It’s true, there are many things small businesses can’t afford. Advertising, at hundreds or thousands of dollars per inch for newspapers and magazines, is one of those unaffordable things. You might think that because you can’t afford print or radio advertising, you can’t afford advertising, period.
While it may be that you can’t afford traditional advertising, even if you don’t have a website you can take advantage of e-mail marketing to increase your revenue from existing customers, and even find new customers. The secret to making the most of e-mail marketing is simple: doing it well.
Creating a customer contact list can be as easy as putting a pad of paper next to your cash register. You can ask for as much demographic information as you like, but the less information you request, the more people will sign up. Most people will be willing to give you a name and e-mail address.
You’ll need to purchase a program that supports e-mail marketing in order to comply with spamming regulations. The program will allow anyone who has given you permission to send them e-mails to be entered into the program. Most will also include an e-mail designer with attractive color schemes and easy-to-use templates. This program will double as a way to manage your contact list. Web-based e-mail marketing programs are offered by most web hosting companies and are very inexpensive.
Once you’ve gotten your list started and you’re ready to start sending messages, follow these guidelines to make your efforts more successful:
Do: Tell customers why to sign up. Will they receive special discounts? Sale announcements? Special event invitations? Updates?
Do: Assure customers that you will not sell or share their contact information with third parties.
Do: Consider offering a “thank you” to customers who sign up. You can e-mail them a code for a free or discounted piece of merchandise, or something more personalized like a gift for visiting you during their birthday month. (Note: For this last option, be sure to ask for the customer’s birth month and day, but NOT the year, when they sign up.) Tell people about this incentive when they sign up, and this will encourage them to open the first e-mail they receive, which hopefully sets a pattern of interest in your e-mails and keeps you on customers’ safe lists.
Do: Tell customers your e-mail address so they can add it to their safe lists. Also, be sure to include a reply-to address in every message.
Do: Tell customers how often they will receive messages. (Never send more than one e-mail per week, unless the content is completely unique.)
Do: Keep your messages short (preferably under 300 words). Organize your messages in lists and short paragraphs, like a web page. Use formatting such as bold type and headings to help customers find the most important information quickly.
Do: Get right to the point in your writing. If you’re having a sale, don’t waste a paragraph introducing it. Remember, most people will scan your message rather than read it word for word. That said, be sure to include exceptions, expiration, special conditions, and other details of any offer you describe in an e-mail.
Do: Encourage your readers to forward the e-mail to friends who might be interested. Also, include an opt-in link so that people can remotely subscribe to your list. Your e-mail marketing program will help you with this.
Do: If you aren’t a good writer (be honest with yourself!), find someone else in your company to write your e-mails. If you have to, hire someone who can do the job well. If the writing is awkward, misspelled, or otherwise unprofessional, readers will be distracted from your message.
Equally as important as what to do is what not to do:
Don’t: Sell or share your customers’ contact information, under any circumstances.
Don’t: Include duplicate text in your messages, or customers will quickly stop reading or even opening your messages. Most people can recognize a quick “cut and paste” and they won’t appreciate it. If you just want to remind customers to visit your business but you don’t have a special event to advertise, consider running an e-mail promotion like a special discount. Don’t send a message unless you have something to offer.
Don’t: Paste articles or secondary source material into your messages. It just makes the message overly long. Instead, add a sentence or two and a hyperlink to the original source.
Most small businesses start with loans or investors. True, a small percentage of business owners use their own money for start-up costs, but that is not the norm. Most of us are not independently wealthy. We start with a great idea, a few dedicated individuals (usually ourselves and a few friends or family members), and a loan to get us going. This means that from minute one, the business is in debt.
It is standard to borrow enough money to operate the business for the first year with little to no profit, even though we hope we’ll have profit from day one. However, getting enough money for the whole year is impossible for most of us. This means we have to find other ways to make ends meet, which usually translates to underpaying employees and cutting corners on expenses.
My mom bought her business (a bakery) for nothing from the previous owners, who wanted out in the early 1990s and didn’t think the business was worth anything. At the time, we were serving only wholesale clients (restaurants), and our profit margin was ridiculously small. The building was leased, but we did acquire some basic cooking equipment, including two convection ovens, a walk-in refrigerator, and a few large mixers. When we decided to expand the bakery into a bakery/café with a dining area, we needed a lot of new equipment.
We borrowed as much money as we could using my mom’s house as collateral. Most banks will only loan you a portion of the equity you hold. In our case, we were only able to get $23,000 to start the business. That may seem like a tiny sum to fund a new business, and it is. We were forced to make tough decisions about how to spend the money. The portion of the building that would become the café needed lots of work. We also needed an espresso machine (commercial ones start at about $6,000), tables and chairs, counters, display furniture, and cash to pay our staff until we could get going.
We spent over $12,000 on rent during our first year in business, which was more than half of our start-up money. Though we inherited some equipment from the previous owner of the bakery, we were surprised at how quickly the money went, even with my family doing most of the work ourselves.
When we first opened, we had nothing in the bank. We were depending on our new income to help us pay off the loan and our new, larger bills. This meant that we were always a few steps behind our expenses. If we had a slow week, bill couldn’t be paid.
Small Businesses MUST Juggle Cash Flow & Expenses
A big part of running a small business is juggling cash flow and expenses. It is necessary to rob Peter to pay Paul, on a daily basis. In the case of my family business, we struggled through the first two years and paid off about a third of our start-up loan before we decided to borrow more money. Sometimes, loan money is used for start-up or expansion, but in small businesses, loans can also be useful just for improving your financial situation, paying off bills, and bridging the gap during slow times.
In the seven years since we opened, we’ve borrowed money three more times. But, we’ve managed to pay off the original bank loan and we’ve made capital improvements along the way. Every business has moments when cash flow is nonexistent and it seems to be circling the drain. Even soft drink giant Pepsi Cola declared bankruptcy in the 1920s and then recovered. Slow times and financial turmoil don’t have to mean the end, even for small businesses. Before you think of giving up, it’s important to know your options. Whether you need a new budget, an adjusted business strategy, a line of credit, or just more money, step one is believing that success is possible. Don’t be too quick to decide that it’s not worth it.
Note: If you’re interested, the bakery’s name is La Dolce Via, located in St. Louis, MO. View our website.
Small Businesses Need Credit
In his February 24th speech to Congress, President Barack Obama said the solution to our economic troubles lies “in the imaginations of our entrepreneurs and the pride of the hardest-working people on Earth.” As of 2003, well over 12.2 million Americans were self-employed. President Obama vowed to make it easier for entrepreneurs to get loans, which may be the only way for us to weather the storm of a struggling economy. Of late, many of us have seen a reduction in available credit that threatens to stop our business’s growth dead in its tracks.
When you own a small business, your life becomes a perpetual to-do list. Not being able to get loans and financing adds insult to injury. It seems as though the system is against us, but in fact the US creates and fosters more independent businesses than any other nation. Now that President Obama is working hard to give us the financial tools for success, it’s up to us to use them wisely.
Inspanning and Outspanning
“Inspanning” is a term of African origin meaning “to yoke an animal.” Inspanning is the process we go through when we start a small business. Slowly we become yoked by the business, which seems to take and take until we feel like we have nothing more to give.
This blog is about “outspanning,” or unyoking yourself from the stress of your business. In its original South African usage, outspanning referred to the unyoking of an animal. We’re going to focus on unyoking people from the oppressive struggle of making ends meet without a surplus of cash. For our purposes, “small business owners” may also be heads of their household, church, or even a small town.
By creating a safe place for small business owners to talk about their struggles and share solutions, we want to help you unyoke yourself from the stress of living and breathing nothing but work. We encourage our readers to share the tricks you’ve discovered for making your business run more smoothly and for relieving stress. How do you keep yourself going every day?