Cake cafe owners with open sign

5 Tips to Consider when Launching your Own Business

If launching a business and being successful at it was easy as entering a store to purchase a piece of your favourite cake,  more than 4% of the newly launched businesses will manage to reach the 10-year mark. 

Almost everyone’s dream is to have their own thriving business, however launching a successful business is no small feat. If you want to launch a business and be successful at it, start putting things in place early enough to give yourself a higher chance of success.

Without further ado, here are some tips that can be adapted to starting a business, regardless of what sector your business operates in. Let’s dive in.

 

Black small business owner smiling at the camera while standing in her shop. Happy businesswoman managing her clothing orders on a laptop. Young female entrepreneur running an online clothing store.
                                Young female entrepreneur running an online clothing store.

Do Your Research And Come Up With A Plan

A popular quote says “failing to plan is planning to fail”. This rings true as one of the most important aspects of doing anything. 

Nonetheless, the most important aspect of planning is to figure out the most salient questions of what, why, how, and when. The Answers to these questions are important as they will help you figure out and understand what makes your business different. You can then follow up with lots of research. Coming up with a plan without research is as bad as not having a plan. 

A plan for a new business has to anticipate and address almost any question that may arise during the actual process. 

That said, a business plan should encompass the business idea/product, target audience, market conditions, and competitor analysis, structure, and source of funding. It will act as a sort of map for your business, validate and put your thoughts and hopes into writing. Moreso, it will convince and answer questions from anyone who wishes to commit to your business. 

Your plan should cover and address all and any questions such parties may have. Questions like what product/service to sell and how it will be sold. How the business is structured, and how the capital will be gotten and used. What other requirements are needed among other things? It should show that you have done your best to anticipate issues and suggest solutions to such problems beforehand.

It should also serve as a guide down the line even though you can amend it as situations change over time.

Get Your Documentation In Order

Before you proceed, your business whether online or physical should have the necessary documentation sorted before it is operational. This is to ensure it is a legal entity. 

Though the documentation requirements can be more or less. It depends on the type of business you are running or intend to run. Importantly, register the business name, and get applicable permits and licensing to ensure your business is not disrupted nor resources wasted when you begin operations. 

You should also ask questions and seek expert advice to make sure that these documents are filed properly and all requirements are understood concerning the structure of your business. In many instances, the requirements or documentation for a business varies at each level of government. 

It can also be based on structure, so getting proper help will ensure that this is reflected in how it is done.

Get Your Finances Together.

Once you get your business plan and documentation in order, you can then proceed to get your finances together via savings, salary, loans from family or corporate institutions. 

Your type of business structure is what determines how you source your funding. Some will only require minimal amounts that can be gotten from savings or family and friends. While others will need business loans or venture capital financing. 

Financing your business is not just about your start-up capital or where it comes from. It is also about how you handle your profit, income, and expenses over time. Being diligent with the money for your business is very essential. Many businesses have gone down the drain as a result of money mismanagement and reckless financial decisions. The proper structure must be put in place to manage your business income and keep it separated from any other.

Be Solution Oriented

Going through the difficult process of launching or putting your business out there will tax you mentally and physically. It will involve doing a million and one things almost at the same but it doesn’t have to be so. A way is to find and join a community of doers on Swaptime that can proffer solutions to specific skills you need to grow your business

Another major tip that will work at all stages of your business is to be solution-oriented. Your business should provide a solution or solutions. The steps taken to set up your business and the way you put your business out should continually remind your audience that you are solution-oriented by fixing a e real customer pain.

This is because people usually resonate with solution-oriented businesses. Even if it means paying a premium for your service or product as you are selling a combination of value, the product/service, and brand experience which should all reflect. The best resources/tools or services are not determined by cost but rather by what return it’s giving for the amount paid. 

Customer satisfaction is the result you should pursue. That’s because the opinion of your customers will go a long way to aid the success of your business. The happiness your customers derive from your business will stem from not only the product or business but their overall experience.

So, it’s important to optimize everything and give the impression of a solution-oriented company

Never Stop Growing

This is a very important tip to always remember as change and growth are very essential to the health of any business. 

Gaining knowledge is a life-long process. A business owner should constantly research their industry, competitors, the markets they exist in and so many other areas. This puts them at an advantage and contributes to develop strategies for sales, marketing, and structure as they are the key areas of any existing business. 

Knowledge also contributes to innovation. Innovative ideas will help make your product/ service visible to your audience, and convert visibility to sales. Also, it will streamline your business process to be optimal and ensure your business grows at a good pace. 

Remember that growth is not just about new ideas or concepts. Be consistent with tried and tested methods that give results. A combination of learning and finding new ways to apply your learning is a continuous business cycle.

Woman sitting in her office smiling into her phone

9 Tips and Strategies for Pricing your Products and Services

Launching a business can be challenging. Unfortunately, figuring out strategies for pricing your products and services is no walk-in-the-park either.

Pricing is one of the most critical business decisions because it directly impacts your sales volume.

Setting your price too low could cause a setback in your revenue, and if you put it too high, you may miss out on valuable sales.

Most entrepreneurs hardly ever bother so much about their pricing strategy. Instead, they probably check the price of a similar product online and then adjust the price by a few margins before it is ready for sale.

Price is a powerful growth lever when you set your pricing right. So, if you are a new business owner and find coming up with a price for your product or services quite intimidating, here are nine pricing strategies to help you better understand how to set the correct prices.

 

1. Know your costs

Products and Services are pretty different when putting a price on them. However, the primary thing is to know your costs and then consider your profit. 

For a product, this means understanding the cost of production, process, overhead, raw materials, human effort, packaging, etc., and then mark-up the product and how many you need to sell to turn a profit. 

On the other hand, services give you great flexibility in setting your prices. The downside is that there is no formula for setting prices and applying them in your business. 

Pricing services can be more complex than pricing products because you can often calculate the cost of creating a physical product. In addition, services are more subjective to the worth of your staff’s expertise, rent, and time value. 

At the very least, you want to ensure that your price covers all direct or indirect costs.

2. Competitive Pricing

Instead of considering costs or customers, competitive pricing focuses on the existing market for your product or service. 

Your homework is to research your competitor’s pricing strategies to determine your price range. The range should have both high and low ends.

3. Rate-based Pricing

This is also known as hourly pricing and falls into the Service providers’ category. It is common to find Consultants, Freelancers, and coaches using this pricing model to trade their time. 

The good news is that you get paid for every hour of work, which is very lucrative. However, clients are not so keen on hourly pricing because they are wary of the service providers who might want to work more hours to make more money instead of being efficient.

4. Price skimming

Skimming introduces innovative products at a high price until there is market competition, and the price gets reduced over time.

Think of smartwatches. The launch of a new type of smartwatch can be set to a high price by the manufacturer since there is no other competition yet.

This pricing model is suitable for businesses that are entering emerging markets. As a company, It allows you to latch on to early adopters before future competitors join an already-developed market.

5. Penetration pricing

This pricing strategy is the opposite of skimming. It involves starting at a low price to penetrate an existing market. The price is set low to attract customers and gain market share. 

This strategy leaves consumers spoilt for choice and the flexibility to switch between brands offering the same product at a lower price. The advantage of this strategy is that it can promote brand loyalty effectively.

Once the objective of being at consumers’ top of mind, the price is then raised.

As much as this strategy can yield success, you should be aware of the risk factor, like taking losses upfront to have a firm footing in a market.

6. Value-based Pricing

Value-based pricing centres around how much customers are willing to pay, as opposed to what it costs to create a product or render a service. The entrepreneur has a massive advantage when value-based pricing is implemented well.

To do this, you must understand your target market and competitors’ pricing.

This focuses on the price you believe customers are willing to pay based on the strength of the benefits your business offers them.

If you have clearly-defined benefits that give you an edge over your competitors, you can charge according to the value you offer customers. 

Though this approach can be profitable, you can lose potential customers whose purchases are determined only by price and give room for new competitors.

This pricing model is best for merchants who offer unique products or SAAS.

7. Premium pricing

This pricing is for businesses that create top-quality and unique products and market them to high-income earners.

If you want to adopt this pricing strategy, be sure you are developing high quality that customers will perceive to be high value. 

Along with this pricing, you will likely need to develop a brand strategy that positions your product as “luxury” or a “lifestyle” that will appeal to your ideal consumer.

8. Pay What You Want Pricing

Think of this as a donation-based pricing strategy. 

It allows the customer to decide the price of the product or service they are paying for.

Including the “suggested price” as part of your “pay what you want” strategy can increase your profit margin more than when you set a price.

9. Consider other factors

Asides from the cost of production, there are other price determinants you need to factor in.

For instance, the impact of VAT on your price, price differences for different areas or markets, online price, etc.

Do you intend to reduce product profit margin to get a higher margin on others? What about payment for customers, whether instant or in instalments? 

All these are things you need to consider. But, most importantly, focus on your cash flow.

Stay on your toes

For sure, prices cannot be fixed for long. 

Things change, be they demand or inflation in the economy, influencing your price. Therefore, you will have to adjust your price to keep up with the market. 

Be abreast of current trends in your market and take customer feedback often to ensure your prices are favourable.

All these different strategies have pros and cons, but knowing your needs ahead will inform your decision on which methods suit your business.

 Above all, be sure the strategy covers your costs and includes a margin for profit.