a number of different types. Display advertisements appear throughout a newspaper, and may use colours, illustrations, photographs, or fancy lettering to attract the reader’s attention. These provide a great deal of creative control over the content of the ad, without being limited to just text. They also aren’t grouped according to classification, unlike classified ads. Display advertisements are typically charged at a rate per single column centimetre. In other words, the height in centimetres and width in columns determines the cost of the advertising space. On the other hand, classified ads are typically charged based on ‘lineage’ or per line.

Another form of advertising offered by most major newspapers are ‘inserts’ – separate advertisements that are placed inside the newspaper, and can have more than one page. Inserts are usually charged at a rate of per 1000 per number of pages. For the purposes of this article, we’re going to limit our discussion to display advertisements.

#2 Size Matters

The second factor that contributes to the cost of newspaper advertising, is size. As mentioned above, display advertisements costs are calculated based on their height in centimetres, and width in columns. Most newspapers have their own standard sized advertising spaces, which your ad needs to fit into. Some newspapers offer non-standard sized spaces, such as a ‘U’ shaped ad around the edges of an open paper, but be prepared to pay a higher price for irregular sizes and shapes.

Let’s look at the standard sizes available in The Courier Mail, as an example.

  • “Small Page Strip”, 6cm high by 7 columns wide, the minimum casual cost per day (based on a Mon-Fri Casual rate of $AU58.51) is $AU2457.42.
  • “Medium Page Strip”, 8cm high by 7 columns wide, the minimum casual cost per day is $AU3276.56.
  • “Quarter Page Strip”, 10cm high by 7 columns wide, the minimum casual cost per day is $AU4095.70.
  • “Horizontal Half Page”, 20cm high by 7 columns wide, the minimum casual cost per day is $AU8191.40.
  • “Full Page”, 38 cm high by 7 columns wide, the minimum casual cost per day is $AU15563.66.
  • “Vertical Half Page”, 38cm high by 4 columns wide, the minimum casual cost per day is $AU8893.52.
  • “Vertical Third Page”, 38cm high by 3 columns wide, the minimum casual cost per day is $AU6670.14.
  • “Vertical Quarter Page”, 38cm high by 2 columns wide, the minimum casual cost per day is $AU4446.76.
  • “Portrait Half Page”, 28cm high by 5 columns wide, the minimum casual cost per day is $AU8191.40.
  • “Portrait Third Page”, 20cm high by 4 columns wide, the minimum casual cost per day is $AU4680.80.
  • “Portrait Quarter Page”, 20cm high by 3 columns wide, the minimum casual cost per day is $AU3510.60.

Here you can see that the cost of a standard size display ad can range from at least $2457.42 per day for a small page strip, and up to at least $15563.66 per day for a full page advertisement. That’s an awful lot of money to invest in a single page, that will only be published on one day. Most of us simply don’t have that kind of cash to throw around, so you’d really need to know what you were doing. This example demonstrates how much the size of a display advertisement affects the price.

#3 Day of the Week

The third factor that contributes to the cost of a newspaper advertisement is the day of the week on which the advertisement is published. Typically, newspaper circulation is greatest on the weekends, and so the advertising rates for major Australian newspapers are adjusted accordingly. In our example of The Courier Mail, the rates are cheaper on a weekday, more expensive on a Saturday, and most expensive on a Sunday. For the most basic display ads, Saturday ads are 25% dearer than Monday – Friday ads, and Sunday ads are almost 90% dearer than Monday – Friday ads.

This pattern may vary though, depending on the circulation of a particular publication. For instance, The Age is most expensive on a Saturday. To illustrate how much of a difference it makes – a small page strip ad in The Courier Mail on a weekday would be at least $2457.42, and the exact same ad run on a Sunday would be at least $4637.64.

#4 Different Sections or Lift-Outs

Most newspapers are divided into different sections and many have lift-outs – and this is the fourth factor that determines newspaper advertising costs. Different sections attract different readers and different volumes of readers, and so the advertising rates are adjusted to reflect this. For example, an advertisement placed in the CareerOne (Employment) lift-out in The Courier Mail, costs 2% more than the general section. The rates for CareerOne, also vary depending on the day of the week, as mentioned above. Some examples of other sections that may have different rates include: Adult Services, Funeral Notices, Real Estate, and Business.

#5 Page Position Within a Section

The next factor that can significantly affect the price of a newspaper ad, is the page number on which the ad appears, within a certain section. The most expensive part of the paper is typically the front section, which might include the first 10 or so pages, and is referred to as the “early general news” or EGN for short. In our example of The Courier Mail, page 2 in the EGN section attracts a 60% loading. Similarly, the first 11 pages have at least a 50% markup. This type of loading is common practice across Australian news publications. Now let’s say we wanted to place a small page strip ad in The Courier Mail on a weekday, on page 3 in EGN, the cost would be at least $4054.74.

The first few pages and back pages of other key sections of the paper, such as Business, also attract a higher loading. For The Courier Mail, the very back page attracts a 65% markup. You can see how the page position of an advertisement can have a substantial influence on the price.

#6 Left Hand Side VS Right Hand Side

The next factor is also related to position of the ad, but relates to which side of an open newspaper the ad appears in. You might be surprised to know that, in some publications, an ad that appears on the right hand side of an open paper, will cost more than one that appears on the left hand side. This is to do with the way readers actually read a newspaper, and where their attention is focused. This factor may also be tied to the page position of an ad, and which section it appears in. For example, in The Courier Mail, for ads on pages 12 to 21, a right-hand side ad costs 5% more than a left-hand side ad.

#7 Colour VS Black and White

Another factor that substantially affects the price of a newspaper advertisement, is whether the ad features colour, and how many colours. Colour ads are more expensive than monochrome or black and white ads. Some newspapers may distinguish between multi-colour advertisements and those that only feature one added colour (called “spot colour”). For example, The Courier Mail charges 30% more for multi-colour display ads, and 20% more for ‘spot’ colour display ads. Remember, that this is combined with any positional loading.

So let’s say we wanted our small page strip ad in full colour in The Courier Mail on a weekday, on page 3, that would be calculated as: $2457.42 + 30% colour loading = $3194.65 + 65% positional loading for page 3 = $5271.17

You can see here how the cost of our ad has more than doubled after we’ve factored in the colour, and position of the ad.

#8 Annual Spend/Expenditure Commitment

Now here’s a factor that also affects the price of your newspaper ad, but this time it’s a decrease, with a catch, of course. If you have the budget, and are prepared to commit to spending a certain amount annually, usually by entering into a 12 month contract, then you may be entitled to a discount. However, the discount depends on how much you’re prepared to spend. For example, to qualify for a 4% discount on The Courier Mail’s advertising rates, you need to spend at least $38500 per year. If you’re a small business owner, chances are you’re not working with this kind of budget, so bye-bye discount.

Just in case you’re curious, businesses that annually spend at least $2.3 million with the Courier Mail, receive a 13% discount. In my opinion, this form of discounting simply highlights how biased mainstream advertising is towards big business. Where’s the discount for all the struggling small businesses? But that’s another story.

Summary:

To sum up, those 8 factors again, and how they’ll affect the cost of your ad:

  • type of ad – display VS classifieds VS inserts – rates based on different measurement units
  • size – pay more for bigger ads
  • day of the week – weekends are more expensive
  • section or lift-out – early general news (EGN) is more expensive
  • page position within a section – front pages and back pages cost more
  • left hand side VS right hand side – RHS is dearer
  • colour VS black and white – pay more for full colour
  • annual spend/expenditure commitment – get a discount if you spend up big

Now that you know what affects the price of a newspaper advertisement, you’re better prepared to decide where and how you want to spend your advertising dollar. If newspaper advertising seems beyond your budget, then it might be worth considering more cost-effective alternatives, such as online advertising.

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