Using Examples of Successful Business Models to Understand Demographics & Define a Target Market

https://en.wikipedia.org/wiki/Demography

One of the toughest decisions is one that every entrepreneur has to face: to whom will I market my product. Having graduated in business management with a focus on entrepreneurship and strategy, I’m often puzzled by new startups with seemingly no understanding of their target markets. Many entrepreneurs are apparently plagued by the myth “If you build it, they will come.” With little to no effort on their part, these small business owners somehow think a marketing plan will take care of itself and a set of core customers will automatically develop. Sadly, that just isn’t true.

Successful Businesses Analyze Demographics, Understand Their Target Markets  amp; Service Accordingly

Successful businesses are built on competitive advantages. In addition to cost-advantages and product differentiations, businesses build brands based on focus–segmenting the market and catering products and services accordingly. No business can be all things to all people. This fundamental rule is what successful entrepreneurs internalize and base decisions on.

Let’s look at three profitable businesses who understand their places in the industries in which they conduct business. These companies know who their real customers are and act in view of that.

McDonald’s is Cheap. Is McDonald’s trying to be all things to all people? No! The fast-food chain sells low-priced hamburgers and French fries. It’s not super healthy, or that great of quality, but it’s consistent, convenient and cheap. Yes, prices have gone up and the menu has expanded over time, but McDonald’s has built its reputation catering to its target market: consumers who want quick and easy grub, on the go. Even though we all at times may be in the realm of McDonald’s target market, the restaurant chain doesn’t try to serve us every meal we could ever want. It wouldn’t make sense given its supply chain and corporate structure. McDonald’s is fine with you grabbing your filet mignon and caviar elsewhere because it knows those wants are better met by someone else. The company understands, given its core competencies, what its target market really is.

Walgreens is Convenient. Does Walgreens serve the same customers Walmart does? Not really. Yes, people who purchase items from Walgreens can also shop at Walmart. But in the moment you’re checking out at Walgreens, why are you there? Unless there’s a sale, or you have a coupon, Walgreens is not likely cheaper. On regular-priced items, you’re paying a premium for convenience. I shop at Walgreens because it’s on the corner. It’s a small store–I can run in and run out in under five minutes getting the three things I need that can’t wait until my next Walmart trip. And if I run into a problem, I have a much better chance at Walgreens of tracking down an employee and getting the help I need.

Shopping at Walgreens is a different experience. Hence, Walgreens doesn’t generally compete on price. There are sales to get you into the store, and a few novelty items here and there, but mostly customers are paying for a personalized shopping experience in a small drugstore on the corner. Would Walgreens gain sales if the company lowered prices? Yes. But, would the store actually profit from rebuilding the company’s structure and marketing strategy? Not likely. In the moment you’re shopping at Walgreens, you’re a different kind of customer than when you’re shopping at Walmart. Both companies know that and continue to grow their businesses accordingly.

Vitamin Cottage is Eco-Friendly. Locally, and perhaps company-wide, Vitamin Cottage Natural Food Market has discontinued making available plastic and paper bags for customers purchasing goods. Is that a revolutionary idea? Yes! Is it ridiculous? Absolutely not. The company has built its brand as a natural and healthy grocer, intent on saving you and the environment. Yes, the store may lose some customers on the sidelines who like killing the earth one plastic bag at a time. But, the business’ green target market has just become that much more loyal. Vitamin Cottage made a smart business move to further company aims and to appease consumer concerns–all because the store understood its target market.

How Can You, As a Small Business Owner, Get into the Successful Business Model Game?

Realize the Goldilocks Phenomenon. Entrepreneurs face what’s known as the “Goldilocks Phenomenon:” identifying a market not too big, not too small, but just right. Entrepreneurs rightfully do not want to limit themselves into too narrow of niches. But, no company has the resources or product offerings to satisfy everyone. And by trying to please everyone, generally, no one is completely satisfied.

In writing a business plan, honestly identify where your company’s strengths truly are in comparison to your competitors and the market which you plan to serve. If you have no edge in a given field, rethink the business plan. If initial research is showing too small of a target market, rethink the business plan. If the numbers aren’t working out–you guessed it–rethink the business plan.

Do Your Homework. Developing an accurate understanding of your company’s demographics is hard work. And while it’s not enough in and of itself to save a company, the lack of it is enough to kill a startup before it’s ever even gotten off the ground. Clearly, finding the perfect niche in the market would be every businessperson’s dream come true.

So how is it done? More market research, more competitor analysis, and a little more ingenuity. Answer the pertinent questions. Who is buying, or who would buy, what you are offering? If you have customers, interview them. What are the commonalities between your customers: age, sex, education? Race, occupation, hobbies, purchasing habits? If you’re only in brainstorming mode as a potential business, identify your potential competitors and interview their customers. What are the commonalities between them? What are the major differences? See what your competitors are offering and analyze who they are targeting. What are they doing wrong? What market segment is nobody reaching? Can you legitimately deliver to that segment that is presently being underserved?

Stick With It. Continue to conduct market research and employ creative techniques to further identify the circumstances in which your company will need to conduct business. Once you really understand your startups’ demographics, you can begin adjusting your company offerings accordingly. Knowing what to offer and whom to target is a balancing act. Fine tuning the details can take years, but the required effort is worth accurately identifying the perfect target market for your business.

For additional information on how to start a small business, you can visit the U.S. Small Business Administration’s website, which is a valuable resource for budding entrepreneurs.

Tips for the Beginning Small Business Owner

https://en.wikipedia.org/wiki/Entrepreneurship

For many of you, just making the decision to become a small business owner is a big step. For those of you who have already made this decision, congratulations. The problem is, what do you do now that you’ve made this life-altering decision? Many people who started out with dreams of conquering the world have ended up struggling just to conquer their street corner in a world filled with competition and bigger brand-name companies.

The secret for today’s new entrepreneurs lies in the ability to learn from others so you don’t have to make those same mistakes yourself. Keeping these tips in mind that apply to almost every industry (regardless of what’s being sold) will help keep your company afloat while you’re getting your feet wet in the world of business. After all, as cliché as it sounds, you never know when your next idea will be the “big one”, and you’ll want to make sure your business is ready to ride the waves.

First off, come up with a special offer for your customers, such as a discount off a bundle of products or the opportunity to purchase a desirable product you wouldn’t normally carry. This will create an incentive for people to purchase from you. Make sure the “special offer” is just that: an offer that is special. It defeats the purpose of the exercise if the customer can take advantage of the offer by any other means.

he great thing about special offers is the fact that you don’t have to go out of your way to order a slew of new products to put one together. Find a few items in your inventory that are related, discount the price if your customer purchases the whole package, and your customers will be satisfied that you’re giving them a good deal. It’s healthy for your own bottom line as well–you’ve just sold three or four items instead of just one.

Next, keep a sharp eye out for niche markets. Surprisingly, although this is one of the first things new business owners should be looking for, niche markets are overlooked far too often. Within your current customer base there are groups of people with common interests. Maybe you have a group who speaks a second language, or a teenage throng. Maybe your products really speak to the needs of the working class. Try to determine these niche groups within your customer base, and figure out the unique needs they must fill. This leads into “target marketing”, where you construct a marketing campaign solely for this group of people. Take your current advertisements, then change them slightly to speak to these niches. Most likely they’ll be grateful that you took the time to figure out their particular interests, which can lead to an increase in your own profits.

Lastly, consider setting up a referral program. One key strategy many entrepreneurs employ is the tactic of turning customers into mouthpieces for their products. Most of the time, if the product is of good quality and fills a need the company doesn’t even need to ask the customer to promote it to others. Word-of-mouth is an often ignored but necessary means of marketing.

Quality alone will help word spread of your business, but you can help it along even further by offering an incentive to customers who refer you. Give such referrals a special thank you, such as a product they can’t otherwise purchase from you, or a nice discount. Also give out customer surveys with your product delivery, asking what was pleasant about their experience with you and what needs work. A few surveys attached to a request for referrals can go a long way in improving your business.

These tips should help you get over that first rough year as a new business owner. Remember, no matter what happens, treat your customer with the utmost respect and you’re already miles ahead of your competition.

Networking, Volunteering, and Government Roles of Small Business

Networking, Volunteering, and Government Roles of Small Business

Government entities need the backing of the citizens and businesses in order for positive changes to take place in a community. Changes must grow from the bottom up. Large and small businesses, services, non profits and ordinary people giving time and in some cases money, to enact positive causes, ensures that the whole community benefits.

Politicians, citizens, religious and business leaders are responsible to find a common ground, stop nit picking and slandering and focus on the real problems . A main initiative rooted in self agenda, is misread, misquoted and misinformed at every opportunity for a payoff of attention, and serves as a waste time on trivia.

Kalamazoo, Michigan is a Model City

In a southwestern Michigan town during the 1990’s, discussions, dialogue and presentations of various volunteer groups in a non-profit organization catapulted sustainable, positive changes and growth. In Kalamazoo, Michigan, these changes ended up affecting surrounding communities in Kalamazoo county. Citizens for change in the combined Kalamazoo and Portage areas know that giving of self will render what is needed.

Kalamazoo Growth Survives Business Downturn

Even though the closings of large donor companies caused the Forum of Greater Kalamazoo to eventually disperse, there were spin-off groups that continued the work. The city improved so fast that people who had lived in the area and moved away came back after a few years to find a city that wowed them. The result was new growth in businesses, and a new look for the city.

Although the recession took a toll and many businesses went bankrupt, the city of Kalamazoo remains progressive and upbeat.

Even though disagreements arise, progressive, positive businesses can overcome and reach agreement through non-profit forums, supporting citizen endeavors and co-operating with government.

Southwest Michigan First, the Catalyst of Business Growth

Although the recession took a toll and many businesses went bankrupt, the city of Kalamazoo remains progressive and upbeat.

In just a few years, the Radisson Hotel was transformed into a space age focal point to Michigan Street.

Kalamazoo Avenue gained a fabulous new renovation to the Arcadia Festival site and across the street, the Amtrack train and bus station lot was merged with the cities Metro Transportation system with new brick and mortar, and parking stations for in town and out of town buses.

Old Brownfield developments in the downtown area changed from slum looks to resurfaced brick, updated and renovated to house new restaurants, technology and other businesses.

Burdick Street Mall-The First Renovation

A new brick paved downtown mall laid over heated duct work now runs through the Burdick corridor. The mall street and walk way was laid over heated duct work and creates a wonderful and exciting place to shop, lounge and eat in or outdoors.

Changes are too numerous to mention in one column and all brought about by the citizens backing government in a small college town called Kalamazoo, Michigan.

New Walmart Opens, Small Businesses Close–Common Misconceptions

New Walmart Opens, Small Businesses Close–Common Misconceptions

A theory the new Walmart opening in town will indefinitely cause all local small businesses and existing retailers to disappear from the grid is a dismal conviction that society and small business owners recognize as unabridged fate.

Independent retailers are under pressure when billion dollar mega-retailers bring local competition–recent article states entrepreneurs gain by innovation.

Old Wive’s Tale Debunked

The article, The Wal-Mart Effect: Wave of Destruction or Creative Destruction?, from Economic Geography shows reputable, analytical stats backed by researchers at University of Florida, University of Toronto, and Princeton. In a 14 year study from 1980 to 2004 in Florida, research suggests small businesses may lose more by regarding or undertaking the notion that business will indefinitely flounder–buying into what has been engrained in the minds of Walmart shoppers, independent retailers, and Walmart greeters across the board.

Even though this a premise society has adopted and adapted to as commonplace knowledge, research from the study states this misconception as fallacy. The ostensible mythos negatively effects intimidated local business owners to the point of considering and often calling it quits rather than evaluating all possible circumstances before closing.

If local surrounding businesses offer services and products Walmart does not provide, the competition is not as steep in the long haul as some skeptics state.

Creative Destruction, Entrepreneurs Step Up

According to the study, retailers close to Walmarts are apt and previously equipped to sell the same products as the mega-retailer–providing the same product or service at a competitive rate either forces independent companies to change or leave the scene.

The vacant locations eventually attract fresh occupants and entrepreneurs that diversify the local market. For example, an art supply store can provide higher end, professional products Walmart does not stock.

A Korean restaurant, for instance, will benefit more from the new neighbor whereas a newly established Kodak store owner may need to reevaluate her business strategy since Walmart provides photo development services as well.

Variety and diversity in the market regenerates depletion of past businesses dissolving while opening doors for future investors, ultimately to potentially successful entrepreneurial ventures, in a business environment when large super stores like Walmart force market transformation.

Over time, the newbies establish products and services to compete and succeed with extensive innovative changes in business strategy to push forward and out perform competitors of old.

Inevitable Losses, Envisioned Gains

Entrepreneurs should be optimistic when Walmart waltzes in a few exits down I-77 from another Super Walmart: the small business owner should take a look at setting up shop next to the fresh asphalt and offer services and products the new mega-vender does not provide, perhaps a joint, non-profit validation parking service venture for Walmart customers.

Professional Employer Organizations for Small Businesses

Professional Employer Organizations for Small Businesses

In an increasingly complex and regulated business environment, owners must manage a plethora of complicated personnel matters, such as employee health benefits, retirement plans, workers’ compensation compliance, payroll, taxes, and unemployment insurance claims. Short of hiring or expanding full-time human resources expertise, many business owners find themselves juggling these unproductive details themselves. Worse yet, some owners leave themselves exposed to potential liability by operating outside of required government standards or find it difficult to compete with their more efficient rivals.

A Professional Employer Organization, or PEO, enables a business owner to keep current staff yet outsource much of the human resources management function, including payroll, benefits, and workers’ compensation. Working with a PEO frees the business owner’s valuable time from these necessary distractions and allows him or her to focus more energy and talent on core business activities that generate revenue and make the company more profitable.

How a PEO Works

According to the National Association of Professional Employer Organizations, the PEO industry is approximately 30 years old, with 700 PEOs operating across all 50 states. Through a shared employment relationship referred to as “co-employment,” the business owner and the PEO agree to share employer responsibilities. Under this arrangement, the business owner typically remains the work site employer and continues to handle decisions related to hiring, termination, job requirements, work assignments, and promotions. The PEO can step in as the administrative employer, taking on functions related to payroll, benefits, and compliance with employment laws.

A typical PEO client is a small business with between 10 and 50 workers, although larger organizations are beginning to utilize PEOs as well. The types of businesses turning to the PEO model are diverse. PEO clients include accounting firms, manufacturers, universities, medical offices, government agencies, and others.

Benefits of a PEO

In addition to relieving the business owner from unproductive time-consuming administrative tasks, contracting with a PEO has other advantages. A PEO relationship can allow an employer to offer enhanced employee benefits that may otherwise be too expensive. PEO sponsored benefit packages can include 401(k), healthcare plans, dental, vision, employee assistance programs, and more.

A PEO may also enhance the work site and contribute to a safer working environment. Staffed by certified human resources specialists, the PEO focuses on safety programs, workplace risk management, and sound human resources practices. Other services may include recruiting, pre-employment screening, and planning for wages and compensation.

In an economy that continues to challenge employers to control costs and rein in spending, a PEO can be a viable alternative for many business owners. Employees can benefit as well, through greater access to valuable and meaningful benefits, in addition to the peace of mind that comes from knowing they work for an employer that is better positioned to remain strong and competitive.

Top 4 Ways to Generate Local Attention for Small Businesses

Top 4 Ways to Generate Local Attention for Small Businesses

If you intend to grow your business, the best place to start is locally. Do not overlook the advantages and support you can gain from your local community.

There are many small company owners and individuals who are looking for effective ways to generate local attention for small business with intentions of expanding. With the economy still in a fluctuating condition, it is important to use the right methods to properly advertise and get your brand or company name out where valuable consumers can see. Here are some of the best ways to attract more attention for small business and the benefits it can bring.

4 Tips to Generate Local Attention for Small Business

  1. Start a Company Website

If you have not done so already, the most crucial step to make is to setup a website for your small business. Even if you have little intentions or future plans to sell products or services online, it is important to remember that consumers almost always do their research on the internet. Aside from convenience, online forums or blogs are the most popular way to find or write reviews about certain companies.

 If you do not have an existing website, you will need to start one immediately in order to generate local attention for small business. Although the most traditional way to advertise is through printed material like newspapers or magazine ads, the costs can be drastically high while the exposure is severely limited. Even if you already have an advertisement in place somewhere in print, an online webpage can only benefit your small business.

A website will not only help you market your company’s professional integrity and products you offer but it is also a great place for customer to leave feedback. In addition to positive reviews, potential customers also have an easy way to reach your business with any questions or problems. If you manage to find customers then you will want to provide excellent service to ensure that they come back for more.

  1. Organize Community Events or Programs

Once you have your company’s website up and running, another great way to generate local attention for small business is to get involved with the local community. Consumers almost always prefer companies that give back to the average Joe instead of reaping the profits for themselves. Consider what industry your company belongs to and use your creativity to start a related event.

The benefits of involving the community can be continuously rewarding. Not only is this a great way to gain word-of-mouth advertising but you will also have relevant and meaningful information to add to your website. One of the most important factors when increasing attention for small business is to have something unique and different to offer that other companies don’t. Since most small businesses do not engage or host local events, your brand name will surely stand out and catch the attention of new clients.

  1. Build a Good Reputation

Any tactic or strategy you use to generate local attention for small business can be a complete waste if your small business does not have a good reputation. In most cases, having no reputation at all would be preferred over having a bad image. Though word-of-mouth is often not the best way to advertise, it is an effective way to warn others. A majority of individuals will tell their friends and family if they have a bad enough experience from dealing with your business.

When looking for ways to generate local attention for small business, be sure that you handle all customer complaints and inquiries with urgent care. Ask yourself whether you would choose a small business again if it takes days to receive a response. Following up is a pivotal step when building a good reputation. If you are able to leave a big enough impression for customers to leave reviews, you will want them all to be as flattering as possible.

  1. Find a Marketing Expert for Guidance

A great way to generate local attention for small business is to find guidance from marketing experts who have full insight into how internet advertising works. If you are looking to expand your company and increase profits then it can be beneficial to invest a small amount for valuable tools. If you are looking to generate leads for your small company, consider some marketing tools such as email lists and always make sure that the content on your webpage is relevant and interesting.

Having a professional can also ensure that you receive a customized marketing plan that meets your unique requirements. Even if you are skeptical about hiring an expert, consider doing your own research online for the many different ways to generate local attention for small business.