Starting a business is an exhilarating endeavor, but building a solid, loyal customer base is a crucial endeavor that can often feel like scaling a mountain—exciting yet daunting. From the early days of the business to years after a business's birth, it's essential to continue growing and retaining a customer base to survive.
Navigating the landscape of building and retaining a customer base requires a blend of intuition, strategy, and sometimes, a bit of luck. However, the foundation of this endeavor rests on understanding your audience deeply and engaging with them in ways that resonate. This means not just seeing customers as numbers or transactions but as real people with unique needs, desires, and challenges.
Why is it so important to grow a customer base?
Growing a customer base is essential for several reasons. Firstly, your customer base primarily drives revenue and sustains your business financially. This is essential not only for your business's survival but also for its ability to grow.
A robust customer base will also fuel word-of-mouth marketing, which can lead to a ripple effect of new customers. This can give your business a competitive advantage over your competitors.
Lastly, a diverse and expanding customer base provides invaluable feedback and data, enabling businesses to innovate and adjust to market demands confidently. This cyclic relationship between customer growth and business evolution cannot be underestimated; it's the lifeblood that keeps a business vibrant, relevant, and competitive.
How to build a customer base.
Step 1: Identify your target market.
Start by conducting thorough research to understand who your ideal customers are, what they need, and where you can find them. This step involves a mix of market analysis, customer data, and even competitor insights. Look into demographics such as age, gender, income level, and geographic location, as well as psychographics, including interests, values, and lifestyle.
A practical way to approach this is by creating customer personas. These are semi-fictional characters that represent your ideal customers, based on real data and some educated speculation. Personas help crystallize who you're trying to reach, making it easier to tailor your marketing strategies and product offerings.
Remember, the more specific you are in identifying your target market, the more effectively you can engage them. This doesn't mean limiting your potential audience but focusing your efforts on those most likely to buy from you. Engaging with your target market in a manner that feels personal and relevant will set the stage for a strong, loyal customer base.
Step 2: Market your business on social media.
In today’s digital age, social media is a powerful tool to connect with potential customers and build a community around your brand. Platforms like Instagram, Facebook, Twitter, and LinkedIn offer unique opportunities to showcase your products or services, share engaging content, and interact directly with your audience. Creating a consistent, authentic social media presence can help you build brand recognition and loyalty.
Start by choosing the platforms where your target audience is most active and tailor your content to fit the platform's style and audience preferences. Engaging with your followers through comments, messages, and interactive features like polls or live videos can foster a sense of community and belonging among potential customers. Additionally, leveraging social media advertising can help you reach a broader audience and attract followers to your brand. Remember, the key is to be genuine and relatable, showing the human side of your business.
Step 3: Offer discounted or free products in exchange for a review.
Offering discounted or free products in exchange for a review can be a game-changer for new businesses looking to build their customer base and credibility. It's a strategic move that accomplishes two critical objectives. First, it gets your products or services into the hands of potential customers, giving them a firsthand experience of what you have to offer. Second, it generates honest feedback and reviews, which are invaluable for two reasons. Positive reviews can enhance your business's reputation and persuade hesitant customers. Meanwhile, constructive feedback gives you a chance to improve your offerings and customer service, ensuring that you're consistently meeting or exceeding customer expectations.
Initiate this approach by selectively targeting customers who are engaged with your brand online or those who fit your ideal customer persona. Encourage them to share their experiences with your product or service on their social media platforms, or on review sites relevant to your industry. Also, be sure to let them know that they need to disclose that they’ve received the product for free in exchange for a review. Ensure you communicate clearly that you're seeking honest feedback, as this authenticity will resonate more with potential customers than overly polished, insincere reviews. Transparency in this process not only builds trust with new customers but also strengthens your relationship with the reviewers, potentially turning them into loyal advocates for your brand.
Step 4: Join forces with another business.
Partnering with another business can open up a wealth of opportunities for mutual growth and expanded customer reach. Look for businesses that complement yours but don’t directly compete with it. For instance, if you own a bakery, partnering with a local coffee shop could be a win-win situation. You can agree on a referral system, co-host events, or even create joint promotions that benefit both customer bases.
This strategy not only broadens your exposure but also positions your business within a community, making your brand more relatable and accessible. When selecting a business to partner with, ensure that their brand values align with yours to maintain consistency and trust among your customers. Together, you can co-create value that benefits your audiences in new and exciting ways, fostering a sense of community and loyalty that goes beyond a single transaction.
Step 5: Personalize customer interactions and provide great customer service.
Personalizing customer interactions and providing excellent customer service are pivotal steps in building a lasting customer base. In an era where consumers are bombarded with choices, making your customers feel valued and understood can significantly set you apart from the competition. Start by using customer data to tailor communications and offers to individual preferences and history. This could mean sending birthday discounts, recommending products based on past purchases, or even addressing customers by their names on calls or in emails.
Great customer service extends beyond solving problems; it's about creating a positive, memorable experience at every touchpoint. This means being responsive on social media, offering hassle-free returns, and going the extra mile to meet customer needs. By doing so, you not only increase the likelihood of repeat business but also turn customers into vocal advocates for your brand. Remember, a satisfied customer is the best source of advertisement.
Incorporating feedback loops is another essential factor in personalizing interactions and improving service. Actively seek customer feedback through surveys, social media, or direct communication, and use this input to refine your offerings and service continually. Demonstrating that you value and act on customer feedback shows a commitment to excellence and fosters a deeper connection with your audience.
Step 6: Do more networking.
Networking, often underrated, is a powerful tool in the arsenal for building a customer base. It's about making connections, sharing ideas, and often, offering mutual support in various business endeavors. In the digital age, networking isn't just confined to face-to-face meetings or industry events; it stretches to online forums, social media groups, and professional platforms like LinkedIn. By engaging in these spaces, you're not only raising awareness for your brand but also positioning yourself as an active participant in your industry's community.
Start by identifying networking events relevant to your business—both online and offline. Attend them with an open mindset, ready to learn and share rather than just sell your products or services. Engage in conversations on social media platforms by joining groups related to your business niche, where you can contribute valuable insights and advice. Networking is a two-way street; it's about building genuine relationships rather than a mere exchange of business cards. Remember, the connections you make today can become your brand advocates, partners, or loyal customers tomorrow.
The bottom line.
Building a robust customer base from scratch is undeniably challenging, yet it's an achievable and rewarding endeavor that lays the foundation for your business's long-term success. Patience and consistency are your best tools. Remember, every customer interaction is an opportunity to learn, adapt, and improve. With these practices, the task of creating and nurturing a customer base will transform from a daunting challenge into an exciting opportunity to build lasting relationships and steer your business toward new heights.
Ah, the pitch. It’s the proverbial softball throw used to score your business a home run. It’s the conversation that opens the door to a customer believing you can solve their problems and lets you close the deal. Let’s talk about creating the perfect pitch to hit the ball out of the park every single time.
Types of business pitches.
Pitches come in all flavors and sizes, and your first step is to identify why you are pitching. Are you trying to introduce your business? Plant the seed for a future conversation? Win immediate business?
Pitches typically are 1 of 3 types:
Cold pitch
The elevator pitch is an example of pitching to someone you’ve never met before. An elevator pitch is a concise, persuasive summary of your business idea or proposal. An effective elevator pitch should quickly grab the listener's attention and leave them wanting to know more.
Example of an elevator pitch
"Hi, I’m Alex, founder of EcoTech Solutions. We specialize in developing innovative, eco-friendly technology that helps companies reduce their carbon footprint. Our flagship product is a smart energy management system that can cut energy costs by up to 30% and enhance sustainability practices. We’ve already gained traction with several major corporations and are looking to expand our impact. I’d love to discuss how our solutions could benefit your company."
Sales pitch
Introduce a product or service to someone you’ve had contact with who isn’t already a customer (e.g., a business peer or someone you’ve already cold-pitched). The main goal of a sales pitch is to convince the listener that your product or service will meet their needs and provide value.
Investment pitch
Pitching to potential investors requires a different approach as it involves convincing them to invest money into your business. The focus should be on highlighting the potential for growth and profitability of your business.
Recommendation
Pitching a new idea or additional products to an existing customer can be less “pitchy” and more of a suggestion. You already have a working relationship with the customer, so your goal should be to show them how your new idea or product can add value and benefit their business.
Know your audience.
It’s important to know if the pitch target is a consumer (B2C) or another business (B2B). A B2C pitch tends to be a shorter pitch process that engages the emotions of one person. With a B2B pitch, you may have to hold a discovery session before creating a pitch to understand the problem and who the decision-makers are. A B2B pitch tends to be a longer process from start to finish. And a B2B pitch uses logic, rather than emotion, as a primary part of its narrative.
Think of it this way. Suppose you are pitching personal fitness training services to an individual client (B2C). In that case, you have to understand what their goal is. Do they want to keep up with their non-stop toddler, fit into a new wardrobe, or live a healthier lifestyle? Your pitch appeals to their emotions (e.g., the joy of chasing the toddler without getting winded).
If, instead, you are pitching your services to a corporate HR department (B2B), then you must meet the needs of all the stakeholders. Emotions take a backseat to meeting business metrics (e.g., you need to show your services will increase participation in the corporate wellness program).
How to create a business pitch.
All pitches—regardless of the purpose or recipient—have the same essential pieces:
- Introduction
- Establish common ground
- Solve a problem
- Ending question
- Close the deal
- Follow-up
Introduction
This is the short and sweet part. Your name and your business name might be all you need here.
If you pitch to a group of decision-makers, consider including historical context such as how long you’ve been in business and how many clients you’ve served. This information allows those who weren’t part of the initial conversation to understand your business’s background.
Establish common ground
With luck, you can establish common ground. People like familiarity as it builds trust and promotes bonding.
If you have mutual business acquaintances, mention them. If you’ve attended the same conference, now is a great time to remind them.
If you’re pitching digitally, you can still establish a pre-pitch relationship. For example, consistently comment on the potential client’s social media posts or reshare their blog posts on your social media channels to create a connection.
Solve a problem
This is the meat of the pitch. A successful pitch is all about solving a potential client’s problem. People care about their own issues—not about you, your product’s features, or your new service protocols.
Don’t blindly pitch. In baseball, opposing teams understand the statistics of a batter before they throw the ball. You need the equivalent (e.g., how long a company has been in business, their pain points, what their competitors are doing differently) before creating your pitch.
You also want to make sure the person you are pitching considers the problem something that needs to be solved. If a business’s founder is a CPA, they’d be unlikely to pay for your accounting services.
Similarly, time your pitch when they have the budget. Knowing the potential client’s funding cycle (e.g., the start of their budget year) can facilitate closing the deal. Depending on the client, you may even want to educate them on funding sources they could use to support the project.
Use your unique selling proposition (USP) as part of the proposed solution. Your USP is what your business is known for. It’s not your niche market. It’s what you do better than your competitors and what people think of immediately when they hear your business name.
Let them say yes.
Never force your idea on the potential client. Instead, invite them into the pitch by using the questions they ask as part of a collaborative process. If both sides of the pitch work together to create the solution, there’s more buy-in.
Give them a chance to say yes by ending your pitch with a question. One option is to use an obvious “yes” question such as “Wouldn’t your business benefit from reducing operational costs by 30%?” Or perhaps use a stepping-stone question like “How about a 30-day trial to see this in action?”
Close the deal.
Remember that the “middle” of a conversation is forgotten territory. People tend to recall the first and last things they hear. Thus, you’ll want to include your key points at the end of your pitch.
If you aren’t closing the deal right then, plan a specific follow-up date. A potential client saying, “We’ll get back to you,” often means they won’t. Be persistent in following up but, of course, learn to accept “no” gracefully. Maybe your solution isn’t the right one today, but it could be 6 months from now.
When you get your “yes,” handle the negotiation process like a pro. Be prepared to meet demands, make concessions, and give the customer confidence that they made the best decision by choosing your business.
Follow-up
A successful pitch and signed purchase agreement is the end of an inning, not the ballgame. Follow through and meet the customer’s exact needs to stay in the game.
Providing excellent customer service helps create a satisfied customer. You can then ask that happy client to write a customer review that you can use in your next pitch.
Tips for Creating a Compelling Pitch
Creating a pitch that resonates with your audience requires strategic planning and execution. Here are some tips to help you craft a compelling pitch:
- Keep It concise: Time is of the essence. Aim for clarity and brevity. An overly long pitch can lose your audience’s attention. Focus on delivering your key points quickly and effectively.
- Highlight benefits over features: Clients are more interested in how your product or service will solve their problems or improve their situation. Emphasize the benefits and value rather than just listing features.
- Use storytelling: Stories can make your pitch more engaging and relatable. Share a success story or a case study that demonstrates how your offering has benefited others in similar situations.
- Be confident and passionate: Your enthusiasm can be contagious. Show confidence in your product or service and convey your passion. Belief in your solution can inspire the same in your audience.
- Prepare and rehearse: Practice your pitch multiple times. Rehearsal helps you refine your message, manage time, and deliver with confidence. Be ready to adapt based on feedback and observations.
- Use visual aids: When appropriate, incorporate visual elements like slides, charts, or prototypes to illustrate your points and make your pitch more memorable.
- Ask for feedback: After delivering your pitch, seek feedback. Constructive criticism helps you improve and tailor future pitches to meet your audience's needs better.
- Be ready to answer questions: Anticipate the questions your audience might have and prepare thoughtful, concise responses. Being prepared demonstrates thorough understanding and builds trust.
- End with a strong call to action: Clearly state what you want the audience to do after your pitch. Whether it’s scheduling a follow-up meeting, signing up for a trial, or making a purchase, make your desired outcome explicit.
Perfect your business pitch.
A successful business pitch doesn’t just happen. It takes thoughtful preparation, practice, and revisions for each customer. The good news is the more you pitch, the easier it is to score a home run for everyone.
Established online marketplaces like Etsy are another way to strengthen your online presence. Etsy can help you market your business to a broader customer base and increase your online sales. We’ll walk you through everything you need to know to set up a successful Etsy shop— from who benefits to a step-by-step walkthrough on how to open a shop and what steps you can take to help your business stand out from the competition.
Before you set up your Etsy shop.
Before starting any business venture, you should perform market research. Etsy is no different. You can take a few simple steps before you begin that will help inform your Etsy shop setup to save you time and maximize the impact of your efforts.
Peruse the site’s navigation.
Spend some time looking through Etsy’s menus. Look at the different categories and subcategories. How easy is it for the casual user to find your product category? Does your product clearly fit into one of the categories? If not, where would your product best fit?
Get a sense of the competition.
Imagine that you are your target customer. Enter the keywords you think they’d search to find your product. How many results come up? How is your product different from what’s already offered? This step will give you a sense of how steep the competition is and what you’ll need to do to stand out from the crowd (more on that later).
How to set up an Etsy shop.
How to set up an Etsy shop.
Setting up an Etsy shop is an easy 8-step process. Grab yourself a fresh cup of coffee or a glass of water, and let’s do this. Your shop can be up and running before you even need a refill.
1. Register for an Etsy account.
If you already have an Etsy account, you can use your email login. You can also choose to log in using your Facebook or Google accounts. If you want to separate your personal browsing from your business selling account, you can set up a new account using your business email. Registering for an Etsy account is totally free.
To set up an account, click the “Register” button at the top of the site. It will prompt you to enter your email and first name and create a password. As with any online platform, you’ll want to review Etsy’s Terms of Use and Privacy Policy. Once you click “Register,” Etsy will email you to confirm your account. Click the link and voila, you’re up and running with your very own Etsy account.
With your brand-spanking-new Etsy account, you can:
- Add items to your favorites
- Use Etsy’s on-site messaging system
- Set up your shop
- Post in the community
Log in to your account, and we’re ready to move on to the next step.
2. Create a shop.
Once you’re logged in, you want to click on “Sell on Etsy.” Again, it’s on the top of the home page. You should find it just to the left of the “Register” button. Stuck? You can also use this link, and it’ll take you right there.
Click on the “Open your Etsy shop” button. Boom. We’re onto the next step. Oh, and if you skipped step one, Etsy will prompt you to create an account or log in here.
3. Set your shop preferences.
Next, you will be prompted to enter your preferences for language, country, currency, and your time commitment to operating the shop:
- Shop language: The default language you will use to describe your items. If you want to add translations into other languages, you’ll be able to make that adjustment after you open your shop.
- Shop country: What country you’re based in.
- Shop currency: The currency you will use to price your listings. Generally speaking, it’s recommended that you use the same currency as your bank currency, as currency conversion fees may apply if your bank’s currency is different from the currency used in your shop.
- Time commitment: Is this a full-time job or a part-time job? Etsy requests this detail for informational purposes. Your answer will not affect the setup of your shop.
4. Choose your Etsy shop name.
Choosing your shop name may look different for new businesses than for established businesses.
Naming an Etsy shop for an established business.
Since your business already has a name, you’ll want to follow it as closely as possible. If that username is already in use or doesn’t meet the Etsy shop name requirements, it’s advisable to use the same username as your other social media handles. Maintaining consistency across multiple platforms makes it easier for your customers to find you and follow you from platform to platform in addition to adhering to brand standards.
Naming an Etsy shop for a new business.
If this is your first time naming your business, we recommend you consult our post on “How to Name Your Small Business.” It will walk you through considerations like checking if the trademark is already in use and choosing a name that makes your business easy to find.
As a rule, the best business (and Etsy shop) names are easy to remember, unique, and tell your customers what you sell.
Requirements for naming an Etsy shop.
Whether you’re launching an Etsy shop for a new or existing business, Etsy shop names must meet the following requirements:
- 4-20 characters long
- No spaces, punctuation, or special characters
- No profanity
- Not already in use by an existing Etsy member
- Does not infringe on another’s trademark
If you’re still at a loss for what to name your new shop, Etsy has provided some helpful tips for choosing a shop name.
5. Create listings
Now that you have a shop, it’s time to fill it. Add product listings to your shop by adding photos, creating the listing description and name, completing inventory information, etc. For each listing, you will need to follow these steps:
Add photos and videos.
Click “Add a photo” to upload photos from your computer. You can upload photos individually, or you can save time by selecting multiple photos so all the photos for a listing upload at once. Hit “Choose” to upload the photos. Etsy recommends that you upload at least 5 photos per listing with a variety of angles.
Photos need to be at least 2,000 pixels wide, but they can vary in height. You don’t have to worry about reducing the size of the photos, either. Larger photos give shoppers the ability to zoom in, allowing them to achieve a more tactile-feeling online shopping experience. Once photos have been uploaded, you can easily rearrange them by clicking and dragging them into your preferred order.
You can also upload a video showcasing specific features or details of your products. Videos can be 5–16 seconds long. Once uploaded, they will not contain any audio, so be sure your video works as a visual-only feature.
Choose the thumbnail photo.
Now that you have all these stellar photos, you need to choose which one you want customers to see first. This is the thumbnail photo. You can set the thumbnail photo by clicking and dragging it into the number 1 slot.
To adjust what customers see in the thumbnail preview, click “Adjust thumbnail” below your first photo. This will allow you to change the square’s position in the photo or zoom in. Once you’ve chosen your new thumbnail orientation, click “Save.”
Add listing details.
Listing details are how Etsy users find products. Without accurate and complete listing details, trying to find your listing will be like looking for a needle in a haystack. Remember that there are 2.5 million sellers on Etsy. Filling out the listing details will help shoppers find you.
For each listing, you’ll need to include the following:
- Title: Give your item a descriptive title. Including the most searchable words at the beginning will increase the likelihood that your product will show up in appropriate searches.
- About the listing: These dropdowns will help you to categorize your item. Because you select from predetermined categories, completing this section is a matter of a few clicks. In this section, you can mark attributes like “handmade,” “vintage,” etc.
- Listing categories: Choose the categories to which your listing belongs. Instead of combing through the list and picking every category that could tenuously apply, take a more discerning approach. Consider where buyers might look to find your specific item, and choose the categories that will increase their chances of finding it easily and swiftly.
- Add attributes (optional): Attributes include characteristics like color, occasion, or holiday. This is another way Etsy makes it simpler for shoppers to find your items more easily.
- Choose a renewal option: An Etsy listing will stay live on the site for 4 months at a time. Listings automatically renew after that time as a default setting. If you want to control when your listings renew, you can select the “Manual” setting.
Describe your listing.
The next step is to describe your listing. This description is the meat and potatoes of what shoppers will read when they view your listing. You’ll need to indicate whether it’s a digital or physical item. Then you can add a description of the item, its dimensions (if applicable), the production process, etc.
You’ll want to take the time to include information about materials, size, how it was made, unique features, etc. to give buyers as much information as possible. It may also save you from having to answer many repeat questions.
You can also include the following optional information:
- Your production partner (if applicable)
- Whether or not the item can be customized
- Which section of your shop the listing falls into if your shop has sections
- Tags (Etsy recommends using all 13 tags available to you)
- Materials
- Price per unit (applies to sellers in the EU)
- Main features (for sellers in Germany)
Add inventory and pricing.
Decide how much your items will cost, and let Etsy know how many you have to sell. In this section, you can also select preferences or include the following:
- Shop tax rates
- SKUs
- Variations (if you offer different sizes and colors, you can include up to 2 variations per listing)
- Personalization
Add files (for digital items).
If shoppers can digitally download your items once purchased, be sure to add the files to your Etsy shop. This reduces your manual labor and increases the speed at which buyers will receive the items, a winning combination for exceptional customer experience.
Set up shipping.
Choose how you want to ship your physical items. You have options!
Marketing
If you’re running an Etsy Ads campaign, you can choose to include your listing in that campaign. If you are running a campaign, listings added from the “Sell on Etsy” app will be automatically added to the campaign. If you want to choose which listings you advertise, you can find what you need to control those settings here.
Publish or save your listing.
Your listing won’t be saved until you click “Save as Draft” or “Publish.” Be sure to save your listing so you don’t lose the progress you’ve made and have to enter it all over again.
6. Choose how you want to accept payments.
If you’re in an eligible country, you’ll receive payments through Etsy Payments. Etsy Payments allows customers several payment options while simplifying and consolidating payments in your seller account.
If you’re in a country ineligible for Etsy payments, you can receive payments via PayPal.
7. Set up billing information.
Depending on your country, you will need a credit card to open your shop. Sellers in certain countries will be asked to keep a card on file as a means of identity verification. The card should be a:
- Visa
- Mastercard
- American Express
- Discover
- Carte Bleue (France)
8. Open your shop.
Once you’ve completed these steps, click “Open Your Shop.” You can always add listings and make updates or changes to your shop after it’s open.
9. Market, sell, tweak, repeat.
Congrats! Your Etsy shop is up and running. Now you can dedicate your efforts toward making your listings and your shop stand out. Track how your listings perform. If they don’t get traction at first, don’t lose hope. Trial and error is a part of business, and you’ll likely have to do some testing before you find the best strategy, especially if you’re in a competitive category. Etsy Ads may be helpful to get your product seen. Tools like eRank can help you learn more about your listings’ search performance. And of course, if you have an established audience, don’t forget to let them know you’re on Etsy!
Etsy fees
Etsy charges a $0.20 fee for each listing (regardless of whether the item sells). When you sell an item, Etsy collects a 5% transaction fee. They also charge payment processing fees, and you may encounter some additional seller fees. To learn more, you can review Etsy’s full fee and payments policy.
Every business will face an emergency at some point. Building a cash reserve will help your small business to weather the storm.
What is a cash reserve?
Cash reserves are funds set aside to cover unexpected expenses or financial emergencies. It serves as a crucial safety net for small businesses.
How much money should go into a cash reserve?
Step one for building a cash reserve for your business is understanding how much money you need. Look at your finances and determine your average monthly cash outlay. Based on your business’s needs, set a goal to save enough cash to withstand whatever timeline you believe is necessary.
At the bare minimum, you should have at least 3 months’ worth of savings in your reserve at any given time. Ideally, you would save up to 6 months’ worth.
Review a list of non-negotiable expenses each month. These costs include your rent, employee pay, and vendor agreements. If you want to save even more, you can look for negotiable expenses (or expenses that you could cut if your business closed) and save for those as well. These costs can include marketing, materials, and inventory.
To calculate your ideal business cash reserve amount, understand that you should expect zero revenue during an emergency closure. Your business will need to rely on your reserves entirely. For example, a hurricane could shut down your business for a month and require repairs. During this window, there may be no way for your business to earn a profit, and you would need to eat into whatever cash reserves you had.
You never want to face a situation where your business will have to close for 3–6 months, but having enough cash available to sustain your company through that downtime will give you some peace of mind.
Treat your cash reserve like a fixed expense.
You likely have several fixed expenses each month—these costs are recurring and do not fluctuate monthly. Common fixed expenses for small businesses include rent, insurance, and car payments for fleet vehicles. If you are serious about setting up a cash reserve, treat it as an additional fixed expense.
Move your savings into a separate account, or create a label within your accounting system for the cash reserve. This way, you will allocate funds to the cash reserve automatically before you look at your more dynamic costs or calculate your monthly profits.
You don’t need to set aside much each month (even a few hundred dollars monthly will add up over a year). However, the sooner you have your reserve built, the better off your business will be if you need to close suddenly for an extended period.
Create a guide for when you can use your reserve.
Whether you are a small business owner with a few employees or a growing brand with a large team, develop a policy for when it’s acceptable to pull from your cash reserve. These guidelines can be a simple written agreement that you keep in your accounting documents or part of your company’s financial bylaws.
This guide is meant to prevent abuse from you and your team—you don’t want to pull from your cash reserve for small problems and repairs, diminishing the amount you have saved. It’s entirely possible to eat away at your reserve if you don’t have a plan in place for when to use it.
Consider creating guidelines to approve the use of these funds. For example, you could require both co-owners to sign off on using funds or require board or investor approval. These steps help create safety nets within your company to protect your funds until you really need them.
Pay back your reserve if you use it.
If you dipped into your cash reserve during the pandemic or needed it for other emergency expenses, don’t forget to pay it back afterward. Cash reserves are meant to be used from time to time, but they are also meant to be repaid when used.
If you’ve followed the advice above, you’ll have established your cash reserve as a fixed expense so it will begin replenishing quickly. However, if you drained a large portion of it, you might want to increase your monthly repayment amount or even consider adding a lump sum to the reserve.
Any cash reserve is better than no cash reserve.
Don’t get overwhelmed with the idea of needing several months of savings immediately. If you feel like creating a cash reserve is an impossible task, then you’re more likely to give up in a few months.
Know that your reserve is going to start small and that it’s okay. Any money you have set aside will help. It doesn’t matter how much or how little you put into your cash reserves—over time, that money will grow. Eventually, you’ll have a safety net to keep your business thriving through any crisis.
Maybe your company is at a crossroads. Or perhaps you’re considering what strategies to implement for the year ahead. Maybe you want to evaluate how your current systems are working or whether you should go ahead with a new product launch.
There’s no doubt that these can be overwhelming issues and decisions for business owners to tackle. The good news is that there’s a helpful tool you can use to facilitate your decision-making process: a SWOT analysis.
You may have heard the term before and written it off as too complicated or not a fit for your small business. But, in reality, a SWOT analysis is an assessment tool that’s simple to use and provides a big-picture view of your company's overall status. You can use it to set goals, determine risks, plan, and identify critical issues that impact your business.
Wondering how to get started? Let’s dig into why a SWOT analysis should be in your business toolkit and how you can conduct one.
What is a SWOT analysis?
A SWOT analysis can and should be performed by businesses of all sizes. Whether you're just starting out or well-established in your industry, you can benefit from performing a SWOT analysis.
SWOT is an acronym for:
- S: Strengths
- W: Weaknesses
- O: Opportunities
- T: Threats
You’ll identify topics under each letter of the acronym to grasp the internal and external forces that can impact the success and well-being of your company.
Developed in the late 1960s, SWOT is a well-respected and highly-practiced business analysis process. Often included as part of an overall business plan, it can also be used throughout a company's lifespan for strategic planning, to prepare for significant changes, and to support business growth.
Why Perform a SWOT Analysis?
When you're faced with a strategic decision or looking for ways to improve your business, conducting a SWOT analysis is an essential place to start. Depending on your industry and your activities, a SWOT analysis can be completed every 6 months to one year or as needed to address critical decisions and shifts in your industry.
Companies may want to complete a SWOT analysis for many different reasons, and there are numerous benefits associated with performing one. A regular SWOT analysis can help you:
- Jumpstart strategic planning for the upcoming year
- Understand your competitors and industry
- Improve operations
- Discover new opportunities for growth in your market
- Identify and adjust for risks
- Reevaluate current strategies that may not be working
- Prepare for expansion or new product rollouts
- Brace for and proactively respond to emerging threats
- Decide where to focus your resources
Needless to say, that handy little acronym can reveal a lot about your business.
How to do a SWOT analysis.
Before you get to work on your own SWOT analysis, let's first take a closer look at the elements you’re analyzing.
In a SWOT analysis, there are two types of factors: internal and external. Generally speaking, the internal ones are elements you have control over—like your resources, people, and operations. In contrast, external elements are out of your control and would be there with or without your business—like your industry, competition, and market.
Here’s how that plays out in your SWOT analysis:
- Internal factors: Strengths and weaknesses
- External factors: Opportunities and threats
Now, let’s break down each of the four pieces of the acronym.
Strengths
What makes your company strong? What are you doing right? These are some of the queries you'll want to answer when considering your company's strengths. As the name implies, strengths focus on the elements of the company where you excel and stand out from the competition.
EXAMPLE: Our high-quality customer service is unmatched in our industry.
Weaknesses
Weaknesses are where your company falls short. It can sting a little to pick apart all of the things that you aren’t doing right, but it’s important to figure out where you could improve and areas where your competitors are performing better. After all, these weaknesses stand in the way of you achieving your business goals.
EXAMPLE: We struggle with retention and have high staff turnover.
Opportunities
Opportunities are where you tap into possibilities that could help your company grow. Think about what gaps in the market you could fill in or what trends you could take advantage of. Don’t limit yourself here—this piece is all about dreaming big.
EXAMPLE: Our customers have been requesting a new product that we could easily launch.
Threats
Threats include any outside forces that could negatively impact your business. Is your company at risk? It’s not a fun question to answer, but it’s an important one. Threats are elements that could harm your company and could range from changes to regulations to an economic downturn.
EXAMPLE: We have a lot of new competitors cropping up, and the market is becoming saturated.
You won’t just identify one topic for each letter of the acronym—this is all about thinking critically and generating as many ideas as possible. Aim to come up with at least 3 answers for each letter of your SWOT analysis.
SWOT analysis example
Strengths
- Strong Brand Recognition: Our brand is well-known and respected in the industry, which builds customer trust and loyalty.
- High-Quality Products: We consistently produce high-quality products that meet or exceed customer expectations.
- Skilled Workforce: Our team consists of highly trained professionals who bring a diverse range of skills and expertise.
Weaknesses
- Limited Market Presence: Our presence is concentrated in a few key markets, leaving room for growth in other regions.
- High Operational Costs: Maintaining our high standards of quality increases our operational costs, impacting profitability.
- Outdated Technology: Some of our production processes rely on outdated technology, which can slow down efficiency.
Opportunities
- Market Expansion: Emerging markets present an opportunity to expand our reach and increase market share.
- Innovative Technologies: Investing in new technologies can streamline operations and reduce costs.
- Sustainability Trends: Growing consumer interest in sustainability provides a chance to develop eco-friendly products and enhance our brand image.
Threats
- Intense Competition: Increasing competition from both established brands and new entrants poses a continuous threat.
- Economic Fluctuations: Unpredictable economic conditions can impact consumer spending and our sales.
- Regulatory Changes: New regulations in our industry could require costly adjustments to our business practices.
How to execute a SWOT analysis for your small business.
You’re probably picking up on the fact that a SWOT analysis doesn’t need to be overly complicated, and you don't have to be a big corporation with many different departments to conduct one.
In fact, even solo entrepreneurs will find this to be a useful tool. Here are a few more tips to help you get started on the right foot:
- Determine Your Reasoning: As mentioned previously, a SWOT analysis can be performed yearly, every 6 months, or as needed. It can be used for a specific area of your business, as part of a product rollout or business plan, or to help decision-making. Understand why you want to do one right now, as that’s an important context to keep in mind as you move forward.
- Gather Your Team: The more input and perspective you have, the better. Decide who you need to include to help you complete as candid of a SWOT analysis as possible. Typically, SWOT analyses are held as brainstorming sessions with key personnel within your company. They may include project managers, department heads, owners, and other staff. If you run your business alone, ask for input from those close to you or who are somewhat involved in your company, such as friends, family, a mentor, or your accountant.
- Create Your SWOT Framework: A typical SWOT analysis is displayed as a 2-by-2 grid. Each SWOT element (strengths, weaknesses, opportunities, and threats) is represented in clearly labeled quadrants. You can easily create the grid in Word or PowerPoint, but you can also use SWOT software, free templates, and generator options available online. Ones you may be interested in include Canva, SmartSheet, Creatly, Lucidchart, and SWOT.
- Solicit Honest Feedback: Remember, you don’t have to go it alone. Ask your staff members questions and write down all their responses to get as well-rounded of perspective as possible.
- Analyze the Results: Your SWOT analysis doesn’t do any good if you don’t take action on what you uncover. It’s up to you to use that information to determine your business strategy moving forward. Create an action plan with deadlines to address issues over the short- and long-term. We’ll talk about this more in the next section.
How to use a SWOT analysis.
Once you've completed the above steps, it's time to analyze your findings. While a SWOT analysis offers a useful review of what's working in your company and what isn't, its real value lies in combining the results.
The process of combining elements of a SWOT analysis is known as matching, and it can help you look at the information in new ways and reveal other findings. Need some inspiration? You can combine elements in the following ways:
- Strengths + Opportunities: Can determine areas where you can use your strengths to seize upon opportunities.
- Weakness + Threats: Can identify the weaknesses you should work on to avoid potential threats.
- Weakness + Opportunities: Can show you where to improve your weaknesses so you can take advantage of opportunities.
- Strengths + Threats: Can indicate where you can use your strengths to diminish or remove threats.
Another way to look at your findings is through something called converting. Here you'll want to analyze the data you've collected on your weaknesses and threats to see if you can convert them into positives.
Once you've accumulated all of your information, you can now create an action plan that you can apply to the appropriate level of your business.
Get started with your own SWOT analysis.
Whether you want a once-a-year overhaul of your business plan or need to decide if it's the right time to expand, a SWOT analysis is where you'll want to begin.
As an integral part of the decision-making process, this helpful tool can provide you with a comprehensive look at your business and help you determine your next steps. That way, you can make business decisions with more confidence—and less confusion.
Do you ever ask yourself why we celebrate some milestones with a party while we ignore others? It is de rigueur to celebrate a wedding or a pregnancy with a bridal shower or baby shower, but historically the same love hasn’t been given to accomplishments like earning a Ph.D. or starting a new small business.
Enter: Twitter. Yes, the internet-destination for doom scrolling can also be a bastion of great ideas. While the idea has circulated on the ether of the internet for a minute, talk of business showers appears to have recently picked up steam on the platform. User @EarnYourLeisure tweeted their idea for celebrating new businesses, similar to celebrating the anticipated arrival of a new baby.
Another user agreed and shared her plans to throw her business a shower.
How to throw a business shower.
Business showers are a novel idea, so there isn’t prescribed etiquette to determine how and when to throw a business shower. But since we’ve been to more baby/bridal showers than we’d care to remember, we’re confident we can use that blueprint to create a better, badder shower to celebrate a friend or family member’s newly-minted boss status.
We know that showers usually involve people, gifts, shows of support, and silly games. Recipients usually register for the gifts because in this case, it’s the utility, not the thought that counts. So how can we make that work for a business shower?
- Make your guest list: it’s time to invite everyone who wants to shower your business with love and support. Yes, while we believe that should be everyone you know, we recommend limiting invites to your most ardent cheerleaders. That aunt who only cares about whether or not you’re getting married soon is not going to bring the energy you deserve. And neither you nor your business needs that right now.
- Send invites: Don’t forget to make Emily Post proud by sending a lovely invitation. You can do a digital invite through Paperless Post or Evite or opt for a paper version. Ask people to RSVP because a.) it’s polite and b.) you’re practicing those Call-to-Action skills that will be very important when running a business.
- Choose the venue: If your business has a physical location, that’s the obvious choice. Allowing your friends and family to see your business space is the entrepreneurial equivalent of “feeling the baby kick.” You can also hold the shower at a restaurant or rope one of your friends/family members into hosting it for you. And because we’re in a pandemic, there’s also the option of throwing yourself a virtual shower.
- Register: Think of the supplies and tools that you need to lay a strong foundation for your business. Yes, a stapler may be on the list, but you can also ask for gifts like a few months of paid bookkeeping software, a small working capital fund, or shipping supplies.
- Enjoy the shower: You’ve worked hard for this. Let yourself relish in the support.
- Send thank-you notes: We would be remiss in invoking the ghost of Emily Post if we did not also remind you to send a thank-you note for all the gifts you receive.
What to buy for a business shower.
Okay, so what kind of gifts does one buy (or register) for a business shower? Shower gifts should be useful, thoughtful, and cute (if at all possible—sometimes it is not.). As with other showers, it’s best to get a gift receipt so the recipient can return or exchange the item if they need to.
- Office supplies: staplers, pens, papers, notebooks, envelopes, etc.
- Computer equipment: laptop, mouse, keyboard, printers, scanners, phone chargers (you can never have too many), etc.
- A mobile payments reader
- Bookkeeping services
- Working capital funds
- Payroll software (if the business will have employees)
- Your expertise: If you have professional expertise that could benefit a new business (like marketing, accounting, business development, etc.), you can consider gifting a few hours of your time to share your insight or your labor.
Business shower activities.
No, we’re not going to suggest you smell diapers filled with melted candy bars. This is professional. Celebrate a new business venture by embracing the excitement of friends and family to do something to support the business.
- Social media bonanza: Ask guests to post something on social media.
- Try and review: Have a product or experience you’d love your friends and family to test? Take them through the experience. It’s great practice for the business owner. Plus, at the end of the experience, guests can tell you what they thought by leaving a review online.
- Focus group: If you’ve got the whole gang together, why not use it as an opportunity for an impromptu focus group?
- Spread the word: Guests can split up to flyer neighboring areas.
- Brainstorm: Brainstorm hashtags, marketing approaches, new products, you name it. This is the time to take everyone’s advice and put it in one place. You can ask one person to be in charge of taking notes, the way you’d usually have someone recording the gifts. There are bound to be some great ideas and creative solutions. Even if it doesn’t apply now, these suggestions may help you down the road.
Don’ts for a business shower.
While it may be tempting to go hog wild, please stop borrowing from baby-party traditions, and please leave “gender reveal parties” alone. Yes, an “industry reveal” party for a friend’s new business does sound very fun, but gender reveal pyrotechnics have already started enough fires. We don’t need more.
What do you think? Will you be embracing business showers? Are there any business shower gifts that we missed? Let us know in the comments.
A significant 23% of small businesses surveyed use artificial intelligence (AI) with 39% stating they plan to adopt AI.
Small businesses are finding innovative ways to harness AI's abilities, from streamlining marketing efforts and enhancing customer communication to optimizing inventory management. Read on to learn more about how AI can benefit your small business.
Unpacking AI for the uninitiated.
Understanding AI and its potential may seem daunting, but clarifying its key concepts and applications can open up a world of opportunity for small businesses.
Machine Learning (ML)
ML empowers systems to learn from data, improving accuracy without explicit programming.
Natural Language Processing (NLP)
NLP allows systems to understand and respond to human language, enhancing customer service with sincerity and insight.
Robotic Process Automation (RPA)
RPA automates mundane tasks with precision, improving efficiency across sectors.
Predictive Analytics
This technology uses data and algorithms to predict future outcomes, aiding in inventory management, market trends, and client behavior analysis.
Generative AI
Generative AI revolutionizes artificial intelligence by enabling the creation of new, personalized content through machine learning.
How small businesses use AI.
Of the small businesses using AI the most common use cases include marketing activities at 56%, customer communications at 42%, inventory management at 33%, and fraud prevention at 26%.
Automation
Almost any repetitive task could be a candidate for using AI technology.
You’ve probably already used a chatbot for customer service — perhaps to receive technical support for a cable outage or make an online payment for property taxes. That chatbot and AI-powered knowledge base eliminated or reduced human time during your interaction.
One estimate says that the “average customer service call lasts six minutes. Four and a half of those minutes, or 75% percent of that time, is spent by agents manually looking for the right information.” Letting AI take its first shot at finding and presenting the information frees up customer service representatives to handle complex problems.
Email marketing software also uses AI. Remember those workflows you configured in your mail software to send customers a welcome email or invite them to use a discount code on their birthday? You can thank AI for that.
AI enables software to write email subject lines that generate better open rates or create a hyper-personalized newsletter. No more agonizing over an email subject line? Who wouldn’t cheer for that?
CRM
AI also integrates well with the customer relationship marketing (CRM) process.
For example, the wine industry realized that younger generations tend to use the Internet for wine purchases. Online merchants reaped the benefits of using AI-powered tools to help guide inexperienced customers to wines that matched their taste requirements.
AI can segment your customer list and create personalized call-to-actions based on where your customers are in their customer journey. Repeat customers may act upon a CTA that recognizes and rewards their past orders (e.g., “You enjoyed our apple pie last month. We have fresh ones available today!”). New customers may respond better if the CTA includes social proof (e.g., “Don’t you want to join 25,000 other savvy wine drinkers by signing up for our monthly newsletter?”).
Fraud Detection
AI can help detect abnormal patterns to generate alerts. Credit card companies have been using this function for a while—notifying you or even freezing your card when a suspicious transaction occurs. Your bookkeeping software might flag an entry as suspicious (it knows your car can’t hold $1000 worth of gasoline).
Microsoft suggests the benefits of detecting unusual behavior can actually go beyond stopping malicious or inaccurate transactions and potentially opening up new customer markets for your business. Their example is a plumbing-supply company that receives a large order from a non-traditional customer. A follow-up call reveals a new use case for plumbing supplies (artists need supplies, too!), and voila—a new customer market appears.
Another example is the insurance industry using AI and predictive analytics to help underwriters make risk calculations for complex customers. Would you want to guess the risk for a customer who recently completed a safe driving course but owns a Dodge charger and has a history of speeding tickets?
Manufacturing
Manufacturing businesses can use AI to help reduce the cost and time spent on quality checks (e.g., AI and robotics can check part tolerances quicker and more accurately than humans). AI can also predict equipment failure and maintenance needs reducing the “line down” syndrome that means lost revenue.
Inventory Management through AI
One compelling use case of AI in inventory management is its capability to predict demand and manage stock levels efficiently. For a small retail business, balancing inventory levels can be a tightrope walk between having too much (resulting in wastage or increased storage costs) and too little (leading to stockouts and lost sales).
AI systems, using predictive analytics, can analyze historical sales data, seasonal trends, and even current market dynamics to forecast demand for products with remarkable accuracy. This foresight enables businesses to adjust their inventory procurement accordingly, ensuring they have just the right amount of stock on hand
Challenges of AI
Like any technology, AI growth has some hurdles ahead.
Bias in AI is a concern as engineers may program their own biases into the technology, or skewed or limited data may produce unreliable results. These biases could mean AI suggestions (e.g., who gets what medical treatment or the financing terms for a client) aren’t objective.
The “black box” problem—data goes through non-transparent algorithms to produce a result—suggests that end-users will still rely on their gut to validate AI suggestions. In simple terms, how many times has autocorrect presented the wrong word, and you had to override it?
The algorithms that underpin generative AI can sometimes make unpredictable associations or draw from less relevant data points, leading to results that may not align with expectations or reality.
The roadmap to AI integration.
Technology is a double-edged sword; its benefits are matched only by the responsibility to use it wisely.
Knowing where to start can often be as straightforward as comprehending your business's most pressing challenges and seeking out AI solutions equipped to address them.
It’s important to have people in our lives who we can turn to for advice. Examples include business mentors, trusted friends, religious leaders, therapists, or family members. Sometimes we already know what we want to do and are just looking for confirmation. Other times, we are clueless and legitimately need direction.
When facing 2 diametrically opposed options, the guidance of others becomes even more crucial. It’s reminiscent of the classic song from The Clash:
Should I stay or should I go now?
Should I stay or should I go now?
If I go there will be trouble
And if I stay it will be double
So ya gotta let me know
Should I cool it or should I blow?
Should I stay or should I go now?
If I go there will be trouble
And if I stay it will be double
So ya gotta let me know
Should I stay or should I go?
We often find ourselves in similar situations. Should we keep our day job or quit? Should we discontinue a struggling product or try to rescue it? Should we expand our office space or work with what we already have?
The situation is heightened for entrepreneurs because of the level of personal investment. You have spent a lot of money and dedicated countless hours to your passion. So you want to make sure you’re making the right decisions and protecting everything that you’ve already sacrificed to get where you are today. And that gets tricky when you get conflicting advice.
“Though it’s known that you shouldn’t listen to all criticism and advice you receive as an entrepreneur, how do you respond when your trusted advocates, mentors, and investors give you conflicting advice?” asks small business expert Tori Utley. “It can put you in a difficult place as an entrepreneur with much to question and consider. It’s helpful to have mentors that will help you navigate the uncertainties of startup and professional life while giving you meaningful insight when you need it most. But when insights from equally qualified, equally invested, and equally credible people start to conflict, it’s you, the entrepreneur, who must ultimately make a decision.”
How to handle conflicting feedback.
Trust us—there will be crucial moments in your business career where the advice you receive couldn’t be more different. Here are some tips for managing the contradictions so you can find the best possible way to move forward:
Take time to reflect.
OK, you’ve received feedback that seems to conflict. Start by allowing time to process the various insights. You might even realize that you’ve misinterpreted some of the feedback and that it is more complementary than you originally thought.
Get a third, fourth, fifth, and sixth opinion.
The funny thing about a stalemate is that it can quickly turn into a landslide victory. Suppose you talk to 2 trusted advisors and get differing opinions. The situation might look dire, but if you talked to 3 other folks and they all agreed with 1 of the original opinions, you could take this near-total consensus as the ultimate green light.
Test the advice.
When possible, it can be helpful to test the advice you get. Let’s say that 1 adviser tells you to go all-in on social ads for your product launch, while another adviser says that display ads are the only worthwhile option. Rather than toss 1 of these advertising tactics, do a series of small tests and find the winner.
Look for the reasons behind the advice.
There will be times when you might be surprised by a differing opinion from 1 of your mentors or colleagues. Take a step back and consider why they feel the way they do. A person’s background and circumstances shape their views, and you might realize that the advice is less relevant to you in this particular situation than advice from another source.
Stay true to yourself.
Your gut has gotten you this far, so don’t tune it out now. It’s essential that you gather insights from respected sources, then follow through on the action that feels best. Nobody on earth understands your business better than you, so it stands to reason that you should be the ultimate decision-maker.
Embracing the beauty of conflicting feedback.
It can be understandably frustrating to get contradictions when all you want is a clear sign pointing you in the best direction. But it’s important to have differing opinions in life because they introduce you to new ways of thinking and challenge your assumptions.
Your small business needs insights to thrive, not an echo chamber. So be sure to always seek out feedback and opinions from your team of trusted advisors. As long as you use proper evaluation strategies and then follow your gut, you’ll be able to lead your business to a brighter tomorrow.
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