Wednesday, January 18, 2017

Websites – You Need One, But What Makes It Successful

Small business owners want to reach as many customers as possible with as little investment as possible. Many try traditional advertising and that method is still tried and true. Many are trying the internet but this new marketing tool has some new rules to play by that are easily overlooked. 

The first step many owners take is to build a website.  Often, they do this with little thought except to get their name out there on a page.  These attempts often prove to be unsuccessful because there was little to no planning put into them. Just as any start up business, planning has to go into the development and purpose of the website.

Janet Attard, owner of the company Business KnowHow has put together a preplanning checklist for developing a website for small business owners.  The checklist is at www.businessknowhow.com.  While the questions it asks are simple, in my working with clients, I have found sometimes the simplest thoughts are often overlooked in planning.  It asks like: 1) what do you expect to accomplish, 2) who will use it, 3) who will do the updates and many more. 

Your website needs goals so its success can be measured against them. Some typical goals for a website are: 1) to sell product to consumers or other businesses, 2) generate revenue in other ways for your business like content subscriptions if you are a writer, 3) develop new markets for your products, and 4) provide new ways for your existing customers to reach you.

The website needs to be built with an audience in mind. This audience is the customers of your business – the people who currently buy your product or new customers you hope to reach with the website. The audience will determine the website’s look and feel regarding how the content is written, the colors used and even font size.

The website you are building should not be a duplicate of competitors.  You want to make sure you investigate your competitor’s websites to see what works, what does not work, how they bring customers into their website and more.  You can learn from their mistakes to make your website more useful to your customers.

Some features making a website easier to operate are aimed at the owner and the customer. For the owner,  it is having the ability to easily update the content, and being able to do marketing through captured emails are just some examples.  For customers, it is ecommerce-shopping carts, online payment options, being able to learn about the products, easy shipping, pictures of the products are also examples.

A big item is making sure you stay in budget. There are companies that offer free website building and others do it for a fee - investigate them both to make sure you get what you want and at a reasonable price. Others offer free development but then charge you hosting fees. 

Another resource for website planning is with Aurora Marketing. They have put together a whitepaper client questionnaire at www.aurora-marketing.net that is pretty thought provoking if you are just getting started or wanting to revamp your site. Some other sights to consider are www.skyrme.com/tools;webplan.html and www.smashingmagazine.com


So continually evaluate your industry to make sure your idea is not already taken and you can stay on top of new trends.  If you have questions or would like to set up an appointment to talk to Richard Proffer, area University of Missouri Extension business development specialist, feel free to email him at profferrd@missouri.edu or call him at 573-243-3581.  He is located in Jackson, MO. 

Thursday, December 22, 2016

Is Your Business Ready for Growth?



Most business people want to grow their business but a question often comes up is, “Am I ready to grow or can I afford to grow?”  Those are big questions for small business owners because of the time, commitment, and financial resources it takes to successfully grow a business.

Inventory

The first step towards growth is to take inventory on your business. Richard Proffer, business development specialist for University of Missouri Extension, says, “I am not talking about physical inventory where you count your product but a more mental and financial inventory to see if you have lined up the right resources to grow.”

For this inventory, the business owner will need to invest time in analyzing the current situation and work on redefining the business’s goals. This analysis will allow the owner to make smarter decisions, be more accurate in the financial projections and move faster into growth when it happens.

Many business owners face the Red Queen paradox where they feel the constant strain of working and working and not getting anywhere but where they started.  This feeling is typical of entrepreneurs who have not done a good job of planning their business’s future. “Simply doing more of the same thing is usually not the answer for growing the business,” per Proffer.

 How to Plan

The first step in planning for a business’s growth is taking that inventory and defining where the owner wants to be in the future with the business. Then the owner plans out what needs to happen with the business either in sales, employees, financials or marketing to reach the desired goal. The third step is to start putting into action processes to reach the goal in the stated time. Finally, goals need to be set so progress can be measured and the owner knows the right path has been chosen for success or where to make corrections to the plan. 


If business growth is part of your plans, feel free to contact Richard Proffer at the local MU Extension office at 573-243-3581 or email him at profferrd@missouri.edu.  He is available to answer questions on small business and help make them successful. 

Who Really Are Your Customers



When I was in the advertising business, I would always ask my clients “Who are your customers?” I would quite often get the common response of “Everyone.”  Even if I would question further, I got the same response.  I finally would start to talk about categories like most frequent customers and those that only came in around specific times of the year and we started to get a better picture.

Those retailers were not unlike many other small business owners.  They want to claim everyone as their customer, when in reality, there is only a certain percentage of people who would use that business’s product.

Who Are Your Customers?

One of the ways to look at segmenting a business’s customers is break them into the users or choosers.  Quite often it is not the users who are buying the product but rather the choosers.  Both audiences need to be marketed to, but in different ways and the business owner must know the motivation to buy or recommend behind each segment so the marketing efforts can be successful. Realize by knowing these motivations, the business increases its ability to drive sales up.

 What Type of Person is the Buyer?

A business owner starts a customer profile by letting go of the myth of “everybody is my customer” and really thinking who are my most frequent buyers. The owner should also know what motivates them to buy or the product’s benefits and features. Here you want to learn about client’s values, attitudes and lifestyles.

What Are Their Buying Habits?

The second step in profiling customers is to learn their buying habits. Where do they shop, spend money, spend leisure time or even more important, where are they using your product. Knowing where they are using the product allows marketing to be not place but time specific which increases the results of the marketing the business is doing.

Who’s the Ideal Customer?

The third step is to determine how many of the ideal customers are really out there in the marketplace. Knowing age, marital status, home-ownership and other descriptive criteria will help in rounding out the picture of the top customer.

 Where is Marketing Currently Reaching?

The final step is to start using this new found information to better target the marketing being done. Ask the question – “who is my marketing currently reaching and do they look anything like my ideal customer?”  If not, then revise your plans and change up a few things so the message is reaching the right audience.


Your local small business technology development center is available to help you in determining the correct audience by calling 573-243-3581. 

"Yes Virginia, there is Funding for your Business..."



Just as the headline refers to the 1890’s news story in The (New York) Sun, there is funding in the capital world for many businesses if they cannot get it from traditional local or institutional banks. 

Where to Find Funding

A business should always try to go local first in seeking funding either from community banks or the larger regional/institutional banks.   But not every business can fit the criteria of local banks and when turned down, they must go elsewhere.  But where is elsewhere is the question University of Missouri Extension Business Development counselors often get when these entrepreneurs come to our offices. 

After learning about the business, its past financial performance and where the owner wants to go with the new funding, the matching up process for the business against several new opportunities on the lending market can get started. 

Non-Profit Lender

One set of new lenders is the nonprofit sector.  While nonprofits have always been around, more and more are starting to lend money to qualified business owners or startups.  The lendee must meet criteria set by the nonprofit but if met, the terms are usually more flexible than a traditional bank loan.  In most cases, the lendee must show refusals letters from banks as proof of need.

Online Environment Lenders

Another set is the online environment.  Companies like OnDeck, Lending Club, Street Shares, Source 1 Capital and many others are now competing for local loans as many banking communities continue to have tight lending requirements. Here the entrepreneur goes to the website, completes the profile and the people behind the scenes go to work on matching the request up to potential lenders.  These lenders may be national banks outside of the local market area, financial investors, venture capital firms or other people or organizations willing to lend money to the entrepreneurial marketplace.

A second part of the online lending world are the peer to peer networks.  Here the entrepreneur tells the business’s story, the need for capital and the planned uses for it.  As people read the application, they decide on to invest or not in the opportunity.  Examples of this type of lending are Kabbage, Kiva, Prosper, and Zopa. 

A way gaining popularity amongst early retirees is using their tax-deferred retirement savings to start a business. This method is complicated due to the tax liability and the many maneuvers to avoid tax penalties for early withdrawal.  Guidant iFinance is an example of this type of lending.

Credit Cards

One not so new way more people are looking at is credit cards.  The National Small Business Association reported that about 33 percent of small businesses has used credit card financing in the last 12 months to help meet capital needs. Overusing this method can lead to cash flow chokes later on in the life of the business so entrepreneurs really need to plan out their usage of this option.

Membership Store Lenders

One final way is membership stores like Sam’s Club or Costco’s are turning to lending to their membership businesses as a way to help grow market share and retain customers.  It is important to know that only businesses can apply for these loans not a consumer.  These loans are traditionally under $25,000 and membership is required for application.  Not all club stores participate in this program so the entrepreneur will need to ask and not assume they do. 

Your local Extension small business technology and development center in Jackson, MO is glad to help entrepreneurs sort out the business’s financial needs and match up sources of capital that will increase cash flow and create a healthier business. Just call 573-243-3581 and ask for Richard Proffer or email him at profferrd@missouri.edu.  

Wednesday, December 21, 2016

Balance Sheet- Does it Matter to a Business



The one of three forms a business owner often does not understand is a balance sheet. This form is one of the best methods for an owner to see how the financial health of the business is and possibly start to see where to improve the business.

What is a Balance Sheet?

The balance sheet is divided into three parts – assets, liabilities and equity.  An asset is something a business owns or has value like cash, equipment, inventory and investments. When completing a balance sheet, do not forget to include items you may not have complete ownership to like the building, a leased car etc.

What is an Asset?

There are two types of assets – current and non-current. A current asset can be turned into cash quickly (usually within one year) like cash, accounts receivable and inventory.  A business owner would not normally expect to keep owed amounts or inventory past this one-year time frame anyway. A non-current asset is the opposite – it is not expected to be turned into cash quickly and include items like fixed assets (land, facilities, equipment and cars.  These assets tend to be used in creating sales for the business.

What is a Liability?

The second part is the liabilities. This is where the business reports what it owes to other people or businesses.  Another name for these items is accounts payable.  Again this section is divided into current and non-current liabilities with the same time requirement as assets. Current paid off within a year and non-current longer than a year is how a business owner should look at the items.

What is Owner’s Equity?

The final section is equity and shows how much the business is worth to the owner(s). It should be the difference between assets minus liabilities. This section can be either positive or negative depending on what is happening within the business. If there is a decision to expand operations, then this section may be in the red due to increased expenses. If there was a significant in sales, the owner may decide to keep money in the business for future use and it would be in the black.

The one thing a balance sheet does not show is how profitable a business is. This is reported on the income statement (a form we will talk about in another column). 


As a business owner, the balance sheet provides a snapshot of the health of the business at that moment and is an aid in deciding on future plans for the business. If there are questions about a balance sheet or any part of your business, feel free to contact Richard Proffer at the University of Missouri Extension Small Business Technology Development Center at 573-243-3581 or email at profferrd@missouri.edu

Where Did My Cash Go?


A question many small business owners ask themselves way too often.  In this column, I have written about the balance sheet and the income statement as financial tools to help entrepreneurs manage their business.  But what if that entrepreneur could predict how much cash would be coming in to and going out of the business on a monthly basis? Or better yet, be able to look further months down the road and have an idea of the in and out flow of cash?

 What is a Cash Flow Statement?

This final of the big three financial reports is called the Cash Flow Statement. This report shows the cash received and paid out on a time specified period as related to the business’s revenue and expense categories found on the income statement. This report is very helpful for startups.

A simple analogy of this report would be to look at the business checkbook where each deposit and withdrawal is recorded. The cash flow report does the same thing except it groups the in and out flows under categories.  By doing this, the owner is able to see monthly trends by categories and annually start to adjust for seasonal variances. 

The Cash Cycle

This report also helps the owner stay on top of the business cash cycle – the time lapse from when money was spent to generate sales till the revenue from sales comes in to the business. This cycle could be days, weeks, or months, but it shows the owner if additional cash is needed to cover expenses until sales revenue comes in from the sales related expenditure.

The cash cycle sounds easy but the devil is in the details. The owner will need to be diligent in tracking the cash flow in and out of the business on a regular basis.


For more information on this final top three financial small business statement or questions, feel free to contact Richard Proffer, business development specialist, at 573-243-3581 or email him at profferrd@missouri.edu.   

How to Set Your Business Apart from Your Competition



As I spend time with friends, I often hear them say, “There is no unique place to go shop these days. They all have the same stuff.”  To which I reply, “why do you shop where you do?’  This leads to sometimes an interesting dinner conversation. But it always reminds me many business owners may not know how to set themselves apart from the competition with little or no cost.

Business Image

Creating an image of your business being different than the competition is part of establishing a competitive advantage for the business.  As a business owner, the competition for your business should be well researched so the idea of what you will do differently will be clearly thought out and easy to implement. Two ways to establish the business’s competitive advantage is pricing and the market.  With pricing, you can lower the price by finding a way to be more efficient thus lowering costs. With the market, you find a niche and exploit it to attract more customers.

Quality of Service

In creating a competitive advantage for the market, some strategies are to really push superior customer service, increase product quality or benefits to the customer, create an atmosphere where customers are welcomed or offer additional add-on services not currently offered by your competitors. The idea behind higher quality is to prove the product to be of such high quality that the niche customers will pay more for it.  I know I am glad to pay for something of quality that will last longer than one month. With customer service, the first impression needs to be positive as customers make quick decisions on if they will come back or not within minutes of entering the business. Also finding new uses of a product and showing it off is another way to benefit the customer. In the store, show how piece of fabric could be used as a fast and easy table runner for an upcoming house party. By focusing on a niche audience, you focus on the needs or desires of a narrow audience who find it hard to shop.  I used to work in a local Big and Tall men’s clothing store.  The store was definitely a niche since we started at extra-large and went up to eight extra-large.  The people who came to us typically had few retail choices and with our focus taking care of them, they kept coming back. We had chairs for them to sit on, we kept it cool even on winter days. They did not have to struggle to get a shirt or pant, the sales staff did it for them and so on. 

Pricing and Product Efficiency

On pricing, the business is typically working on a lower price point to attract new customers.  This method is fine if your way to doing things is more sustainable because the serious competitor will also work to match your price. Some ways to do this is to increase your production efficiencies.  Here you learn to be more energy efficient, buy product for lower prices or work out credit terms with the suppliers. As a business owner, you might upgrade your technology to better track inventory, record sales for bookkeeping purposes or to develop an online presence. Innovation is also a way to reduce price and it does not necessarily always mean technology.  You could be innovative on how you promote a sale through Facebook or other social media outlets, by better tracking your customer’s purchases to remind them when a similar product has come in or being more personal to customers by creating an anniversary/birthday program. As the business owner, staying on top of overhead is a daily task.  This is an area where a business owner can lose his shirt quickly. Staying aware of employee turnover, salaries, benefits, operational costs and physical structure costs like rent, can help see areas to trim. 


Creating a competitive advantage is important to the success of a business. The business can stand out and attract customers or be like its competitors and be open waiting on the doors to open. If interested in obtaining free assistance in establishing your business’s competitive advantage, feel free to contact Richard Proffer at the University of Missouri Cape Girardeau County Extension SBTDC at 573-243-3581 or email him at profferrd@missouri.edu