Home » 2014 » September

Marketing Your Side Business Online, Pt. 1

How do you find businesses when you need a particular service or product? Do you pull out the yellow pages and thumb through them, looking for something relevant? Or do you quickly Google what you are looking for?

These days most people are searching the internet for products and services. Phone books are nearly extinct. We keep our phone book in the car – to use for kindling when to start bonfires (really).

Getting In Front of Your Market

It is clear that you are going to need an internet presence for your company if you want to be in contact with the customers in your market. This presence can take many forms – social media like Facebook and Twitter, free blogs, review websites, and official websites.

You can use some or all of these platforms to promote your business. This multi-part blog series is going to look at each one and show you what is most important to spend your time on.

Let’s just look at social media for now.

Using Social Media To Promote a Small Business

There is a huge variety of social media sites available now – Facebook, Twitter, Instagram, Pinterest, and so on.

Facebook and Twitter are by far the largest, so those are probably the two that most companies will focus on, but you need to go where your market is. If your target customers are hanging out on Google Plus, use Google Plus.

Companies in some industries, like the party rental business, will probably benefit greatly by posting pictures of  their work at weddings and other events on Pinterest, because that is a site that many people visit when planning a party. If customers can see and begin to visualize the benefit that your company can provide their party it will be easy for them to want to do business with you.

The consideration of whether your target market is largely using a specific social media platform is the most important factor in deciding whether to spend time using that platform.

The Benefits of Social Media

Connect With Customers

The obvious benefit to social media as a platform for advertising your business is that it is (can be) free. It is hard to beat free.

Another great feature is that social media is great for generating discussion with your market. This discussion is perfect for getting to know your customers and what they desire. Ultimately, this makes you more in tune with the needs of your customers and more able to give them what they want.

Connect With Suppliers

Social media also connects you with the suppliers for your industry. You can follow the companies that distribute the products that you use, and this allows you to stay up to date with trends in the market and new product availability.

Collaborate

Finally, social media can help you to connect with other people in your industry. If you own a canoe rental business you can connect with other canoe rental owners across the country (and world) to see what is working for them, and to gain new business ideas or approaches from their experiences.

The Downside of Social Media

Social media may seem to be a realm of infinite possibility, but there are certainly difficulties with advertising your business via these channels.

No Control

The first problem is your control over the platform. You do not have any. If you use a Facebook page as your home web page you are putting your company in somebody else’s hands. Facebook can suddenly change the rules and decide to drop your company from its site, or Facebook may suddenly close down and disappear all together. If this happens your platform and base of followers is gone. The same is true for any social media platform.

Decreasingly Free

Advertising on social media such as Facebook used to be free and easy. It was almost as if Facebook offered to advertise your company for free on the side of a truck that it would drive around past all of your target customers all day long.

These days, Facebook still advertises your content for free to a small extent, but it is almost as if they are driving the truck around in the countryside at 2:00 am. Almost nobody sees your content, even if they opted-in to receive it from you by joining your group. That is, nobody sees it unless you pay Facebook a bribe to drive the truck around near your customers.

As social media sites go public and have to pay investors a profit you can expect more of this. Sure, you might have 100,000 Facebook followers, but only a small fraction of them (think 2-4%) are going to see your post unless it gets a ton of “likes” and comments, or unless you pay Facebook to “boost” each post. This model can work really well if you have money to spend on advertising and know the monetary benefit of reaching a given number of customers. If you are starting out and have a low budget however, it is difficult to make work and is probably a waste of time.

So Many Voices

The other major hurdle with social media is the problem of getting your company seen.

It is easy for a company to get lost in the sea of other companies and people on a social media platform. Their search process is not as refined as a search engine’s, like Google, so customers have have a difficult time tracking you down when they search the social media site for you.

Once the customer does find you, there is no guarantee that they will see the content that you post to the site.

As we discussed, customers will probably only see Facebook posts that you pay to promote.

Twitter, the other major social media site, is similar. Twitter still shows everything that you tweet out to each person that follows you, but the large volume of tweets mean that your content gets pushed down out of sight very quickly. If you customer is not checking their feed right when you post they are not likely to see it at all.

This leads us to the problem of what to post to social media. People go on sites like Facebook and Twitter and Pinterest to connect with friends and family and to see interesting stories, not necessarily to learn about businesses. To earn a spot on your customer’s social media feed you will need to find a way to post engaging content that is both entertaining and provides value.

The Verdict on Social Media

Your business should have a presence in social media, but it should not be your only presence online.

Tools like Twitter and Facebook are great for connecting with your market and for presenting your company’s story in a way that others can start to trust you and desire to do business with you.

Social media can also connect you with others in your industry that you can collaborate with.

If you put all of your marbles into one basket like social media, however, you leave yourself open to getting burned by rule changes or shifts in the internet marketplace.

So, where can you look to start building an online presence outside of social media? We will take a look at some other free options in the next installment of this series, which is now available Here.

Have you had any success marketing your business on social media? Share your experience in the comments below!

The Case for Running a Rental Business From Your Garage

For the new entrepreneur looking to start up his or her first rental business it can be a crippling mistake to think that one must have a physical storefront for customers to visit.

My father and I ran our party rental business, Picnic Table Rental, out of our garage for years by delivering products directly to the customers. I am convinced that this is the best possible way to start a rental business, for four reasons.

1. Low Costs

The clear advantage to storing rental products in your garage is the cost savings. No rent payments, so you can keep more of your profits while you grow the business. Also, you remove the burden of missed rent payments for the storage space during any slow seasons.

With our business we decided to keep growing beyond what our garage could hold, so we eventually rented out a large storage facility and the business moved into its own building. For the first several years, though, the business did not have to bring in money each month to cover the rent for storage.

2. No Posted Hours

Not having a store that needs to be open at specific hours each week saves a lot of time and allows you to run the business on the side if you are already working another full-time job.

Customers can simply call to set up delivery for a rental and their calls can be returned during lunch break or in the evening. In my experience customers were fine with this setup, and it is much more efficient than keeping a building staffed all day.

3. Time Flexibility

Running a business from home not only removes the commitment of staffing a physical location each day, it also allows for a flexible working schedule.

At Picnic Table Rental If we wanted to take a vacation for a weekend it was easy to let inquiring customers know that we did not have any inventory available on those particular dates. With no store to staff and no deliveries planned, we were free to go on vacation.

Occasionally we would still deliver some rentals for that weekend when we went on a short vacation. Instead of delivering the items one day and picking them up the next, we would arrange with the customer to have the product delivered on Thursday evening and picked up on Monday evening while only charging them for one day. This allowed us to still bring in money for the business while also getting a weekend away.

4. No Commute

In the years when the business was run from our garage it was glorious to walk out of the house to the garage, load up the truck, and leave for a delivery.

When we rolled in late at night after a busy day we could park the truck and go to bed without having to stop at a storage facility first.

If we needed to do some cleaning or maintenance on our products we could fit that in between other tasks around the house.

These are small conveniences that I did not fully appreciate until we had a paid storage facility that was a fifteen minute drive from the house.

Keeping a Side Business a Side Business

In the end, running a rental business from your house offers conveniences that keep your side business manageable and prevent it from overwhelming you and your schedule.

What do you think? Is running a business out of your garage a good or a bad idea?

There Is No More Competition

We were driving down the highway, towing a trailer full of tents and picnic tables, on the way to deliver products to the next customer. Suddenly we saw the truck for another rental company going by in the opposite direction, and my brothers and I would boo (only half jokingly) because the other company was competition and competition had to be beat.

Except in today’s marketplace competition does not really exist.

How Business Used to Be

In the past the concept of doing business implied that your company was competing in a specific market of a specific size with a few other companies. When you gained some of the market share, the other companies would lose some.

You could beat out the competition by having better advertising. Maybe your price was even a little better than their’s. At the end of the day you needed to be the biggest dog in the market to make the best profits.

How Business Has Changed

Widespread access to the internet has obviously changed the game. In the past it was easier to get away with bad service if you were the well-known company in the market. Now the customer can instantly look up reviews about your company before they decide to do business with you.

This searchability is a good thing. Suddenly customers are able to find companies that serve a very narrow, specific niche. If I feel like throwing an 1800’s-themed party I can probably find a place to rent rustic costumes and furniture.

Instead of spending big money to advertise to millions of people on tv, only a very small fraction of whom actually want your product, you are able to market exactly to the people that want what you have to offer.

Instead of a few companies competing against each other for a general market, there are many companies that each specialize in a very specific niche within the market.

What Replaced Competition?

“Competition” is a term used loosely in today’s market. Collaboration is becoming a much stronger force, so treating any perceived competition as the “bad guys” may be a big mistake. The key is in knowing what each company’s target market is.

An Example of Rental Collaboration

Let’s say that you decide to start a party rental business, focusing on high-end parties. You rent out fancy linens, dinnerware, serving platters, and equipment and atmospheric decorative pieces for ballroom dancing. You name it Fancy Party Rental.

Your “competition” may be another party rental company, but they may focus more on middle-income families who would like to rent tables, chairs, and tents for graduation parties and family reunions. Their name is Everyday Table Rental.

In this example there may be some overlap in the products offered and the potential clients. You are both in the party rental market, but you mostly serve two different niches within that market. There may also be great opportunities for the two companies to collaborate to offer complete solutions for events like outdoor weddings and fundraisers.

While talking to a customer you recognize that they need your linens and table settings for their wedding reception, but they also need more tables and chairs. You can let them know about your recommended vendor for tables and chairs, Everyday Table Rental, whom you have a business relationship set up with.

You may even be able to offer to handle the details of setting up business with Everyday Table Rental for the customer, once you know exactly what the needs are, so that the customer does not have to worry about coordinating the two companies on their own.

Both companies can win in this situation. You might have an agreement set up so that Everyday Table Rental pays you a fixed percentage of any sales that are made when you recommend them to a customer. You get paid the commission for recommending Everyday Table Rental, and they get a new customer. This agreement would go both ways. Everyday Table Rental would also be watching for situations in which they can recommend your business and get paid a commission for doing so.

Collaboration Grows the Market

As the saying goes, “A rising tide raises all ships.”

When companies within an industry collaborate they are not simply sharing a piece of the pie that represents the market. They can actually grow the market, making the pie bigger.

Work done well gets attention. The party-goers from our example above are going to see the wonderful setup at the wedding they will ask about the suppliers. They might learn about Fancy Party Rental and Everyday Table Rental for the first time. They did not know that the rental market even existed beforehand, but now they have seen what you can do and they can’t wait to do business with you in the future. The market has grown.

Have you seen a great example of collaboration between two companies in the same market? Share your story in the comments below!

 

 

Pricing Rental Products, Part 3: Pricing Strategies

In Part One of this series on pricing rental products we talked about determining the minimum price to charge for rentals.

In Part Two we talked about how prices affect the perception of your business in the market.

Now, let’s talk about some pricing strategies that can be used to both add value for your customers and increase your profit. Even if you already have an established rental company these strategies can be used to take your business to the next level.

Pricing Strategies

Add-On Strategy

A great way to both offer a low price on a popular item and maintain a healthy profit is to price add-on products strategically. The concept here is to price a very popular product on the low end of the market’s price range but make up for the loss in profit by charging a little more for products that are commonly rented together with the main product.

An obvious example of add-on pricing in a sales environment is the computer printer industry. Companies will practically give away their printers knowing that the customer will be buying high-profit extras such as USB cables and ink cartridges as a result of buying a printer.

The low up-front cost leads to stronger profits over time because the low-priced product gets customers to choose to do business with you, and by default they buy the higher-profit products from you as well.

The same can be applied in a rental business. Say that you find that many of your customers, when renting a tent, will also rent sidewalls to enclose the tent or lights for inside the tent. Your company may be able to offer the tent for a lower rental price by increasing the profit margins the sidewalls and lights.

Losing Money to Get Business

A similar strategy to the add-on pricing strategy is referred to as the “loss leader” strategy. This is a temporary strategy that involves selling a product at such a low price that you are actually losing money on it, but it leads extra customers into your business to spend money on other products.

It only makes sense to sell at a loss for a short period of time, so you might use this pricing strategy as a promotion to get customers when you are first starting your business, or during a slow time of year.

Grocery Specials  by Taber Andrew Bain CC BY 2.0 via Flickr

Grocery Specials by Taber Andrew Bain CC BY 2.0 via Flickr

This is a common strategy at grocery stores. They will advertise one or two products for an exceptionally low price that cannot be found at other stores, because it is a money-losing product at that price. Customers see the ad and come in to get the great deal.

While in the store, the customers notice other great deals and remember products that they need to buy. In the end the store ends up profiting more from the extra customers and selling more of other products, even while taking a hit on the profit of the marked-down item.

Reward Customers for Larger Orders

In our business the primary product was fold-away picnic tables that rented for $15 a day (at that time). Our average sale was for 3 picnic tables for one day, a total of $45. Many customers would also add an $8 banquet table to hold their food for the party buffet, leaving an order total of $53.

We managed to increase our average sale by offering a free banquet table for every four picnic tables rented.  This worked for a couple of reasons.

  • The customer often looked at this as spending only $7 to get an extra $15 picnic table.
  • The company was looking at it as getting paid extra to include a less-popular item for free. Also, many customers bumped up their orders by multiple picnic tables just to get the free banquet tables, so average sale prices went up noticeably.
  • Everybody gained value, and everybody won.

Another Illustration

When you buy a restaurant gift card around Christmas time there is usually a deal, such as “buy $100 in gift cards get a $25 gift card free!” This is a brilliant marketing idea for restaurants.

Why?

In this deal you can assume that the restaurant’s typical gift card sale is around $50. By giving away $25 in gift cards for every $100 they still manage to raise their typical gift card sale to $75 (when you account for giving away $25). The restaurant increases their average sale by fifty percent and you get a free meal out of it, so everybody wins.

Charge Less for Longer Rental Durations

The longer an item is rented out, the better the deal you should give the customer. This is a common business practice, and it makes sense. Your product is not going to make any money sitting in storage, so renting it out for a longer period of time is saving you hassle. It is a lot easier to rent out one product to one customer for three days than to find three customers to rent the product for one day each.

The level of discounting depends upon your product and the market that you are targeting, but the general idea is that a customer who rents a product for an entire week is paying less than seven times the daily rental price. You might give them a half day or full day free for renting your product for an entire week. This can help to bring in more money up front and it increases the percentage of the time that your  product is being rented out.

Are there other pricing strategies that you have seen or used? Share them in the comments below!