Making a Newsletter: Tips on Making One for your Business
May 13, 2008 | Posted by InvestorBlogger | Read this comment
It’s time to do our new business newsletter. We’ve had quite a few problems with this issue but it’s finally done… I can breathe a little when the new newsletter is done. Summer is coming and this is the best time to promote our business as our target parents are now looking for schools for the summer and afterwards. So the newsletter is a very good promotional tool.
At the moment, we’re pretty limited in the presentation for the actual newsletter: we don’t do color yet. But I’m becoming certain that this is the direction we need to go in: of course, we’ll then need to send out the flyer to be done commercially. OK. This is what it looks like! It was made using MS Publisher 98 … in Windows 98SE, but later versions of Office include this, too.
Even in this era of online commerce, creating a short off-line flyer, newsletter or card can be a good way to gain additional attention for your service, store or website. You can use the wizards in Word or Publisher 2008 to get you started with the basic design, write a few short columns, make it informational and of value to the readers.
Layout
I created two documents, each A4 in size. Then I named number 1 - pages 1 and 4. Number 2 is pages 2 and 3. I used a simple printer connection to the photocopier in our office and printed 2 pages on each A4 page. It was tricky to get the double-sided effect, and I wasted quite a few sheets in the photocopier. But soon, I was able to double print each A4 page. Folded in the middle, I had a four-page newsletter.
Tracking Results
I create a special link to the online sites (use a redirect if you want to) to track the traffic. If you get really smart, you can create several runs with different URLs to track the effects of different distribution points (in a larger city, this would be a great idea!).
When clients or potential clients are just looking for simple introductory information without too much hype or a sales presentation, this kind of flyer or newsletter can really answer their questions without pressure sales. I usually attach a name card to the newsletter with a personal name on it.
And it works. New clients often pick one up on the way in. Of course, as a community tool, I also distribute it to our existing clients. So there’s an added bonus there, too.
It REALLY works.
Business Start-Up Killers or How to close your business in five steps!
March 10, 2008 | Posted by InvestorBlogger | Comments Off
Having been in business now for nearly eight years, I recently had pause to consider why typical businesses don’t succeed in the local market in Taiwan or anywhere. This list includes some of my observations:
1. Poor Financing
Most business owners here in Taiwan budget enough money to open the business, but they base income projections and the related decisions on the most rosy of circumstances in the first three months. The result is often that the business will close within 3 months because the businesses have run out of cash, and haven’t built up enough customers on a returning basis to pay for the basic costs. If you’re planning to open any business, remember to consider several scenarios and prepare for different results.
photo credit: foundphotoslj
When we opened our business, we had very low estimates of income in the first six months; and we were financially comfortable with the idea of paying costs until the business could support itself. Part of that was a realization that salaries for the bosses (the only staff at the time) would be token only.
Solution: Always budget for a period at startup in which income is less (much less) than your expectations. Don’t forget to include unexpected startup costs. Be bullish on these because best-case scenarios rarely occur.
2. Missing the Mark
It’s amazing how many business owners only look at the superficial aspects of running a business. Yesterday my wife and I ate in a coffeeshop that had newly opened. The coffeeshop had a great location, and lots of potential. But when we walked into the store, everything LOOKED fine. It’s only when we ordered the food that we noticed the LOOK of the store was quite different from the reality. The staff were untrained, didn’t know how to greet customers, the drinks we ordered were pricy (for that kind of service) and really didn’t measure upto drinks at half the price in better restaurants (no flair), and the management seemed too busy doing the work to notice what was missing: an atmosphere, good service, and passion for the foodservice business. Oh, well.
The restaurant was called O Sole Mio and had a very pretty facade with a decent counter area, and much of the right equipment, too. Its location was on a major route around the north coast of Taiwan just outside Jingshan. In reality, most people would only stop once as we did.
Solution: Focus hard on the quality of the food or service that you produce. Make sure that they are up to scratch. And be your own harshest critic.
3. Location, Location, Location
That’s right. We’ve seen great businesses with potentially good profit margins killed by their locations. Why? Because the location chosen for the business ate up most of the businesses income. The business owner had chosen a high traffic location to maximize the market exposure. Result: he ended up paying over the odds for rent. When it turned out the product wasn’t that great, initial business interest fell away, and word of mouth didn’t occur.
A bakery opened across the road from our community and fell victim to this situation. Worse: the baked goods were quite unexceptional, and there was little reason for customers to cross the road to shop there, when TWO very good bakeries were less than 100 yards away. It shut in less than three months.
Solution: Choose a cheaper location, and create such a great product that people will go out of their way to find you. Once you have the quality, margins, and cash, then rent a mainstream property.
4. Hiring Staff
This has to be the biggest bugbear of any new business. Why? Finding good staff is an ongoing nightmare for our school from the first year that we opened. We have recruited actively most of the past eight years, but many of the applicants have been less than desirable. Even those we vetted carefully and who came to interview and do demos with us were in most cases unsuitable. We hired the best of those interviewees, but in reality only one or two of those we hired had the passion to be an excellent teacher.
Of course, hiring and training are both essential. When you hire new staff, it’s important they be trained properly. This is an aspect we seriously underestimated as we expected our hires to have the same passion and skill as we shared. This expectations have been tempered by our experience.
Solution: you have to be prepared to hire selectively, manage directly, and fire decisively. Poor staffing and staff who are unmotivated and interested only in their salary both will seriously undermine your business.
5. Freebies, Giveaways and Discounts
Over the years, we have noticed that some promotions work and some promotions look like they work. You have to learn to tell the difference.
- Freebies - Giving away products and services for free rarely generates a good client-base. Why? Because you will always attract people who like ‘free’, and who will shrink at the first sign of a bill or invoice. If you are going to do freebies, make sure it is tied to something that is purchased. And clearly state that these are introductory offers only.
- Giveaways - Giving away products may work for toothpaste and shampoo. It will likely not work for your business. Why? Because you will have to give away a lot of samples just to get some leads. Be careful with what you give away.
- Discounts - Discounts also can be used to attract attention, but you need to be careful in how you manage them. Otherwise you will find that you have to offer permanent discounts to keep customers who ‘thought’ that the discounted price was the regular price. Worse, as we found out, some customers will tell others that that is the pricing.
Solution: Clearly limit the duration, type and extent of your promotions. Make sure that your discounts, freebies and giveaways are closely tied to those you are trying to attract. And manage your cost basis effectively enough that you can still have a decent mark-up after your promotion. Otherwise, you will find it difficult to service those accounts properly.
One of the biggest reasons that you need to avoid these ‘killer promotions’ in the long term is simply that you will end up in a bidding war either with your own pricing or with a competitor’s. You should have confidence in your pricing structure. Aggressive promotions will create initial surges of interest, but may undermine the future of your business, the quality of your products, and your reputation.
These five issues are all issues that I’ve dealt with in different situations. They did not all pertain to my current business, but I’ve seen how the effects of these bad decisions can effectively ruin a nascent business, even one that has passed the first two years. Do let me know if you have any additional suggestions for this list.
The 80/20 Principle: It’s just a rule of thumb
February 8, 2008 | Posted by InvestorBlogger | Read these 5 comments
not one of the ten commandments… Read on.
Ade’s blog just recently posted about the 80/20 rule and how it applies to bloggers. In this post, I would like to point out some of the reasons why I think the 80/20 rule may be flawed, and you’d be wise to consider NOT applying it to your blog’s readers.
An introduction: What is 80/20?
Wikipedia has a great article on the 80/20 otherwise known as Pareto’s principle. The principle was greatly popularized by a recent book called: The 80/20 Principle by Richard Koch. Good book, good reading. In summary, 80/20 states that the majority of results will come from the minority of inputs. In particular, 80% of sales in a bookstore will come from 20% of customers. There are many examples that you can find. While the numbers 80/20 are approximate, other variations have been seen, too, including 90/10, 70/30, etc. It is now being treated as a rule of thumb in many industries, and being applied in a number of diverse situations.
It’s a rule of thumb, not a rule!
The recording companies, principally the big 4, have been adopting this principle over the last few years with their back catalogues which have shrunk somewhat as artists have been eliminated who don’t reach certain mass market metrics. Now I was thinking about the 80/20 rule and it may or may not be true in some circumstances, but I would argue that in some situations, esp. like the CD industry, it’s a bad idea for a number of reasons.
Let’s examine CD purchases: logic dictates that you should only stock the top 20% of CDs. In some situations this may be fine if there’s limited stock space or some other important limitation. BUT a significant number of purchasers would probably buy a top 20% CD AND another CD of a lesser known artist. You then lose the CD sale for BOTH CDs not just one. Why? Well, as the CD companies are discovering: shoppers tend to buy multiple CDs at one time, and may shop frequently. With the top 20% of CDs on sale, such frequent shoppers would quickly buy the top 20% and then not have any more to buy. Result: they begin to shop elsewhere, where they buy the CDs that they can’t get in the bigger shop, and at the same time they’ll buy the popular CDs too.
For the shop, this is bad business: they lose the top quality purchasers who buy multiple CDs at a time. They therefore have to start increasing their advertising to attract those shoppers who only buy the top 20% of CDs, and those shoppers may only shop occasionally, may be more price sensitive, and may not be loyal to any particular CD store or chain of stores. Worse comes when even the marginally popular CDs are dropped as the store further refines its stock of CDs. Previously when third-tier CDs were dropped, sales may have risen incrementally, as some customers bought more second- and first-tier CDs. This effect would have been temporary as regular purchasers would soon find not much new to buy as most new artists would start out as third-tier or lower before being ‘discovered’ by shoppers.
So the store decides that with deteriorating sales in its CDs it has to boost its margins by shifting more copies of the top tier artists. It increases promotions, cuts second-tier CDs, and lo and behold, the sales and margins rise magically again. But worse is to come: customers begin buying fewer CDs (they either already have the ones they want or they don’t care for some of the artists) and regular customers become scarce. After the promotions are over, it’s difficult to get regular customers to come back, and the top spenders are now going elsewhere for their CDs.
So, it looks like the CDs/music market is declining, and the management is left with little choice but to scale back the CDs even more or close the store.
Of course, downloading (legal and otherwise) came along at a time when the CD industry was already in bad shape. Downloading and alternative mediums for music (online radio, ringtones, etc.), not to mention alternative sources for entertainment, all coincided to make things really difficult for CD companies. But to cut your catalogues and reduce your roster of artists is now looking to be one of the ways in which the big four cut their own throats.
The 80/20 principle sounds like a logical way of thinking until you realize that if you start to pursue the top 20, you will quickly lose a lot more incidental sales. And some of the incidental sales MAY just turn out to be the top 20% of purchasers in the future…
And for bloggers: should you follow the lead?
While the principle may be in principle correct, ignoring the 80% of your readers may lead to erosion of your blog income. Why? Because when readers click away from your blog, it’s usually through an advertisement. Hence, to maximize your blog’s income, you need to encourage your readers to love it, enjoy it (briefly) then click away to a Google Ad, affiliate link or other advertising. It’s likely that if you just focus on the 20% of your readers, your expenses will rise as a result of increasing usage your server’s power power, and your income will go down as regular readers become ad/affiliate link blind.
There are many people who do not seek to make any money out of their blogs at all. Power to them! Well done! There are bloggers like me who started before making money on a blog was possible, but have found the dollar signs an additional benefit. However, for both kinds, increasing readers is a great benefit, if the blogger can afford to pay for the hosting costs. If you cut into your revenue streams, then you’ll find that you will be paying the costs for your regular readers. If you are doing it as a hobby, perhaps that is appropriate for you. But perhaps not.
Overall, I am becoming a very anti-80/20 activist. I think focusing on such goals really doesn’t help much. I can cite several examples in Taiwan, where such short-term thinking led to very poor short-term results, muddied business plans, and withdrawal from the local market with a sullied reputation.
So I believe that the principle as a business principle is flawed, in many instances. I do recognize instances where it is a valuable ‘rule of thumb’ but it should not be treated as a law or rule in the absolute sense of the word. For the business world, which seems to be focused on the next quarter or next business year, it may seem to be a ‘golden rule’. In reality, it’s likely to prove to be fool’s gold. Unfortunately the 80/20 principle is fast becoming one of the canons of western business principles.
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