Retail isn’t really about prices, it’s about profits. Adjusting prices is definitely one way to address profits, but the most successful merchants also ask, “what about the wholesale cost of my incoming inventory?”…
It’s that time of year again! The days are getting shorter, the air is getting colder, and the in-laws are hunting for bargains on airfare. The holidays are upon us and that means it’s retail’s time to shine! - or at least brace. Here are a few stocking-stuffers to help you maintain firm control even during the busiest times...
If you've been out in the streets at any point in the past couple of weeks, you may have noticed people even more engaged with their phones than normal. You may also have heard or seen something about the summer phenomenon that is Pokémon Go...
Between keeping the lights on and managing your staff and doing the accounting and all the other roles that come with the territory, you've got plenty on your plate as an entrepreneur. We're going to add one more thing—small business press. Why bother investing time into media outreach? Well, quite frankly, it's free publicity just hanging out there—ripe for the taking—that will otherwise spoil when opportunities are missed.
Drawing from my own experience, I appeared on a Minneapolis lifestyle news program a couple of years ago to highlight locally made holiday gifts. Within one day, each of the three businesses in the feature reported that several people had called or stopped in specifically because they saw something they liked on TV. Those are real customers through the door who had no idea these businesses existed the day before.
These opportunities might seem hard to come by, but connecting with media outlets can be easier than you think. Here are a few tips to get started.
1. Tell stories. Reporters are not interested in giving you a free commercial to tell the world about why they should buy your stuff, but they are interested in stories that fit their audience. If you can tell a new, informed, colorful story, reporters will want to talk to you. What kinds of stories?
-How you started your own natural health business after 10 years as a successful pharmacist. -Why you are organizing a benefit for the fire-damaged shop across the street. -How you are crowdfunding and crowdsourcing ideas for your second location.
2. Be the expert that you are. Or introduce reporters to experts you know, using your business as the backdrop. Reporters remember community connectors.
-How you are the only person in the world who makes jewelry cast from a tiny octopus. -How you navigated the state's new brewery regulations. -How two of your gym's best customers are a husband and wife duo training for Olympic ski jumping.
3. Use your inventory. Let your products be the story. Get personal with it. Get generous with it. Get weird with it.
-Drop off a Pinterest-worthy picnic basket filled with your signature maple syrups to all the local television stations with a handwritten note before National Pancake Day. -Ask a local artist to build a diorama made out of noodles (using some of the 2,000 types of you have at your Asian grocery store) and invite food journalists over for a bite to eat. -Those tiny octopus earrings? Bring 'em back out and invite a major fashion blogger to style them into one of her outfits and see invite her for a tour of your studio.
Do you have any other media tricks up your sleeve? Let us know in the comments or say hi on Twitter!
When it comes to cyber attacks, being a small business basically puts a bullseye on your back. The National Security Alliance reports that one in five small businesses fall victim to cybercrime each year. Of those who are hacked, 60% go out of business within six months of the attack. So yes, you could say that cyber attacks on small businesses are a serious concern.With the recent Target security breach affecting millions of people across the country, it's more important than ever to take care of your own customers' personal information. As a small business owner, there are a number of simple ways to protect yourself from hackers.
1. Lock up your Wi-Fi network (like, yesterday). Enable WPA2 security protocols and use a totally nonsensical, unreasonably long password. Isolate your payment system so that credit cards are processed on a different network from the one you and your employees use for tooling around on the web.
2. Update your software. Make sure you're using the best security you can afford and keep it current. Outdated anti-virus software, firewall security or credit card processing systems can be easier to crack because the latest security patches are missing, so install updates as soon as they are available.
3. Get suspicious. What kinds of cyber security and software do you use now? Whatever it is, study it so you can recognize when something's not quite right. If you use Square, read about their policies here. If you use complementary software that accesses customer information, learn about their encryption methods too. Make sure only you and your employees are logging in to your servers or any other password protected systems. Flag unusual traffic surges or login attempts that might be caused by hacking attempts.
4. Back up your data regularly. In case of theft, outages or cyber attacks, you don't want to be caught without any of your important information. Vendor invoices, sales data, customer information... this could all be lost if you don't back up your devices using something wonderful like Box or CrashPlan.
Image via Shane Pope on Flickr
Imagine you've got shelves upon shelves full of obsolete inventory that is just taking up space in a warehouse. In reality, those shelves are not just full of stuff, they are full of money. Your money. The problem is, the money is tied up because those products just won't move no matter what kind of clearance prices you've slapped on them.Excess inventory can have lasting effects on a business' bottom line. Prevention is the best medicine (which is why Shopventory exists!), but if you're already in a bind we've got some solutions so you can start filling those shelves with inventory that flies off them instead. Let's clean house!
- Above: Let's put this cash back together, shall we? (via Tax Credits on Flickr)
1. Sell online with sites like eBay, craigslist, Overstock.com or list it on Freecycle, a network where you can give and get all kinds of freebies. It depends on your products and the time you want to devote to this, of course, but you can either sell your merchandise individually or in lots. The Internet is a weird place—despite the odds, you might even find someone to buy those 200 "Happy Birthday, Frank!" T-shirts you accidentally printed for a party of 20. Maybe there's another Frank out there with 200 friends or maybe there isn't, but you won't know until you try.
2. Transform the inventory into something special, even if it sort of isn't. Use it to laugh at yourself and the fact that you found something decades behind the times. It's not "obsolete," it's an "Exclusive Collection of Vintage Discmans (that don't work)." If you do it right, the hype and cheekiness just might help you sell the rest at full price or inspire a group of hipsters to start a Discman DJ Night. At the very least, it'll give your customers a good chuckle.
3. Sell, give or trade the products to another seller. WHAT? Crazy, right? But hey, maybe you know a fellow business owner or surplus vendor who has the time and patience to deal with this lot better than you can. One seller's trash is another's treasure—when you build that positive rapport, you might find yourself coming into treasure occasionally too. Or make a trade. For example, a party rentals company will surely be able to find use for 2,500 wine glasses and you might be able to trade them for any number of things you need, from props to style your product photo shoots to rentals at your next company picnic.
4. Make a donation to a local organization, school, library or charity. Get creative, because even misshapen tin cans can be put to good use by a high school art program. Make sure to keep detailed accounting of charitable donations and you'll come out with a handy tax break come April.
5. Recycle or trash. If you've exhausted all other options, it's time to toss. Arrange for pickup or haul recyclables to the appropriate place (you know, to avoid toxic spills and whatnot). There are also quite a few businesses out there that will even buy your scrap electronics, metal, plastic, etc. Recycling scrap metal can have a huge impact environmentally. Do your research and you can really clean up (pun-intended) on that excess.
Intuit recently posted this great infographic showing the best cities for women entrepreneurs—and we were especially excited to see Shopventory home bases of San Diego and Denver on the map!More compelling, however, was their set of seven simple tips that are applicable to both men and women starting their own business. Mentorship and developing a support system was a common theme, but the last one really stuck with us: Don't wait for perfect timing.
If you're waiting to feel "ready" to dive into starting a business, you'll be waiting a long time. With such a huge career decision, it's unlikely you'll ever feel 100% ready to take the plunge. And we are far from suggesting that you quit your day job without a road map... but if you've got a viable product, a well-thought plan and the financial and personal support you need to make it happen, it might be time to go for it. Forbes even theorizes that the best time to start a business is during an economic downturn, so what are you waiting for?
It's that time of year when it just feels right to set new goals and start new habits. While most of us are jotting down "work out more," it's a great time for small business owners to set aside a moment to make professional resolutions for the coming year.We've rounded up four unexpected resolutions that can help small businesses grow in big ways.
1. Give more things away for free. Yeah, we mean it. For example, if you make artisan soaps, send some to the influential lifestyle bloggers and local journalists that you follow (don't skimp on the pretty packaging either!). If you make gourmet beef jerky, sample your new recipes in farmers markets and tasting events. These investments in the experience can grow your customer base leaps and bounds, but pick and choose them wisely. Sure, a huge annual food festival is going be great to show off your jerky to a lot of new people... but it's also very expensive and last year you were buried in the back tent with 17 other meat vendors. Hmm, but what about that smaller craft beer festival that's the same weekend? At the beer festival you won't be competing with as many food purveyors and it's common knowledge that beer drinkers and jerky eaters are exactly the same people. Plus, it's a charity event, so there are warm fuzzies and tax breaks involved too. We think we've got a winner.
2. Get rid of your social media. Wait, don't cancel your accounts just yet. Instead, vow not to sweat Facebook this year—delegate. Say you own a coffee shop and want to show off your baristas' gorgeous latte art. Instead of worrying about those posts yourself, ask your staff to take the reigns on project #latteartlove so they can share whenever they create something particularly inspired. Or maybe one of your baristas is a marketing student and particularly funny on Twitter. Give them the keys to the social media and let them run it. Delegate to your customers too. Make sure you have social media signage visible in places where people are likely to share. At that coffee shop, perhaps you set up a chalkboard near the beverage pick-up line and on the wall by the much-photographed watercolor painting of Nicolas Cage.
3. Drink more champagne. That is to say, meet more people. Go to networking events and even host some of your own event for your customers, neighborhood, fellow business owners, etc. Or choose a different person from your community to ask out for coffee. It could be a potential mentor, someone in your field who just moved to town or someone who just seems really, really interesting. It might be as intimidating as a blind date, but chatting is the original social networking.
4. Take more breaks. We've misled you with the title of this post (sorry!) because you were probably expecting this one, but it's a big one. Schedule personal time for yourself. Make a no laptops on Sunday policy. Take a real (yes, unplugged) vacation. Running a business is a round-the-clock job, but you can't do it on an empty tank. If you feel like you don't have enough hours in the day, take a personal audit. Identify the one thing about your day that takes up far more time than it is worth. If you can, completely cut that thing out entirely. If it's a necessary evil, find a way to make it less evil. Maybe that means delegating something, hiring a part-time bookkeeper or scheduling a block of time on Mondays to dedicate solely to customer service rather than trying to tackle it little by little each day and getting lost in it. Whatever you need to do, do it in January so that you can start taking better care of yourself and your business this year.
You survived the holiday rush. PHEW. But if you’re in retail, your work is just beginning. Before you settle in for your long winter’s nap, you still have to count the things. All the things.Here are our six favorite year-end inventory tips to help you get through the process without a breaking into the New Year’s Eve champagne early. We’ll drink to that.
1. Dedicate time to the task. Take the day off or use a series of slow afternoons to dedicate solely to inventory. Focus and keep distractions at bay.
2. Enlist help. Two sets of eyeballs are better than one even with a small shop. Depending on the size of your business, this might involve simply asking a trusted pal to come in for an afternoon. For larger businesses, split your staff into small teams to count (and recount) together.
3. Reward yourself and your staff. Motivation can come in many forms. Order lunch for everybody or bring in a masseuse to give your crew back rubs during their breaks. Give yourself something when you’re done too—you know what you like best.
4. Keep notes upon notes upon notes. After you’ve combed through your products, you might’ve discovered you need a better way to organize them. Or you might’ve uncovered a huge box of plastic dinosaurs that didn’t sell very well this year but will be perfect for your legendary window displays. Make sure you’re not just counting, but making detailed notes that’ll help you be more successful in the coming year.
5. Clean house. Do you have products that have been collecting dust for years, decades even? Even a clearance sticker can’t work miracles. Don’t feel guilty about getting rid of outdated or ridiculously unpopular merchandise. All it’s doing is weighing you down and taking up important space.
6. Use technology to save time and money. Yes, we’re slightly biased. Truly though, the right tools and software can help make taking inventory much less of a drag. A system like Shopventory keeps track of your inventory and sales automatically throughout the year, so it makes those year-end reports and accuracy checks that much easier come tax time. Even if you’re not using a program this year, it’s a perfect time to start since you’ll have all the right information and spreadsheets on hand to upload. You’ll thank yourself next year.
Yesterday we tuned in to the American Express OPEN Forum for a talk by best-selling author Malcolm Gladwell, who spoke about the immense power of the entrepreneurial spirit. In his recent book David and Goliath: Underdogs, Misfits and the Art of Battling Giants, he investigates instances where the little guy’s resiliency and unconventional approach wildly outweigh the perceived advantages of the big guy.In other words, successful small business owners are able to shake things up in ways that big business simply can’t.
Gladwell used several examples to demonstrate this idea, but the first and most adorable was a story about a scrappy, uncoordinated basketball team of 12-year old girls who could barely shoot but learned how to win. How? Because they didn’t play the game the way everybody else did. They spent all their energy disrupting the other teams with ruthless full-court press defense (well, ruthless for 12-year olds). Against all odds they ended up making it to the championship that year.
Much like a smart startup, these girls shook things up. They focused on what they could do vs. what they couldn’t. They forced their competition to play by their rules. They took risks. And they surprised everyone.
We're rooting for you.
Pricing can be a bit tricky until you get the hang of all the formulas that help you decide what each item costs. But what about when you add psychology to it all? Thomas Nagle and Reed Holden, authors of The Strategy and Tactics of Pricing, determined the nine principles, or "laws," that affect consumers' psychology in regards to their purchase decisions. With these laws, you can better adjust your price strategy knowing the psychology of your customers.
1. The Framing Effect Customers are more aware, or price sensitive, when they consider the price as a loss instead of a worthwhile gain. They also are more aware of pricing when prices are not paid as part of a bundle, but separately.
You've seen the infomercials that eagerly tell you to purchase their product for only five easy payments of $49.99, right? We know that it's really just $249.95, paid in full or in parts. But marketers rely on this trick because they know customers are likely to veer away from the higher number if it is displayed. By doing this, marketers are reducing the "loss" which customers perceive.
2. Reference Price Effect When a customer can directly compare the price of a product with a competitor, price sensitivity increases.
Knowing that stools at Wal-Mart and Target are cheaper than at a small shop, a customer may be wary of the price difference. This effect is difficult to work with because each customer has their own priorities and values when it comes to products.
This is why you shouldn't bother making an argument that your product is better. Rather, you should talk about why your product is different.
3. Fairness Effect Customers are more price sensitive when they consider a product's price to be past the point of "fair" or "reasonable" depending on the context of the purchase.
Similar to the Reference Price Effect, this concept of fairness and what the customer feels they should be paying is relatively unpredictable. Customers may have an average price they are willing to pay for a product, but there are always outliers above or below the average.
4. Shared Cost Effect
If you and three friends have a barbeque, the price of all the food appears lower because the amount you pay is only a fourth of the total price. The smaller the amount of the product price customers pay for themselves, the less price sensitive they tend to be.
Difficult Comparison Effect
If a customers feels that the effort required to find information about the best price, competing products or best solution is excessive, they'll less likely to be sensitive to the price. Similarly, if they have to compare an unknown product to a familiar one, and it take a long time for them to discern the difference, they'll probably select the familiar one regardless of price.
Customers may also be less inclined to find alternatives on the fly if they are short on time or are given a sense of urgency. This is exactly why limited-time offers work so well.
6. Switching Costs Effect The higher the inconvenience a customer must make to switch providers, the more price sensitive the customer becomes to look for alternatives. Switching costs take many forms - investment of time, resources, complexity of purchase, number of people a buyer needs to convince (like their husband), etc.
7. Price-Quality Effect Customers worry less about the price if higher prices denote higher quality. Creating a perception of exclusivity, rareness or quality will persuade the buyer to be ok spending more. The product itself doesn't need to be of the highest quality. If the branding denotes a high-quality ethos, customers will spend.
Do you truly believe that a shirt with a Nike Swoosh is worth on average $15 more than one without? It's the perception of Nike being a quality brand that convinces customers to pay the higher price.
8. Expenditure Effect
Customers are more price sensitive when the purchase accounts for a significant percentage of a customer's available income or budget.
When customers are on a tight budget, they will think harder about whether or not the product is worth the purchase, compared to a spendthrift or a person with enough money to spend wildly. Knowing your ideal customer will help you decide pricing; delving deep and considering his or her spending means and income is the sort of detail that will help direct your business.
9. End-Benefit Effect Customers look at the overall big picture of their purchase: the end benefit. There are two parts to this:
- Derived Demand - The more sensitive customers are to the end benefit price, the more sensitive they tend to be to the prices of the products that make up or contribute to that benefit.
- Price Proportion Cost - This refers to the percent of the total cost of the end benefit determined by a particular component that contributes to the end product. The smaller the components share of the total cost of the end product, the less sensitive customers will be to the end benefit's cost.
This applies to high-priced products that have multiple components contributing to that cost (ie. Computers, entertainment centers, exercise packages/programs, etc.). A customer considers what warrants that high price and decides if that is worth it for them in the end. As you've probably read, some of these effects overlap. One effect can lead to another. Hopefully you have a better idea of the purchasing mentality of customers and can use it to your advantage. These will not help you predict the perfect prices that will make some buy every single time, but you can understand why someone may not purchase one thing. And also, it should be encouragement to look into your competitors so you can outwit their prices.
For more information on price sensitivity and consumer psychology, read Holden and Nagle's book, The Strategy and Tactics of Pricing. Or leave a comment below!