The 7 Psychological Reasons Promotional Products Are The Most Vital Part Of Your Business

The current economic atmosphere has made the majority of Americans cling tight to their wallets like never before. People are less willing to spend money on the little things that are not vital to their existence. Everyone is looking for a bargain, and becoming and remaining a successful business owner is becoming more and more difficult.

At least that is how a lot of business owners think. A few business owners are thriving and prospering in the current climate, and what likely sets them apart from their counterparts who are failing is the courage to remember how they gained their success in the first place.

Marketing is key to most businesses, and if you are one of the fortunate few who does not require a marketing plan, please stop reading this now. For those of you that are seeking out new business, take heed of the psychology that determines whether or not a customer decides to do business with you instead of your competition.

This author has a deep and abiding love of guerrilla marketing. The act of physically seeking out business through telephone calls, promotional events, print advertising, and relentless footwork. These techniques have been proven time and time again to be highly effective, especially for those companies with the tenacity to do so on a regular basis.

There is a reason that big chain stores send out brochures and catalogs to their customers…they work! Take a visit to your local Wal Mart, and you will see dozens of customers doing their shopping based on what they found in an advertisement prior to paying a visit.

There is an old adage that says that you need to spend money in order to make money, and there is a tremendous amount of truth in it. It is vital that you present a prospective customer with something that makes a great first impression, and nothing makes a strong statement like a well designed, professional business card, flyer, or brochure to go along with your winning smile.

The following is a list of seven psychological reasons quality promotional products are a vital part of your business:

1. When someone is in the market for a product or service, they typically will seek out people who are good at what they do. Consequently, they believe that someone who is good at their profession is successful. They expect everything about a business to be perfect. Nothing shatters that mental perception more quickly than a poorly designed brochure or business card that was printed on your personal computer.

People assume (and they are generally correct in their assumption) that successful people are successful because they are able to focus on small details. Your mystique and uniqueness can be quickly undermined by a perforated edge or a logo that looks like it was designed by a third grader. If you expect success, you must demonstrate success. Today’s consumer demands excellence, not only in the quality of your work, but in your methods of procuring business.

2. The nightly news is rife with stories about unsuspecting consumers being taken advantage of by companies that promised one thing and then did another. For this reason, consumers are highly cautious. A business card printed on Avery business card paper and run through a home laser printer is something that literally anyone can do with relative ease. Professional promotional products make customers feel more comfortable doing business with you. The last time someone handed you a business card with a perforated edge, how long did it take before it was in the trash?

3. Put yourself in a hypothetical customer’s shoes for a moment. How comfortable are you going to feel writing a sizable check to a company that does not care enough about their business to produce a decent printed explanation of what they offer? How much research are you going to have to do before you decide to do business with a company that hands you a black and white business card with a list of your services? The world revolves around the consumer, and they expect immediate gratification for their desires. How likely is a consumer to do business with you instead of a competitor if they do not immediately trust you? Furthermore, how much steeper is that proverbial hill to climb if you are not able to offer a good looking printed product that reflects your dedication to your trade?

4. Size matters. Despite what every girlfriend you had in high school told you, size is very important to a potential customer. Nothing implies size and success like a professionally designed promotional product. If you hand someone a business card that took next to no effort to create, consumers instantaneously view you as suspect, demonstrating a lack of professionalism, and a tiny one man operation whose future is in question. To the contrary, a glossy business card with a substantial thickness elicits a sense of trust. It sounds a bit on the silly side, but most professionally designed business cards have the approximate thickness of a greeting card. Professional products feel like a gift to a customer and help you build rapport and trust.

5. Customers need to see things in writing. Bids and proposals simply do not look nice when they are printed on plain white paper. Professional letterhead makes a proper statement, and is a demonstration of the professionalism of your business.

6. Name recognition is subconscious. If you are able to remember the first time you ever heard of Nike, it would be a surprise. However, with no effort whatsoever, you can probably name ten products that they produce. This is because the big companies of the world have done a fantastic job of producing a brand through advertising cleverly and using a myriad of promotional products to burn their company into your memory forever. You can, on a much smaller scale, and for far less money, do something similar for your business in your own community.

7. First impressions are literally everything. Setting the tone for your future business dealings with a customer determines the likelihood that you will gain a customer’s immediate business and any future business. There seems to be a belief that it is important to cut corners and costs, and the first thing that a lot of businesses tend to cut out is advertising. Advertising is the lifeblood of a company, and without professional marketing materials, the odds of gaining any new business goes down drastically. Your feet don’t have holes in them, so don’t shoot one into them by skimping on the little things that keep your business looking as professional as it can possibly be.

I worked in business to business sales for nearly a decade. I never took a business seriously unless the business card they handed to me could be used as a coaster. Your invoices and letters should be on professional letterhead if you expect a customer to take you seriously. Business cards, brochures, flyers, banners, and any other kind of printed marketing materials should be professionally designed and look perfect if you intend to use them to brand your business and inform your customers about what you do.

In conclusion, it is vitally important that your marketing materials reflect the professionalism of your business. If you don’t love your business enough to make it look nice, how can you ever expect a prospective customer to do business with you?

Buying a Business for Sale – Get These 3 Essential Tips to Decrease Your Risk

Let’s face it – In today’s economy there is a lot of risk associated with doing business. It seems like every week you hear a story on the news or from a friend about some new business going bankrupt. We are surrounded by people who are being shattered by this economy.

So, what are we supposed to do?

As entrepreneurs/business owners, how can we ensure our own financial security in this time of hardship? How can we be sure that buying a business for sale won’t be just another in a line of business failures?

Well, today I would like to talk to you about 3 ways you can ensure that you are running a competitive business. Specifically, I’d like to talk to you about business acquisition and how to do it the right way so that you are taking much LESS risk, instead of more.

3 Tips to Decrease Risk When Buying a Business for Sale

Tip #1. Be Patient

Just because you’ve decided that you’d like to buy a business for sale doesn’t mean you have to go out and commit to a purchase tomorrow.

Take several weeks or even several months to monitor the listings in your area. Try to develop an eye for which businesses seem to be going up for sale because they’re losing money and no longer viable, and which businesses are going up for sale simply because the owner/management no longer has the time or desire to commit to their business.

Obviously, we would like to find the latter.

If you rush into this acquisition you’re liable to make a stupid decision, or to perceive something the wrong way, which down the road could cost you your success.

Tip #2. Study Cause and Effect of Promotion Strategies

One of the huge advantages of buying a business for sale over starting your own is that you have an opportunity to see what that business has done to promote itself, and how it had an impact on that business. In other words, you can observe a promotional campaign and judge its ROI without having spent any of your own time or money on doing so.

This is immensely powerful, and not something to be skipped over lightly.

Once you have a business in mind that you think you might be interested in, it’s important that you talk to the owner about what promotional strategies they tried in the past and what kind of results they seem to. Comparing promotional campaigns to financial data is one of the most powerful ways to pre-judge the current and future success of a business before you buy, and if possible I advise you try to find a way to do so.

Tip #3. Embrace the Brand, Don’t Shake the Brand

Many people who acquire a new business think that the only way they’re going to be able to make it successful is if they put their own “personal touch” into it. In other words, they believe that their own personal branding is going to be what makes or breaks a business’ profits.

However, this is nothing more than a romantic ideal that many entrepreneurs can’t seem to separate themselves from, and in the end it causes them to lose money.

When you buy a business for sale, don’t immediately try to take things in a radical new direction. Do more of the same and make small tweaks one at a time so you can see their effects. This is the secret to taking an already profitable business and turning it into a truly booming success.

I really hope that these 3 tips have helped shed some light on what you should be doing as a potential business buyer to ensure that you see a good return on your investment, both time wise and money wise.

Starting a brand new business in this economic climate is almost like committing financial suicide, that’s true. However, buying a business for sale that has a proven track record of success that you plan to further build upon and expand is NOT financial suicide…Not at all. It’s good business in an economy where you can’t afford bad business.

If nothing else, I encourage you to at least browse some of the local listings of businesses for sale in your area. I think you’ll be pleasantly surprised by some of the things you find.

3 Tests To Qualify For A Small Business Loan

Banks and other lenders are really only concerned about one thing; getting repaid.

After all, that is how they still make the bulk of their revenue; making loans and getting repaid both interest and principal.

Thus, to qualify for a business loan, you simply have to demonstrate that your business can service the loan request – meaning being able to make the loan payments for the life of the loan.

Most lenders will perform the following 3 analysis calculations to determine if your business has the cash flow to service the proposed new loan.

1) Spread The Financials:

Banks / lenders will require three years of past financial statements at a minimum. The reason is to see if your business could have serviced the loan over the last three years. If it passes this test, then your business should be able to service the loan for the next three years.

Thus, they use your past business performance to determine what your future performance should be.

To spread your financial, most lenders will do the following for each past period that your business provided financial statements:

  • Take your net income (that is your net profits after all operating costs, taxes and interest payments).
  • Add back any non-cash accounting items like depreciation (deprecation is not an ongoing cash expenses but an accounting anomaly to reduce taxable income for tax reporting purposes only).
  • Add back any one-time charges or expenses – expenses that are not expected to reoccur in the future.
  • Then subtract out the interest charges for the proposed loan – only the interest portion at this stage as interest payments are considered regular business expenses.

This results in the true net positive (hopefully positive) cash flow of the business – cash flow that will be used to pay the principal portion of the business loan.

Now, if your business’s cash flow at this point can cover the principal portion of the loan, you have almost pasted this test.

Most lenders will not just want to see if your business’s cash flow meets the minimum principal portion of the proposed loan but would like it to cover 25% or even 50% more. The reason is that should your business have a slow period and revenues decline by say 25% or 50% – your business’s cash flow would still be sufficient to make the loan payment.

Example: Your business requests a $100,000 loan for three years with a monthly payment of $3,227 – broken down as interest of $449 and principal of $2,778.

Therefore, your monthly cash flow should not only cover the $2,778 in principal but say 1.25 times more or $3,473.

Also, keep in mind that this cash flow figure should not only cover the proposed loan’s principal but the principal payments of all the business loans the company has.

Principal payments are not income statement items and are not accounted for based on normal operating income and expenses but are balance sheet items and are paid out of net income (after all operating expenses).

Interest charges from loans are an operating expense and accounted for when the financials are spread.

Financials could be spread monthly, quarterly or even annually – depending on the types of financial statements requested or the policies of the lending institution.

If you can past this test via your past business performance, then it is highly expected that your business will do the same in the near future.

2) What If Scenarios:

Here, the lender will perform a series of “what if” scenarios on your financial statements.

For example, they may take your total revenue per period and reduce it by 10% or 20% – keeping all other items (your expenses) the same.

Then, spread those numbers again to see if your business could still service the proposed loan – e.g. still have the cash flow to make the payments.

Again, reassuring the bank or lender that your business would still be able to repay them should your business hit a slow period.

3) Debt-to-Equity Ratio:

Lastly, while your business may be able to service the proposed loan’s payments, banks also want to ensure that your business is not over leveraged – meaning that your business does not have too much debt in comparison to its equity.

Let’s say that the entire market declines or crashes and your revenues fall so low that you are forced to shut down the business. In this situation, would you still be able to repay all your lenders – including this proposed loan?

Thus, lenders look to a safety measure known as the debt-to-equity ratio.

Measuring your debt-to-equity is simply taking your Total Liabilities and dividing them by your company’s total equity.

The higher this ratio, the more risk the business has as it is relying on too much outside debt financing.

A ratio over 3 (meaning that the business has three times the debt as it does equity) is too much risk for most lenders to feel comfortable with.

Most businesses will have a debt-to-equity ratio between 1.5 to 2 and are considered safe to their prospective lender.

Now, if your business does not pass all these tests with flying colors and you still need a small business loan to grow, then it is up to you (the business owner) to manage your company in such a way to bring your business in line with these tests.

It all starts with your understanding of your business and the measures it has to pass to qualify.