Why is your network so vital to business success?

Starting a small business is exciting, but it’s also difficult. One important resource you’ll need to marshal is your network – this means social contacts in family, social, professional and recreational networks, as well as professional role models. Later you’ll need access to another type of network as well, comprising lawyers, bankers, accountants, suppliers, potential customers and investors.

Why is an entrepreneur’s network of contacts so important?

Research shows that an entrepreneur’s use of networks is highest during the pre-venture planning stage and tapers off as the business starts and grows. This might be attributed to the lack of time the new business owner has for eating, let alone networking. Still, entrepreneurs can credit their success to networking and developing contacts to generate ideas, test concepts, and get support. Some cultures benefit from a strong connection to their faith or heritage communities. For example, Canada’s Indigenous community has a long history in the practice of storytelling. Stories are told to share the way of life of Indigenous people within and outside the community. Experiences are passed down so that other generations can benefit from the collective wisdom.

So, how do you expand your network?

Make sure to reach out to other entrepreneurs who can help connect you to other people. “Can you connect me?” or “Who is the one person in your network you think I should meet?” are two powerful phrases that you should get comfortable using over and over. Entrepreneurs like to help new and growing businesses succeed — it’s their way of giving back for the help that they too received in the early stages. If you’re shy or an introvert and shudder at the thought of networking, start slowly. Join a local business meet-up group, your local Chamber of Commerce or other business clubs to help get you started. When you’re a business owner, you’re in the sales business — and sometimes that means making small talk. But fear not! Learning to network effectively is a great skill to develop. Check out this blog post for more tips for networking for the networking-averse!

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Best wishes for the holidays – and the New Year!

As we come to the end of 2022, we’d like to thank you for being with us this year. All of us here at GoForth Institute wish our fellow entrepreneurs a festive and restful holiday season. We’re looking forward to exciting new things in 2023, and we hope the new year is wonderful for everyone – in small business and in life!

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social media conversion ideas

3 tips for increasing social media conversion

When your goal is to drive traffic to a landing page, online shop, or signup form, here are some social media ideas to increase conversion.

1) Keep your branding consistent throughout your sales funnel

Imagine you’re scrolling through your feed and an ad from one of your favourite businesses catches your eye. You click on it, only to see a landing page that looks completely different from that initial ad. How many of you would assume you somehow ended up on the wrong page and leave? Keep your brand pillars in mind in every stage of the customer experience so your customers know it’s you, and you can increase their confidence.

2) Ensure your landing pages are mobile and user-friendly

Did you know that 69% of internet users use their phones for product research? Or that mobile web traffic accounts for more than half of worldwide traffic? Making your landing pages mobile-friendly and as simple as possible will mean a smooth experience for mobile users, which makes it easier for them to investigate your business further. Focus on visuals, ease of use, and a clean, minimal design.

3) Try user-generated content in your social media

User-generated content, or UGC, refers to the content that’s created by a brand’s followers or customers. For example, a video showing a customer using a service or a tagged Instagram or Twitter post displaying the product. And, more than half of customers trust UGC over other forms of marketing. Being able to see other people enjoying your product or service increases your business’ authenticity and trustworthiness. Check out Later’s blog post for ways to use UGC in your social media marketing strategy.

As always, make sure your content is top-notch, valuable, and engaging to your audience. Check out GoForth’s online small business training for more great marketing tips!

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How do you estimate sales in a small business?

Estimating sales is one key way to figure out how well your business idea might work as an actual business. The stronger your sales forecast is, the more confident you can be in going ahead with your small business idea. Estimating sales lets you organize market and financial data in a way that helps you figure out what your profit might be – the money that’s left over after all your expenses have been paid. We don’t need to tell you that profit is important! No profit, no paycheque for you. That’s no way to live.

At GoForth Institute, we want small business owners to live comfortably right out of the gate. However, that takes planning. And lots of it! So let’s look at one of the most important types of  planning you can do as a new entrepreneur — the sales forecast.

There are three methods for creating a sales forecast: i) Market share method; ii) Daily capacity method and iii) Market testing.

Market share method to estimate sales

In the market share method, the sales forecast begins with an estimate of market size. This is the total number of consumers or businesses in your trading area that would be interested in purchasing your product or service. It’s your target market, but with a number attached to it — how many are there?

Once you have your market size, you need to estimate their consumption — how much are they currently buying? You can get information on past consumption through primary market research or secondary market research.

When you have an estimate of the number of buyers in your area and how much they buy each year, you can estimate total market demand by multiplying the two numbers together. For example, Jill and her sister Lauren want to open a flower shop. Their city has 100,000 households, but not everyone in the city would travel to their shop. So they assumed that only people who lived within five kilometres of their flower shop would want to do business with them.

Here’s market demand for Jill and Lauren’s flower shop:

City Size = 100,000 households
Market Size = 10,000 households live within five kilometres of their store
Annual Spending per household on floral arrangements = $140 (from local statistics)
Total Market Demand = 10,000 households × $140 spent per year = $1,400,000

Market demand vs market share

Market demand is not the same as market share. If Jill and Lauren open their shop, it will make theirs the seventh flower shop competing for the total market demand for flower arrangements. So, assuming all competitors are equal in size and competitive advantage, and that Jill and Lauren could jump right into business without any retaliation from competitors, they could potentially earn a one seventh share of the total market demand for flowers. So how does that translate into estimated sales for them?

Total Market Demand = 10,000 households × $140 spent per year = $1,400,000
Estimated Market Share = 14%
Estimated Sales for one shop = $1,400,000 × .14 = $196,000 in sales.

So, using the market share method of sales forecasting, Jill and Lauren (and hopefully you!) see the potential revenue for their shop. This estimate should be adjusted to account for seasonality, special events (like Valentine’s Day flower purchases), and general economic conditions of the region, weather, seasonal changes and holidays. It’s impossible to predict the factors that will most likely impact sales, but you should try to account for them in your sales forecasts.

Daily capacity method to estimate sales

With method of developing a sales forecast, you estimate what you think you could sell on a daily basis. Let’s go back to Jill and Lauren, the flower shop owners we talked about last week. They could estimate the number of customers coming into their shop to make a purchase of flowers or accessories, and the number of flower arrangements sold over the phone for delivery on a daily basis.

Here’s what their sales worksheet looks like:

Product/service Price Units sold/day Total Sales
Floral arrangements by phone $75 5 $375
Floral arrangements in person $60 5 $300
Accessories, home décor $35 10 $350
Cards $4 5 $20
Total estimated daily sales $1,045.00

Assuming the business will be open six days of the week, every week of the year (or 312 days), Jill and Lauren can estimate their annual sales by multiplying 312 days × $1,045.00 to get $326,040. This estimate should also be adjusted for seasonal sales, economic conditions of the region, and so on.

Market testing to estimate sales

Market testing is another way to estimate sales in your small business. Here are the steps involved:

  1. Develop a prototype, model or description of the product or service that you can show to others. Most ideas for new products or services don’t work the first time. With a model or prototype, you can photograph it or create a picture of some kind and demonstrate it to a prospective buyer. It also allows you to try it out for yourself to make sure it works. (Be sure to keep accurate notes of your research; you may come up with an even better idea later.)
  2. Seek out potential customers with your sample or prototype and ask if they would buy it, how often and how much of the product or service they’d buy. Be sure to call on the individual who makes buying decisions. Then ask them how much they’d pay for this product. If people criticize your new product idea, ask them why. Ask how the product could be modified to make it more attractive.

The only real test of a product or service idea is a live market test. Listen carefully to comments and objections of the buyer – their feedback is priceless. Most importantly, listen for their interest to purchase and comments on what they’d pay. From there you have the beginning of your sales forecast.

Good luck!

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