Business Planning

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Cross Promotion - A Low Cost Way to Grow Your Business

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With marketing budgets under pressure, business owners and managers are looking for ways to do more with less. One of the most effective ways you can find new customers with minimal expense is cross promotion.

Cross promotion is simply when two or more businesses combine resources to market their products or services to each other’s customers. The main criteria for success in cross promotion are that the businesses serve the same types of customers but don’t compete with each other.

There are hundreds of ways businesses can work together to achieve this. Here are a few cross-promotion ideas that can help you expand your market on a small budget.

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Choose your customer wisely, you don't want everyone

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Nearly every business is dependent on a constant flow of new accounts. It’s easy to ignore this because most businesses earn most of their revenue from old, established customers.

The problem is that a certain percentage of old customers will drift away or change their focus every year. They’ll change their buying habits, often for reasons that you can’t influence or life just happens.

So you need to continually market to recruit new customers, establish them, and start promoting them up your customer ladder, so that one day they’ll be part of your staple business clientele.

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Break-Even Analysis - Your simple high value tool

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One of the trickiest aspects of bringing a new product to market is to estimate the total cost involved in its production. Cost of production effects margin and margin determines how many units must be sold to make a profit. If the number of units sold can’t provide sufficient margin at a market acceptable price, then, no matter how good the product is, producing it will result in a loss for the business. The nexus between cost of production, price and units that need to be sold to make a profit, is called the ‘break-even point’.

Break-even analysis is one of the most important financial tools you can use to make better business decisions.

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Discounting is Dangerous

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Offering a discount in the heat of negotiations may seem like a good idea at the time but thoughtless discounting is an easy way to lose money fast.

Before you succumb to the temptation to win new business by offering a discount take a moment to consider these ten problems associated with discounting.

  1. Discounting eats away profit margins!

  2. Negotiating a discount focuses the customer’s attention on your price. If your only competitive advantage is price you are in trouble because price can always be matched by a competitor. The focus should be on the benefits of the product to the customer that make the price, if not

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Sketching Out The Competitive Landscape

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For anyone trying to grow a business, one of the necessary tasks is to map the competitive landscape and continue to keep tabs on how things develop in it over time.  With a good understanding of the competition facing your business you’ll be able to spot and exploit opportunities as they develop.  Ignoring the competition or letting success lull you into a false sense of security could mean nasty surprises further down the road. The following points can help you start developing a strategy:

  • Identify your competitors: Your competition includes anything that could draw customers away from your business. For example, for a movie theater, other cinemas represent a direct competitor. But there are also a number of indirect competitors that need to be outmaneuvered as well. These are businesses after the same customer dollar as you. For the movie theater, cable TV networks, DVD rental stores and even online movies all represent competitors.

Dealing with Disasters

For those who haven’t experienced a disaster first hand it’s difficult to imagine, even from the graphic images fed to us by the media, the realities of the situation. What pictures cannot convey is the frustration of an owner watching their business suffer through the several days or weeks during which power is unavailable, transport facilities are out of operation, communications are down and access to the premises is prohibited. It’s exactly those restrictions that can spell the death of a business caught up in a disaster and unprepared to deal with the consequences.

Are you prepared? Ask yourself these questions, they cover some of the most critical aspects of keeping the business afloat after a disaster.