/Pricing/Accounting;/U/Blog;

1. Set a billing schedule

It’s
tempting to give preference to paid work and put invoicing off. But no work is
paid without invoicing, so make it a priority. Pick a day and time of the week
to get it done, then lock it into your schedule. If you’re just too busy,
great, hire a bookkeeper to help.

2. Invoice more often, get paid more often

Invoicing
can be such a chore that a lot of businesses only do it once a month. And that
doesn’t make sense because invoices are paid late. When you’re slow sending
them, and your customers are slow paying them – it’s a bad combination.

Consider
billing weekly. Or, if you do lots of odd jobs, send invoices as soon as the
work is done. It prevents a backlog from forming, and it gets your customers on
the clock sooner. Money should start flowing into your business more
consistently, rather than in fits and starts.

3. Connect quotes and invoices

It’s a
good idea to get quotes signed off before starting work. Use descriptions from
that agreement in your invoice so customers can see they’re getting what they
paid for. It should help avoid misunderstandings or invoice disputes.

4. Use invoice templates to their fullest
potential

Many
businesses use invoice templates from spreadsheet software. They can save a lot
of time if you:

·       
save templates (with pre-filled information) for
specific types of jobs and customers.

·       
build in formulae that total charges and add taxes for
you.

Make
sure you’re getting the most out of your templates. As you grow, you may
eventually move onto a dedicated invoice maker.

5. What could an invoice maker do for you?

Specialist
software can speed up the invoicing process by:

·       
learning the price of your products and services

·       
calculating taxes and automatically preparing paperwork
for filing

·       
doing daily bank reconciliation to tell you which
invoices have (and haven’t) been paid

·       
working from your phone, so you can send invoices from
anywhere

6. Track time and materials better

Figuring
out the time or money you’ve spent on a job can be slow work. If you need to
open a diary, refer to old emails, and sift through dozens of receipts to piece
everything together, then it’s probably taking too long. You really need one
source of truth for time and one for expenses.

Not
everyone is good at staying this organised, but there are apps to help:

·       
Time-keeping apps allow you to clock in and out of jobs
from your phone.

·       
Expense apps allow you to photograph a receipt and
attach it to a specific job so the information is there when you go to make an
invoice.

7. Should you accept online payments?

You can
get your money up to 30% sooner just by offering a convenient payment
method. There are a lot out there, including debit and credit card,
automated clearing houses (ACH) like PayPal, or bank transfer. It costs nothing
to set any of them up, although most providers charge a transaction fee.
If your customers already pay on time, then you’re probably ok. But if they’re
slow, an easy payment option could speed them up. 

8. Train your customers to pay on time

When
you first bill a new customer, call them to check the invoice has everything
they need. It’s a nice courtesy but you’re also taking away excuses for late
payment. If they miss the due date, call the very next day. You don’t have to
be aggressive. You’re just making sure nothing’s wrong, and signalling that you
watch this sort of thing closely. Keep this up over the first few invoices to
set expectations.

9. Chase invoices like you really want them

The
most important part of the invoicing process happens after you’ve sent the
bill. Because no matter how accurate, professional or well-formatted your
invoice is – it probably won’t get paid on time. You have to follow up. Remind
your customer when the due date is up and, if they still don’t pay, get on the
phone. It’s not fun but it’s hugely important.

Build the perfect invoicing system

A smart
invoicing system will help you get bills out faster, and money in sooner.
That’s good for business. Use these 9 questions to review your invoicing
process regularly, and keep from falling behind.

The Internet has made it very easy for a business to make
its goods and services reach more and more people all over the world. 
Advertising on social media platforms like Facebook, Twitter and Instagram are
widespread. 
However, advertising on video platforms like YouTube is not always
the first option for businesses who want to advertise their goods and services
online. 

Businesses are missing a considerable goldmine here….

Why?

According to Google, more than one billion people watch more
than 6 billion hours of YouTube videos every month.

As a result, YouTube could be the next best platform for you
to advertise the goods and services of your business.

This article would educate you on the benefits of
advertising your business on YouTube.

YouTube has an
enormous reach

YouTube is a hybrid between a search engine and a social
media network. This makes it well positioned to reach a vast range of internet
users.

Internet users can be classified into two basic categories;
those seeking social interaction and those seeking information.

After Google, YouTube is the most popular search engine. It
has more searches than Bing, Ask, AOL and Yahoo combined! It is also the third
largest social media network.

This makes YouTube be in the best position to get a hold of
the people in the two categories mentioned above.

Google has also reported that YouTube reaches more people
between the ages of 18 and 49 than any cable TV network.

If you are trying to get your products and services to reach
a high number of people, try using YouTube. 

You can easily
influence purchasing behaviour

YouTube has a substantial impact on customer purchases. In a
case study cited by Entrepreneur, a custom shoe retailer, Shoes of Prey
partnered with Blair Fowler to host a giveaway on her channel. The result was a
tripling of the online sales of Shoes of Prey.

In a recent YouTube report, it was noted that 66% of beauty
product purchasers, 72% of auto-vehicle purchasers and 65% of smartphone
purchasers pointed out that YouTube-influenced their purchasing decisions.

Whether your business falls into these categories or not, it
would be a fantastic idea for you to take advantage of the market influence of
YouTube with some well-placed ads or brand videos.

 

Easier to track

In the online advertising business, getting current metrics
are vital in ensuring that your ad dollars do not go to waste. This process has
been made easy by YouTube. The Analytics tab of your YouTube account would
provide in-depth information about your viewers.

It is important to note that the available data depends on
what format you choose for your ad. Some packages include clicks, reach,
frequency, engagements and views. However, you can also track video viewership.
You can also figure out how often your ad is being watched to a percentage of
its length.

These metrics and surveys make it easy for you to figure out
how well an ad is performing so that you can easily tweak your strategy to meet
your goals.

 

You can target your
audience

You can target people based on demographics like gender, age
and interests. Through this, you can reach the perfect audience for your
product.

Ever heard the quote by David Allen, who
says “You can do anything, but not everything.”

This is the reality that we have to face in
every area of our lives, particularly for business owners and managers. For the
most part, your days would be filled with performing tasks like managing
orders, staff and customer complaints. Also, you may have to handle some
aspects of finance here and there.

This is normal. As a business owner or
manager, it is essential that you have a grasp of an aspect of the business
you’re overseeing. However, while you can d a bit of everything, doing it all
by yourself is impossible.

Have you ever heard the saying ”Jack of all
Trades, Master of None”?

It is vital that as a Business manager that
you are a jack of every aspect of your business. But it impossible for you to
be a master of everything. It merely is not worth your while.

You have to know when to call the experts.

Experts would produce the kind of results
that it would have taken you to create in weeks in a few days. By relieving you
the stress and pressure of handling the business all by yourself, they help you
gain that competitive edge because you get to focus more on your business. 

This article will educate you on the
benefits of hiring an expert for specialized areas of your business.

 

Helps save Time

Hiring an expert would save you loads and
loads of time in more ways than one. Have you tried to do something you are not
that good at? It took a before you could get it done, right? And when you got
it done, would you honestly say the result was top-notch?

I think not….

Hiring experts would help you save time you
spend on a job, thereby saving you money. This is because you get to focus on
the things you are good at. 

Growth

Doing it all by yourself could stall the
growth of your business. By outsourcing some activities, you can focus on
generating income and scaling your business. Think of it, as letting go of the
reins on your horse, thus making it move faster. 

Saves Cost

By outsourcing, you get to save money in
the long run.

How? You may ask…

For instance, when you hire an outsider
instead or relying on new in-house staff, you get the best person for the job.
Also, you can scale up and down as much as you need. Thus, reducing operating
costs.

You can get free advice from outsourcing
(in a way). Though you would be paying for their services, the services come
with a ton of knowledge and experience. Just ask nicely.
 

Reduces risk

Hiring an external staff enhances the risk
of wasting time and effort is involved in training in-house staff members on
the tasks needed in case it does not work out.

Another reason why external staff can be
said to minimize risk is that they are required to do so by law. You can sue
them for damages if they do a shoddy job. 

Aids Flexibility

Hiring experts would give you the ability
to help solve a problem quickly without having to hire new staff or allocate
tasks to staff in-house. Thus, making it easy for you to adapt rapidly to
changes in the market.

 

On the list of crucial things that determine if a small
scale business will stay relevant or fold up within a short while, money is
right on the top.

However, a startup could have lots of money, but without a
sufficient budget, finances would be mismanaged; eventually leading to their
folding up.

Without doubts, budgets are essential for any business that
wants to grow or thrive. Budgeting isn’t a reduction in the amount you’re
spending; that’s a misconception. However, an advantage of budgeting could be a
reduction in your cost per time, as unnecessary expenses would be cut out.

That being said, a budget is a financial tool that you can
use to predict your future expenditure in relation to your income. If you’re in
any financial difficulty, a budget is a handy tool to help you get out of that
situation. If you have a debt problem, then you need a budgeting solution.
While it is essential to draw budgets, drawing a sufficient budget is even more
critical. 

Here are 10 Tips that are sure to be highly useful for
beginners in this budgeting game

•    Just start!

Whether it’s a pen and a piece of paper or using a
spreadsheet that works better for you—get on it for a start. There are
software’s that could be of help too. The most important thing is not to merely
think of it, but to begin to act. 

•    Don’t beat
yourself up because you have to do a revision
Who says having to do a budget revision is a bad thing? As
your business grows and costs change, it is excellent to do a budget revision,
especially if the whole budget game is new to you. 

•    Start with the
smooth and specific plans and prices

Start with the income you’re sure to receive, expenses with
fixed rates and the likes of them. Starting like this makes it very easy to
draw the budget, so you don’t get discouraged on your first attempt. 

•    As a business
owner, your salary should be budgeted for as well

If you want your budget to be adequate, then every single
amount you plan to spend must be documented. This includes your salary, even as
a business owner. Never take the entire profit as your salary. It disturbs cash
flow within your business over time.

 

•    Remember to
budget for manpower

If you are looking to spread the reach of your business or
getting more resources to scale up your business, never leave out manpower. As
your plans get bigger, you would need more hands, and they need to be budgeted
for. 

•    Make some serious
projection into the future

It is vital that you take out time to live out the future
you want for your business in your imagination. By doing this, it would be easy
for your budget to cover up almost all the costs of your future projection.

•    Write notes

As you add more figures to the budget, write notes that can
be attached to it. This would help any other person looking at the budget in
the nearest future to understand why specific changes had to be made. Examples
of such notes could be something on the difference in the cost of a particular
material. 

•    Miscellaneous is
a must 

Unexpected legitimate expenses are a must. It is always
better to include them in your budget and as an unwritten rule; a 30% margin is
safe for unexpected costs. It will save you from the search for emergency
funds.

•    Employ an
Accountant or a Bookkeeper

Budgeting is so important such that even if you are
short-staffed, you must have an accountant or a bookkeeper at your disposal.
Remember, cash flow determines if your business will thrive or pack up. 

•    Embrace the
Process

Budgeting is a part of your business. Embrace it for what it
is and bring yourself to love the process. The earlier you get used to the
process, the better for you and your business.

 

 

What is depreciation?

Depreciation is what happens when a business asset
loses value over time. A work computer, for example, gradually depreciates from
its original purchase price down to $0 as it moves through its productive life.

There
are techniques for measuring the declining value of those assets and showing it
in your business’s books. This area of accounting can get complex so it’s a
good idea to work with a professional.

Purpose of depreciation: 3 main functions

Depreciation
accounting helps you understand the true cost of doing business (because wear
and tear is an expense), reduce your tax bill, and estimate the value of your
business.

1. Depreciation as an expense (cost of doing
business)

To understand how profitable your business is, you
need to know all your costs. Depreciation is one of those costs because assets
that wear down eventually need to be replaced.

Depreciation
accounting helps you figure out how much value your assets lost during the
year. That number needs to be listed on your P&L report, and subtracted
from your revenue when calculating profit. If you don’t account for
depreciation, you’ll underestimate your costs, and think you’re making more
money than you really are.

2. Depreciation and tax

Because depreciation lowers your profit, it can
also lower your tax bill. If you don’t account for depreciation, you’ll end up
paying too much tax.

You
can gradually claim the entire value of an asset off your tax. However there
are rules around how quickly you can depreciate certain assets from a tax
perspective.

3. Valuing your business (depreciation on the
balance sheet)

As
assets lose value, so can your business. A transport company with old
trucks may not be worth as much as a transport company with new trucks, for
example. Your assets are listed on your balance sheet, on what is called the
fixed asset register. Make sure you update the register whenever you work out
depreciation. It’s also worth remembering that assets are often used to secure
loans. As they drop in value, they offer less security, and you may find it
more difficult to get finance.

What can be depreciated?

While
most business expenses are tax-deductible, they’re not all depreciable. There’s
a difference. Consumables like stationery can be deducted from tax but you have
to claim for them in the year you bought them. For most businesses, only fixed
assets can be depreciated.

What are fixed assets?

A fixed asset is something that will help you
generate income over more than a year. It includes things like tools,
machinery, computers, office furniture, vehicles, and buildings. You don’t
always have to own them. Some leased items may be depreciable, too.

Intangible assets, which are non-physical things
like patents and copyrights, can also be depreciated (or amortised). They’re
incredibly valuable to your business and that value gradually shrinks as they
near their expiry.

If
an asset doesn’t lose value – such as land – then it can’t be depreciated. Nor
can inventory. That is dealt with separately, under the field of inventory accounting.

 Choosing a depreciation schedule 

To depreciate an asset, you must first estimate its
lifespan. A computer might only last three years. A kiln in a factory could
last 30. You’ll probably find that the IRD has a depreciation schedule for the
types of assets in your business. It’s common for small business owners to
simply follow those recommendations.

An
asset’s value can be adjusted to zero at any time if it’s lost, stolen or
damaged. It can also be sold, traded or combined into a new asset.

Methods of calculating depreciation

You
also need to decide how an asset’s value will decline over its lifespan. Will
it lose most of its value early, or will it lose value at the same rate every
year? There are many different methods of calculating depreciation, and some of
them are quite complex. Three of the most common are:

Straight line depreciation

Under
this method, the asset depreciates the same amount every year, till it has zero
value. For instance, an asset expected to last five years would depreciate by
one-fifth of its ticket price each year.

Diminishing value depreciation

Under
diminishing value depreciation, an asset loses a higher percentage of its value
in the first few years. That rate of depreciation gradually slows down as time
goes on.

Units of production depreciation

The
lifespan of some assets is better measured by the work they do than by the time
they serve. For example, a vehicle might travel a certain number of kilometres,
or a packaging machine might box a certain number of products. You could
depreciate these assets based on usage rather than age.

Depreciation for small business

Depreciation can seem tricky at first, but it’s
nothing to be scared of. It will help you better understand your costs and
lower your tax bill, which are good things.

It
doesn’t have to be complex either. Most businesses simply adopt the
depreciation schedule provided by the IRD. Once it’s set up in your accounting
software, the maths happens automatically and the numbers flow straight through
to your tax return. And, as always, an accountant or bookkeeper can provide
advice along the way.

The Importance of
Debits and Credits

Debits and credits are one of those
fundamental concepts in accounting. If you are having trouble understanding
them, chances are you are going to be lost throughout the rest of accounting.
Understanding debits and credits lays the foundation for almost anything else
you do in accounting. If you confuse the two, your calculations will almost
always be off.

Stop Thinking Like
a Consumer

The typical person has heard the
terms debit and credit tons of times in their lifetime. Usually the context of
these terms includes the word card on the end. As a consumer, you typically
think debit is good credit is bad. If you are going to grasp the concept of
debits and credits, you will need to forget everything you think you know about
them.

Where are They
Recorded

Debit is often
referred to as “dr” and means left. Debits are recorded on the left
side of a balance sheet or ledger.

Credit can also be
written as “cr” and means right. Credits are always recorded on the
right side of a balance sheet or ledger.

Do not mistake these for being terms
to mean an increase of decrease. The major difference between debits and
credits is the side of the account they are recorded on.

Accounting Balance

For every debit or
credit, there must be an equal account entry in the other column to balance it
out. This represents the exchange that was made. You are showing with one
account entry what was gained. The other account entry is showing what you
sacrificed to obtain the other item.

Remember: The sum
of debits must equal the sum of credits.

The left side of the balance sheet
must equal the right side of the balance sheet. The left includes assets and
expenses. The right side includes liabilities, owner’s equity and revenue or
profit. 

The Basic
Accounting Equation

Assets =
Liabilities + Equity

Which Accounts are
Which?

When you look at
the basic accounting equation; you can see that assets are on the left and
liabilities and equity are on the right. This tells use that assets are debit
accounts and both liabilities and equity are credit accounts. 

We figure this
out by which side of the equal sign the account is on in the equation.

Assets include the following:

·       
Cash

·       
Accounts Receivable

·       
Inventory

·       
Prepaid Expenses

·       
Plants

·       
Equipment

·       
Buildings

·       
Land

·       
Office Supplies

·       
Investments

Liabilities include the
following:

·       
Accounts Payable

·       
Notes Payable

·       
Long-term Debt

·       
Unearned Fees

Owners’ Equity includes
the following:

·       
Invested Capitol

·       
Retained Earnings

·       
Surplus

What is meant by this is:

·       
Increases in Debit accounts are debited.

·       
Increases in Credit accounts are credited.

·       
Decreases in Debit accounts are credited.

·       
Decreases in Credit accounts are debited.

Steps to Recording Transactions 

1.     Decide which
accounts are affected by a transaction.

2.     Decide whether
those accounts are debit accounts or credit accounts.

3.     Decide if the
accounts are increasing or decreasing.

4.     Debit or credit the
accounts as instructed above. 

Examples

A company buys $500
in land with cash.

·       
Cash is a Debit account. Since it is decreasing, we would credit this
account by $500.

·       
Land is a Debit account. Since it is increasing, we would debit this
account by $500.

·       
Debits = Credits

A company sells
$1000 in products on credit.

·       
Sales is a Credit account. Since it is increasing, we would credit this
account by $1000.

·       
Accounts Receivable is a Debit account. Since it is increasing, we would
debit this account by $1000.

·       
Debits = Credits

 

Technology has facilitated all aspects of life –
transport, cooking, shopping, studying, entertainment, you name it. Long gone
are the days of going through much trouble to do. You can watch a movie with 3D
characters stepping out of the screen and cook a healthy super fast meal in
under ten minutes. Then, you’ll need to add about 60 seconds for googling the
recipe online. You can do your shopping online, in two
clicks. You can take online courses whenever you like. 

Do
you even want to drive anymore without satellite assistance?

Al personal assistance is
now your trusty companion wherever you may go, with a sole purpose of making
your life much more comfortable. Furthermore, now you can stop wasting time in
a painfully long queue in a bank to pay your bills. 

With
online banking, you can do everything on the go, or in the comfort of your own
home just by having the right app and an internet connection. Finally!

 

The perks of online banking. 


What online banking can do for you
is amazing. Besides paying your bills, you can save, transfer, borrow,
calculate. The banking industry has evolved so dramatically that now you have
online-only banks which are becoming increasingly popular. This only goes to
show that the future of online banking is a bright one.

So
many have chosen to tap their screens to get things done, the need for an
actual brick-and-mortar facility is slowly but surely fading away.

What
makes this such an attractive option is the cost. There are no monthly fees to
pay if you fail to meet specific criteria, which is often the norm with
traditional banks.

It will
even help you avoid fees altogether, especially those that can add up fast and
sneak up on you. Furthermore, they offer mobile platforms where you can do
absolutely all you need, from looking up your balance to taking out a loan. 

Predict
the future with online banking tools.

Well,
online-only banks are indeed not the only ones that can offer such a
user-friendly service. Almost every bank that wants to remain competitive in
this fast-paced high-tech world needs to provide an e-option to its customers.
Let’s say you want to take out a loan. There are so many factors to consider.
How much you earn, how much you owe, your equity, predictions concerning your
financial future.

Undoubtedly a
time-consuming process, whether you’re doing it alone or with the assistance of
a bank clerk.

Fortunately,
now all that can be done for you, over the internet, by using online
calculators and financial tools. All you need to do is go to the chosen
lender’s website and select the calculator that suits you. 

Should
you wish to figure out what your borrowing power is, click on the icon and
begin a short, step by step process towards your property goal. Calculate what your
monthly home loan repayments may look like, find out how much you could save by
having an offset account, or how much equity you might be able to access from
your home loan.

Not
only can you calculate your home loan, but you can also get it approved then
and there – online, with detailed guidance.

Online
mortgage buyers are indeed at an advantage since they do not have to spend time
visiting different banks and flipping through countless portfolios of mortgage
options. They have the freedom to browse, cross-reference and compare at their
own pace, to make a well-informed decision in a short period of time. There are
often fact sheets, how-to videos, FAQs and the like to help the whole process
go smoothly.

Even if you experience some
problems managing your finances and feel you could use some assistance at that
particular moment, e-banking has got you covered.  

The
evolution of the system has enabled customers to have a real-time client chat
within the website itself. An Al chatbot ill provide
personalized support to clients 24/7, including consultations or advice anytime
you need it. It can even answer hundreds of customers at the same time, so
there’s no more waiting in line. 

Mobile
banking.

Today,
everything is going mobile. There’s no other way for a modern bank to have a
leading position on the market with only a website. A well designed
user-friendly mobile application is a priority. This has many benefits for both
customers and banks.

A
winning banking mobile app has to be a versatile tool to suit all customers.
There are certain fundamental features that you should be using in order to
have a stress free online banking experience. Firstly, what you need is a
simple, yet secure sign-in.

Biometric authentication technology can verify a person by recognizing voice
patterns, typing rhythm, even gestures. With a good management feature, users can monitor their
accounts, balances, transactions, and transfers.

 If
you feel you can’t resist the urge to splurge, a saving goal option will do
wonders for your budget.

An ATM
locator will save you heaps of time, so you don’t have to wander around looking
for a place to withdraw funds. These are only a few perks you get to enjoy by
always carrying your bank with you on your mobile. 

What
the future holds for online banking.

You’ve
heard the name blockchain
enough to notice it is becoming
increasingly popular, especially when it comes to banking. But what is it
exactly? Blockchain is a system in which a record of transactions made in a
cryptocurrency is maintained across multiple computers so it functions as a
ledger that numerous parties can access at the same time; it can’t be altered
and is almost impossible to hack thus it operates as a single source of truth.

As
far as banking is concerned, fraud reduction would be one of its significant
contributions to the sector.

Besides
its indisputable security aspect, it
minimizes the number of intermediaries which could reduce processing costs by
billions. It has been speculated that blockchain technology will
be the end of money as we know it since we’ll be using cryptocurrencies, which
can spell the death of traditional banking. 

A
word of caution.

It all
sounds incredibly appealing, having all you need online and managing your
finances with a click of a button. However, you shouldn’t mindlessly throw
yourself into the wonders of cyberspace without being aware of what might
happen in a worst-case scenario. In other words, once your sensitive data like your
account number are out there, they become a potential hacking target.

Hackers
are tirelessly working on bypassing security systems, and it still is a
seemingly never-ending game of cat and mouse.

Mobile
apps can be compromised, and reliability of service is not 100% guaranteed. You
never know when a bank’s online services might go down. The safest thing to do
if you are using online banking is to regularly check for malware, use unique
usernames and passwords and avoid checking accounts on a public Wi-Fi. You can
never be too careful when it comes to your life savings.

Online banking will grow on you. Who can resist saving precious time by using a mobile app or a computer to do something that would otherwise take forever to complete? 

Instead of doing your finance-related research on foot marching from bank to bank in order to find the best deal, you’ll be sitting at home, sipping coffee and clicking away to compare all the benefits banks today are competing to offer to you in particular. 

Being well informed about all the benefits and drawbacks of online banking will help you make the right decision as well as prepare you for all that might occur. 
Whatever the future may hold, one thing is for certain – it will be a better one for sure. 

Because whether you’re selling a product or a
service, starting a new business involves risk. I’ve been an entrepreneur all
my life. Looking back, I’ve relied on safety nets at every stage in my career.
I think not having the right safety net is what stops a lot of people from
pursuing their entrepreneurial ambitions.

Before
I list 13 safety nets you can rely on, I want to illuminate how they have
helped me launch, sustain, and grow different businesses.

When
I was in my early twenties, I began designing products. The first one was a
novelty baseball cap that had foam fingers you could rearrange to send a
message, like the peace sign. I ran an ad in a magazine to test the market for
demand. This only required fabric, a sewing machine, and money for the ad. I
didn’t need a safety net. I didn’t sell very many.

My
next endeavor was opening up a store in Capitola, a quaint seaside tourist town in Northern
California. This was in the 1970s. I made everything that I sold in the store
— primarily soft sculptures made out of nylon. My rent was about $150 and I
had two partners who split expenses with me. I didn’t have to borrow money
because I had saved about $10,000 before getting started. In this case, my
savings were my safety net. For the next four years, I supported myself as I
enjoyed watching the waves go by.

A
few years later, I caught a break selling my creations at a festival in
Sausalito when an individual connected me with someone who could scale my
business. Meeting Steve Askin, who was running a company called What’s New,
changed my life forever. Within 30 days, he was representing me and selling my
products to stores across the country. The orders were coming in so quickly I
borrowed $5,000 from my father so that I could hire people to help me sew, and
thus deliver on time.

It
was obvious I was in over my head, so I taught Askin’s factory employees how to
make my creations instead. This time around, my safety net were my parents. This
was also the first time I was exposed to the idea that someone else could make,
market, distribute, and ultimately sell what I originally invented. This is
called licensing, and it became my preferred business model.

The
answer why is simple: even though I’m an entrepreneur, I’m risk-averse, and
with licensing there’s basically no risk involved. Your licensee is already in
business and on the hook for the heavy lifting of product development, meaning
manufacturing, marketing, and fulfillment. In other words, they take on all the
risk.

It
took me a while to get good at licensing my ideas for products. Until then, my
wife Janice had a full time job and supported me. I also took on quite a bit of
freelance and consulting work to supplement my income during this time.

Later,
I started a business selling uniquely-shaped guitar picks. We sold mostly to
fans, not musicians. Four of us pitched in a little bit of money so we all had
equity. Soon enough, our picks were being sold in thousands of stores including
Walmart and 7-Eleven. We became a Disney and Taylor Swift licensee. Getting
into Walmart was exciting as well as daunting. We had to scale up, and to do that, we needed capital. The
bank would not loan us, so I invested my own capital (about $250,000) to
fulfill the Walmart order. This was money I had saved as well as inherited.

It
doesn’t matter how much you prepare. There are going to be unforeseen
obstacles. That’s just the nature of doing something new, which is what
entrepreneurship is all about. It’s worth it.

That
said, running out of time and money are two extremely common challenges for any
new business. You need a safety net to prevent you from an unnecessarily rough
landing.

Personally,
I like to keep it simple. To be sure, there are more complicated ways of
raising money, like working with angel investors or even venture capitalists.

1. A part-time job- I highly
recommend taking a part-time job to supplement your income when starting your
business. Find one that’s flexible and doesn’t demand five days a week for
eight hours a day. If you can find a part-time job in the industry you’re
interested in and can learn from, that’s even better.

2. Freelance work- I began
freelancing for toy companies that I approached about licensing my ideas for
products. Some eventually did license ideas from me, but the freelance work I
was offered helped me pay bills as I was learning how study product lines. I
also did freelance work for toy companies like Mattel, which included
traveling overseas for manufacturing and design.

3. Develop a side-hustle
mentality- Yes, you want to be self-employed. But there can be great value
in gaining industry experience first. Personally, I encourage you to seek out a job at a startup. I look at the time I worked at the toy startup Worlds
of Wonder as a side-hustle. It was a full-time job, but I was already dreaming
about running my own business. I volunteered for every assignment that I could,
because it was all a learning opportunity. So no, I don’t think you need to
quit your day job right away. Your mindset is what’s most important.

4. Choose a partner wisely- If you’re
passionate about becoming an entrepreneur, you will need the support of your
spouse. After I quit Worlds of Wonder,
being able to depend on my wife Janice was instrumental. I earned income as a
freelancer and through temporary gigs, but it was really having the freedom to
fail that made a huge difference.

5.
Consulting- Worlds of Wonder hired me to be a consultant after I left. The
pay was great and I was also able to submit my ideas to them. And although
I didn’t license anything, I was once paid a large holding fee of about
$15,000.

6. Stay lean- Like I
described above, I started a guitar pick company with three other friends by
investing our own money. I believe two of us put in $10,000 and the other two
put in about $2,500. We grew from there.

7. Find a business partner- I’ve been
running my coaching business inventRight with my business partner Andrew Krauss
for 20 years. What’s truly amazing about this venture is that we didn’t put in
one dollar. We produced seminars for the first couple years and then started
selling coaching online. We had no overhead and no costs. No risk, no safety
net needed.

8. Grants- It’s
possible to get grants from the government to start your business. The process
is not complicated, but it must be done correctly. Entrepreneur
contributor Kedma Ough has written at length about how to do this, including here, here and here. 

9. A loan from a friend or family- Personally, I find it very nerve-wracking working with friends
and family, especially when borrowing money is involved. I don’t recommend it.
 

10. Crowdfunding- I
absolutely love this business model. Pre-selling an idea through crowdfunding
allows you to raise capital to start your business with. The major issue is
that people think they have a money problem, but it’s really a knowledge problem. This is why so many crowdfunded
projects that raise oodles of funds still fail to make it to market. Running a
business is not easy, even when you have capital.

11. Savings- I used my
savings to start three companies. This is a great safety net, but it requires
discipline.

12. Licensing- If you
focus on selling the benefit of your product idea first, you can spend very
little of your own money licensing. No safety net required.

13. Testing- You can
stay lean by focusing on a prototype and spending money on ads. Is anyone
interested? Today you can do this using social media platforms. Companies in
the “As Seen On TV” space run ads for products that don’t actually exist yet.
Over the years I tested my ideas at street fairs, festivals, in magazines, and convenience stores. Extremely low risk.

Before you start
pulling out your hair and not sleeping at night, create a safety net. Please
realize, you will always doubt yourself a little. And it will be rough, always.
These are the only constants. With the right safety nets, you can become an
entrepreneur without putting your future and the future of your family at risk.

“Very few startups have a firm grasp of what exactly positioning is, why it’s important and how to do it,” says April Dunford, an expert positioning consultant.
“Positioning” means the place a brand occupies in the minds of its customers. That’s important, but one of the main mistakes founders make when considering their position is doing so too late. After all, it’s easy to get caught up on the product side of things. You start out building marketing strategies, complete with innovative ideas for how to captivate a wide audience. But in fact, the most crucial decision to make in those early days, is instead exactly what your message is, and how it fits into your marketplace.

Once this has been locked in, you an work on the product to back this up, and on the marketing strategies needed to spread the word.

With this said, here are some key pointers for anyone launching a new business and looking to define his or her positioning.

Avoid head-on collisions.

In Positioning: The Battle for your Mind, their seminal book on the subject, Al Trout and Jack Ries argue that you should never compete head-on with a company that already has a strong, established position. You should always look to position your product or service as a radical departure from the norm, even if you’re operating within the same niche.

Chipotle’s opposition to industrialized farming is a good example. The company effectively sidestepped many of its fast food competitors by making integrity a key tenet of its business. However, critics may well have argued in those early days that Chipotle’s positioning was a hard one to occupy long-term in the fast food industry.

Take note of competitors’ branding strengths and weaknesses.

To determine what your business’ positioning should be, carefully analyze your competitors’ branding strengths and weaknesses. This is something that most marketing departments do when starting out, and it’s important that you do it too; be honest about your competitors if you want to avoid a potential “head-on” collision.

By filling in the gaps in the service your competitors provide, you may find that your competitors are less your competition and more your means for drawing more attention to your niche. This is why clothing shops and restaurants often congregate at

the same location in cities. As long as their offerings differ, they can benefit from their competitors’ overflow, especially at the start. (For more tips on competitor analysis, see this SEMrush blog)

Lyft is a company which effectively sized up its competition, Uber, and used its analysis to carve out a large share of the market. On the surface, these are two companies offering similar rideshare services, but  Lyft quickly sized up Uber’s reputation as an enterprise with some ethically dubious practices. Accordingly, Lyft focused on offering a friendlier service which both encourages interaction with drivers and passengers, and introduced carbon-neutral rides and bike shares.  

Work on your positioning statement.

Back in the 1940s, marketing was comparatively easy. If yours was a less competitive market, you simply had to provide some clear text, explaining the features of your offering. In the 1950s and 1960s, things got a little harder as images began to define which products would draw the most attention and see the most success.

Since those early days of marketing, things have come almost full circle again — because establishing exactly what your product or service does is once again crucial in a world that’s chock-a-block with advertising. Your own statement must be concise and focus on one or two key attributes. It needs to differentiate your offering from the competition’s and target your ideal audience.

Amazon’s positioning statement form 2001, when the company mostly sold books, is an often-cited example of an effective positioning statement: “For World Wide Web users who enjoy books, Amazon.com is a retail bookseller that provides instant access to over 1.1 million books. Unlike traditional book retailers, Amazon.com provides a combination of extraordinary convenience, low prices, and comprehensive selection.”

Wow, that’s one positioning statement that’s changed. But in your own case, don’t take your positioning statement lightly, as it will end up forming the core of your marketing activities.

Provide evidence.

While this might not be a priority in establishing your positioning, being able to back up the claims of your positioning statement and related materials will be invaluable.

This can be as simple as linking to customer reviews on your site, or linking to more detailed reports on how your service or product operates. Giving your potential customers the ability to deep-dive into the intricacies of your offering is essential even if their first exposure to your company is merely a brief statement of services.

Neil Patel has said that optimizing your case studies to contain more high-quality facts that back up your claims, while reducing unnecessary word count, is crucial for increasing your conversions. The use of case studies affects conversion rates regardless of what industry is being marketed, Patel has said.

Gathering enough reviews to impress your customers before you’ve launched can be difficult, of course, but some case studies and carefully selected pull quotes should tide you over until you’ve on-boarded more customers. If you aren’t sure how to write your first case study, AutoGrow has provided this useful guide. 

While positioning statements for the same kind of product from multiple companies may vary, segmentation further varies how a business positions itself. If you want to know more about segmentation, you can see a useful article at Insane Growth; but in short, you may find that dividing your messaging among two or three key groups of customers (whether that be by customer persona, location or any other useful parameter) can do wonders for your conversion rates.

McDonald’s, for instance, uses segmentation to great effect. Its breakfast ads tend to target men of working age men, rather than children, and its international locations contain both products and advertising geared toward local tastes and traditions. Its McCafé segment is also trying to take customers from Starbucks by targeting younger, more health-conscious students and offering a location often open 24 hours.

This is what’s meant by “microscale product positioning,” and it is likely to form some of your own marketing department’s work in the future; but it is worth considering now if your offering requires a more segmented audience from the get-go.

Conclusion

As Abraham Lincoln once said, “Give me six hours to chop down a tree, and I will spend the first four sharpening the axe.”

Positioning is the first hurdle to startup success, but many entrepreneurs and marketers fail to treat it with the care they offer their general marketing and product development activities.

If you are going to dedicate a large proportion of your working hours to a business venture, make sure you figure out your positioning before you do anything else. If handled diligently, intelligent positioning won’t just ensure that you have a fighting chance at survival, but it will reduce the impact of your competition, and help you avoid the need to make drastic changes to your product or services over time.