Are your online business sales projections realistic or “pie in the sky?”
It’s fun to skim through a number of new business plans in a short period of time. I always take special note of the sales projections and compare one set against another.
During my corporate career in small business economic development I have the opportunity to review business plans, marketing plans, financial plans, profit and loss statements, and one of my favorites – sales projections.
Why did I look forward to reviewing them? I always thought it quite fascinating, and often “telling” about the entrepreneur’s chances for business success. Some sales projections read like fairy tales, others were more like the title of the song “The Impossible Dream,” and still others were so conservative it almost raised the question “If you can’t sell more than this … why are you going into business?”
Of course, there is probably no merit in comparing apples to oranges as I’m suggesting I like to do. But it sometimes becomes apparent which prospective owners are attempting to be objective, and which are merely dreaming. Even if you don’t understand specific market demand, you will get a distinct “feel” for the amount of hype and exaggeration that floats around in the numbers and the logic.
Sometimes, you almost laugh at the over blown-up numbers that entrepreneurs pull out of the sky. You wonder how they came to the conclusions they did about their future sales. I often asked the entrepreneur to show me the research he had done on market demand and why he thought he could command a certain percentage of that demand with a new business. A new business prospect should be able to explain his reasoning and estimation methodology; but even so, some leave you merely scratching your head wondering “where the heck did that assumption and figure come from?”
I will tell you that I don’t ever remember looking at a sales projection that I thought looked too conservative very often. It’s always the opposite case, as one would expect. Still, I would expect entrepreneurs to have a certain amount of optimism and hope for the level of business their new project could achieve.
Especially in small business niches, it seems that typical sales projections are far off the mark. I have heard long-time product and marketing experts state that it is very rare that a specialized niche product will sell more than 1,000 units.
If the business owner says something like “I only need to sell 3,000 units to break even,” you can pretty well assume that this particular product and its owner are in potentially big trouble – at least in meeting projections!
Testing can certainly reduce the chances that your projections are way out of line and I always suggest an initial roll-out on a small scale to see how a product or service is received in the marketplace. It pays to not roll the product out until tests has been accomplished and changes made to optimize sales. The results are not totally indicative of your final sales results, of course, but you will have a ballpark idea whether the product will likely be a good seller, a flop, or (typically) something in between.
The price of your product will certainly play into the equation. A $20 product may need a thousand sales for a comfortable profit given the work involved and the investment in marketing; but a $200 product will give you the same amount of revenue, yet you only need to make 100 sales. That could be a more realistic an approach. It’s why you test … in order to maximize sales given various pricing points.
Here’s another test of the usefulness of your projections. Ask yourself: “What proportion of my registered customers (or subscribers) are likely to buy my product?
If the answer is 2%, or 5%, you will have a number to base a “thoughtful” sales figure on. If you say 50% or 75%, the chances are you’re not being realistic. You will know your audience the best and if you have presented various offers in the past you will have at least some “feel” for how a new product might be received.
Why base sales figure estimates on your customer base rather than the number of prospects in your niche? If you can’t entice folks to register for your site and your services for free, does it follow that they’ll buy from you in any greater numbers? (Of course they could, but there is no sound basis for assuming they will.) In fact, I would expect that an audience of loyal subscribers would convert much better than random prospects in the niche market that are being contacted for the first time.
The next time you are trying to estimate sales projections, remember to be realistic, base your estimate on some defensible reasoning, test the viability of the product and optimize results … then be conservative in your projections until you know your audience and their buying habits well. There are fewer downsides to underestimating than overestimating.
To your online business success,
Freelance Writing as a Career Online
Like every other freelance skill I can think of, profitable writing for the Internet is largely market driven. The consumers of the product ultimately determine what, how much, and the price they will pay for their purchase.
Since the Internet provides access to global markets, and global freelancers, some have complained that they can’t compete against authors in far away places willing to sell their time and work for pennies on the dollar (U.S.). How does an author in the U.S., for instance, make a living writing articles when the going rate online seems to be so depressed?
If no one looking for articles, for example, would pay $5/500 words the price of articles would climb. But there are freelancers that will work “for cheap” and consumers that will pay dirt cheap prices for that work thinking it’s a real bargain … so that market segment exists.
In my opinion, here’s the key for freelance writers: don’t try to compete in that bottom dollar market.
Open your mind to the possibilities of using your writing skills in other ways. Too many writers (many of them newbies) assume that article writing is the only outlet for their work. But it’s not – not by a long shot!
Here are some other ideas for you writers:
1- Use your writing skill to produce your own reports, ebooks, lead magnets, sales letters, whitepapers, how-to guides, freemiums, etc.
Focus your list building on business owners and entrepreneurs, especially targeting a niche or two where you have some current knowledge and experience. Offer the complete finished product (ideally including graphics) and include branding with the business owner’s private logo, contact info, web site link, etc. Sell the finished products “ready to go” so the owner can use it right out of the gate with possibly only very minor changes needed. Charge custom prices for your custom work.
2- Your skill could be used in selling “hot sheets.”
I’m specifically thinking about the entertainment industry, gaming industry, dating industry, etc, but hot sheets can be appropriate for many markets. Subscribe to several hot niche magazines (like People Mag, for one) then focus on “putting your own take” on what you read. Don’t copy or rehash. Be a commentator and produce a weekly or monthly “hot industry news” kind of writing in your chosen niche. Build your list of people that can’t wait to hear from you. If you had 1,000 faithful subscribers that devoured everything you published on a weekly or bi-weekly basis at $2 a pop, you would be happy, right? What if you had 10,000 addicts? Or half a dozen specific niches you covered?
3- Write your own serials, novelettes, novels, plays, short stories, magazine articles.
If you’re good, this road could lead to some major income. I think the key would be to find the genre that appeals to you and for which you could find avid readers. Think about selling “serials” where readers get caught up in wanting to know what happens next with your characters. The same type of content can be written in the non-fiction space as well. The key here is to niche down deeply into the vertical market and specialize. Become the “go to” author for that specialization where avid fans dwell, build your subscriber list, and then feed the hungry audience over and over again with paid content (maybe) giving a nice discount for “valued paying customers” on your list.
4- Do technical writing if you can learn that skill.
There is a great and on-going need for manuals, instructions, how-to booklets, product guides, etc in technical fields. Those who already “speak the language” should focus on areas of their own expertise. Even those without experience could sell their writing in less technical subjects after researching the various appropriate topics online.
5- Write to create your own products.
Every “how to” niche is ripe for product creation where you explain something that needs doing to those who want advice, hand holding, or reassurance that they’re doing something correctly. The sky’s the limit on this one. There are e-books, e-courses, tutorials, reports, PLR content, and lots of other sellable products in every niche from which you can derive a nice income.
6- Instructions to business owners.
I almost hesitate to mention this one simply because it is so powerful if you grasp the idea. The market is online solo and small business owners. The idea is to write short yet authoritative instructions about various tasks that business owners have to do but don’t know how to do, don’t want to do, don’t have time to do, or at least would like to learn how to do better, faster, and cheaper. Think business execution steps of instruction. Let’s face it … more and more everyday people are coming online with ideas to make money. Many fail, of course, but there is a constant need to have a mentor or guide that can help these entrepreneurs to understand and execute specific online business tasks that have to be done. Many of these people know nothing about running a business online. You could be the one that authors the steps to daily online business execution for them.
There are so many things you could write about: getting customers, nurturing customers, promoting services, building or maintaining a web site, doing business taxes, dealing with angry customers, keeping employees happy, outsourcing billing, setting up merchant accounts, email marketing and list building, SEO for their web site and on and on and on. But here’s where you can make your writing very valuable.
For each set of instructions you write, make it specific to one type of business (their business) and one market (whatever their niche might be); for example, “How to promote your dental service online.” Be very specific. Then with just a little bit of “tweaking” you can change your report to “How to promote your bookkeeping service online,” or “How to promote your Investing service online.” By being specific you will attract a much larger and hungrier crowd of prospects in your chosen niche because the prospects see you are writing for their exact business. And by leveraging the concept of re-purposing your content, you can create great content once and then simply modify it a little for the niche audience and have a ready-to-go new product targeted for a totally different niche.
7- Blogging, of course!
This is a very powerful and popular way to express yourself through your writing and many people have learned to do it in a way that provides an income for their effort. To be a profitable blogger you must be disciplined and willing to create valuable niche content on a very consistent basis. You must be a good writer and be willing to share your personality and expertise in your posts. In addition, you must figure out how to monetize your blog. There are many, many ways and methods to choose from in order to generate income with blogging and you will have to decide what is best for you and your audience and then master that technique. There are lots of monetization examples online.
OK, this has been a long discussion but I wanted to help you to start thinking about writing as something other than just producing articles.
The field really is wide open and you can make a substantial income if you get creative, differentiate your writing, be specific in your business model, and provide outstanding service consistently as well as high quality, engaging and compelling writing!
A simple word of caution: great writing (that people will buy) is produced by authors that have writing talent. Many don’t. Certainly, anyone can improve their writing skills over time. But if you can’t communicate at all, can’t form a proper sentence, or don’t like to write, please choose a different way to make money online. I’m serious here. The Internet is a virtual dumping ground for poor and worthless content. Don’t add to it!
To your online business success!
Six Tips for Finding Great Marketing Advice
When it comes to Internet marketing, one of the real challenges for a new entrepreneur is sorting through all the rubbish to find the wisdom.
What am I talking about?
Maybe more than any other marketplace, Internet marketing “how to” advice, both good and bad, flows pervasively around the Internet selling circles like no other niche I know. Every business owner, every business hopeful, forum and discussion group lurkers, and anyone with an opinion seems compelled to spout their wisdom about doing business online.
What’s wrong with that? There would be nothing wrong with lots of varied opinions and discussion except for this:
A great majority of the “wisdom” is not wisdom at all. People tell untrue stories, exaggerate, and outright lie to make themselves out as successful business owners because they believe that others will buy their courses, ebooks, and affiliate suggestions since they are authorities and experienced sellers. Many have the “fake it ’til you make it” mentality.
The problem with all the nonsense that is swirling around online selling “how to” is that the advice given is often counter-productive, sometimes business killing, and can even be against the law. It makes the newbies job a lot more difficult because he wastes time, effort, and money in trying to figure out what works and what doesn’t work online.
What I’m hoping with this post is to help you with some suggestions or tips on how to discover where the truth really lies – where you can count on the information being solid and doable.
Learning to sort through all the rubbish to find the gold nuggets is not an easy task but it is very important for the new marketer.
One place most newbies go to for advice is the Warrior Forum.
Most of us go to the Warrior Forum to learn about Internet marketing and how to make money online.
No doubt, you have already personally witnessed the great paradox of this forum (and really the Internet in general). There’s so much wonderful information. And there’s so much bad information. And you get to be the judge of which is which . . . what to rely on and what to discard!
It’s hard to be a good judge when you’re new to the field and you immediately get bombarded with all sorts of tantalizing offers, advice, and opinions. How do you tell the truth from the garbage? Who is serving up the good stuff and who is peddling the stuff you have to scrape off your shoes?
Here are six tips that might help you discern what is helpful and “good” compared with what is garbage and “bad.” This analysis could be used at any forum or discussion group (not just the Warrior Forum):
1. Pay attention to the source of the information. In my experience and most of the time … good information emanates from the same sources over and over again. Garbage, also, comes from the same sources. Rarely do they mix. Those with experience and longevity in _________ (add the niche) typically tend to have staying power because they have learned what works and what doesn’t. Long-standers are concerned about their reputation and will usually warn if the subject is beyond their own experience or outside their expertise. Often fly-by-nights are after a quick buck and they’re gone. Newbie advice can be either good or bad, but without specific experience a newbie is often reciting what he has heard from another (which should be considered suspect until proven otherwise).
2. Stay away from the edge of the cliff. The more you study Internet marketing, the easier it is to tell which strategies and tools push the envelope of ethics, good judgement, and accepted practices. Shady tactics, gaming the system, black hat methods and software, etc, sit at the edge of the spectrum. Truth, honesty, ethical methods and white hat are found at the center of IM. The closer you venture toward the edge, the more likely it is that you’ll do yourself harm. Your reputation in online selling can make or break you!
3. “Paid for” has no edge over “freely given” advice. Sometimes we tend to value things we’ve purchased over those that were given to us at no cost. To assume that value in IM advice can only come from purchases would be wrong. Remember suggestion #1 and find the source of wisdom, then listen to what that person says, freely given or paid.
4. Let the words “easy,” “instant,” “auto-pilot,” “push button,” “dominate,” “no work,” “30 minutes a day,” “opportunity of a lifetime,” “the only ______ you’ll ever need,” and “six figure income” be red flags that need to be analyzed further. Success in IM takes work, is rarely easy, and profits generally build over time (often slowly at first). People, ads, and offerings that tout instant success, fast wealth, and nor or little actual work should always be suspect and are most often sales pitch fodder. Marketers that sell the “no work” dream are like dirty diapers, they’re full of #*+@. I know it’s a warn out cliche, but “if it’s too good to be true” … (you know the rest).
5. Marketing is marketing. Business is business. The Internet is a delivery tool. Long-standing, time-honored, proven business tactics work for both physical and digital based businesses. The net has helped to create huge business fortunes … but it’s use has also become one of the biggest time-wasters in history for the entrepreneurs who won’t take action or who implement garbage tactics and practices. Some business owners spend all day sending and reading emails, checking out social media, and trolling the forums. These people aren’t doing what it takes to create and run profitable businesses – they are wasting their time in activities that keep them busy but unproductive.
6. Good information is also timely information. Be aware that change comes at an ever rapidly increasing pace. Products don’t last forever – they become outdated, stale, and sometimes obsolete over time. Effectiveness, utility, and therefore top quality products and advice need to be up-to-date, tested, and modified in order to remain useful and cutting edge.
And just for fun…
7. Expert, n. : an ordinary fellow a safe distance from home. Sad but true.
To your online business success,
Should I Quit My Job?
One of my subscribers and I were conversing (at her request) about online business and she seemed to be very frustrated about her ability to chart a course for her future involvement in full time Internet business.
Her question was simple and one I’ve heard many times: “I don’t know if I should ease into my business part-time or quit my current job and jump in with both feet. What do you think?”
This can be one of the most perplexing and difficult decisions you have to make as you decide to create a profitable business.
Most people are anxious to get going down their own chosen path … but are also realistic about the uncertain future because they don’t want to negatively impact their families with a poor decision that leaves them with no income source.
So, if you are in this same position, here are some questions to ask yourself that may help you to come up with the right decision for YOU.
Obviously, there is no “one best way” to enter self-employment. The choice you make on how to do it will most likely depend upon your current state of affairs: your employment situation, your tolerance for risk, your family size and makeup, and your ability to take care of your financial obligations with or without a continued regular paycheck from your current job.
There is some wisdom in not rushing things at the outset. Quitting your full time job and putting your loved ones at risk can be a very scary proposition. If you lose your medical and life insurance coverage, will you be able to afford these new out-of-pocket costs? How long will you be able to last if your daily and monthly living expenses come from your savings account?
Who will make the house payment, the car payment, and buy groceries until your new business begins paying off? Will your spouse have to go back to work to help support the family? Or will your current “other” income be enough for you to live on until the business gets going?
What if you get into the daily operation of your business and find that you really aren’t happy with what you’re doing? Or that you can’t generate the amount of revenue you need in order to justify staying in business? If your new business was forced to close its doors, would you try to find another job in your field or search out another new business idea?
On the positive side, full time business means you will have more time to spend on your operation, it should reach profitability sooner, and you will grow your clientele faster. Also, you will be available during the day to talk to customers and supplies. Sometimes too, part-time owner operated businesses are not taken seriously by lenders and distributors.
The cons of beginning a business as a part-time project include not having sufficient time to really work the business as it should be done, the drudgery of coming home from a hard day’s work only to be forced to put in more sleepless hours on top of it, unnecessarily lengthening the time until the business becomes profitable, and not being able to deal with important communications during the day time business hours. Stress and burnout also often become major issues, since family and leisure time are often sacrificed on behalf of the new part-time business needs.
You will have to make the decision on how best to get started by reviewing your own circumstances, the projected time it will take before income will flow from the business, and how much savings or reserve you have at your disposal to keep you and your family solvent.
Before you decide, here’s a tip: involve your spouse and family members in your decision from the outset. They need to understand the commitment both you and they will have to make, and the resulting sacrifices that may result. They will be in a better position to be supportive and understanding of your time constraints if they buy into the decision.
Just one other important question: if you begin on a part-time basis, how do you know when it’s the right time to quit your job and go full time?
I’m glad you asked! Here’s my feeling. Wait until the pace of your new business causes you to lose sleep many nights in a row. If you have enough demand that you can’t fill all the orders without losing a lot of sleep, you will probably be at a point where your business will support you as it continues to grow.
Ideally, you should be making as much (or more) in your new business as you did in your prior job. When you can cover your old salary (or hourly wages) for six months in a row, you should be fine to move to full time Internet business. By placing a six-month of making “X” income as a criteria, you will pretty much be assured that your income is steady enough to task away the risk of quitting your old job.
One of the reasons why I am so high on the solo Internet business path is that the costs to entry are very low (hence the risk is low), the demand and time to fill it can grow together, and you will be able to dictate the point at which you transition from part-time to full. The idea being that you don’t have to put your spouse and family in a high risk situation so that you can begin a new business career for yourself.
To your online business success,
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