The FreeAgent Blog
Posted on 12 December 2013 by Matt Perkins - Jump to comments
It's the most wonderful time of the year... for networking! During the festive season, opportunities to network with other business owners are abundant - Christmas parties, awards ceremonies and events seem to pop up everywhere.
However, if you are one of the many people who cringe at the thought of face-to-face networking, it's hard to think of these events as a golden opportunity for your business, and far easier to dread any potential awkward conversations! Fear not! This guide to the 'dos and don'ts' of face-to-face networking will help you to make the most of the festive season for the good of your business.
- If you're standing on your own in a room full of strangers feeling nervous, think about how you would feel if someone came and introduced themselves to you – pretty relieved eh? So pluck up some courage, look around the room and you are guaranteed to spot plenty of people in exactly the same position. Everyone's a winner!
- Have an 'elevator pitch' in place – but be very careful not to be too rehearsed or you'll sound insincere. Use it only as a guide to quickly and effectively explain what your business does and what opportunities/partnerships you are looking for.
- Have plenty of business cards on you, but more importantly, make sure you collect other people's. It is often a good idea to offer your card during a conversation, that way the other person either feels compelled to offer you theirs, or it will at least give you the lead in to ask if it is not forthcoming!
- Make sure you follow up quickly after the event – a quick email to say 'nice to meet you' or even better – send a LinkedIn invite and build your network of contacts at the same time!
- Butting into existing conversations is the worst of networking faux pas. There is nothing worse than someone jumping in with a big 'hi!' when you are mid-conversation in a useful discussion – don't do it!
- Even if you are really enjoying a conversation with someone, don't hog them for too long or you could end up missing lots of other potential contacts in the room (or making them miss some)! The best way to network is establish a mutual interest, make the connection (exchange cards) and arrange to follow up over a coffee or phone call away from the event at a later date.
- Don't do all the talking! You can gain a lot more information and assess a potential partnership/opportunity by listening to what is being said.
- Don't waste time stuck talking to someone you have no common ground with. Don't be afraid to step away from the conversation. You should do it tactfully and politely - perhaps introduce someone else in the conversation and step out - but be decisive.
And one final note on networking – remember, you aren't just selling to the people in the room! Every single person there will have their own personal network. Make a good impression using the tips above and they are likely to be happy to introduce you to people outside of the room – that's what networking is all about!
Matt Perkins works in FreeAgent's Business Development Team, and spends his days travelling the country to meet small business owners and organisations; in fact he does more networking than a fisherman's repair service.
Posted on 30 July 2013 by Emily Coltman - Jump to comments
It's a hard task for a business to put a price on its products and services. After all, you can only charge a price that customers are willing to pay, but you also need to make sure that your prices are covering all of your costs and meeting your own business goals.
So how to find that right price? Here are two simple pricing techniques that can help you make sure that you’re covering your costs:
Cost-plus pricing method
At a basic level, your price should cover all of the costs of your product or service, otherwise your business will lose money. You can use your costs to set your prices with a technique called cost-plus pricing.
To calculate your price using the cost-plus technique:
- Add up all the costs associated with selling one unit of your particular product or service. Don’t just include the materials you used to make the product, but also delivery, postage, and a share of general business costs such as accountancy fees, and heat and light. Don’t miss out your own wages or drawings, either.
- Once you’ve added up all these costs, think about the “mark-up” you want to charge. This, broadly, is how much profit you want to make. On a product that costs £10 per unit to make, if you add a 20% mark-up this will be £2, so the sale price per unit will be £12.
What mark-up should I use?
There is no right or wrong answer about what mark-up you should use in your business - average mark-ups vary from industry to industry, so for example, check out this guide of retail mark-ups to see how diverse mark-ups can be. The most important thing is that you choose a mark-up that’s right given your own business needs and the marketplace you operate in.
If you’re looking for more detail about the cost plus pricing method, check out Joanne Dewberry’s excellent book “Crafting a Successful Small Business” This book focuses on the crafting industry, but its lessons about pricing will be very useful for most businesses.
Overall return pricing method
How much money have you put into your business, and do you want to get that money back quickly? The overall return pricing method helps you price your products with the aim of making back your original investment.
To calculate your price using the overall return method:
- Add up how much you’ve put into the business so far - for example, if you’ve spent £5,000 on the day-to-day running costs of your business and spent an additional £3,000 on equipment, your total investment would be £8,000 so far.
- Add up how much your total costs will be to produce your product or service for that year. Let’s say this is £7,000 in the first year.
- Add the two numbers together - so to pay yourself back your investment and cover all your costs, you need to make sales of £15,000.
- Divide that total by how many units of your product you want to sell, and hey presto, you know how much each unit will be sold for.
Of course, if you have made a significant up-front investment in your business, it may be unrealistic to cover all of your investment in one year’s worth of sales - to address this, you could use this same technique and split your investment cost over a number of years.
Pricing is a delicate balance between you and your customer - with these calculations, you can make a more informed decision about what price your business needs to charge, not just what the customer is willing to pay.
Posted on 26 July 2013 by Adrian Mather - Jump to comments
Altering your pricing structure is a common - and useful - strategy to use when you’re planning to grow your business. To get you thinking about your options, here are some great examples of businesses that successfully changed their prices and the approach that they took.
Got a great example of a company that achieved success by altering its pricing structure? Leave a comment or hit us up on twitter to let us know - and have an awesome weekend!
Posted on 23 July 2013 by Emily Coltman - Jump to comments
Increasing your sales volume is a key way to grow your business, but it’s also a challenging thing to do. So can you learn anything from those businesses who have succeeded in growing?
In the third part of her series of articles about growing your business, our Chief Accountant Emily highlights how three businesses successfully increased their sales volume.
1. Expanding into a new market - Tots Teas
The most obvious way to get more sales volume is to find more customers - but where do you find them? Here are a few things to consider:
- Expand locations - could you open a second location that would make your product or service available to even more customers? Is your current location the best place to get the maximum amount of customers?
- Expand your demographic - do you currently target a certain demographic with your products or services? What other similar demographics could you target to widen your sales potential?
- Expanding through franchises - If you’ve got a great business model that you think would work well for others, could you franchise that business? West Country-based children’s party caterers Tots Teas have chosen this way to grow nationwide, without the need to recruit employees or open expensive premises. Franchising is a common growth strategy among expanding businesses - and one that can achieve great levels of success.
2. Launching new products - Innocent smoothies
You could approach this either by adapting your existing product (which you may want to keep selling as it is, alongside the new product), or by launching a completely new one.
For example, drink company Innocent’s business started off as a small venture making nothing but fruit and vegetable smoothies. They’ve since expanded into making other wholesome consumables (such as veg pots, fresh fruit juices and now noodle pots) which matches their original brand vision, but also enables them to increase their sales volume.
For another great example of a brand launching new products, take a look at how skincare giant Beiersdorf started with their NIVEA cream in 1911 and has since expanded their product range into other related cosmetic products.
3. Expanding into a new country - Boutique London Lets
Taking your business to a different country could have great potential, even if you’re a small business. Boutique London Lets managed serviced apartments in London, but found that by sourcing and managing their staff online, they could quickly expand to many international markets - now 90% of their revenue comes from outside the UK.
While there is great potential for expanding internationally, these opportunities come with their own special considerations. When you’re thinking about expanding internationally, here are some things to keep in mind:
- What are the local rules and customs that you should avoid falling foul of? For example, if your business creates food products, do your current manufacturing processes meet the specific health or cultural standards that some foreign markets demand - or would you need to restructure your production line to achieve this?
- Is the language barrier a problem? That doesn’t just mean a different language altogether but also cultural nuances. Even if you are expanding into other countries where your language is spoken, it’s worth taking the time to get a native to review your copy.
- What about taking payment from customers in foreign currencies? Do you have the necessary banking arrangements in place to do that? If you don’t want to have a bank account in the local currency, look into the fees you would be charged to use a service such as PayPal to take payments in different currencies. It’s also worth checking out services like TransferWise to see if they can cut down on costs. Remember too that currencies change in value compared to each other, so you might be paid more - or less! - than you were expecting.
- And finally, what are the rules surrounding sales tax and VAT if you sell goods or services to different countries?
Hopefully these examples will give you a great starting point for thinking about increasing your own sales volume. In our next post, we’ll talk about how to balance both volume and profit margin, and the art of pricing.
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