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What Business Should My Online Business Be In?

What Business Should my Online Business Be In?  

Business is a combination of science and art, passion and logic, excitement and control. The trick to success lies in finding and maintaining the balance between these factors. This applies just as much to your choice of business as it does to any other part of it.   

We have spoken before of the importance of passion in your choice. Without passion, running your business will feel like eating sand.   

But on the same lines if the business is not built in a successful industry and one that will be successful for years to come, you will be building your online business on a foundation of sand.  

What Industries will Create the Future?  

So what industries should we be aiming at?  What are the markets that are guaranteed to grow for the next 20 years? The talking heads on the internet seem to agree on more or less the following list, but remember, tomorrow is a another country, and the journey there is getting faster and stranger all the time, so no guarantees.  

Having said that, there are some industries we can almost rely on. These include:  

  • Health (from desperate ill-health to improving fitness and wellbeing)
  • Employment Services
  • IT (including hardware, software, design, manufacture, repair, installation, outsourcing, games, etc).
  • Financial Advice
  • Management, scientific and technical consulting services
  • Child day care service
  • Skilled technical services

How can I Use This Information to Position my Internet Business?  

Finding an appropriate niche for your small business is not always the easiest of activities. A quick glance at the list above might leave you with the feeling that all of these are ‘big industry’ subjects, so how can a small home business running on the internet possibly find a place in any of them? The thing to remember is that your niche can be tiny, but because you can potentially reach so many people, it can still attract enough customers to create a very successful internet business.  

So how do you go about finding your niche?  

Play the Generational Game  

A key tool of professional marketer is what they call ‘segmentation’. This tool involves breaking their market into groups (like cutting a pie into slices of various sizes). The groups are chosen according to certain factors everyone in the group has in common.   

One very valuable way of grouping people has been according to their generation. You have probably heard of Baby Boomers (1945 – 64) and Generation X (1965 – 79). There is also the ‘silent generation’ (1925-44) and the Millennials’ (1980 – 95)  One way to use these marketing groups is to put them into a ‘Slice ‘n Dyce’ table (see http://tinyurl.com/yle9sey).  This works by putting whatever parameters you choose across the top row.   

We put:  Customer Base, Industry (Health Requirement), Model, Location and Style as our column headings.  In the rows below the headings, you fill in the appropriate variables (see our example for ideas).

Using this approach it is possible to create a range of possible business blueprints, with alternative models. locations, styles and industries.  In our example we used Health Requirements as the industry.  These can be combined with one of the generations to create a unique niche. 

You could use this table for any of the industries above.  You would have to change the variables for the Industry, Model, Location and Style, but you can use our table as a template. 

As you will see if you go to the link above and scroll down, we have been able to identify two top level business concepts using this approach.  Have a go, it’s fun and can give you all sorts of ideas. 

Turn a Problem into an Opportunity 

One of the business opportunities we identified involved the health requirements of Baby Boomers.  We are constantly being bombarded with the fact that Baby Boomers’ longer lifespan is a big problem for society. But for a business person this means more potential customers with more health needs that she can provide the answers to. 

One of the outline business we identified involved the huge demand from Boomers for cosmetic procedures.  We thought that an online business aimed at these Boomers, could bring together information, advice and guidance on providers of all sorts of cosmetic procedures (including dental procedures).  It could help clients decide what was right for them without them being at the mercy of the providers. 

It could then provide an end to end management service if a client wanted to go ahead with a procedure.  This could include finding, checking and booking the procedure, arranging travel and accommodation, arranging insurance, giving reassurance and, if required, arranging ongoing care at home. 

This business model does not stop with the health requirements of potential clients.  It will be possible to get into factors such as: 

Employment Services:  Acting as or interfacing with and employment agency providing the home aftercare mentioned above. 

Training Services:  For all the people who go through the employment agency. 

Financial Advice:  finding and managing the best loans to pay for the procedures, finding relevant insurance and providing savings vehicles that will enable clients to save for their next procedure. 

Management, Scientific and Technical Consulting Services.  In this case most of the consultancy service provided would be medical or dental.  A consultancy clinic on the web site would be a very attractive thing to potential clients. 

Income streams for a business like this could come from: 

  • The clients  
  • Affiliate fees or commission from the providers. 
  • Advertising. 

This is just a tiny number of suggestions about how you could apply one market (baby boomers) to the hot industries of the future.  Try mixing the generations and industries along with the other variables to see if you can find a connection to your passion and the beginnings of a niche you can make your own. 

Ever onwards and upwards

Managing Your Business – 27 Ways to Cut Your Own Throat

You’ve gone into business. You understand that success is a product of your commitment and hard work. You know what you have to do to make your business thrive. It’s also sensible to consider what not to do, as there are many pitfalls that await such resolute entrepreneurs as you. Here’s just a small sampling of things to avoid doing.

1. Estimate the amount of money you need to get started, then begin as soon as you have enough.

“Just enough” isn’t enough. Have extra funds for expenses you hadn’t counted on, for sales that are slow in coming, and for when things go wrong. Remember, not enough capital is the number one reason new businesses fail.

2. Educate your prospects to want your product, even though they may not know they need it right now.

If there isn’t a clear, immediate need for what you sell, you’re inviting a marketing disaster. You can’t educate the market to want what your product provides. Sell to the market’s needs, not your own.

3. Don’t worry about taxes until they’re due.

The last thing you want is tax problems, with the feds or anyone else. Tax authorities can really sock it to you. Put away what you’ll need for taxes in a special account, and pay on time.

4. Your customers know you, so you needn’t remind them how good your company and your products are.

You may think they know all about you, but they don’t. Keep reminding them why they should do business with you. Don’t ever forget that there are competitors out there who are trying to steal your customers.

5. Pay rate-card prices for advertising.

If you do a good deal of advertising, negotiate your media rates, rather than paying rate card. Rate cards indicate what they’d like to get, not what they’re willing to accept. Radio and TV rate cards, especially, are usually fiction. Take a tough stand, and you can often save a bundle. You won’t get a deal if you don’t ask for it.

6. Let the newspaper write your ads for you.

Newspapers are in business to sell ad space, not write ads. They’ll churn out an ad for you, but it may not have real sales pizzazz. Pay an ad copy specialist to do a proper job.

7. Ask for a business loan without checking your credit rating.

Check your credit rating in all three credit reporting services before you apply for a loan. (Equifax, TransUnion and Experian.) If there are blemishes in your credit history, you must be ready to explain them. Also, check for errors and outdated info. A report is not supposed to indicate any problems – except bankruptcy – that are more than seven years old.

8. Manage your business from behind your desk because that’s where a boss should be.

As Woody Allen is reported to have said, “Eighty percent of success is showing up.” Get out and meet your customers often and regularly. You want to be the guy who shows up.

9. Run just one or two ads, if that’s all you can afford.

It’s multiple exposures that make advertising work. It’s unlikely that an ad or two will have a long-term impact on your business. If you can’t do a thorough job advertising, save your money. You’ll probably do better investing it in public relations.

10. Make all financial decisions yourself, because you know more about your business than anyone else. (Do your own tax reports, too.)

Running your business without the help of a smart accountant is asking for trouble. You need an outside expert to make sure your financial records are right, and that you’re not over- or under-paying your taxes. Choose your accountant carefully.

11. Borrow from your operating capital when you need money for personal expenses. You can always pay it back later.

If you have to start paying your personal expenses with operating capital from your business, it’s likely to be the beginning of the end for the business. You must have adequate operating capital, or your company will falter. Get personal funds somewhere else.

12. Don’t spoil employees by thanking them when they do a good job. That’s what you pay them for.

A pat on the back for a job well done goes a long way in keeping an employee motivated. Withholding praise goes a long way in making him/her unhappy with you, and with the job. The number one reason employees quit is because they don’t like the boss.  

13. Now that you have a base of loyal customers, build on that base by spending most of your time going after new business.

You’d better keep your existing customers happy, because they’re the ones who generate most of your profit. Take them for granted, and they’ll drift away. It’s far easier and cheaper to sell to an existing customer than it is to find a new one.

14. If it ain’t broke, don’t fix it.

Better to fix it before it breaks. Change your methods and operations to deal with changing times, changing markets, changing business outlooks. Don’t let a changing world – and your competitors – overtake you because you’re committed to the old ways.

15. Don’t worry about your competitors. It’s your own business that’s important.

Your competition is just waiting to take your customers away from you. Keep your eye on them: their business practices, products, prices, marketing. Don’t let them get ahead of you.

16. Your color brochures cost you a bundle. Don’t hand them out to just anybody.

Hold onto them and they’ll start to turn yellow and unusable on your storage shelf, where they won’t do you a bit of good. A brochure only has marketing value when it’s in the hands of a prospect or someone who’ll pass it on to a prospect.

17. Don’t be compulsive about conserving capital. It takes money to make money.

Capital is the lifeblood of your company. If you want to buy something, ask yourself if you really need it to make your business grow. And if you answer yes, ask if there’s something else you need even more. Don’t spend unnecessarily, and don’t waste anything, not even a paper clip.

18. You don’t need a website. Your customers never use the Internet.

Virtually everybody uses the Internet. A website is a necessary marketing tool. If you don’t have one, you’re sending business to your competitors who do.

19. Cut your price to meet the competition, even if you must sell at a loss.

You must make a decent profit to stay in business. Make a case for superior quality and service to substantiate your higher price. If you absolutely must lower your price to meet competition, do it on a temporary basis, as a special event sale. When the sale is over, the price goes back to where it was.

20. Your outside sales reps are experienced marketing pros. Leave them alone and let them do their job.

Your reps sell other products beside yours, and they can easily spend more time pushing those products than they do pushing yours. Communicate with your reps often, and make sure you’re getting your share of their efforts. Demand a report of each sales call.

21. Work on sales. Worry about collections later.

Stay on top of collections constantly. The longer you allow customers to fall behind in their payments, the greater the likelihood they’ll never pay at all. Delinquent customers can quickly sink your business.

22. Look for cheap space for your retail business. If your customers want what you sell, they’ll find you.

You can never compensate for bad space. Out-of-the-way location, no parking, bad neighborhood, will keep customers away. You’re doomed even before you open the doors.

23. Your product is what counts. If it’s good, they’ll buy it whether they like you or not.

Customers tend to buy from people and businesses they know and like. Relationships are critical, sometimes even more important than the product.

24. Pay yourself whatever money comes in.

Taking more out of the business when you have a good month is a dangerous practice. It robs from operating capital and cash reserves, leaving your company unable to cope with a downturn in business or other emergency.

25. Earn your profit when you sell.

You can sell only for what your market is willing to spend, no matter what you paid for the product. Experienced marketers agree that they earn their profit when they buy. Get prices from many suppliers to make certain you can buy for a cost that lets you sell at a good profit. As the old adage goes: Buy cheap, sell dear.

26. When things go wrong, get rid of the employee who fouled up – the sooner the better.

Be careful not to set your business up for a nasty wrongful termination lawsuit. Don’t fire because of discrimination or for retaliation. Document every employee offense in writing. Consult your attorney for guidance. Minimize your risk.

27. When it comes time to sell your company, impress the prospective buyer with what a good job you’ve done building the business.

If your buyer thinks you’re key to the company’s success, he’ll begin to doubt how well it will do without you. It’s better to build your sales strategy on the strengths of your key employees – the ones who’ll be working for the buyer after you’ve left.

Tough Economic Times Put Family Businesses to the Test

Recently, a good friend confided in me that she’s been waking up in the middle of the night worried about the economy and its effect on her family and business. She’s not alone. Business-owning families across the country are concerned about the impact of oil prices and the impending economic slowdown. For many, the demands and tensions of tough economic times highlight even more clearly the need for trust and open communication between family members. These demands and tensions also emphasize the need for economic discipline, clear policies, and well-established systems of family and business governance.

Over the last 15 years of economic prosperity, the financial success of many family businesses has spawned a number of bad habits. A recent meeting I had with a client led to a discussion of the economic outlook in his industry-rising fuel costs together with a more competitive landscape have led to a shrinking bottom line. The natural tendency in tough economic times is to cut costs and consider letting some employees go. Upon further discussion with my client, it became clear that the family members around the table in management positions were reacting to the pressures without a clear understanding of the true cause of their financial troubles or the likely financial impact of their decisions.

I asked the founder of the business how he ran the business seven years ago, when it was growing rapidly. As expected, I heard that there were regular weekly meetings that included a review of the financials and in-depth analysis of revenue and cost trends, and a comparison to a budget. My client admitted that as the business grew and profitability exploded, the budget process became less disciplined. Weekly meetings became monthly meetings and then disappeared altogether. Further discussion also revealed that family tensions were ignored as the business grew and bank accounts expanded.

Suppression of family conflict did not resolve it, but only made it more deep seated. This lack of financial discipline combined with increasing tension in the family and a shrinking bottom line were leading to real challenge. Beyond economic discipline, families must have the discipline to stick to their policies and succession plans. Families can avoid creating additional tension at an already challenging time by enforcing discipline in all areas of family business planning.

Family Business System Managing the intersection of the three systems present in family business-family, business, and ownership-is a key to family business success. Tough economic times create stress across the system. Business performance may suffer and tough decisions need to be made. Family business conflicts, which are easy to ignore when the return from the business is good, rise to the surface during an economic downturn. Family members not in the business may blame those who are for not addressing financial problems sooner. Owners have to deal with the possibility of cutting back on distributions or possibly even selling the business. The conflicting goals, which are often present in the three systems, are best managed by policies and processes that ensure all concerns are addressed and brought into alignment.

The tendency is to ignore policies and processes when times get tough. However, a sound family business infrastructure is even more crucial in tough economic times. Families have a dividend policy stating that dividends will only be paid when they do not threaten the viability of the business. In tough economic times, dividends may need to be suspended. During an economic downturn, the test will be whether or not family members follow the policy.

Enforcement of a family employment policy is another example. Breaking the policies that you have in place is not good for the business or the family. There does need to be some flexibility in policies and processes to address unforeseen challenges. However, families must consider the long-term implications of breaking rules they originally made in the best interest of the business and family. To weather an economic downturn, families must build a strong infrastructure and stick to it.

Four Tips for Addressing a Downturn 1. Build or return to sound business management practices. Tracking and enforcing responsibility for financial results is important in good economic times, but it is essential in a downturn. Creating a realistic budget to ensure that revenues will cover costs is also imperative. This exercise should consider what areas can be cut back if revenues shrink substantially. Once the budget is complete, create a process for tracking performance against the budget so that any changes in the environment faced by the business are identified quickly. Developing solutions in areas that are not tracking against the budget and then holding management accountable for delivering results (or alternative solutions if budget expectations are no longer realistic) are a natural outgrowth of the process. Last but not least, it is critical in uncertain times to hold regular management meetings where the team can discuss changes in the business environment and also develop plans to address them.

2. Be prepared for lower distributions. A business that has prospered over the years and has always paid generous distributions or dividends to its shareholders may find it difficult to meet these payouts during today’s challenging economic times. A family shareholder group that has taken the time and effort to learn about their business and the factors that make their dividends possible will be in a much better position to anticipate and adapt to changes in their dividends than a shareholder group that has just accepted their dividend checks without any effort to understand what lies behind them.

3. Stick to your employment policy. Many families require members of the next generation to work outside of the business for several years before the next generation can work in the family business. However, when the economy slows and a well-paying, desirable job is tough to find, the family may be tempted to ignore its employment policy and hire young family members right out of college. The family may ask, “What good is having a business if we can’t help the kids during tough times?” A valid question-but perhaps the members of the family would be wise to remember why they created the policy requirement in the first place. Most family members are able to make more significant and enduring contributions to their business after having a chance to learn in other work settings. Just because it’s very difficult to find work, is that requirement no longer relevant? Rather than simply ignoring the established policy, a family must seek ways to help young, inexperienced family members without abandoning its stated policy. There are many ways to accomplish this, and each family will find its own way. For example, the family business can help family members with resume development, interview preparation, or even introductions to possible employers.

4. Honor the succession plan. A father or grandfather who has turned management of the business over to members of the next generation is often tempted to jump back into action during tough times. The family may welcome and encourage their involvement because of Dad’s or Grandpa’s history of success under pressure. Will the family allow the current leadership to lead or will there be too much fear for the family to place its trust in the next generation’s leaders? An “either/or” solution is not the answer. Finding a way to access the wisdom of the senior generation without cutting off the junior generation at its knees will be imperative. Combining the wisdom of the past with the talents of the present will be the key to success in these tough times. A family’s response to these economic times could be seen as a test of will and commitment. A family shareholder group that has worked hard to establish policies and governance systems will certainly be led to question the wisdom of those policies, which were likely created during times of peace, calm, and even prosperity. Will the family stick with its policies, even if individual or collective suffering results in the short term? What will take precedence-the needs of the business, or the needs of the brother who requires his dividends for a mortgage payment or the sister whose daughter needs a job? All systems will begin to fray or fracture at their weakest point, when the going gets rough and pressure starts to build. A family system is no different. Many family businesses are seeing and feeling more than a few cracks starting to emerge in response to today’s increased economic pressure. By returning to the tried and true-strong governance, agreed-upon policies, family education-families can use the challenges of these tough times to become even stronger and more unified.

This article is designed to provide general information and is not intended to provide specific legal, accounting, tax or other professional advice. Since your individual situation may present special circumstances or complexities not addressed in this article and laws and regulations may change, you should consult your professional advisors for assistance with respect to any matter discussed in this article. Family Business Consulting GroupĀ®, its editors and contributors shall have no responsibility for any actions or inactions made in reliance upon information contained in this article. Articles are based on experience on real family businesses. However, names and other identifying characteristics may be changed to protect privacy.