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Strategy

Another happy client

Businesses face difficult decisions every day about what direction to go.  I was fortunate enough to help Eskenazi Health with a strategy analysis that involved an opportunity cost analysis and risk matrix to help their form their decision.
eskenazi healthEskenazi Health is a comprehensive safety-net public health system with an acute-care hospital, a network of primary care centers, mental health services, community education programs, and many other services. Located in downtown Indianapolis, Eskenazi Health’s mission is to advocate, care, teach, and serve with special emphasis on the vulnerable populations of Marion County.

See a need, fill a need

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Often entrepreneurs come up with their business idea because of their own personal experiences or that of someone in their circle of friends & family.  This is a great strategy but sometimes doesn’t tap into a market large enough.

In episode #850 of Planet Money, The Fake Review Hunter the hosts interview Tommy Noonan, creator of SupplementReviews.com.  SupplementReviews.com is a highly popular website that provides unbiased user reviews of health supplements.  However, Tommy soon found that there were reviews that were suspiciously positive.  Because Tommy’s entire website was based on authentic user reviews, fake reviews became an existential threat.  After a lot of research, he found that some of these reviews were being written by the supplement companies themselves.  He uncovered so many fake reviews that he started noticing a pattern; almost like a modus operandi.  They were often single product/brand reviews, used fake pictures, lots of reviews in a short period of time, and/or only had one review.  Sometimes the “reviewer” would give positive reviews for one brand and negative ones to competing brands.

This is when Tommy had his a-ha moment.  If his website had fake reviews, others would also probably have them too.  So he created another business that aligned with one of the juggernauts of the internet, Amazon.  Tommy’s site which uncovers fake reviews is called ReviewMeta.com.

 

How to find a need

As mentioned at the top of the post, most rely only on their personal experiences or that within their network.  Sometimes the need is obvious.  For example, at a 7-Eleven in Shirley, New York one 7-Eleven sells more coffees than any other franchise in the US; all because of one store manager than knows virtually every customer’s name and greats them.  No special location mojo or customer flow algorithm, just old fashioned customer service. You can read more about it in my post Competitive Advantage and Coffee.

Other times it is not that obvious.  In that case, you have to hustle in a different manner.   How do you do more “work” when you’re already working to the bone?  Find efficiencies:  know your customers, know your competitors, lower your expenses,  by working to learn more doing more research in episode #700 of Planet Money, Peanuts and Cracker Jack.  In Boston’s Fenway Park, Jose Magrass is the top seller.  One year, on opening day he sold 500 hot dogs, $2750 worth of hot dogs in a single game.  In fact, Jose has been the top seller for over 5 years.  Part of his secret?  He has a spreadsheet where he analyzes many factors beyond just the weather such as what his competing vendors are selling and what fans are likely to purchase depending on the price of their seats.  For example, behind home plate diet coke sold better because possibly that is where the “vain people” sit.  That kind of analysis is impressive.

Another Happy Client

sans bar

Sans Bar is a one-of-a-kind sober bar in Austin, TX.  Their mission is to provide a safe, sober environment for adults to celebrate life while promoting personal and social wellness.

I had the pleasure of creating financial projections for founder, Chris Marshall.  With the help of this important document, entrepreneurs can see how much they need to make and save in order to meet their financial needs; in addition to many many other uses.  You can read more about the importance of a financial plan.

The Importance of Planning

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Excess inventory, cost management, and other issues are a reality for most businesses.  When uncontrolled, a business can face inadequate cash reserves and even bankruptcy.

To mitigate these issues, proper industry and market research coupled with financial planning for contingencies is crucial for any business.  Whether you’re in the ideation phase or are already up and running, knowing how much to allocate to the various activities a business engages in is difficult so contact me and let’s create a strategy that works for your business.

Festivals, Farmer’s Markets, Conventions, oh my!

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Ultra Music Festival – Miami, Florida

It’s summer and festival season is here.  Events are big business with over 87 million people attending trade shows, conventions, & conferences; while 32 million people attend music festival.  Some annual industry and market stats:

  • Trade shows, conventions, conferences
    • Number: 284,600 annually
      • There are 248 convention centers in the US with a total of 56.29M prime exhibit space.
      • The majority of conventions (21%) have 1,000 – 2,499 attendees
    • Participants: 87,728,000
      • Average attendee spends 8.3 hours viewing trade show exhibits
      • 81% of trade show attendees have buying authority
  • Music festivals, fairs, and other festivals
    • Number: 1,413 annually. Music festivals alone total over 800 annually
    • Attendees: Over 102 million people annually. 32 million people go to at least one music festival annually.
      • Attendees spend on average, $207 a year on live music events and digital music/streaming
      • 1/3 of all festival fans go to more than one festival per year
  • Farmers’ Markets
    • Number: +8,400 markets that convene regularly
    • Attendees: 310,800,000
      • Farmers’ market shoppers spend a mean dollars/week was $25.38
      • Shopper visit an average of 6.12 times/month

 

What It Means To You

Events are targeted.  So attendees are in your market, many in your target market.  Renting a booth, depending on the event, can be fairly inexpensive.  This is an economical means of raising awareness for your product/service for the following reasons:

  1. You are not locked into a commercial lease contract
  2. Can test the viability of your product/service
  3. Get targeted market feedback

Some of what you may need depending on the event:

  • Mobile merchant services such as Square
  • Email collection method
  • Banners and booth appeal
  • Ready-for-market product/service
    • Or compelling marketing materials (videos, images, samples) of your product/service.

Read more about festivals and marketing.

Contact me and let’s see what strategy works best for your business.

The importance of niche-ing

Question:  How should new products/services be created?

A)  Make a novel untested product/service then find customers for the product/service?

Or

B)  Find a group of customers, find one of that group’s unmet need, then create a product/service to address than unmet need?

Answer:  B

Reason:  The development process of the product/service will take time irregardless of choice A or B.  However, with choice B, the likelihood or having to rework the product/service to make it more closely meet the needs of the target market is lower.  Also, with choice B, you have a better idea of the size of the target market.  Having a market large enough to grow your business is very important.  More on that below.

A great example of choice B is Girls Auto Clinic.  Girls Auto Clinic is a brilliant combination of female-focused auto repair shop and salon.

Founder Patrice Banks felt what many of us feel when car issues come up:

“I felt like an auto-airhead. I hated all my experiences going in for an oil change, being upsold all the time for an air filter,’ she said. “Any time a dashboard light came on, I panicked.” – Patrice Banks, Girls Auto Clinic Founder

Of course many people come up with business ideas like how Patrice did:  through personal experience.  However, where most people fail is that their own experience might be too niche.  In other words, the market might be too small.  How do you know if your market is too niche?  Market research.  Market research is a process of analyzing factors such as demographics, purchasing habits, direct and indirect competitors, macro and microeconomics, and other elements.  As much art as science, thorough market research is a critical step before moving forward with any concept.

Market research is one of the many services I offer at the most competitive prices in the industry.  Contact me and let’s find your niche for your new business.

Market adjustment in the retail space

According to a new Credit Suisse report, up to 25% of U.S. shopping malls may close in the next five years.

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What are the reasons?  Of course Amazon and online shopping is a major reason.  However, another factor is mall overexpansion.  Currently there around 1,200 malls in the US.  Between 1970 and 2015, the number malls grew more than twice as fast as the population.  As such, it is predicted that within the next 10 years, that number will decline to 900.

Of course brick-and-mortar retail stores will never completely disappear because of the needs listed above and because of the fact that humans are social by nature.  Just the type and make-up of retail stores will change.  Possibly pop-up stores (a strategy utilized with great effect by Halloween stores) will become more common?

 

Another considerationmacys_dep_store

What to do with vacant buildings?  That’s a lot of land that could be used for other use.  Maybe mall owners will lower their rental rates.  In some areas of Manhattan, retail rents have declined 10-15%.

More housing? Closures from major chains like Macy’s and J.C. Penney are pouring up to 37 million square feet of space back into the market.  That could reduce some housing costs.  Although, generally more expensive housing markets have greater discretionary spending which is often used for shopping.  Also, the time and cost to demolish existing structures, rezone, and rebuild into residential properties along with its infrastructural linkages is not insignificant.

Some mall owners have indicated that vacant properties will be renovated and updated in efforts to attract new tenants and raise rental rates.

 

What to do?mindmap-2123973_640

Who knows that the future will bring but keep in mind that juggernauts like Walmart, Macy’s, and Sears are affected.  So starting a service or online store that doesn’t compete with what Amazon sells is a safer option.  Brand your own product (e.g. Bonobo, Dollar Shave Club) and controlling your own distribution is another option (of course be aware of knock-offs).  B2B businesses (e.g. no one buys industrial components at malls) is insulated from mall closures.

Services such as dentistry, restaurants, car mechanics, large difficult-to-ship products such as mattresses, etc. will remain (so far) an insulated industry.

Analyses such as what I have done above is a small and cursory part of the industry/market analysis and strategy consulting services I provide to clients.

 

Another happy client

strategic alliance

Seattle based Strategic Alliance Consulting provides network system architecture and application solutions to medium and large scale businesses across the country.

I am providing Strategic Alliance with strategy consulting which includes financial planning, marketing, and organization development.

 

Live by the sales projection, die by the sales projection

Creators of the board game The Contender: The Game of Presidential Debate raised $140k on Kickstarter but ended up $40k in debt due to inaccurately predicting future sales.  This caused them to order more games than they could sell and ultimately caused them to go into the red for some time.

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So how do you predict sales?  Forecasting is as much art as it is science, finding a right method that is accurate will greatly enhance the efficiency and profitability of any business:  over-ordering materials, under-allocating resources, etc. all undermine a company’s operations.

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The selection of a method depends on many factors—the context of the forecast, the relevance and availability of historical data, the degree of accuracy desirable, the time period to be forecast, the cost/ benefit (or value) of the forecast to the company, and the time available for making the analysis.

When a company forecasts for a particular product, it must consider the stage of the product’s life cycle for which it is forecasting. The availability of data and the possibility of establishing relationships between the factors depend directly on the maturity of a product, and hence the life-cycle stage is a prime determinant of the forecasting method to be used.

All my business plans come with projected financial statements.  I use a combination of industry growth data, historical sales data (if my client has any), seasonal adjustments, advertising expenditures, and other factors pertinent to my specific clients.

Which method is right for you?  Send me an email and let’s figure out how to plan for your company’s future.

 

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