30 days to Becoming an Entrepreneur: Planning for ancillary sales

Ancillary sales can be a huge money-maker. It certainly has been for the airline industry. You know that luggage fee that has changed the way we all pack? That’s an ancillary sale. Ancillary sales basically are fees, services, and products that are complementary to your main product or service. Other examples are snacks at gas stations, bubble wrap/moving boxes at storage units, and software/anti-virus protection when buying a Dell computer. Sometimes, your ancillary revenue can surpass your main revenue.

When your first starting out, it can be easiest to just focus on your main products. Ideally you’d have all your offerings available right away – but sometimes that’s not always feasible. At The Woof Room, we didn’t have much for ancillary sales until we had been in business almost a year. We were too busy focusing on getting the business up and running to deal with the additional cost and time involved with selling other things. Eventually, we did add some products (frontline, biodegradable poop bags, dog toothbrushes) as well as light grooming (bath, ear cleaning, nail grinding, teeth brushing). We’ve had these things in place for about 6-10 months and they currently make up 5-10% percent of our monthly income.

Since selling ancillary products often require an outlay of cash, you’ll want to make sure that what you buy has a long shelf-life and will likely sell. For example, Frontline is a moderately expensive item. Because we didn’t know if it would sell, we only order a few of them to test the waters. We quickly sold all of them within a couple weeks and now regularly stock them.

Lastly, be mindful when picking and pricing your products. We actually did a survey of all our customers to see what they would like to see us sell/offer. This was very helpful because we were able to get feedback from our customers about what they’d buy. We picked our products based off their feedback and the likelihood of them selling. Additionally, we priced them to be lower than what a client would pay elsewhere – while still providing us with a decent profit (20-50% on most items).

Next, 30 days to Becoming an Entrepreneur:Navigating the world of business partnership

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30 days to Becoming an Entrepreneur: Standing your ground with customers – good customer service vs. being a doormat

Dealing with angry customers is never fun. When you open your business, you’ll experience a wide range of people and the complaints they have about your business. There are typically three different scenarios when dealing with customer complaints:

  • You screwed up. Maybe your staff overcharged them, you weren’t open because someone didn’t show up for their shift, or they received a faulty product. Nonetheless, in this scenario it’s clearly your fault. The only option is to sincerely apologize and make it up to your customer. This is the easiest scenario because everyone agrees who screwed up.
  • The client screwed up. They didn’t read your return policy, showed up late after your store closed, or let their coupon expire. Regardless, it’s a situation where it’s obviously the customers fault. You did everything you could to make sure they understood your policies but they either didn’t listen, didn’t read, or didn’t do their own due diligence in some way. When people are complaining to you because of one of these type of issues, they usually know they are in the wrong – but just want to see if you’ll give in. Don’t. I know everyone always thinks the customer is always right – but that simply isn’t true. The customer is not always right. When it’s clear they are wrong, then they are wrong. You should be sympathetic, kind, and understanding but make sure they understand where they are wrong. If you let them break your policy in some way you are opening the door for it to happen again and again.
  • Gray area. Sometimes you’ll have customer issues that come up and it’s not clear whose fault it is. In these cases it’s usually best to appease the customer by giving them what they are asking for – or meeting them in the middle. If you definitely did screw up, you certainly don’t want to insist it’s the clients fault.

The important thing to remember about customer service issues is to be proactive. At The Woof Room, we have had new staff overcharge clients. Since I go over our daily reports with a fine tooth comb, I almost always catch this. I always credit the client and email them right away to know that I caught this and fixed it. Sometimes they didn’t even know they were overcharged. This shows customers that you are not just in it for their money – that you are a business that operates with integrity – and that is important to people because many businesses would just keep their money without saying anything.

Next, 30 days to Becoming an Entrepreneur: Planning for ancillary sales

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30 days to Becoming an Entrepreneur: Becoming part of people’s routine

Are you one of the millions of people that start their day by stopping in your local coffee shop? All those people didn’t always go to Starbucks for their morning coffee. It became their routine. They began planning to leave earlier than usual, planning to buy coffee instead of making it at home, and planning to go a little out of their way to get that morning fix. For many businesses, the key to building your customer base is by becoming part of people’s routines.

For The Woof Room, that meant getting people who didn’t normally bring their dogs to daycare to give it a try. But not just give it a try in one day – give it a try long-term. It takes around 3 weeks to make something a habit. That meant we needed to get people bringing their dogs to daycare regularly, to make it be a habit. Not only would it be normal for them – but that would give them ample time to see the positive effects of bringing your dog to daycare (less destruction at home, more exercise and socialization, etc).

So, how to get you people to suddenly start coming regularly? We offered an awesome deal. We offered a buy one, get one (BOGO) deal on our daycare packages. Everyone loves a deal – so of course we had a fair amount of people unfamiliar with us buy them to give us a try. By buying a large amount of daycare, they had to keep coming regularly since they expired in 4 months. This gave them an opportunity to try us out – and helped them form the habit of being a regular customer 🙂

When thinking about how to get people in the door – or keep them coming, think about this and how you can become part of their normal lives. Think of ways you can make things easier for them – and have a positive impact.

Next, 30 days to Becoming an Entrepreneur: Standing your ground with customers – good customer service vs. being a doormat

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30 days to Becoming an Entrepreneur: Should you hold an open house or grand opening party?

Should you throw a party? This will certainly be the most difficult question you will grapple with in your process to open your business 🙂

There are two questions you should ask yourself when deciding whether to throw a party – do you have the money and do you have the people?

Throwing a party costs money. Since it’s your grand opening you’ll like want to promote it, serve food, have prizes, have fun activities, have a photographer, etc. All these things cost something. If you have the time and you’re lucky, you can probably get sponsorships for the party (i.e. free photography, free food, etc) in exchange for promoting the sponsor. When Deckci Decor had it’s last open house, we had a local cake bakery sponsor the open house and they gave us a ton of free cake in exchange for having their business cards at the party. We also had a special for clients that came and booked that day – at the open house.

If you throw a party, you want people to be there. The last thing you want is to spend a bunch of money on this party and have no one show up. Not only is it disappointing for you – but it doesn’t look that great to the people who do come when there are only three people there (counting you). Make sure that you have a community of people that will come to ensure it is a success.

Are open houses worth it the time and money? Honestly, no. I don’t think it’s worth it for a new business. You don’t have a community of clients and don’t have tons of money to spend. If you are an existing business that is moving your location, then that’s a different story. But for new businesses, throwing an open house/grand opening party isn’t worth it in my opinion. You’d be better off just having a grand opening day discount – then you’d save the stress of hoping people show up and the money of providing a fun time for those that do.

30 days to Becoming an Entrepreneur: Becoming part of people’s routine

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30 days to Becoming an Entrepreneur: Tips for hiring your first employees

Your staff can make or break your business. If you hire the right staff, customers will love your business and will come frequently. If you choose the wrong staff, you will have unnecessary stress and unhappy customers. You can usually weed out some of the “bad” staff in hiring. Most of this is common sense, but make sure to:

  • Have applicants complete an employment application. This is where you collect their job history, references, availability, etc.
  • Have a well-written job description. Make sure to clearly outline the details about the position, expectations, and availability required. If people know that you want someone to work 20 hours per week on M, W, F then you won’t waste time with those that want to work less or more – or aren’t available for those shifts.
  • Consider a multi-step interview process. At The Woof Room, we did phone interviews, then in-person interviews, then working interviews. The working interviews had someone coming in for a 4-5 hour shift to actually do what they’d be doing if they were hired (they were paid for this). This was an excellent opportunity to see if they’d be a good fit – and make sure the job is someting they’d want. We did have people decide the job wasn’t a good fit for them (and some we decided weren’t a good fit for us) so this was an important step for us.
  • Invest the time in training. Training is critical in hiring. Don’t skip this step or spend too little time on it. Create a training protocol to ensure each new hire is trained in everything they need to know – and has the opportunity to test that knowledge before they are on their own.

Don’t forget about the logistics of hiring! I highly recommend you use a payroll service. While I am all about doing as much as possible in-house, dealing with payroll taxes can be time consuming. Payroll services typically charge a flat rate and then an amount per employee. The cost is minimal, when we had less than 5 employees it was around $25-$30 per month. With our 10+ employees now with The Woof Room we pay about $55 per month. Considering the amount of work involved with payroll and payroll taxes (and keeping up with human resources notices for employees) it’s well worth the money.

Once you make your selections and have payroll set-up, you’ll need them to complete a W4. You should already have their employment application. You’ll also need to get proof of legal status – which is usually a social security card and drivers license – both of which you copy and keep on file just in case. Lastly, if they are doing direct deposit you’ll need a voided check and direct deposit authorization form from them. Make sure when you get this information to triple check what you write down and turn in to payroll. A typo can be costly – particularly when payroll does checks on their social security number.

Next, 30 days to Becoming an Entrepreneur: Should you hold an open house or grand opening party?

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30 days to Becoming an Entrepreneur: Doing a daily deal – negotiation and preparation

Everything is negotiable. When we did our first daily deal we were desperate for new business and just took what they offered and did the deal they wanted. It wasn’t in our best interest – but we really wanted the deal. I wish I knew then, what I knew now.When negotiating with a deal site, there are three primary things you can negotiate on:

  • Deal specifics: It’s up to you what your deal is. Don’t agree to do a deal on something you may lose money on. At The Woof Room, we book out of our hotel suites for dogs every weekend the entire summer – and every holiday. Because of this, we will not do deals on boarding. We learned this lesson the hard way with our very first deal (which included boarding). You can also say it’s only for new customers and place limits (i.e. one per customer or cannot be used on Friday nights).
  • Percentage you keep: They will negotiate with you on what percentage you keep. They might not come up as high as you want, but as long as they come up – event a few percentage points – it’s more money in your pocket. It doesn’t hurt to ask and it’s just money you’re losing if you don’t.
  • Expiration date: They will tell you 6 months (or 1 year) is standard – but that doesn’t mean anything. You can choose whatever expiration date you want – within reason. So,  if Christmas is your busiest time then make sure your deal expires in November so you don’t get normal customers for Christmas at discounted rates.

Once you have hammered out the details and you feel comfortable with your deal you will need to prepare. You will get A LOT of inquiries the few days your deal is for sale. How many? It varies greatly. A good way to estimate is take the normal amount of phone calls, emails, and visits you get in a day and multiply that by 10 – 15. That will give you a good idea of what to expect in terms of increased traffic. You’ll also have a lot of work after the deal handling the new clients. Three tips to make this process smooth are:

  1. Make sure you (or a very experienced staff person) is the “voice” for your business during the sale period. The last thing you want is someone coming in months after the deal telling you an employee told them something was ok when it’s not. When we do deals we put together a fact sheet about them and focus on the rules and restrictions so that everyone is aware of them.
  2. Be proactive. You can see the list of people buying your deals as they buy them (while the deal is still live). If you notice the same person buy 7 deals or a current customer buy deals for new customers, deal with it right away! Contact the customer to let them know they aren’t eligible – or contact the deal site to refund the deal. Take care of it right away, but months down the road it won’t be very easy.
  3. Collect sales tax! The deal sites do NOT collect sales tax and explicitly state on the deal that they do not include sales tax. You are going to have to pay sales tax and you definitely don’t want to have that come out of the already small amount you are getting from the deal so make sure you and your staff collect sales tax from every customer bringing in a deal.

Next, 30 days to Becoming an Entrepreneur: Tips for hiring your first employees

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30 days to Becoming an Entrepreneur: Daily deal site – is it worth it?

Are daily deal sites a boon or burden to businesses? There are many articles, blogs, etc that talk about how daily deal sites are bad for small businesses. I think they aren’t a great fit for every type of business – but for some businesses, they are an excellent way to bring in new customers.

What are daily deal sites? Daily deal sites (Groupon, LivingSocial, Crowdcut, etc) are email advertising campaigns sent out daily to massive listservs of individuals that have opted to receive deals. Businesses agree to offer something at a discounted rate as the daily deal. The deal site also takes a cut of the sales. For example, today on Groupon in my area you can buy a $20 gift certificate to a local restaurant for $9. People love buying these because everyone loves a deal.

What are the pros and cons? The pros are that you get access to an enormous amount of people that have never heard of your business. Some deal sites have lists of hundreds of thousands of people. You don’t pay anything to have a deal unless someone buys something. So, if no one buys your deal you just got a lot of free advertising. You also get an influx of cash which is always helpful for a new business. The cons are that you are getting very little for your deal. Not only are you required to offer something at 50% + off – but you also have to give a percentage to the deal site. The percentage you get to keep varies based on the deal and your business – but it usually varies between 50% – 75%. If you are a giant like Amazon you probably get 90% or more – but small businesses usually get stuck with only 50 – 60%. That means in the example above of the restaurant, they are only getting $5-$6 for each deal sold. So they are basically selling $20 gift certificates for $5 or $6. Another con is some customers will only come for the deal – and never come back, which defeats the purpose of doing the deal (bringing in long-term customers). Lastly, daily deals are a lot of work. Not only do you often get a huge influx of calls, visits, etc during the deal promotion – but some businesses get unmanageable rushes of customers that they are not prepared to handle.

Should you do a daily deal? It depends. I personally don’t see how it’s worth it to restaurants and other businesses that people go to very infrequently. For The Woof Room, it was very worth it because the nature of dog daycare is that people bring their dogs regularly. Some people bring them daily, others weekly. So, even if only 20% of people that buy a daily deal become regular customers we’ll easily make the money back we lost. Also important to consider, is the cost of actually providing the deal. Don’t lose money on it! Factor in all costs associated with providing your service or deal. It doesn’t make sense to give someone $15 worth of food when they are only paying you $5.

Anyone have any experience doing a deal site? What were your thoughts on it?

Next, 30 days to Becoming an Entrepreneur: Doing a daily deal – negotiation and preparation

Photo Credit: Mark Smiciklas

30 days to Becoming an Entrepreneur: Developing a marketing strategy – ideas for getting the word out

How do you get people in the door when you open? As a new business, the plethora of advertising and marketing opportunities will amaze you. Advertising is everywhere. There are two strategies you’ll be focusing on:

Advertising

As a new business, you’ll likely have a small budget for advertising so it is especially important you use those dollars wisely. In my opinion, most traditional forms of advertising won’t give you as good of a return on investment. TV, newspaper, and magazine ads are costly – skip these in the early stages. I’d recommend you focus your advertising on three areas:

1) Online. I have had success purchasing advertising from Google and Facebook. They are pay per click – so you only pay if someone actually clicks on your ad and views your website. For a new business, this is perfect because you only pay for people that actually look at your ad and are interested enough to click on it to see your website. Google is much more expensive than Facebook – but for a reason. You can use Google to purchase advertising so that anytime someone types the key works you select your ad will come up in the sidebar or the top of the page. You can also put caps on how much you spend, so once you hit your budget maximum they just stop showing your ad. With The Woof Room we did this when we first opened, we wanted our ad (we had a coupon in our ad) to come up for anyone searching things like “dog boarding,” “dog daycare,” etc.

2) Related venues. Advertise in targeted locations. For example, we bought dog poop bags with our information on them and put them at all the local dog parks. Know your market and target it directly for advertising.

3) Daily deal site. Groupon, Crowdcut, LivingSocial, etc are all options for getting new clients.

Referrals

Word of mouth and customer referrals will be one of the most important – and sustainable ways to advertise your business. There are two ways you can build referrals to your business:

1) Customer referral program. Customers that love your business will tell others about your services/products. Oftentimes though, people don’t even think about it until they are asked. Turn your customers into proactive referrers by creating a customer incentive program. Give them a reward – and the person they refer a reward – once that person has purchased anything. We created a referral program at The Woof Room and it has been helpful in bringing in new clients.

2) Partnerships. Create partnerships with similar businesses and nonprofits. Help them whenever possible. With Deckci Decor we have several partnerships with event venues where they refer us to their clients and have us listed on their website. At The Woof Room, we partner with several local rescues and provide free daycare and boarding for dogs without a home.

Next, 30 days to Becoming an Entrepreneur: Daily deal site – is it worth it?

Photo Credit: Mark Smickilas

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30 days to Becoming an Entrepreneur: Tips for building out your space

Just like remodeling your home, building out your space will be costly – and will be impacted by your taste. While it would be nice to put in slate floors in the bathroom and stainless steel appliances in the break room, it isn’t practical.

  • Think long-term. While some things cost more because they look nice, others cost more because they last longer. Aim for durability. While it may save you a couple hundred dollars to use a cheap flooring, you’ll pay for it in the long run when you need to replace the floors after only a couple years of use.
  • Think through a normal day. Don’t just think about what you will be doing in the space, think about how specifically you will be using the space – and test it. For example, take a mop bucket from where you plan to put your mop closet and bring it to where it will be needed. Was it convenient? Messy? Practical? What about an office? Think about if you are going to have one, and if you are, where it should be located. For example, if you plan to work in there while your business is open, you’ll want it very close to the showroom/retail area/check-in desk – or will want a window/doorbell.
  • Plan well. Don’t be in a rush – if possible. Take the time to plan for everything and get plenty of bids. Each contractor you have come in may have a different idea for what would be best. Only by hearing those ideas will you know what is best for you. By being in a rush, you put yourself in the situation to accept the bid that can get it done the fastest – which isn’t always the best (or the most reasonably priced).
  • Bargain shop. You don’t need shiny new everything. A used coffee table for a sitting area, oops paint from home depot, and coupons can all save you money. Treat the money in your business account as if it were your own and be a smart shopper.

Next, 30 days to Becoming an Entrepreneur: Developing a marketing strategy – ideas for getting the word out

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30 days to Becoming an Entrepreneur: Negotiating for your lease

Usually the landlord presents you with a lease and you sign it. Don’t do that! Everything in that lease is up for negotiation. By just accepting whatever the landlords gives you, you are missing out on an opportunity to save money and cover yourself down the road. What should you negotiate on? Most things. Here are the key things to negotiate on:

  • Lease start date: No one can sign a lease and open for business within a day or two. It will take at least a couple weeks – but for most people it can take months. For us, it took us almost four months to renovate our space for The Woof Room and Deckci. As a new business, we did not want to pay rent when we weren’t open so we were able to negotiate that we could get in to the space beginning in August to renovate, but our lease wouldn’t officially start until mid-October. We opened for business at the end of November. This saved us over $10k in rent. Try to push back the lease start date as far as possible to lower your upfront costs. Ideally your lease would start when you actually open for business (or later).
  • Lease term: Many landlords for commercial or industrial spaces want long-term leases. At least 5-10 years (one building we looked at wanted us to sign a 30 year lease!). As a new business, you don’t want to sign a lease that long if possible because you never know what might happen with your business. We were able to negotiate our lease to be a 3 year lease. Also, this is also where you should negotiate any conditions on your lease. For example, you should make your lease conditional on city (or other governmental) approval. For The Woof Room, we made our lease contingent on getting approval from Roseville to open.
  • Rent (and rent increases and what rent includes): Negotiating your rent to be lower is worth a shot – but don’t be surprised if rent is a sticking point. Try to get taxes and cam included in your rent. Make sure to have a note in the lease about the landlord needing to provide proof of taxes/cam going up before they can increase your rent because of it. Also, make sure to spell out rent increases (if any) in your lease. For example, our rent increases by 2% annually. Lastly, try to get some or all of your utilities included in your rent. We were able to get water included in our rent. Because we wash a ridiculous amount of linens for Deckci, this was a huge win for us.
  • Renovation: Oftentimes landlords will cover some of the costs associated with building out or renovating your space. This is something you should negotiate for. Some will just flat out pay for contractors to do some work, others will give you a rent credit for $x amount. We negotiated that the landlord would remove all of the glued down carpet throughout the space, construct about 100 feet of interior walls (carpentry, drywall, tape, mud), demo a concrete landing, and add a drain and plumding to the room we planned to do laundry in. These things saved us at least $4,000-$5,000. Make sure you write a deadline for this work to be done by in the lease. Make sure to also note that you have permission to do any renovations necessary for your business.
  • Parking: Write out any parking spaces that will belong to you as part of the least.
  • Care & Maintenance: Our lease says this “Lessee shall be responsible for routine repair and maintenance of HVAC, lights, interior walls & floors, and general interior repairs. Lessor shall be responsible for roof, exterior walls and building structure.” What is considered “routine maintenance and repair” has been big. About 6 months after moving in the space the AC wasn’t working – we hadn’t even used it yet (it was right after winter). We called the landlord and they tried to make us pay for it. Fortunately, we were able to talk to the contractor who confirmed that the problems were NOT routine maintenance and repair, so the landlord had to pay for it. Make sure to have that terminology in your lease – and always make sure any repairs are actually your responsibility.

Most importantly, make sure that anything you discuss is in the lease. Make sure all of the above items are spelled out in the lease!

Next, 30 days to Becoming an Entrepreneur: Tips for building out your space

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