Guide: How to Build an Electrical Business

How to Grow an Electrical Business

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Are you looking into how to grow your electrician business? Well, you’re at the right place. In this guide, you’ll learn the top considerations — everything from coming up with a business plan to financing options.

Here are the steps you should be taking to ensure your electrical business is set up for the growth that you envision.

Devise an Electrical Business Plan

Just like any business, an electrical business needs a solid plan. Going through the planning process allows you to focus on specific steps to get your ideas off the ground. It also provides an opportunity for you to outline short- and long-term growth objectives. 

As you devise your electrical business plan, you’ll need to address and evaluate market needs, capital, overhead, competition and pricing. This information will come in handy when it’s time to set specific benchmarks. A business plan will also make managing risks easier because you’ll have a better understanding of revenue and expense projections, logistics and operational plans, and the competitive market landscape. All of this can lead to improved decision-making and provide a more realistic view of where you expect your electrical company to be in the future.

A business plan for growing an electrical business generally consists of the following components: 

  • Executive summary
  • Market opportunity
  • Marketing and sales strategy
  • Operations plan 
  • Personnel strategy
  • Financial projections 

The overall purpose of this plan is to formulate an effective strategy for growth, determine your future financial needs and attract lenders and investors.

Before you get started on this important step, you should first find a mentor who’s doing what you want to accomplish and is willing to share everything you need to know about growing an electrical business. By shadowing your mentor on the job, you’ll have the opportunity to ask questions and get electrical business ideas — everything from how to finance electrical equipment to professional liability insurance.

And industry business owners agree. Tommy Mello, The Homer Service Expert, for instance, says it would have been helpful to find a mentor before starting his own garage-door business 15 years ago. Instead of spending time figuring things out on his own, he could have more quickly emulated best business practices.

“You’ve got to act like the business you want to become, and I didn’t know that back then,” says Mello, owner of A1 Garage Door Service, which reached $30 million in revenue last year.

“If I would have listened to a mentor tell me, ‘This is why you shouldn’t do this,’ or ‘This is why you should,’ it would have definitely fast-forwarded the business.”

Before creating your electrical business plan, you may also want to listen to electrician podcasts for tips and ideas, as well as read books on how to grow your electrical business.

Create a Marketing Plan

Once you determine that there’s a marketing opportunity for growing your electrical business, it’s time to develop a marketing plan or strategy. Start by creating an outline of specific marketing tactics that could help expand your customer base and build sustainable long-term growth.

Some examples of marketing tactics for an electrical business are as follows:  

  • Content marketing, such as search engine optimization (SEO) services for electricians to get your business visible in multiple cities
  • An optimized website to showcase your brand
  • Pay per click (PPC) advertising
  • Google local services ads for lead generation
  • Networking with other large and small businesses, especially home services businesses
  • Networking with other local electricians
  • Social media, video and email marketing
  • Customer testimonials
  • Offer free annual electrical “health” services

Decide an estimated budget for each marketing tactic that you choose to utilize, and be sure to test each strategy and measure the results. Your marketing plan should also detail how you will sell to customers, key marketing partnerships, a pricing strategy and your market positioning. Keep in mind, as your electrical business grows, you’re marketing mix will likely change. Therefore, your marketing tactics, strategy and financial ability will continue to evolve along with your business needs and goals.

Develop an Operations Plan

Your operation’s plan will explain all the specifics about how your electrical business will run. It should include actionable details on your company goals, procedures and timelines, as well as keep everyone involved accountable for meeting deadlines and on track with growing your electrical business.  

Your operations plan should have the following:

  • Long-term goals, key milestones and timelines
  • Strategy and processes for inventory sourcing, suppliers, equipment, technology, people, capital, financing, sales, marketing and in some instances, R&D, logistics and supply chains.  
  • Departmental budgets, as well as employee roles and responsibilities
  • Strategy for support processes, such as human resources, payroll and accounting
  • Process for monitoring progress

Overall, you’ll need to think about what your electrical business will look like as it grows. Start by looking at where it is today and where you would like it to be in the future. A communication strategy along with your operations plan is also critical to ensure your team is working towards your stated goals.

Recruit and Train Competent Employees

Electrical contracting businesses belong to a sector of skilled trades that often find it difficult to attract and retain qualified employees due to high demand. However, although employee turnover risks may be greater in the electrician construction and maintenance sector than others, you should not skimp on investing time and money in training while growing your electrical business. By having a properly trained workforce, your workers will be able to learn necessary skills that allow them to improve productivity, reduce costly mistakes and build confidence. In turn, adequate training can lead to the engagement needed to increase workforce morale and reduce employee turnover. 

For electrical businesses, safety training is typically a priority. From using electrical equipment to installing electrical wiring, training will help eliminate mishaps on the job that could hinder your business from growing. 

Technology training is also key, especially from a competitive standpoint. Keep technology in the forefront by developing a comprehensive skills training program to help foster new technologies and innovations, which can in turn improve crew management, project handling and safety strategies. 

Keep in mind, your employees will be working and interacting with your clients on a daily basis, so your electrical contracting business will only be as good as the people you hire and train. A well-trained staff can see where improvements could be made and develop client relationships to propel your business forward.

When building your recruiting program, it’s suggested to develop a comprehensive organizational chart that includes clear job descriptions and expectations for every position. Incentive pay for recruiting efforts is also recommended.

“Some people say, ‘always be closing.’ I say, ‘always be recruiting,’” says Mello, who gives employees $1,500 for referring a new hire.

“I think a lot of us, we just don’t start the business right,” he adds. “Give it such a strong foundation, there’s nowhere to grow but up.”

Set Financial Projections and Secure Financing

Growing your electrical contracting business can put a strain on your cash flow. Therefore, you’ll likely need to secure additional financing. Before shopping for loans, determine how much financing you’ll need based on your overall growth plans for each investment.

Some common options to finance your electrical business expansion are:

Bank Term Loans

Start your loan shopping by looking for bank term loans from traditional lenders, especially if you have good credit and established profitability. Bank term loans can cover most of your electrician financing needs and have the most favorable rates and terms.

SBA Loans

SBA business loans have similar rates and terms as traditional loans because they are actually provided by traditional lenders. SBA loans are partially backed by the federal government, which means some of the lender’s losses will be taken care of if you default on the loan.  

Online Lenders

For quick financing, you can also look into online business lenders. Online loans are typically under $250,000 and come with shorter terms and higher interest rates than traditional bank loans. However, online loans have lower credit and cash-flow requirements, a faster funding process and give electrician companies another option to finance their business expansion when a bank loan is not available or can not get you the working capital you need quickly enough.  

Equipment Leasing

Obtaining machinery or equipment is common when expanding an electrical business. A good alternative to traditional equipment loans is equipment leasing, as equipment leases are conducted relatively fast and are easier to qualify for. Terms can also be more flexible, and lease payments lower, when compared to equipment loans. The option to purchase the equipment at the completion of the lease is another benefit.

Overall, there is a loan out there for any kind of electrical business expansion need, including working capital, advertising, recruiting, payroll expenses and more. It’s just a matter of determining what type of loan will be the best fit for your particular situation.  

Know Why You Want to Grow Your Electrical Business

Growing an electrical business is an important endeavor that requires quite a bit of thought. Identify your personal strengths to find out where you’re going to need help and to see if expanding your business is right for you. Determine how well you understand other areas of business, for instance, financial and management topics in electrical contracting. Then, seek the assistance of mentors in the industry to fill in the knowledge gaps.   

More importantly, though, set forth a compelling case for growing your electrical business in the first place. Or as Mello says, “You’ve got to choose what’s important to you and decide what’s your ‘Why?’”

 

 

Surviving Covid: Rethinking Revenue Models

Rethinking Revenue Models During Re-Opening and Beyond

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As businesses look toward the third quarter of the year, many are still looking for ways to overcome the unexpected pains that COVID-19 has inflicted on their revenue models. With states and localities having widely varying re-opening plans, it’s only natural for businesses in every sector to be on the lookout for new ways to generate revenue.

 To help your business find inspiration for its own COVID-coping and re-opening plans, the businesses below share how they’ve reimagined their revenue models over the past two quarters.

 Adding Humanity to Membership Models

Before COVID-19, Scott Beaver, Ph.D. (affectionately known as Dr. Scott) and his company Easy Hard Science operated on a fee-per-course revenue model for its pre-recorded and live-by-chat video classes. With kids out of school for an indefinite time and parents’ needs to keep their kids learning, Beaver switched his business over to a membership model.

Now offering unlimited courses for a simple monthly fee, Beaver can overcome the trend he sees with how other companies are leveraging the internet during the COVID crises.

“Families are still stuck at home, and they are being offered all sorts of digital and mail order products,” says Beaver. “These products are safe, yet perhaps less human.”  Easy Hard Science provides what Beaver refers to as “good old ‘service with a smile’” and believes that his commitment to personal service is why families want to join and then stay in his membership program. He experienced a 300% increase in revenue in just six weeks after launching his membership model.

“We spend hours and hours talking with parents and having learners in live online classes and suggest you do the same,” he says. “Don’t expect robots to keep your customers happy. The world wants and needs more humanity at this moment, even if it’s delivered in a digital format.”

Investing in Micro-Influencers

 

 

Escape the chaos and embrace the calm one drop at a time. ☀️ Via: @jamesaspey #nuleafnaturals #nuleaf #cbdoil #cbd #organic #fullspectrum #wellness #peace

A post shared by NuLeaf Naturals Est. 2014 (@nuleafnaturals) on

NuLeaf Naturals had a healthy revenue stream built up through retailers, which came to a halt once states and cities imposed shutdowns. That forced NuLeaf to rethink its revenue model and focus on one that would help it become more self-reliant in all economies. 

No matter the circumstance, NuLeaf’s Vice President of Operations Ian Kelly knew that people still need to buy things, and eCommerce is the best bet in terms of safety. He helped navigate NuLeaf to a new revenue solution with micro-influencers through Instagram – online personalities with 10,000 followers or less.

“Micro-influencers are great for growth hacking social media without shelling out too much money,” says Kelly. “Investing in five micro-influencers with 10,000 followers is better than targeting one influencer with 100,000 followers. If you can find micro-influencers who are already fans of your products, it’s a great catch.”

Through NuLeaf’s micro-influencer campaigns, they’ve experienced a significant increase in engagement – especially direct messages from potential customers asking questions about their products. NuLeaf can now engage with new customers on a one-on-one level and start meaningful conversations that address a potential customer’s specific concerns. As a result, they’ve seen a rise in sales and plan to carry the micro-influencer marketing strategy alongside retailer re-openings and beyond.

Envisioning New Verticals

Rethinking Revenue Models During Covid

Credit: UCplaces.com

 

When you wanted to create or take a virtual tour – through a city, a haunted house, a historical monument – UCPlaces was the place you went to. Their app took you inside for a look at destinations far and wide, yet when COVID came along, tourism ground to a halt. Tourism was one of the main reasons people tuned into UCPlaces tours, for the self-guided experiences in new cities and countries.

“Since tourism took such a huge downturn, we were forced to adopt a new business model out of necessity,” says Mary Rutt, the company’s Director of Business Development.

As the company started rethinking revenue models, one COVID-related trend stood out.

“With folks moving out of crowded cities and rural real estate markets becoming flooded, we felt that the UCPlaces tour creation platform could be a great tool to help real estate agents stand out,” says Rutt. The only challenge was figuring out a way to create tours that real estate agents and their clients found beneficial. UCPlaces did their version of market research.

“We started by presenting the platform to a few local agents for their feedback. Our goal was to determine if providing tours to potential buyers would be something they’d find exciting,” she says. “The reaction was overwhelmingly enthusiastic, and we knew this was a revenue stream we had to explore.”

Two months after having the idea, UCPlaces now targets real estate agents to create “where to live” tours for their potential buyers to learn about a new location and not have to be in the car with their agent. 

“UCPlaces users can pop in their earbuds or connect to their car’s Bluetooth speakers and take one of our pre-recorded, GPS-led walking, hiking, cycling, or driving tours on their own schedule without needing to gather in groups,” says Rutt. “It’s perfect for social distancing.”

As you move into re-opening, the rethinking revenue models, such as the revamped models mentioned above, can help you identify new opportunities to keep the cash flowing in any market conditions. With a bit of creative thinking, you could discover that your next enduring revenue stream is easy to implement and can provide value for years to come.

best books for small business owners

Best Books for Small Business Owners Series: The Innovator’s Dilemma

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As a small business owner, do you consider how exploring new ideas can lead to future success? If making time for continuous learning isn’t at the top of your priorities, you’re not alone. And we want to help. Reading or listening to business books can offer new perspectives and help you understand classic business lessons. So, follow our Monthly Must-Reads series! In this series, we share the best books for small business owners. We’ll save you time by helping you determine whether each book is worth your attention. For each featured book we:

  • Identify exactly which types of business owners will benefit from reading it
  • Summarize the main points
  • Share key take-aways and reader reviews

This month, we cover The Innovator’s Dilemma by Clayton M. Christensen. Check out the end of this article for our past must-reads.

Business Book:

The Innovator’s Dilemma, by Clayton M. Christensen

Focus:

To uncover two innovation types and to understand the purpose of and necessity for each of them.

Main Idea:

When companies disregard opportunities for disruptive innovation, they risk going into the shadows of more inventive start-ups.

Great for Small Business Owners Who:

Develop innovative solutions for niche markets, or have long-standing businesses and want to protect themselves from dissipating.

Synopsis:

The Innovator’s Dilemma identifies and explains two types of innovation: sustaining innovation and disruptive innovation. Sustaining innovation is the ongoing effort of listening to and improving from customer feedback. In this way, it satisfies customer’s current needs. Disruptive innovation helps companies evolve, to meet customers’ needs–often in an underserved market. Examples include the transition from digital to smartphone cameras, GPSs to navigation apps.

Christensen goes on to explain which types of companies typically focus on disruptive innovation and which ones lag behind—and why. He offers strategies for how both long-standing companies and new start-ups can successfully explore and benefit from disruptive innovation.

Key Take-Aways:

Large, well-resourced companies are more likely to ignore disruptive innovation and suffer because of it. They may not even notice niche markets. They might think that these markets aren’t offering enough rewards to compensate for the lack of credibility. These companies should continue their sustainable innovation efforts. They should also start paying attention to how niche markets want to use their products.

For start-ups and small businesses, disruptive innovation offers huge opportunities. They’re often first to market. Targeting small niche markets offers a more forgiving, cooperative and engaged customer base. Disruptive innovators don’t directly compete with larger, better-funded market leaders for customers. This means they have a higher chance of growing surprisingly quickly and unchecked.

Pursuing disruptive innovation can help companies take–or keep–their place as market leaders of the future.

Reviewers Say:

“Clayton Christensen’s The Innovator’s Dilemma…remains one of the most important business leadership books on the market… The pace of technological innovation has increased drastically… [but] the foundational principles remain the same—when companies are doing everything right, they can still lose their position of leadership in the market. Companies are incentivized to act in accordance with what their customers want, and if they are not careful, that mentality can preclude them from taking advantage of disruptive opportunities that their current customers are not yet interested in. Christensen’s warnings should be heeded by leaders and managers at all levels of the organization…. I look forward to reading about how the Innovator’s Dilemma can be addressed in this age of near-constant innovation and rapid technological advancement.”

“I’ve been involved in innovation most of my careers, and now wish I’d read this book much earlier. The simple but powerful thesis of the book is backed up by data and case studies from disparate industries. Like many business books it is a bit repetitive at the end… But the ideas and usefulness are five stars.”

Monthly Best Books for Small Business Owners:

August, 2019 – Blitzscaling

September, 2019 – The E-Myth Revisited

October, 2019 – Influence: The Psychology of Persuasion

November, 2019 – Built to Last

December, 2019 – Multipliers

January, 2020 – Start with Why

February, 2020 – The Five Dysfunctions of a Team

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Preventative Measures for Small Businesses To Take During COVID-19

Preventative Measures for Small Businesses To Take During COVID-19

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With COVID-19 having broad impacts on the global economy, you might be wondering if there are preventative measures for small businesses to take to protect themselves and their customers during these uncertain times.

Indeed there are. Below you’ll find actionable steps that businesses operating in a wide array of industries can take to secure services, put customers at ease, and stay nimble as new information becomes available.

Bolster Inventory

One of the most important preventative measures small businesses can take during these earlier stages of the COVID-19 disruption is to bolster their inventory.

It’s time to examine your current purchasing practices. Pay special attention to your overseas suppliers that may be impacted by export delays. You’ll likely want to increase orders from a typical 30-day supply to a 60- or 90-day supply, especially for your most popular inventory. If you find suppliers challenged to meet your increased quantities, don’t be shy about exploring alternative suppliers. At the very least, you’ll establish new supplier relationships and lay the groundwork for securing operations during current and future market disruptions.

You’ll also want to take steps to bolster your internal inventory for things like office and cleaning supplies. Consider increasing your orders for your daily consumables. Purchases like copier/printer paper, shipping supplies, and in-office consumables like paper towels and toilet paper can all be stored. Whether supply chains get disrupted for these items or not, you’ll use them regardless.

Establish In-Office Protocols

Major consumer-facing businesses have made a proactive practice out of sharing their preventative measures with the public. Whether it’s an airline sharing aircraft disinfectant procedures or your local fitness club letting customers in on their cleaning methods, your customers and employees will appreciate your procedural transparency.

Let the people you rely on most to keep your business running know that you’re taking their health and safety seriously. Here are some tips for safety measures small businesses like yours can take to reassure your team and customers:

  • Office/store cleaning: Consider an email or in-store signage letting customers know your daily and overnight disinfectant procedures. Offer hand sanitizer pumps or wipes if you have shopping baskets or carts. Add additional wipes at checkout/customer service areas. Place paper towels instead of reusable fabric hand towels in all public restrooms.
  • Examine return policies: Explore whether you need to make adjustments to return timelines to accommodate a customer’s desire to limit public exposure. Also, examine how you’ll process returned items and sanitation procedures for returns if necessary.
  • Employee measures: If you haven’t already, now’s a perfect time for an all-hands meeting to discuss COVID-19, its impacts, and safety measures your company is taking. Ensure employees have a plentiful supply of disinfectant products like wipes, soap, and hand sanitizer. Establish a firm sick policy and consider a permanent adjustment to your paid sick leave time.
  • Leverage technology: Consider limiting employee travel (even out and about in town) to avoid unnecessary exposure. Implement digital meeting tools like videoconferencing to continue collaboration during times of limited mobility.

Using the tips above, you can both reassure customers and employees as well as continue business operations responsibly.

Stay Up-To-Date

New information comes out each day about the impacts of COVID-19. One of the most important preventative measures for small businesses is an ongoing commitment to awareness.

Establish a point person or team within your company to stay up-to-date on the latest news. This includes information about new cases, travel recommendations, safety suggestions, and more. The following sites can provide reliable, authoritative information on COVID-19:

Depending on how COVID-19 affects your region, you might consider closing your business for some time to prevent disease transmission. While not an easy decision, it could be a necessary one for safety. Always consider whether a temporary closure of your physical location(s) could benefit public health and make contingency plans for key employees to work remotely during times of potential closure.

With so much news coming out each day about COVID-19, it’s natural to feel a bit flummoxed. However, a bit of planning, a generous amount of communication, and some common-sense safety measures can make your team and customers feel more secure during unsettling times.

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How Customer Service Can Help Small Businesses Survive A Potential Slowdown

How Customer Service Can Help Small Businesses Survive A Potential Slowdown

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Customer service might be the key that helps many service-oriented SMBs survive slow supply chains caused by COVID-19.

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coronavirus supply chain disruption

Supply Chain Disruption: Managing Impact from COVID-19

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U.S.-based SMBs account for roughly one-third of all imports into the country. Supply chain disruption during the COVID-19 era proves to be a critical threat to operations and profitability.

However, means do exist for businesses to mitigate the impact of these market disruptions. Simultaneously, businesses can create improved supply chain protocols to manage such disruptions.

Below, you’ll find insights from Suuchi Ramesh, founder and CEO at Suuchi Inc. and Albert Goldson, Executive Director at The Cerulean Council. Their tips can help your business navigate the current landscape. They can help you chart a path forward to improve you and your business’ resilience in any market.

Immediate Impacts of COVID-19 on Supply Chain

What can SMBs expect to experience as COVID-19 extends its reach across the globe? “The immediate impact will be robust customer demand for current inventory,” says Goldson. Businesses will stockpile inventory, which means suppliers could experience accelerated inventory sell-through. While the initial cash flow could be considerable, there are impending downsides.

Increased demand will cascade into multiple supply chain disruptions. Businesses might find themselves caught between depleted inventory and extensive replenishment delays due to indefinite lead times from overseas suppliers. Goldson states that companies could experience a cash flow squeeze due to uncertain lead times.

Ramesh anticipates that U.S.-based businesses will turn an eye toward risk and shift to an emphasis on local-for-local supply chains. “With more local control, businesses will have a better way to combat macro-economic variables.” Businesses are beginning to consider the impact COVID-19 might have on different areas of their supply chain. Ramesh advises companies to hedge their risks against disruptions from all suppliers.

“Today, it’s the east, but it really could be anywhere across the globe,” she says.

Four Tips for Managing Supply Chain Disruption

The following tips can help businesses to hedge risks and mitigate cash flow disruptions due to COVID-related delays.

Focus on Digital Systems

A supply chain is only as good as its communication protocols. That’s why Ramesh says businesses should consider investing in digital systems to improve communication in their supply chains.

“For companies who are primarily communicating by email or phone calls, when things like COVID-19 happen, communication comes to a halt,” says Ramesh. “If you have a system that connects your entire supply chain, it provides continued communication when something like this happens.”

Diversify Your Supply Chain

Now’s the time to diversify suppliers and initiate outreach to other potential suppliers. When businesses can develop a base of multiple supplier countries, they can still course-correct when one global supply center is affected. While new suppliers might seem to be a short-term solution, Ramesh considers alternative sourcing to ultimately be a long-term play.

“For brands that are lethargic or just don’t have the resources to think about multiple sourcing partners, it’s natural to procrastinate if there are no immediate risks,” she says. “When you’re forced to search for a short-term alternative, if successful, it can turn into a long-term opportunity.”

Goldson advocates for businesses using this time to establish multiple alternative suppliers.

“Even if you already have a secondary source, establish a third source,” says Goldson. “The world economy is entering a period of high risk and uncertainty, and the more options you have, the better you can weather the storm.”

“Stress Test” New Suppliers

Businesses can identify new suppliers and engage in entry-level transactions. Therefore, it’s critical to ensure new partners can meet demands under extreme conditions. Goldson advises that companies occasionally “stress test” suppliers by giving secondary suppliers a larger than usual order to see if they can handle the demand.

“It’s counter-intuitive, but think of how you test your car’s air-conditioner in the winter to make sure it’s running okay after months of non-use,” he says. These stress tests can help businesses identify maximum orders per supplier and create fulfillment strategies for a wide array of supply chain disruptions.

Focus on Compliance and Sustainability

As you put stress test protocols in place, Ramesh advocates for businesses to find a newfound focus on compliance and sustainability. “A disaster like COVID-19 is one thing, but you want to ensure that if any type of similar issue has impacted a partner, they have the procedures, resources, and steps in place to combat the issue and a digital system to record it all,” she says.

Have open and frank conversations with suppliers about current market disruptions. Ask them how their businesses are making adjustments to prevent future slowdowns on their end. Communicating about compliance and sustainable business practices across varied market conditions will ultimately strengthen the relationship between customer and supplier for the long term.

You now have four tips to help you shore-up supply chain disruption in the wake of COVID-19.

By diversifying your supply chain and investing in better communication across the board, you’ll be prepared to withstand market variances both now and in the future.

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finding your unique market niche

Identifying a Niche Market that Works for You

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Identifying a niche market is a more profitable strategy for small businesses, rather than trying to sell products and services to all “potential” customers. As we have noted before, “the most successful enterprises work hard to target specific groups of customers to whom their offerings are most attractive.” Those specific groups comprise a niche market where focused branding and marketing messages often have the greatest impact – because those groups are made up of prospective customers most likely to be drawn to what a business has to offer.

Finding a niche also serves as an excellent way to stand out from the crowd. Broadly speaking, a niche business “is a specialized or focused area of a broader market that businesses can serve to differentiate themselves from the competition,” according to Business News Daily.

Anything that differentiates your business from a crowd of competitors has the potential to trigger fast and large-scale growth – the goal of many small business. Key benefits include:

  • A bank of loyal customers who belong to this niche market and gratefully purchase the products or services delivered by an enterprising small business
  • Reduced competition because this niche market has been largely overlooked

That’s why: It makes sense to pursue a specialized group of customers, rather than attempting to sell to everyone.

Identify your target audience

How does a business go about identifying the right niche market?

Start the process by “closely analyzing the current state of the market and determining if a significant enough portion of that customer base is receiving the special attention it wants and demands.” If that customer segment isn’t receiving special attention, it’s a golden opportunity for your business to gain a valuable foothold.

Other strategies include:

  • Checking out Google Trends to determine the level of potential interest in a product or service aimed at an underserved audience.
  • Seeing what’s going on on social media. Are consumers looking for a product or service close to what you offer?
  • Researching the range of products offered by the big online sellers, such as Amazon.

Is your proposed niche product or service already offered by other small businesses? That might not be a bad thing, notes Constant Contact, since “finding a large amount of products that already exist for your niche … indicates a strong market,” particularly if you focus your efforts on creating a product “that’s unique and stands out.”

Conducting research takes time and resources. But if you land upon an underserved niche market, it’s well worth the effort.

Assess the level of your own commitment

Taking on the challenge of locating and profiting from a niche market requires a certain mindset. It starts with having the necessary passion and energy to go after this market. Without that energy, you can easily lose interest in doing the hard work involved.

Consult friends and colleagues in your professional networks. Use these individuals as sounding boards to evaluate the potential of your niche product or service. Does it strike others as a great idea and worth pursuing, or do you encounter mostly lukewarm levels of interest?

Don’t think you have to reinvent the wheel. To appeal to a niche audience, you may only need to tweak an existing product or service. Maybe a minor upgrade will do the trick, as opposed to creating an entirely new offering.

Focusing your energy on this specialized market can be hugely profitable, as long as you have the right level of commitment.

Gauge the degree of interest in your product

Appealing to a niche market doesn’t have to depend upon guesswork. Once you have a viable product to share with prospective customers, it’s time to test it out.

One effective means of assessing interest among consumers is: offering them the chance to “test-drive” your niche product. Offer samples with sufficient features that provide a reasonable way for people to try out the product. This can be in your bricks-and-mortar store, through free online deliveries, at trade shows and other industry-related venues.

The feedback you get can give you a fairly clear idea about how well the offering is regarded by potential buyers.

Another option is distributing surveys among those who try out your new product. Create brief surveys focusing on whether or not this product genuinely addresses an overlooked consumer need, if it’s easy to use, what other benefits might be gained, etc. Surveys can occur via email, through on-the-spot questionnaires at tradeshows, or in small focus groups.

Again, this will help you determine whether or not to move forward to larger-scale production and distribution.

Identifying and reaching out to a niche customer market requires time, resources and focus. The potential for growth, is huge.

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joseph hoelscher

Joseph Hoelscher: Using Creative Marketing To Help Customers Avoid Your Services

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If your marketing helps people avoid needing your products/services, it seems like you might be going in the wrong direction. After all, isn’t the whole point to land more customers? In the right situation, though, this counterintuitive approach can lead to terrific results. Joseph Hoelscher, a DWI lawyer and partner at Hoelscher Gebbia Cepeda, built his marketing campaign on one key concept. They want to stop people from driving drunk so they don’t need services in the first place.

Finding a Legal Specialty

Hoelscher has been practicing law for about 14 years and specialized in DWI for several reasons. “I was good at it, it pays well and unfortunately it happens a lot. Anyone can accidentally have too much to drink.”

After working in this field, Hoelscher has seen plenty of the horrible results from DWI. “I’ve had vehicle manslaughter cases where the outcomes have been just horrific. Clients with serious injuries, losing their kids to CPS, and of course seeing the harm done to victims.”

Even though Hoelscher makes his living from DWI law, he longs to see the day when this is no longer an issue. If it meant him practicing another form of law, he’d do it.

Taking a Different Marketing Approach

Hoelscher felt uncomfortable with how the typical DWI firm handles marketing. “I’d see a lot of ads where the behavior seemed almost encouraged: hire us and you won’t get in-trouble.”

He wanted to try something different while potentially helping with this troubling issue. Hoelscher and his representatives attend events where people are partying and drinking, like San Antonio’s version of Mardi Gras, the Fiesta Festival.

At the event, they’d hand people cards with a code for a free Uber ride. “We’d put our info on the back along with a slogan, “we’d much rather you pay for an Uber than our retainer.” Hoelscher would also give these cards to parents at college events so they could pass along to their children.

Building Loyalty

Hoelscher said the response was overwhelmingly positive. “People would get a laugh and make sure to hold onto our cards.” He noted that humor was a good way to bring up the topic. “At these events, people are out to have a good time. We weren’t trying to judge them.”

Even though Hoelscher tried to cut down on DWI with the free rides, he’d still end up getting clients. “People would call, “ah I should have used your free ride.” Or they’d refer a friend, a family member who got in-trouble.”

Ultimately, Joseph Hoelscher finds clients by showing he cares and it shows how you can drive business by leveraging community engagement.

Seeing Cost-Effective Results

“We’ve also run radio, print, TV, and social media ads. The ROI was better on this targeted, personal outreach.” Hoelscher said they pick events where people are going to be drinking, their target audience, and that definitely helps their ROI versus print, radio and TV where they’re hitting a broader audience.

He also commented that his contrarian approach remains affordable. “We’ve had good success with social media, but the cost per lead had quadrupled over the past few years whereas the cost per lead is still the same for our rideshare campaign.” That’s another benefit of trying something unique, you aren’t fighting for resources with the competition.

Finally, he points out that the rideshare campaign helps get more out of his other marketing. “People take pictures of themselves getting into rideshares and link to our social media. When people see our other ads, they remember ‘oh that’s the guy who helped me avoid drinking and driving.'”

joseph hoelscher

Advice for Other Business Owners

If you’d like to try a similar campaign, Joseph Hoelscher says put yourself in the customer’s shoes. “Where are your customers coming from and what’s getting them in trouble?” In his case, he finds that people often drink and drive not on purpose, but because they didn’t plan on how to get home. His firm gives them that ride home they need.

When customers create problems for themselves, he recommends pointing out the issue, but doing so with humor. “If you engage in nonjudgmental outreach, people appreciate it. You aren’t trying to sell on fear.”

Above all, this style of marketing works. It shows customers you care about them. “I’ve had so many clients say they hired me because I was looking out before they had a problem, not like everyone else who only came knocking after they needed a lawyer.”

 

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customer acquisiton or retention--which is best for your small business and what are the benefits of each one?

Customer Acquisition or Retention–Which is Better for Your Business?

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Which aspect of business growth is more important–customer acquisition or retention? It’s an age-old question for small business owners. They must constantly decide where to put their precious funds and resources.

Focusing on retention means paying close attention to the needs and pain points of an existing customer base. On the other hand, customer acquisition involves the constant effort to boost brand awareness. It requires you to entice new customers to “take a chance” on your business. You have to find innovative ways to connect with prospects. This is the case, even if the business doesn’t know exactly who they are, or what specifically they want.

Here’s an in-depth look at both of these essential components of business growth.

Customer Retention

Any business that builds a reliable pool of repeat customers is doing something right. Whether their focus is on providing outstanding customer service, continuously testing the quality of their products or services, or simply making it easy for customers to purchase what they sell, their strategy to retain these loyal customers is often a successful one.

As the marketing platform Fivestars puts it, retention “is usually cheaper and it’s the lower hanging fruit.” Generally speaking, these marketing efforts are less costly and more successful. This is because “customers who are already familiar with your business, and presumably have a positive impression of you are easier to convert.” This is compared to a customer who knows little or nothing about your business.

Repeat customers are more open to a company’s marketing and sales efforts; they did business with that company in the past and, presumably, value their products or services. As Constant Contact notes, the following benefits might accrue:

  • It’s considerably less expensive to keep the customers you have than to acquire new customers.
  • Loyal customers require less time and resources to sell to, as opposed to new customers who–despite a costly marketing outreach program–may end up choosing not to purchase anything at all.
  • Focusing on repeat business means you “create a group of loyal customers that will happily … promote your business” and “refer 50 percent more people than one-time buyers.”

Maintaining ties with an established target base makes all the difference in the world between struggling to survive and anticipating a bright future.

Customer Acquisition

Acknowledging the virtues of emphasizing retention shouldn’t obscure an equally compelling fact of business life: without acquiring new customers, you don’t have a base of current customers to retain. Growth requires acquiring new customers, and even more so if a company is executing an aggressive expansion plan.

Of course, a lot of work goes into the acquisition process. A company determines who potential new customers are, evaluates different marketing and messaging strategies, decides the best approach that’ll resonate with the target audience the most, conducts a successful sales process, and participates in related activities.

Therefore, the costs associated with customer acquisition are significantly higher than that around retention. According to Agile CRM, “As your customer base grows and you increase your brand awareness,” the acquiring of new customers “becomes exponentially easier.” The key is leveraging the acquisition of new customers “to solidify their trust in your ability to support them and make them successful.”

How to Boost Customer Retention

Unfortunately, businesses don’t always work as hard to retain customers as they do in attempting to gain new ones. But, successful retention efforts cost less and demand less time and effort than the acquisition process. Consider the following action steps to keep a focus on loyal customers:

  • Always make certain new customers get the support and guidance they need from the moment of the sale and beyond.
  • Generate “how-to” and other related content addressing the constant needs of the new customers.
  • Check in with customers to determine their satisfaction level(s) with the products or services they purchased. Provide answers to any and all questions ASAP.
  • Let these customers know of product upgrades, repairs to computer glitches and other changes in the business that might affect them.
  • Establish a state-of-the-art customer response and support system. Keep in mind: One negative experience with your business can turn a trusted customer into someone who never buys from you again. Do everything you can to provide support and guidance for any problem a customer encounters.

These action steps require additional funds and resources. But if they aid in boosting retention, they are worth every penny.

The Key to Acquiring New Customers

For “new customer acquisition in 2020, business owners should balance past tactics with new strategies.” A focus on specific strategies can help businesses achieve this vital objective. These include:

Refocus efforts on target customers.

Clearly identify specific groups of customers to whom your product or service is most attractive. Avoid wasting time and resources where the chances of generating new customers are slim.

Embark on social media campaigns.

Leverage social media to attract new business. This can result in higher brand awareness through the distribution of free, value-added content. Paid social media efforts can be equally effective in increasing brand visibility within your target audience.

Try a focused product or service giveaway initiative.

Giving prospects a chance to experience your offering on their own terms (and at no charge) can result in a favorable experience that leads to the next step of the purchasing journey. Free product trials and/or no-cost software downloads can go a long way towards demonstrating the benefits of your offering.

 

In the end, every business has to find its own balance between acquisition or retention. A lot depends on the stage of growth a business is in, and the particular growth strategy to which it commits. Without new customers, a business can’t grow. Without a base of loyal customers, growth is equally problematic. Find the right balance and you have the potential for unprecedented expansion in 2020 and beyond.

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4 Ways You Can Turn Excess Inventory Into Extra Revenue

4 Ways You Can Turn Excess Inventory Into Extra Revenue

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Are you looking for a way to give your business revenue a boost? Your inventory may hold the answer. If your excess inventory is collecting dust on shelves or in a warehouse, moving it around can inject new life into your revenue numbers. Here are four ways to help reinvent your excess inventory.

1. Bundle it

One option is to bundle your inventory and sell multiple items together at a singular price. This can get products that have been gathering dust off the shelf and out the door–all while generating a profit. There are several ways to approach bundling, including:

  • Combining older or slower-selling products with newer or faster-moving ones
  • Bundling multiple units of the same items
  • Grouping items that are commonly used together

Here’s an example: If you run a salon, and have a hot-selling brand of styling gel, you could package it with the overstock of shampoo and conditioner you’re struggling to get rid of.

To make a bundle enticing–generally speaking, the total price of the bundle needs to be lower than the cost to buy each item individually. Just remember: Keep profit margins in mind so you’re not unnecessarily sacrificing revenue.

2. Offer it as an incentive

Upselling can be a simple and effective way to increase revenue. The idea of an upsell incentive is to use one item to convince your customers to buy a second, more expensive item. In an upsell, you can use the extra inventory to offer products as a bonus–or as a “gift with purchase” when a customer meets a certain requirement. For instance, the customer(s) may need to spend $50 or $100 to get the freebie. This way, you get the revenue benefit from the sale–and you get to move more inventory in the process.

Upselling with incentive works best when customers feel like they’re getting a high-value freebie or bonus. When you create an incentive campaign, remember to weigh the value of what you’re giving against what you’re asking customers to spend.

3. Create a timeline

Marking items down can attract bargain-hunting customers. But, it helps to have a plan if you want to run a sale with maximum impact. Just sticking items on a clearance shelf may not cut it–especially if you have a lot of inventory to move. A better option might be to hold a “flash sale” online or door-buster sale in-store. These kinds of events can create a sense of urgency among customers who don’t want to miss out.

Remember: Timing matters for sales. Have them too often and they might lose their impact.

4. Change up your marketing

Sometimes, sprucing up how you promote excess inventory can boost sales. Simple techniques to vary how you market your inventory may include but aren’t limited to:

  • Relocating items to a different part of your store
  • Redesigning product displays
  • Updating product photos in your online store
  • Adding new keywords or descriptions for products sold online
  • Placing them somewhere new on your site
  • Writing a post about it on your business blog

These are all ways to showcase excess inventory in a new light. The payoff can be a healthy revenue boost if repositioning inventory results in a sales comeback.

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