Analyze Business Opportunities
Hello everyone today we are on lesson fourteen analysed business opportunities which is actually way more fun than it sounds ah a lot of a lot of targeting scary right there but it's actually really fun so today's school is that you're gonna learn to analyze business opportunities to make smarter choices with your money right that's really what this is all about and we're gonna deal with that indecision, paralysis things that tend to have it a lot when you're running a business. So in the last lesson we determined if you're ready to use crowdfunding to grow your business and really that's what we've been talking about in the last couple of lessons is all the different options that come that are available to you to finance your business and so today what we want to dio as we're in session to generate revenue quickly on dh we are on lesson fourteen analyzed business opportunities we want to do today is we want to figure out when an opportunity presents itself and it requires some investm...
ent for your business how do you know if you should take the leap right? How do you know if you should do it? So the reality is that as a business owner you will have to make decisions about where to invest your money for the potential of generating more revenue we talked about this idea that sometimes you have to spend money to make money you're gonna have to spend money to make or spent a lot of money to me you make a lot of money right? And the scary part typically is there's no guarantee right? Sometimes you have to spend that money and you don't know if and when you're going to see the return so do you suffer from decision paralysis? Do you ever feel like you've not or have you ever not taken an opportunity for your business because you just couldn't decide so having anyone here I see some naughty monica, what about you, huh? And so many facets like originally it was like, do we go forward with wholesale right that that one held us up for a long time just kind of figuring out was the right move for you hadn't meant to write like that don't do it all right, right? And so a lot of times you won't be missing out on a really great opportunity for business because if you can't make the decision you end up doing nothing right and we have to do things to move our business forward. We have to take advantage of opportunities. The other question is do struggle sometimes suggest if I large expenditures for your business right and large is different for everyone for some people a large expenditure, maybe a couple hundred bucks right? For other people a large of finisher, maybe ten grand you know I talked about that story of having teo fund trade show booth that was a little more than I had in terms of cash on hand a lot more on then cash on hand right but sometimes it's hard to justify those because you don't know if you're gonna get the return on investment and are you scared to take the next step in your business because you're worried you might lose money right have you sometimes said this opportunity could be okay but I'm afraid you know there's a potential to lose money so I'm just going to let it go right I see a couple a couple not there christina is there something for you that was yeah like the next step for me say would be to produce a more stamps but then how do I know like this design will do well but the minimum safer examples like one hundred pieces right so I invested that well I don't know if it'll do well right and especially in the beginning one hundred pieces seems really scary and what's the cost of something like that say two dollars per right so you're looking at a couple grand there to make that happen and then right how do you how do you know right so what we want to do today is learn howto analyze potential opportunities so you know if you should be investing your money now it's never foolproof right? I wish it was, but now I don't have a crystal ball, someone has a crystal ball and they want to help us out here. That'd be great, but I don't have a crystal ball, but you can learn how to strategically look at opportunities and make the best guess so that you can move forward. So before we actually analyze opportunities, I want to talk about what is an opportunity. What are we talking about when I say opportunities for your business and an opportunity is really anything? Were you make an initial upfront investment in exchange for the potential of future revenue, and that second part is key, right? We're making an upfront investment in exchange for the potential of future revenue a couple lessons ago when we had many crary on she really talked about that importance of prioritizing revenue when we're analyzing opportunities, we're not saying, oh, should I spend five thousand dollars to meet my website prettier because that's not something that brings this potential future revenue in a very strategic way now, we might say, should I invest three thousand dollars to make my website prettier, plus two thousand dollars in advertising to drive traffic to my website that's an opportunity, then, right? Or maybe it's? Should I invest that money? Teo upgrade the functionality of my website. Plus the money to drive traffic right? So we want to always think about what the future revenue is and if we can't make a direct link to the revenue that I would say it's not an opportunity it's probably one of those detail that we want to put on the back burner until we've got the business going. So this might include anything from doing a show maybe it's a wholesale show, maybe it's a retail show, whatever that is those krabi opportunities, maybe it's getting a space right? Maybe you're thinking about a retail space, something like that that could be an opportunity you're considering might be advertising or sponsorship and the tricky thing was something like advertising or sponsorship is that, you know, there might not be a timeframe for that investment write if you're doing a show like okay, this is when the show happens I have to decide by x date to do it or not so that at least there's a little bit there, but you may just be deciding what I want to drive traffic to my web site I want to do some advertising and that's an opportunity that has a whole ton of variables, right? How much do you spend? Where do you advertise? But you can analyze that just like you and analyze anything else? Maybe you got an opportunity to do some product placement maybe a blogger wants to wear your product, right? Or maybe you want to send something out to the media or maybe we want to do a give way a couple lessons, you know, monica asked about giveaways give away is an opportunity that should be analyzed just like anything else. Yes, it's a lower cost opportunity, you know, the cost of a few product is very different than the cost of a trade show, but it's still an opportunity that should be analyzed so that you're not saying, ok, our strategy is going to be we're going to forgive a ways a month, and they don't ever get you any traction, right? Maybe it's attending an event or conference with the goal of networking with customers or prospects. So in this case, I'm not talking about weighing an educational opportunity. That's a different thing, right? Let's, get them talking about maybe there's a conference and you think a lot of your potential customers were there? You know, holly, maybe you want to target some kind of interior design conference, maybe it's way more efficient just to go network with a bunch of interior designers and talk about your product, right, so that's an opportunity that you could analyze. So there's lots of ways and you won't come up with some other ones you maybe it's hosting a workshop we're going to talk about you for you is an option as we go along too, so there will be other opportunities that you see and then some of them might be, you know, do I buy more equipment? Do I buy it bulk those air opportunities as well? But if you're going to analyze that as an expenditure, you need to make sure that it's back to buy the actual revenue strategy, so if you're going to invest in more equipment, what's the plan then to get the product sold right? So I also want you guys to think about that if you're going teo, buy more materials that book that nancy back with a plan to get those sold so it's not really an opportunity until we're getting what we're doing in front of the customer the same thing with christine stamp example, right? So you may want to make that purchase, but how are you gonna get that sold and that's going to tell you really where the real opportunity is, right? Is getting the product sold? So how do you analyze an opportunity, any opportunity that we're talking about when you're thinking about business decisions, you're gonna have to pieces ah hard up ah hard analysis and a soft analysis now the hard analysis and I'm using these terms because there are about the best that we can do right so hard analysis involves crunching the numbers right really looking at the bottom line the revenue potential all that good stuff a soft analysis means taking a look at the overall vibe and aesthetic kind of all of those other factors and the best decisions take both into account and they are both incredibly important because what we're doing is we're selling visual products that appeals to a certain aesthetic and if that is off I don't care how good the numbers look right I actually just relearned that lesson myself I recently did a trade show I ran the numbers I knew where I need to be I thought it was possible you know I looked at the target audience I thought I could make it work I got there and the aesthetic was just so far off I stuck out like a sore thumb it was just so different and it was a total flop for me and if I had done my due diligence on the aesthetic part I could have realised that if I had waited to do that show a season flown down and walked it I would have known instantly that it was not my people so I did I did my due diligence I did that harder now yes but I missed that soft piece and it was a flop so numbers a really important I'm not saying they're not but it has to be the right fit has to be the right vibe has be the right people it has to be the right aesthetic actually we're going to start is with a soft analysis of a potential opportunity so to make this a little bit easier I want you guys to just take a second and think of an opportunity that's specific to you right think of something that you could d'oh like what's an opportunity that you could take a trade job perfect and I want you to think of a specific one if you can write because that's gonna make this easier shell art for an art fair in art festival christine work we're doing workshop joy boston crashed there okay that that retail trade joe perfect yeah they say magic traitor um there's a small trade show I know about maybe for you let's say the conference of interior designers right? Maybe something like that like house there's like house house so perfectly all the lighthouse tour and I could connect you with your attention that's mostly a local shop for local shop perfect reaching out to them awesome all right so now that you've got that opportunity kind of in your head we're going through an answer some questions and think about it you know both the soft and hard analysis so is this opportunity a good fit for your brand that is always the first consideration and there are really three key areas to consider audience aesthetic and price point and any one of these is off let the opportunity go no matter how cool it seems matter if you think everyone is there right sometimes I I look at some of those really fun craft shows only they should do that again you that point I'm like oh that's going to renegade this weekend should I have done that? No doesn't matter how cool it is it doesn't fit those three pieces it's not the right opportunity for you and again the right opportunity for me is going to be very different from the right opportunity for you because we have different audiences we have different steady actually a different price points but you want to evaluate these two the best of your ability so who is the audience and how well do they align with your ideal customer profiles? They're a couple ways that you can figure this out right if you can say you're doing a trade show or an event walk the show before you do it right but walk it with that key in mind right? Lf he will go walk trenches and get super overwhelms you have to know what you're looking for when you walk a show one of the big things is audience who is walking the show floor do you see examples that match your ideal customer profile do you not for something like a a retail show or if you don't have the time I'm done, shows that I haven't walked before, but then hang out on social media, right? What's the show's instagram hashtag who is there? Who is talking about it? You know, in your case for senior talking about doing some workshops, right? So you're thinking about doing them some coworking spaces who is typically the audience? They're right, who were they bringing in? Those were great ones where you can following on social media and see who's hanging out and really engaged in the space. So if you can't get to something, you know, new social media use that to dig around, see who the audience is. You know, if you're looking at a store, find out who's shopping that store, go into the stores you can not with your products, never with your product, my friends, who on stores always want me to say that, right? But go into a store and actually go like a busy saturday afternoon definitely don't bring a product that but got busy. Center every and see who's shopping, right? Is that the kind of person that you want, and if you can't get to that store again, look up on social media who's following them. Who's following them is a really good indicator who's following them if they have a hashtag who's using that hashtag who's been in there, who's using the you know, the g o tag, right? That's another everyone find stores to find the store's geo tags. He has been there who's tagged themself there right on instagram, you know above the picture there's that little location spot, right? Yeah, that's geo tag so you could find out, you know someone like oh, here I was in this cute store, you can see who's in there who sharing those pictures, right? The other thing is, how large is the audience? And what percentage would you need to convert, right? So you might be doing to give away say, a blogger has come to you and they said I wanted to give away, or I want to feature your product, what's their readership, and how much of that readership would you have to convert into a customer to make it worth your while? Or maybe you know, you're not going to convert them into a customer right away, but maybe you have to convert a certain amount to your email list, right? To make that worthwhile, I think christina's is a good one for you, right? You're doing these workshops? What percentage of workshop attendees do you have to convert into people who purchased your product and how much product do you need them to buy right to make it worth your while set something else he who look at you so how big is the potential audience and what do you have to convert and some of these are a little different if you're looking at reaching out to stores then it might be how many stores you have to reach out to to kind of get your goal right but thinking about how big the audiences if you're at a trade show it's a small one you're going to need a lot more of your right people there and they have a big one with a lot of audience it right then the next one which is super super important and be realistic is the aesthetic right? How well does the aesthetic mesh with your brand right be honest can't fit a square peg into a round hole right? You may be like this show is cool it's so awesome the aesthetic is off it's never gonna work and chances are the aesthetic is off and you say you're applying to a show you're probably not going to get anyone in anyway right? So now you're wasting your time trying apply to things that aren't the right fit so think about that that vibe that aesthetic and if there are other brands there are they good man act with you right? You know if you're doing a show people aren't just buying one thing right? So would they buy that product in addition to your product you know if you're doing say something ana blogged again that give away that that product placement the aesthetic right as the customer even looking for a product like yours that's something that I think monica for you is a big consideration because there's a lot of mommy bloggers who are looking just to score some free product right I would assume you guys get approach for giveaways and things like that is the aesthetic the right fit? Isn't that chic stylish mom because if it's not you're not going to make the sale you're never gonna convert those people the customers right? And then also what is the aesthetic of the organization? I have not done trade shows because their branding is too far off from mine that's a that's a big deal right don't tarnish the reputation of my brand by doing something that's a bad fit and also probably because they're not attracting the right people anyway even though we might have some other similarities the aesthetic is too far off and again what is the aesthetic of the audience right are you know do they have a style that matches your style if you're doing that right? Do they care about the good graphic design or do they want the crafty scrapbooking thing right yeah are they looking to be the sheik mom or they the one that feels guilty and she's been swept hands and she doesn't want to be told that she's not chic right so thinking about that as well we're all in visual products it really does matter and you have to do your duty oh due diligence on that take my word for it right um and then price point what is the price point that the audience is comfortable spending if your price point is off the opportunity is never gonna work for you if the blogger mostly features super cheap products people are going to see yours and think that is free insane and that's what they're going to talking about right but if the bloggers featuring something really high end your product is going to fit right in there right so figuring out where that price point aligns with yours and then right if there are other brands involved how does their price point compare you never want to be the most expensive one at the show or in the store so that's always the hard sell right I always want to be the low on either so you want to kind of pay attention that as well but right where do you fit in make sure you're in the ballpark and be honest with yourself if the vibe is off don't don't force it go look for an opportunity that suits you better create your own opportunity if you have to write, you know if you're getting approach while these loggers to giveaways and they're not right it's probably better to host to give away that you control start to finish because then you can control all of those aesthetic variables you can control the vibe you can control the audience that you're bringing in, so don't try to force an opportunity if that first piece isn't right, even though we're calling it a soft analysis. It's super super important the other thing you want to think about is how ready are you to take advantage of an opportunity, you know, invest a lot of money in a trade show and then come home and not be able to fill orders, right? You want a plan for a kickstarter campaign that suddenly goes bananas and now you're that person on kickstarter who took seven million years to actually get the product out it's really frustrating for the audience? I've been on the other side wait like really it's not here yet like, come on, they said september and now it's like august of the next year, right? Like where's my thing right? You want to be that person, so make sure you're ready to fully take advantage of that opportunity if it's something where you're doing an opportunity that's traffic generating to your website are you capturing emails or do you have a way to final people to follow you specifically on social media and you have a game plan down the road right? We talked a little bit about this giveaway idea you could do a giveaway but you have to be strategic so it's not this is a giveaway it's this is a giveaway to capture customers so that I can convert them down the road right which means a giveaway in the high time when you're trying to sell the people like I don't wanna give away the middle the holiday season because that's what you want people to buy you won the giveaway beforehand would that strategy to convert them into customers so then the second part of what we want to dio was they want to complete ah hard analysis of the potential opportunity now is where we run some numbers it's important again all that first vibe stuff has fit it has to be the first fit but once you're like ok I think this could be it for me now let's run some numbers so you want to know your opportunity costs that means how much will this opportunity cost you really really cost you the cost of a trade show is not just the cost of a trade joe right it's the trade show plus the travel if you're doing it for the first time booth pictures all that good stuff right there's a lot more costs associate id plus the inventory. Right. Wait, yeah, there could be a lot more costs then you realize. And the other way to think about it is how much will you stand to lose if it goes one hundred percent bust? How much? How much are you losing by taking that opportunity? And are you comfortable? Can the business withstand that? Right? So you might borrow some money to do a trade show. You don't get that money back right away. Can what happens? Can you handle that? Right? If you have to take out that ten thousand dollar loan and it takes you several years till you generated that revenue, are you going to be okay financially? Right? That's an important consideration and sometimes that's actually. Why it might be better to borrow a little bit of money, but I may have had pretty close to my booth fee in the bank when I took that big opportunity. But if the show was a bust, then I would have had nothing by taking out that loan and knowing that I could pay back over time when the show is a little slow. I still had cash at hand to keep moving my business forward that's a big deal, right, because if something doesn't work we don't want that to be the end of your business right? We want to make sure that if you invest all that money and you don't see that return or you don't see that return as quickly as you hoped for that you're going to be okay obviously some opportunities have really low costs a product placement give away something like that you might be spending that much right but we also have to be careful because some of these could have high costs for our brand you don't see the brand the runs giveaway every fifteen minutes right now you're not going that way right again all these opportunities about using them strategically then obviously some opportunities have really high costs the other thing to think about is what is the time investment for this opportunity because your time is also valuable yeah a trade show is not just the time of the show all the time prepping for the show and the pre show marketing and all that good stuff right researching stores you know reaching out that we also have the time investment you may decide after you've done some research that it's actually a better use of your time to go to a show and hit a bunch of wires it wants right sometimes that happens that's it was for me I wouldn't just be in their efficient you know time is money a week at a trade show was better than getting up every day and emailing stores for months and months I wanted to move through quickly right so think about the time investment you both the actual time that you're putting in and kind of the longer picture of your business right? Maybe it's a really short intense time investment but it takes out a long slog that could be really useful right son step two is to calculate your break even what is the minimum amount you need to make to make this opportunity worthwhile? What is the minimum amount so definitely you want to break even depending on your time investment you may want to cover that scene in the case of christine what's the minimum amount you we need to bring in from this workshop to make it worth your while I won't make you actually answer the question yet but that's something that you want to think about and in your case it's really interesting because once you know that minimum number you actually have a couple different scenarios for how you could bring the revenue in is that the workshop see is it selling a kit for the workshop that they need to participate isn't telling something after you have a couple different scenarios to hit your goal but you can't figure out which scenario is best until you know what the minimum use make is right so figuring out what the minimum you need is to make the opportunity worthwhile we really actually want you to make more than that, but we want at least start there and then figuring out what would need to happen to make that revenue target right? To make that trade show worthwhile, maybe you need to write five thousand dollars of orders at the show your trade shows are always a funny one to calculate opportunity because there's a longer life span and that something else to think about too right? Some things if you don't make the money right away that's it the opportunity that's it's run its course other times it might be about lead generation and making the money down the road but no one needs to happen take that revenue target right? If your goal is five thousand dollars at that trade show, what does it look like in terms of number of stores, number of sales, minimum order all that good stuff, right? What needs to happen to that revenue target at your workshop is a better in scenario air scenario b right? Think about that and then you want to determine the revenue potential for this opportunity now, of course this is the trickiest part, right? This is the one what ships everybody else because we don't have a crystal ball that we don't know but what you want to kind of look at is how much could you potentially make from this opportunity again, a little hard, no crystal ball, we'll talk about that in a second. But then also, how quickly could you see that revenue you're doing workshop and and your revenue model is that you're getting people to pay and buy a kit in advance. You can actually see the revenue before the workshop starts, right? That's, pretty cool, that's pretty rare, but it's pretty cool, right? A trade show some shows people come and write orders, they're very heavy order writing, other shows they're about networking, that's something you want to find out because you may go to a show and not see the revenue for a long time, but then you might get something good, you know, I have a friend who doesn't show that people don't write a lot of orders there, but then she got a big order from free people after the show didn't matter that she wrote, I think the show because the return on her investment was huge, right? So you have to know, but if you go to the show you or any orders and you're waiting for that big payout, can you can you sustain the business? Can you afford to have that happen, right, do you have to come out of an opportunity with cash in hand? Since you mentioned the minimum order, what are your thoughts on minimum order? Do you go in kind of middle of the road? Do you go in something safe that you think people would be more likely to make a order while they're at the show or if you're going to go a little bit higher? Do you offer some kind of incentive, like waving, shipping or what are your thoughts on all of that? So I always say that the best minimum order is what gets you the best display in the store so that customers by and it gets you the reorder, so I turned down a lot of stores because I have a lot of source you want to slide in it like three hundred dollars for me, they have to be at least four, fifty or five hundred or it's not worth it they're not going to get the re order, but when I calculate like my average dollars per order when I'm looking at an opportunity, what I find is that my average ten c around seven or eight hundred because I have plenty of stores who at that for fifty five hundred dollars minimum don't they don't even ask they just write the order and we move on so you and your guys case really? What is the bare minimum display in a store that's gonna look good? No, maybe it's like they have to have at least five nursing scarves and at least five pieces so that's where I would go with minimum and if a store can't hit that mean five and five is nothing right that's practically a personal order, you know, so don't go so low to incentivize orders because it's not worth it they're not going to be good long term accounts and that's what you actually want when you're thinking about a wholesale show if you want to do a little incentive, you know if you're trying to boost that cash flow to show you could do something like free shipping if you write the order of the show right, you can do little things like that if you're concerned about people coming looking not writing right away something else, you can always look at an opportunity you know, what's the way to sort of jump start the revenue at the opportunity you know, we have got rachelle maybe doing some art fairs, you know people may want to take the post card and go home, but you can say that's fine, but if he ordered through the website it's a little more expensive if you write the order now this is the price right? Nothing huge don't go crazy, right? Because we don't have the value your brand we wanted money, you could give people some little incentive to make the revenue come in a little bit earlier, right? Same thing. Maybe you're working with a blogger and you do something like if you if you do purchase within a certain time. There's a little the count, right? Personally found that doesn't work great, but it's also not. I don't have an impulse buy product, right? We had tiffany whips on as a guest. That probably would work great for her. She's got that great impulse byproduct. Little tiny discount. Probably by, like, crazy. It doesn't work for me, but some companies, um what I've noticed they do is they give you, like a two percent or a five percent discount if you pay in net ten versus your terms, which maybe net thirty years. Six right. And you can absolutely do that as well. Give people an incentive to get the cash flow in early on for me personally, if it's a new account, I want the payment upfront. They have to give me a credit card before I ship and that's very standard as well. The only exceptions to that tend to be your museum stores in your department stores. So that's, another good thing is for first time orders, you know, especially the trade joe get get the money up front, full payment up front well, I take the credit card and then I pay charging it ship, but I have it in my hand I wanted to my hands when I made the show right so that I don't track them down so that something else to think about and the other thing is you know, if you're doing an opportunity where you're taking orders, how quickly will you actually get the money and get that shit out? So in the kicks in the yet our lesson on crowdfunding and kickstarter, we learned that you don't get the money from a kickstarter campaign right away it takes a little while, right? So you have to plan for that as well. You might get a lot of as ready orders at a trade show, but if you're production schedule is six to eight weeks out it's pretty common in ceramics, right? You guys are on a longer time frame so you might walk out of there with a lot of orders, but if you're not shipping them for another six to eight weeks that sixty eight weeks we start seeing that money. So now we wait we talking about a long time for when you invested in the trade show till you finally see the return you have to plan for that so how do you really know how much you could potentially make from an opportunity? The real answer is you don't but the best thing you khun dio is talk to people who've been there this is where networking making connections making friends in your industry is so important right? We've got that private facebook group you guys conjoined just for our seeping to the class get in there find people who have experienced the opportunities you're looking at get to know people you know I have my trade show circuit friends and we are very comfortable talking about numbers what did you write at this show? Well, you did this thing how much did you make the on ly what you're going to know but you have to be on our relationship with those right? You can email me out of the blue and asked me I'm not going to tell you please don't let me out of the blue and asked me how much I made a trade show I don't have time to respond to all of those right but you make friends you make connections, you start to find people and you asked to the best of your ability right and find people who are going to be serious right? Who will actually give you numbers because someone's great show if someone else's crappy show right so someone like it was great, I don't care what is that number look like? Write what is great actually mean to you that's what you want to know you know if you're thinking about partnering with a blogger on a given white find someone who's working them before did you see any traffic to your website what happened from that right find people who've been there and talk to them as much as you potentially can that's the best way you know yeah never certain but it's your best bet we've also put together bonus lesson for you guys if you purchase this course which is on calculating r o I so those of you who want to run the numbers and feel a little bit more solid about those were going to go through that in a bonus listen it's a great way to kind of really dive down and get super comfortable with those numbers but again only after you've made sure that that soft analysis that the vibe, the aesthetic, the price point all that good stuff is a good fit for you your band so in the next lesson we're gonna start something I am super excited about, which is that we're going to learn the keys to entering the market with a bank this is where we go from talking about how to fund your business to how to actually make some money right who's excited for that awesome but before we go let's take a look at today's homework so I want you to identify one potential opportunity based on the market you identified in lesson ten so what exactly is that trade show? What exactly is that art fair? Where are you going to do that? Workshop, you, how are you gonna approach customers? Whatever it is, drill down to one specific opportunity, and then I want you to complete that soft and hard analysis of the opportunity. You've got space in your workbooks to do that, so go in there, work on that, see if it's a good fit, and I'll see you guys in the next lesson.