If you’re starting a new business or you would like to redefine or refocus a business to help improve sales or give focus, there are three major points every business should consider.
- What to sell
- Who to sell to
- How to complete that sell
What to Sell
Deciding what to sell is elementary in starting a new business or redesigning or refocusing your business.
When you are trying to determine what to sell, look at the following things:
- What you have access to
- What you are able to get access to
- What is available in the market to sell
Anyone can go to a store, buy a product, and resell it, but for your business, you need to have a general industry. For the small business that isn’t exactly sure what to start selling, a good place to start is with something you feel is interesting. You have knowledge about the product, experience with it, and an ability to go out and source good products. Your passion about the product will carry through and help you to sell better. Take the photographer who photographs landscapes. The reason they photograph the landscape is because they love it and appreciate the beauty and they want to share it with others. They can easily determine what to sell based on the quality and beauty of the photographs.
It’s important to consider whether you want to buy products at a wholesale price and sell them for a margin or if you would like to provide a service or produce a product and make money off the time and/or a margin off the products.
Who to sell to
When starting a new business or redefining and refocusing an operating business, it’s important to know what you’re going to sell, but deciding WHO to sell to is even more important. Knowing who your customer is and what is important to them is imperative to selling a product. You can create the best product in the world, but if you don’t know who to target with your product, you aren’t going to have success.
There are three major types of consumers with specific concerns. Those three concerns are:
Those who are strictly concerned about price only care about that at the end of the day. They might be attracted to your business because of your selection, but in the end, they just want to see certain prices; they don’t care about the buying experience. If you are this type of retailer or service provider, understand that about your customers and instead of focusing on service or customer support, focus on the setting the price low enough to please them. If you spend too much time focusing on service or customer support, you will incur more expenses, and your price would have to reflect that. A good example companies that focus on price is the big box stores like Wal-Mart or Target. You see lots of products and great prices, but should you ever need help, it’s rare that you can find someone, and if you do, likely they won’t know where the product is or they may not be willing to help you because it isn’t their job.
If you are the kind of business that focuses on price, you need to understand that you are up against these types of businesses where price is their driving force. You’re going to need a large selection of goods to go to.
The next type of consumer is the one who cares about service. For a smaller business you are more likely to be able to provide a greater degree of service and as such, your prices need to reflect that difference. If you’re offering greater service, then your prices need to be higher. The time you spend with them upfront or in the end after you’ve given them the product is going to be reflected in your price.
Inevitably, you will have people who come through the door and all they care about is price. It will be offensive to you when they say, “You’re more expensive than this other store.” Well, that’s not your customer. The person who’s strictly concerned about price doesn’t care about the service you can provide for them. High level of service equals higher prices and your customer needs to be okay with that.
There are customers who care about a business having a large selection of goods. Think about the last time you bought something and whether you purchased it in a big box store or an online retailer. What type of selection did they have with their products? If you’re going to give a large selection and your customer doesn’t care a lot about selection, but they care about the price, then you need to be sure that your service is reflecting of that.
As a side note, looking at a traditional retail type establishment. Consider an online business like opsgear.com. They sell all sorts of products, they have a large selection, their price is competitive, and they have a large degree of service by having a large variety of videos on their website explaining all of the products. That’s more beneficial than a traditional retail space because they are able to shoot that video one time and then that video can be reused multiple times for each product. It is possible to hit the customer who cares about product service and price selection, you just have to be careful when considering your overhead and how you’re going to sell that.
How to Complete a Sell
Once you’ve decided who your customer is, how are you going to go about implementing a strategy to target them? There are three general types of strategies:
- Specialized Business
- Service provider
The volume store is something you’re familiar with and that’s Wal-mart, Target, or other big box stores. The manufacturer to a retail and specialized store offers a high degree of service while their selection is not diverse, their service is so great and that’s who they’re trying to sale to. They’re not after someone who wants a low price and so in their goal to complete a sell, their prices reflect that service that each customer gets.
And then in a retail circumstance you many have a high-end specialty service where they offer few products but their specialized and they’re very expensive. The specialized stores make money off the low volume sale, but it has a high margin. Because they are so specialized, they are able to turn that dollar into a profit. The prime example here is if you were to walk through an upscale retail shopping environment like in Vegas or New York where there are many boutique shops wherein they have very few products which are all very expensive, and their retail space reflects that
So as you are starting a business or refocusing and redefining a current business, remember the three things to consider:
- What to sell
- Who to sell to
- How to complete that sell
If you have and questions or other observations please feel free to post them in the comments. Please feel free to reach out to attorney Michael Steck who helps Utah business owners setup, effectively manage and profitably sell small and mid size businesses.