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What Does ROI Really Mean To Entrepreneurs?

Return on investment should go beyond accounting – it’s about what’s really happening in your business, and if you’re spending money on the right stuff.

Ed Hatton

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Return on Investment or ROI is a percentage used to compare investment options or evaluate business plans. The formula is ROI = (Net Profit / Cost of Investment) x 100.

So, if you wanted to buy a business for R1 million and expected profits are R300 000, the ROI would be 30%. Among SMEs, the term ROI is widely used as an estimate of the likely return on the investment of non-financial as well as financial resources.

For instance, an entrepreneur could ask, “What return will I get from a new business campaign compared to potential losses from existing customers who feel ignored?” Typical investments are management time, floor space, quality upgrades, delivery capacity or scarce skills, and these are difficult to quantify in financial terms.

The return is not necessarily in cash either; market share, increased competitiveness, brand awareness and gaining first mover advantage are just some of the returns that may be hard to express in accounting terms.

But if it’s all so difficult, why should you bother with ROI? Without a ROI estimate, you don’t know if you’re making best use of your people, time, machinery and know-how. Could you use all these to more effect on another opportunity? Opportunity cost is the return you would have made if you did something different, and you can only assess which would be better by having some form of ROI.

The right measurements

Few SMEs will have the resources to do exact costing on indirect costs and returns, so it pays to develop a few rules of thumb to put values to things like management time, customer satisfaction, staff motivation and other intangibles so you can do a rough ROI calculation.

Sales and marketing initiatives are typical uses of ROI. You may want to expand your sales force or develop a branch structure, but should you rather move to online sales or build a reseller channel? You probably need to approve marketing campaigns to build your brand or gain incoming sales leads, and it’s tough to choose the right ones.

Related: How To Prove Your Marketing ROI

You have limited funds to spend on sales and marketing, so it’s wise to ask if you’re getting the best ROI for each sales team, channel and marketing promotion. A ROI calculation helps to evaluate existing marketing initiatives or sales models, and choose the right new ones.

The same applies to products and product ranges. Which are giving you the best ROI when considering issues like technical support and inventories needed? We all have ‘old favourite’ products that have served us well, but should we still be selling them? ROI could tell you.

Cost of products

Whether you manufacture or buy goods to sell, it’s all too easy to keep things as they are. With rapidly rising costs and a very fast-changing environment, that is not always a smart idea.

Questions you should be asking yourself include: What will give me the lowest overall cost of product, considering quality, reliability, speed of delivery and payment terms; which supplier gives me the most opportunity to maximise sales and what is the cost of being let down by a supplier?

Related: Give And Receive: The ROI On Incentives

Then examine alternative ways to get your products or raw materials. Long-term buying contracts, outsourcing manufacturing or sharing machinery and delivery vehicles may give you a much better return on investment. Many informal businesses form buying co-operatives to reduce their cost of sale.

ROI is a useful tool to assist decision-making. ROI in the informal sense, with some rules of thumb to make you think about the intangible costs and benefits means you can rely on reasonable information rather than having to fly blind. Thinking about return in the broader sense is a great way to make better decisions and build your business.

Ed Hatton is the owner of The Marketing Director and has consulted to and mentored SMBs in strategy, marketing and sales for almost 20 years. He co-authored an entrepreneurship textbook and is passionate about helping entrepreneurs to succeed.

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Small Business

What Presentation Skills Do Small Business Owners Need?

Presentations are vital to small business owners who want to attract and retain new clients, so if you are looking to improve your skills in the area, read on below for some simple presentation tips and a list of presentation skills that every business owner should have.

Amy Galbraith

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Being a small business owner means that you need to be confident in yourself and in your abilities. But, when it comes to business presentations, this confidence often fizzles out and is replaced with nerves and anxiety. Presentations are vital to small business owners who want to attract and retain new clients, so if you are looking to improve your skills in the area, read on below for some simple presentation tips and a list of presentation skills that every business owner should have.

The ability to think strategically

Rather than thinking of your presentation as a simple set of Powerpoint slides, you should think of it as part of your marketing efforts. This means that you will need to have the ability to think strategically about your presentation.

Every time you prepare your presentation, you should have this structure in mind before you go up to speak:

  • What do I want people to remember at the end of my presentation?
  • What is the next step my audience should take once I am finished?
  • How can I gain my audience’s trust?

Gaining your audience’s trust is vital to the success of any presentation, as it allows them to immerse themselves in the presentation, which makes it easier for you to create a cohesive marketing strategy based off of this presentation. You already know your ideas will be accepted and appreciated.

Related: Five Strategies For A Winning Sales Presentation

Control over body language

Being able to control your body language in a stressful situation is key to any presentation success. Many presentation tips include taking a deep breath before going onto the stage, to quell any nerves, and practising in front of a mirror for a week before the big day to see if you have any nervous tics that you need to control.

Nervous tics can include anything from playing with your hair, tapping your fingers on a nearby surface, crossing and uncrossing your arms and other such anxious movements. If you are giving a presentation, these tics can become distracting to the audience, so you need to be able to control your body language in order to appear calm, cool and collected in front of your audience.

Strong communication skills

Standing up in front of a group of people can be nerve-wracking and this can lead you to forget your speech and fumble over your words, leading to a disappointing presentation. You will need to build up your communication skills by practising your speech or presentation regularly before you step up on stage, so be sure that you have clearly outlined notes to read from.

However, there is a bit more to it than simply memorising a script. In order to remember your material and make it ‘flow’ naturally, you will need to understand the information you are trying to communicate, including the following:

  • The information you want to cover in your presentation, including statistics
  • The flow or sequence of the material you are speaking on
  • The goal of the presentation
  • Any questions your audience might ask

Understanding the material will help you to remember it and explain it to anyone who might have questions. Speak as though you are speaking to a friend and you will find that your presentation builds a natural flow all on its own.

Related: (Video) How You Can Make Your Next Presentation Memorable

A charismatic presence

While this is more of a personality trait, having a presence is vital to the success of any client or conference presentation. Building your presence before your presentation will ensure that it is a success and that you leave your audience satisfied and their interests in your company piqued.

Having a charismatic presence means that you are able to express vision and give people a reason to be inspired by your presentation. You can achieve this by speaking about your success in terms that are transferable to others, such as providing tips on how to start your own business or providing relatable advice for entrepreneurs who have hit a rough patch in their business. Be sure that you do not use too much jargon, as this will diminish your presence and make you seem un-relatable.

Presentation tips for success

There is nothing more embarrassing than falling up or down the stairs so it is important that you know your venue before you set up your presentation. Ask the venue owners if you can have some time a day or two before you are presenting so you can familiarise yourself with the entrances, exits, where the podium is and how the sound and projector system works.

Too many people use slides to read their presentation off of rather than using them to augment their speech. When you put slides together, think like an artist and use them to show graphs, visuals and key points rather than having your entire speech on them, word for word. Your audience will appreciate a visually creative display rather than a boring slideshow with of your notes.

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Small Business

Even SMEs Can Use Big Data: Here’s How

If entrepreneurs are brave (and forward-thinking) enough to take the plunge into big data, there are many business advantages to be gained… especially before everyone else catches on.

Michael Colin

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Big data has for years held a reputation as a business tool that only large corporates have the time, money, and human resources to use effectively. But, as is so often the case with technological disruptions – what once seemed unattainable is becoming sleeker, faster, more affordable, and more user-friendly than ever before. In fact, it’s not a stretch to say that with strategic usage, even small businesses can gain as much advantage from big data as any Fortune 500 company.

To start with, what is big data? Organisations deal with data every day, from customer profiles to supply chain processes and sales figures. Big data takes this operational information-gathering to the next level. Multiple data sets are drawn together to create a large resource of facts and figures, which (and here’s the most important part!)  are subjected to complex analysis to pluck out useful insights that enhance business operations.

Traditionally, SMEs haven’t delved much into big data. When you’re busy trying to build a successful business from the ground up, submerging yourself in statistics probably sounds more like a hindrance than help. But times have changed, and over the years, capitalising on big data has become a lot easier and more budget-accessible for SMEs. No need for dedicated data managers and unaffordable analytics platforms.

Related: 3 Ways You Should Use Data Science to Skyrocket Sales

In fact, over 70% of respondents to a global survey of small businesses found that the adoption of this type of technology exceeded their expectations. Closer to home, 27% of SME decision-makers expect to be using big data within the next five years.  If entrepreneurs are brave (and forward-thinking) enough to take the plunge into big data, there are many business advantages to be gained… especially before everyone else catches on.

A detailed understanding of your customers

You may think you have a good picture of your customers, but inevitably you’ll encounter blind spots at some point. Big data can fill in the blanks and give that same customer picture HD-clarity. Buying habits, consumer profiles, satisfaction levels, social media usage – combine this information, apply the right machine learning algorithm, and the result is a far better understanding of customer wants and needs, which you can then work to better fulfil. This applies to both the product or service you’re selling and the way you’re marketing it.

Perhaps even more importantly, big data can help you get ahead of trends. There are a few things more valuable to a business than having the first-mover advantage as latent demand surfaces. And the best thing about big data is that it’s based on solid facts and figures. When it comes to predictive decision-making, it removes assumptions and guesswork, allowing you to get off the starting block first, and with sure footing.

Improved internal processes for your company

Big data is not just about heightening customer relationships. It’s a powerful resource with massive benefits for organisations internally as well. And not just in terms of time- and cost-savings around business analysis.

Crunch your operational statistics, and you may find surprising ways to optimise processes – such as identifying places where automation can be introduced or retooling your staffing to meet shifting demands over the workweek. In addition to reinforcing business decisions, big data is excellent at helping to identify problems in real-time and correct course. Today, solutions are available immediately, when in the past it could take weeks or months to mine such valuable insights.

Related: Can Your Marketing Team Speak Data?

Tools to take advantage of big data

What do you need to make the most out of big data as a small-business owner? In the digital age, the foundation is a reliable high-speed Internet connection. This is because of big data’s own evolution.  Data analysis was once a lengthy process which required a large amount of hardware storage (and, before that, filing cabinets), it has now evolved into a digital product provided by many business solutions providers over the cloud. The handling of information is streamlined in this way, and setting up databases, sending information for analysis, or receiving meaningful results, happens almost instantly.

SMEs may not have the resources of their more established, big sibling rivals. However, up-and-coming businesses do typically have the advantage of agility thanks to their size. It’s easier for a start-up to move quickly, redirect as needed, and act on just-gained insights and trends. This makes big data no longer “nice but unnecessary,” but an essential tool to give your company that all-important advantage in the digital economy.

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Small Business

A – Z Easy Small Business Ideas

Whether it’s a ‘eureka’ moment at three in the morning, or a persistent feeling that you’ve got a great small business idea, here’s some of the things you need to know to determine if you’re on to a good thing.

Entrepreneur

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A small business is by no means a lesser one to the big corporates out there – even they were once small.

The term ‘small’ simply refers to the size of the company in terms of its turn-over (less than R1 million per annum) and its number of staff (usually 50 or less), certainly not its clout.

Related: How To Go From A Clever Idea To A Viable Moneymaker

In fact, it’s often small businesses that give large corporates a run for their money as being small allows for greater agility and flexibility, quicker turn-around time, and greater room for customisation. Ready to get your small business started?

A small business can start in a home kitchen, a spare room; it can start in a garage. It can start in a small rented office space with just a laptop computer and yourself manning it, or it can start between friends, spouses, business partners.

Mostly though, a small business has minimal staff, is started with a small amount of capital, and it carries low overheads.

Need small business ideas?

Take a look at the list below to help you start brainstorming. The key is to examine an industry that you have strengths in, and determine whether the skills and character you have (or can develop) can meet a need within that industry.

Here are some examples of businesses you can start from home:

A

  • Air-conditioner and appliance repair
  • App developer
  • Ad agency
  • Antique restoration and resale
  • Aquarium supplies and maintenance
  • Animal trainer.

If you have a skill and it can be sold to someone who needs your skills, it is a business.

B

  • Bookkeeping
  • Professional blogger
  • Business consultant
  • BEE consultant
  • Baker
  • Body guard service.

If you are looking at service oriented businesses, make sure you are properly qualified to perform the service and registered with the appropriate associations for credibility.

C

  • Catering business
  • Chef
  • Carpenter
  • Car mechanic
  • Cellphone repair
  • Child care
  • Computer maintenance and repair
  • Computer training or programming
  • Construction and clean-up
  • Customer service professional
  • Call-centre.

People will buy a product or service if it makes their lives that little more convenient.

Something that saves people time, money or hassle is essential for a sustainable business.

D

  • Dry-cleaning service
  • Driving service or school
  • Data capture or data analysis service
  • Desktop publishing
  • Dog training, walking or grooming
  • Disaster prevention and planning service
  • Direct mail marketing service
  • Database management

We know you were thinking Doctor – however, there are options beyond being a ‘doctor’.

E

  • Engineering consultant
  • Exporting business
  • E-tail store
  • eBay reseller
  • E-tail secret shopper to see if someone’s e-tail experience is easy.

If it’s happening online, you can add an e- to it.

F

  • Florist
  • Freelancer
  • Furniture removal company
  • Fire safety
  • Fire-hydrant maintenance and sales.

Whatever you do, it doesn’t always matter if it’s a traditional or ‘old’ business, so long as you’re doing things differently and that they’re meeting the needs and interests of the modern consumer.

G

Although established internationally, an up-and-coming industry in South Africa is all things green, from construction to materials, to greening businesses through lowered carbon footprints.

  • Green cleaning service
  • Green consultancy

If green doesn’t float your boat, there are household aggravations like:

  • Gutter cleaning
  • Garage makeovers
  • Gluten free products and foods creation and baking.

H

  • Hairdressing
  • Handyman service
  • Holiday planning service
  • Home inspection service
  • House-sitting service and anything home-based.

I

  • Importer
  • Image consultant
  • Image or Internet researcher
  • Interior designer.

Be careful to research your industry properly before entering in to it, take ink cartridge refilling for example. As technology changes, will you be able to sustain your business?

J

  • Jewellery designer
  • Jam-maker
  • Journalist
  • Javascript developer
  • Got space? How about a junk yard?

K

  • Knitting,
  • Kitchen fitting
  • First aid kits like cyclist and other sports, or kit-cars for motor enthusiasts.

L

  • Life coaching
  • Labour broker
  • Liquor manufacturer
  • Lab consultant or running your own lab
  • Laundry service
  • Language instructor
  • Lock-smith service
  • Lifesaving.

Provided whatever you do adds value to the customer that they can’t get elsewhere, you’re on to a good idea.

M

  • Start your own marketing company
  • Massage therapist
  • Make-over consultant
  • Motivational speaker
  • Moving company
  • mobile masseuse
  • mobile salon
  • mobile food truck
  • mobi-app developer
  • Medical consultant.

The latest trend as technology advances is for things to be mobile.


8 Ways to Come Up With a Business Idea

So, you want to be an entrepreneur? Then you’ll need a business idea. Here are eight ways to come up with a original business idea.


N

  • Nail salon
  • Nutritionist
  • Nurse – Think a post-operative care service, or even elderly care.

O

  • Organic producer
  • Online trader
  • Occupational therapist.

P

  • Personal shopper
  • Plumber
  • Party planning
  • Personal trainer
  • Pest control
  • Photographer
  • Photo-retoucher and restorer
  • Project manager
  • Personal tutor
  • Pool cleaning
  • Proofreading.

Q

  • Quality controller
  • Queuing service
  • Quantity surveying
  • Quiz master.

R

  • Restaurateur
  • Resume consultant
  • Recruiter
  • Research consultant
  • Restaurant or business reviewer.

S

  • Secret shopper or secret reviewer.
  • Sales
  • Salon or spa
  • SEO
  • Social media strategy
  • Scrapbooking
  • Speech writer
  • Sound engineer.

T

  • Translation services
  • Transcription services
  • Tax accounting and consulting
  • Sun-free tanning solutions
  • Training
  • Tutoring.

U

  • Underwriter
  • Upholsterer
  • Undertaking services.

V

  • Video producer
  • Videographer
  • Virtual assistant service
  • Voice-over production
  • Voice training
  • Viral marketing.

W

  • Webmaster services
  • Web design
  • Wedding planner
  • Wallpaper design and hanging
  • Car washing service.

X

Ok you’ve got us there… try something x-treme.

Y

  • Yoga instructor
  • Youth mentoring, counselor, camps, youth co-ordinator
  • YouTube video producer
  • YouTube channel manager.

Z

We’re drawing at straws for this one, especially when the only thing you can come up with is ‘zoo’. But even they might need some services outsourced.

Tips about selecting a small business idea

So now your brain is thoroughly overflowing with new business ideas. But before you go quitting your job and investing everything you own into it, it’s time to assess whether it can be turned into a sustainable small business.

Here’s what you need to evaluate:

  • Who is the target market? There’s no business if no one will buy your product or service. Is your target market able to afford (and prepared to pay) for it? Do you have reams of market analysis about your target market’s likes and dislikes, area densities, income, responsibilities, age, gender, education etc? The clearer the picture you can paint of your target market, the more able you are to provide to them.
  • What makes you stand out? Does your idea already exist? If so, what are you doing differently to your competition? Is there something unique or value adding that you offer? If your business idea is new, is your target market ready to take you on? SEO, for example, was around a long time before businesses saw its value and started paying money for it. Make sure your business has a unique selling proposition (USP).
  • Money, money, money. While some ideas are great, whether it will translate into an awesome business is determined by a financial feasibility study. What will it cost you to get the business off the ground, how long will you need to wait before you break even and see a return on investment? What are the on-going expenses like overheads? How will you bridge the gap between starting the business to it becoming profitable? Once you’ve completed a feasibility study, you may be disappointed to discover that the idea just won’t make a profitable and sustainable business. Don’t be sad though, at least you discovered this before you poured in your life-savings into a dead-end idea. Keep thinking.

Choosing a small business idea based on strengths and passions

Everyone has skills. The trick is to see what skills you have in your current job or through your work experience that are transferrable into your new business.

Take a hard look at your business idea and see whether you’ve got both the personality traits and the necessary skills to make it happen.

If the answer is yes, keep going. If you find that you’re quitting your corporate job because you despise it, starting a business to capitalise on that same work experience might not be your calling.

Related: 10 Businesses You Can Start Part-Time

Assess what your personal interests are, what you’re passionate about, and how you can use the skills you have to turn it into a business. Entrepreneurs need to be passionate about their business idea – as it will be passion that motivates you during tough times.

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