Selling

Whether you operate a factory, wholesale outlet, retail store, service shop, or are a contractor, you will have to sell. No matter how good your product is, no matter what consumers think of it, you must sell to survive.

Direct selling methods are through personal sales efforts, advertising and, for many businesses, display - including the packaging and styling of the product itself - in windows, in the establishment, or both. Establishing a good reputation with the general public through courtesy and special services is an indirect method of selling. While the latter should never be neglected, this brief discussion will be confined to direct selling methods.

To establish your business on a firm footing requires a great deal of aggressive personal selling. You may have established competition to overcome. Or, if your idea is new with little or no competition, you have the extra problem of convincing people of the value of the new idea. Personal selling work is almost always necessary to accomplish this. If you are not a good salesperson, seek an employee or associate who is.

A second way to build sales is by advertising. This may be done through newspapers, shopping papers, the yellow pages section of the telephone directory, and other published periodicals; radio and television; handbills, and direct mail. The media you select, as well as the message and style of presentation, will depend upon the particular customers you wish to reach. Plan and prepare advertising carefully, or it will be ineffective. Most media will be able to describe the characteristics of their audience (readers, listeners, etc.). Since your initial planning described the characteristics of your potential customers, you want to match these characteristics with the media audience. If you are selling expensive jewelry, don't advertise in high school newspapers. If you repair bicycles, you probably should.

Advertising can be very expensive. It is wise to place a limit upon an amount to spend, then stay within that limit. To help you in determining how much to spend, study the operating ratios of similar businesses. Media advertising salespeople will help you plan and even prepare advertisements for you. Be sure to tell them your budget limitations.

A third method of stimulating sales is effective displays both in your place of business and outside it. If you have had no previous experience in display work, you will want to study the subject or turn the task over to someone else. Observe displays of other businesses and read books, trade magazines, and the literature supplied by equipment manufacturers. It may be wise to hire a display expert for your opening display and special events, or you may obtain the services of one on a part-time basis. Much depends on your type of business and what it requires.

The proper amount and types of selling effort to use vary from business to business and from owner to owner. Some businesses prosper with low-key sales efforts. Others, like the used-car lots, thrive on aggressive, hoop-la promotions. In any event, the importance of effective selling cannot be over-emphasized.

On the other hand, don't lose sight of your major objective - to make a profit. Anyone can produce a large sales volume selling dollar bills for ninety cents. But that won't last long. So keep control of your costs, and price your product carefully.

Record Keeping

The keeping of adequate records cannot be stressed too much. Study after study shows that many failures can be attributed to inadequate records or the owner's failure to use what information was available to him. Without records, the businessperson cannot see in advance which way the business is going. Up-to-date records may forecast impending disaster, forewarning you to take steps to avoid it. While extra work is required to keep an adequate set of records, you will be more than repaid for the effort and expense.

If you are not prepared to keep adequate records - or have someone keep them for you - you should not try to operate a small business. At a minimum, records are needed to substantiate:

1. Your returns under tax laws, including income tax and social security laws;

2. Your request for credit from equipment manufacturers or a loan from a bank;

3. Your claims about the business, should you wish to sell it.

But most important, you need them to run your business successfully and to increase your profits. With an adequate. yet simple, bookkeeping system you can answer such questions as:

How much business am I doing?

What are my expenses? Which appear to be too high? What is my gross profit margin? My net profit?

How much am I collecting on my charge business?

What is the condition of my working capital?

How much cash do I have on hand? How much in the bank? How much do I owe my suppliers?

What is my net worth? That is, what is the value of my ownership of the business?

What are the trends in my receipts, expenses, profits, and net worth? Is my financial position improving or growing worse? How do my assets compare with what I owe?

What is the percentage of return on my investment?

How many cents out of each dollar of sales are net profit?

Answer these and other questions by preparing and studying balance sheets and profit-and-loss statements. To do this, it is important that you record information about transactions as they occur. Keep this data in a detailed and orderly fashion and you will be able to answer the above questions. You will also have the answers to such other vital questions about your business as: What products or services do my customers like best? Next best? Not at all? Do I carry the merchandise most often requested? Am I qualified to render the services they demand most? How many of my charge customers are slow payers? Shall I switch to cash only, or use a credit card charge plan?

The kind of records and how many you need depends on your particular operation. A boy selling newspapers part time each day does not need inventory records. He buys and sells his entire stock each day. But shoe store or dress shop operators will soon find they cannot keep necessary inventory information in their heads.

ToSay that you are the type who's starting new small business. You Have given attention to the general chances for success, and have
selected the new company you want to establish.

What practical issues will you face in starting your organization? How Much money will you need for starting new small business?
Where can you get it? What kind of business organization will you have? Where should you locate the business? (start company tips
to follow)

The first question you need to reply is: Just how much cash will I need? But this question can not be answered until other
questions are answered and many decisions are made.

To decide how much cash is needed to start a business, enter all Of your potential income and all of your planned expenses onto a
job sheet or kind.

Though you may feel that This Type of preparation is more than You need to start a simple small business it's useful to get
started with this approach to management which puts down figures in black and white. You will discover the same approach valuable
in an established small business.

First, estimate your sales quantity. This will depend on the overall Quantity of business in the region, the number and ability of
competitors now sharing that company, and your capability to compete for the customer's dollar. Obtain assistance in making your
sales quote from wholesalers, trade associations, your banker, along with other business-people. A number of company and
statistical books could be useful in making sales volume quotes.

In reaching your final estimate of sales do not be over-enthusiastic. A brand new company generally grows slowly at the start. If
you overestimate sales you are likely to invest too much in equipment and initial inventory, and commit to heavier operating
expenses than your actual sales volume will warrant. Since you're just starting up you might have no sales for the first few
months. At any rate you may expect your first few months to be quite low.

You must also decide what percentage of your earnings will be cash And what percentage will be sold on credit. If you guess that a
certain part of the earnings will be on credit then you must figure when you're going to get the money for these earnings. One
month? 2 months? More? Never?

Next, in our guide to starting new small business, estimate how Much cash will be paid out. Remember in starting a company you may
be purchasing gear, paying licenses and fees, which makes deposits on lease, utilities and so forth, several months before you
open the door. A few of those expenses are easy to estimate. If you have decided to lease a building (more about this later) then
you understand what your deposits will be and how much you'll need to pay out each month. You can probably get the expense of
fees, licenses and utility deposits with a couple of telephone calls.

Other cost figures may take a bit more work to get. 1 way Is to obtain average operating ratios for the type of business in which
you are interested. Among the sources for such ratios include Dun & Bradstreet, Inc., trade associations, publishers of trade
magazines, specialized accounting firms, industrial companies, and colleges and universities. The normal ratios for your type of
company multiplied by your estimated sales volume will serve as bench marks for estimating the various items of expenditure.
However, do not rely exclusively on this method for estimating each expense item. Verify and change these quotes through
evaluation and quotations in the particular market area in which you intend to operate.

Do not forget to pay yourself too. You may need money to live on if You have to quit your job. If your spouse is working and can
encourage the family for a while you may not have to withdraw money from the company. The longer you can go without taking cash
out, the faster you will develop a solid cash position. Now you've estimated your cash receipts and expenses, write down the
amount of cash you will put into the business to start. This goes online 1 in the case below. Next, add lines 1 and 2 for your
first month to get line 3. Then add up all the expenses to find 5. Subtract line 5 from line 3 to get line 6. This money at the
end of month then goes to line 1 for the beginning of the following month, etc.

If you continue this for the entire year, very shortly you'll find You have negative amounts or even a negative cash flow. About
this time you will also understand that you should be operating on this kind with a pencil which has a fantastic eraser.

In this overly-simplified case, you see that by the end of June you are minus $200 in money. Two solutions can be tried - reduce
your purchases at June by $200 or begin with $200 more. You may be unable to reduce expenses (they will likely go up as your
company starts). So you will need to put in $200 more to start with. If all you have is 4000 then the additional $200 you need is
funding you need to get from someplace else.

Do not be fooled by this very simple illustration. Many small businesses Start with the 200, and try to get the $4000 from
someplace else. Since a Major cause of failure in the early stages of a company is Under-capitalization, be very careful in your
planning at this point. You can Almost always plan on several unexpected expenses and a few delays in expected income.

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