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Common Sense Business Solutions

Experts share strategies in Kelowna

The third week in October is “Small Business Week”, a week dedicated to supporting local, small businesses. The week was designed to bring awareness to Canadians about the role small business plays in our economy. A group of six business experts has put together a full day of educational, hands-on sessions designed to help business owners grow their business.

Small Business Sales Summit [ http://salessummit.ca ]

“Most small business owners today aren’t focused on growth. They’re more concerned with just surviving,” said Colin Parker, CSO of Lonestar Sales Performance. “Daily I have local small business owners tell me how it’s a struggle competing against big box stores and online competition. It is a constant battle to find time, sell more services and help clients.”

At 5.3 percent, the Thompson-Okanagan region recorded the fastest net growth in the number of small businesses between 2007 and 2012. That increase in numbers brought new jobs, innovation and vibrancy to each community. Despite their importance, many small businesses struggle to achieve success amid a crowded market of big box stores and online mega-retailers.

On Tuesday, October 21st, 2014 at the Mary Irwin Theater in Kelowna, six of the best local sales and business growth specialists will provide a day of education and learning targeted at helping the small business owner grow. The Small Business Sales Summit is an intensive, hands-on, “here’s how you do it” workshop.

“We’re here to show small businesses how to not only survive but grow and thrive,” said Colin Parker.

This full day event is co-sponsored by three companies who are dedicated to helping small business grow; CIBC, Younility and Regus Office Solutions. The six local speakers are: Crystal Flaman, Dan Zaleski, Frithjof Petscheleit, Alexandra Krieger, Guy Steeves and Colin Parker. Tickets are $74 per person and are available at the Rotary Centre for The Arts Box Office or online at Select Your Tickets.

I would highly recommend that small business owners make time for this workshop. The learning opportunity gained during this day could be the “make it” for your business this quarter, in 2015 and beyond.

 

This column focuses on business problems and how to solve them. Andrew Gregson, BA, MA , M.Sc.Econ is an economist, author and a Senior Partner in iNTENT Financial Inc, a Kelowna based finance and consulting company. The 4 partners specialize in finance, pre-determined profitability, sales and marketing. If you need further information, please contact us through the website at www.intentfinancial.com.



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A wildly successful manufacturer

Niche food producer “Sweets from the Earth” thrives using innovation, uniqueness and an unwavering focus on quality.

A neighbour’s stew turned Ilana Kadonoff off meat at the age of seven. Since then, she’s adopted a vegan lifestyle and has built her baked goods business accordingly: Sweets from the Earth, which ranks No. 111 on the 2014 PROFIT 500, uses only all-natural, 100% plant-based, GMO-free ingredients. Kadonoff’s two Toronto facilities—one for peanut-, nut- and seed-free products, and the other free of gluten and wheat—turn out more than 150 types of egg- and dairy-free goodies, which are stocked at retailers and food outlets across Canada. She gave us a tour and shared some secrets of her success.

 

Stay patient

Kadonoff usually tests new products an average of 15 times, but it can take up to six months to actually get an item out to market. The company has to source ingredients and suppliers, and develop nutrition panels and packaging, among other things. “When I first started, and it was just me, I could have an idea and I could develop the product, and then the next day I could start making them and selling them, says Kadonoff. “Now everything is a huge process.”

 

Stick to core values

“Everything we do is completely from scratch, from the vanilla beans that Ilana scrapes to the colours we make for our own products,” says Marc Kadonoff, Ilana’s brother and vice-president of Sweets from the Earth. “Most bakeries will use a little bottle of colour. What Ilana will do is fresh press spinach or kale, or carrots or beets to get the colours we need. It’s all fruit and veggie based.”

 

Diversify your customer base

Sweets from the Earth sells about 55% of its products in retail stores and 40% through food-service operations. The remaining 5% are custom items like birthday and wedding cakes.

 

Steal ideas from customers

Inspiration for new products and recipes comes from different places, including customer requests. “Our [Berry Bran] muffins were a result of a customer calling me up, saying, ‘I really love those fruit and fibre muffins from McDonald’s—can you make me something like that?’ So I went to McDonald’s, and bought some of these muffins and begrudgingly tasted them, and then I went online and looked at their ingredient list to see what they put in them,” she says. “Then I just started playing in the kitchen.”

 

Offer shoe allowances

Five years ago, Sweets from the Earth only had seven employees. Today it has 35 full-time workers—each of whom receive a shoe allowance, because outdoor shoes aren’t allowed in the company’s gluten- and wheat-free facility. Employees are also required to wear lab coats, hairnets and gloves to prevent any contamination from outside sources.

 

Invest in infrastructure

At top speed, the company’s wrapping machine can package 120 items per minute. (Each item is run through a metal detector afterward, to ensure no foreign objects have fallen in.) “We haven’t raised our prices in seven years, and the reason we’re able to do that is because we keep on investing in infrastructure and equipment to make us more efficient,” says Marc Kadonoff.

 

Buy locally (most of the time)

Kadonoff uses local Ontario carrots in Sweets from the Earth’s spiced carrot cake—at least during the fall and winter, when harvest-time prices are affordable (by summer, prices increase by as much as 55%).To offset the rising costs of raw materials, Kadonoff buys in bulk: 5,000 kilograms of spelt lasts the company about two months.

- Reposted from the original article in Profit Magazine by Kristene Quan June 12, 2014

 

This column focuses on business problems and how to solve them. Andrew Gregson, BA, MA , M.Sc.Econ is an economist, author and a Senior Partner in iNTENT Financial Inc, a Kelowna based finance and consulting company. The 4 partners specialise in finance, pre-determined profitability, sales and marketing. If you need further information, please contact us through the website at www.intentfinancial.com.



Price Guarantees

Article written by Linda Bustos

 

Though I’d never recommend “lowest prices” as a unique selling proposition, I notice many retailers use a Price Match Guarantee or even a 110% Guarantee to convince customers to purchase from them and not the competition. I’d venture to say Price Guarantees are becoming “Ubiquitous Value Propositions” rather than unique!

Let’s define the difference between:

Low prices: Retailer in general has lower prices than other online retailers or less than the products are priced offline. Examples: Amazon, Wal-Mart, Tigerdirect, Overstock etc.

Low Price Guarantee or Price Match Guarantee: Retailer agrees to match the price of a competitor if the customer finds the item cheaper elsewhere. Subject to restrictions including lowest advertised price, US only, online only, in-stock only, exact model number etc.

110% Price Guarantee: Retailer promises to beat a competitor’s price by 10% or X% before or after the sale.

 

The Pros and Cons of Price Matching

These policies assure the customer you’re not trying to price gouge and will honor requests to at least match a competitor’s offer which is usually a customer’s expectation. And most retailers expect customers to be too lazy to comparison shop anyway.

They can also save returns post-sale, though most policies I’ve looked at actually restrict price match to pre-sale. When Amazon discontinued its price match policy, the customer simply returned the item.

But there are more cons than pros, including:

1. You interrupt the selling process, and risk the customer never comes back.

2. If you encourage customers to start searching elsewhere, you risk they find a competitor with a better shipping rate, better product selection, better site usability, better prices across the board, and actual unique selling proposition (that’s attractive) or find the product available at a physical store.

3. If you simply match prices, why shouldn’t the customer just buy from the other guy? Saves the customer contacting you and waiting for your price match approval.

4. Reading price match requests, manually checking competitor prices and responding to them takes up customer service resources.

5. You condition your customer to be price focused rather than value/service when dealing with you.

6. You have to be very clear about your terms and conditions – which customers likely never read through or fully understand.

7. In this economy, many stores are going out of business or will take a huge hit on a loss-leader. Others sell refurbished goods which the customer doesn’t understand is not the same as non-refurbished.

8. Your conversion rate / ROI for various marketing channels get messed up. Your Adwords may be driving a lot of traffic that leaves and returns to your site as direct type-in traffic, a browser bookmark or subsequent keyword search. Because most analytics tools credit the last referral, you can’t properly attribute success to keywords that referred the customer in the first place (without special software / hacks). Ditto for email / banner / affiliate / insert-marketing-channel-here.

Many retailers will only honor the price match before the sale, but a bigger issue is disgruntled shoppers who find a lower price after they’ve bought from you and seek a price adjustment. At least the price adjustment keeps the customer happy (and if issued as a credit may encourage a repeat visit or just a pissed off customer). Your attribution isn’t muddled and you are guaranteed the sale – it already happened.

 

What About 110% Price Guarantees?

This one is a bit more interesting from an economics perspective. Theoretically, if retailers really don’t want to budge on their pricing, they should all have 110% guarantees. This discourages competitors to lower prices because it only encourages the customer to buy from a retailer who will beat that price. If all retailers adopt the 110% guarantee and keep prices at full MSRP (manufacturer suggested retail price) the playing field is level again – no one wants to risk advertising a sale.

Of course this isn’t a perfect theory. It depends on the customer being fully aware of all retailers’ prices and policies. And we know most products inevitably go on sale. Unless retailers sit down for a pow-wow and agree on a markdown schedule, there’s going to be variation in prices.

There is something psychologically powerful about a 110% Price Guarantee. It’s not merely a price match – it’s a “we value your business so much we won’t be undersold” message. It speaks to the fear “what if I find it cheaper somewhere else” and assures you “we’ll take care of you.”

But there’s a major downside to 110% Price Guarantees. You can get burned by resellers who’ll find an uber-low price, buy up all your stock with an additional discount and resell it on eBay at a profit. Combine that with a free shipping offer and you lose big-time. Trust me, it happens.

 

Price Guarantees – No Substitute for The UVP

There are certainly psychological benefits to offering a price match or offering to beat competitor prices. It’s a marketing thing. It’s a customer service thing. It’s a loyalty thing. It’s part of your value proposition, if you offer such a guarantee.

There’s also plenty of reasons not to do them.

Whether you decide to use them or not, please understand price matching is no substitute for a unique selling proposition / unique value proposition.

 

Originally published: April 6th, 2009 by Linda Bustos

 

This column focuses on business problems and how to solve them. Andrew Gregson, BA, MA , M.Sc.Econ is an economist, author and a Senior Partner in iNTENT Financial Inc, a Kelowna based finance and consulting company. The 4 partners specialise in finance, pre-determined profitability, sales and marketing. If you need further information, please contact us through the website at www.intentfinancial.com.

 



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At the Core: Lessons in pricing from Apple

Apple has taught many entrepreneurs the importance of design, how to create buzz when introducing new products to the marketplace, how to pioneer new technology and the importance of superior quality.

But Apple also has wily pricing experts who have used pricing strategies to create extra profits.

 

The most recent example is the Apple response to Samsung’s huge presence in the India market. Apple’s products are too pricey for the average Indian, where many people still survive on $2 per day. Smart phones make sense in countries where electricity supplies and telecoms infrastructure is weak and prone to frequent blackouts. Phones add value to people’s lives by bringing them close to the markets. This has already happened in some poor fishing communities that dot the coastline. When heading back with the catch of the day, they can check the spot prices at various ports within reach and choose the best paying one. Clearly smart phones are an economic accelerator. So, how to get more smart phones into Indian hands?

Apple has used a price skimming strategy for the consumer market. Early adopters pay greatly for the newest and brightest toys. But Apple also knows that competitors can enter the market easily and quickly after Apple has pioneered the technology. So constant innovation is a hallmark of Apple products.

But that means the earliest smart phones are soon obsolete. Apple could NOT “dump” the old phones on the American or early adopter market, for fear of cannibalizing its own consumer segment. So Apple took the older phones to India, effectively buying market share with a great if outdated product that has already generated all the profits Apple expected.

But not all of us have the luxury of dumping our old products on a foreign market. How can Apple’s leadership in this pricing gambit be put to use in a Canadian small business?

If your pricing model demands a profit margin on each and every inventory item you sell, you will not be able to sell the end of season or dust covered items for a dollar. You will lose money.

But Apple has a simple idea. Not all inventory moves equally. If you sell seasonal or fashion products, some product will be left over after the majority has sold. If your pricing model allowed for this hangover – check your records in prior years -, then you could sell the leftovers for $1 and make a profit. See my prior articles on how the big box stores price this way or take a look at my book, Pricing Strategies for Small Business. If you sell strategically, you can gain new clientele. By contacting your customer list and advising of a tremendous sale, you move inventory that would otherwise gather dust and gain loyal customers at the same time.

 

This column focuses on business problems and how to solve them. Andrew Gregson, BA, MA , M.Sc.Econ is an economist, author and a Senior Partner in iNTENT Financial Inc, a Kelowna based finance and consulting company. The 4 partners specialize in finance, pre-determined profitability, sales and marketing. If you need further information, please contact us through the website at www.intentfinancial.com.



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About the Author

Andrew Gregson, BA, MA, M.Sc. (Econ), holds a Master's Degree in Economics from the London School of Economics.

Andrew's experience working with an international business consultancy and being a business owner for 15 years was the impetus for his book "Pricing Strategies for Small Businesses". He brings his expertise in finance, pricing and debt restructuring to the table to help struggling manufacturing and service companies to return to profitability. This has helped companies to rebuild value and often to sell at much higher dollar values.

Andrew has contributed to trade journals, "Spark" on CBC National Radio and has been a guest speaker at business networking groups, colleges, universities on his topics of expertise - pricing, exit plans and debt. He is also a frequent contributor to blogs and online postings for business help.

Andrew is currently the President, Board Of Directors intent Financial Inc., his role is overseeing intent Financial Inc., Intent Investment Corporation and other related ventures.

 

Website link:  www.intentfinancial.com

Contact e-mail address:   [email protected]






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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet presents its columns "as is" and does not warrant the contents.


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