Yaneek Page Making your small business more competitive
QUESTION: I operate a daycare in St Catherine and really need your help on managing my money and how to gain more publicity and be competitive in the market.
— Daycare Owner
BUSINESSWISE: You have touched on five extensive business disciplines: financial management, marketing, public relations, business strategy, and product/service development, which all require considerable proficiency, planning, and resources.
It would not be possible to cover all of these areas in a single column; therefore, I provided you with the formal names of these disciplines so that you can do your own research and build your knowledge, skills, and capacity in each area through online learning.
Perhaps the most important point to impress upon you is that you cannot expect to properly manage and execute all of these areas alone, especially if you have no formal training or prior experience. You will need help.
Practically speaking, given your financial and human resource constraints, this help will likely need to come from family and friends, a business partner, a mentor, an advisory team or board, the implementation of technological tools and applications, and outsourced services.
Financial management
At this early stage of your business life cycle, executive financial management is the most critical because you burn through cash very quickly, and at the same time typically earn significantly below the amount required to break even and turn a profit.
Start with pricing and budgeting. The key to managing money is to properly budget for your expenses and income so that your spending and earnings are in alignment and based on predetermined targets. Also ensure that your services are properly priced and that the business model is viable.
As you would know, a legally registered business has several statutory obligations, particularly to the tax authorities, and failing to meet some of those obligations can result in personal financial ruin. Therefore, it is imperative to consult a licensed accountant to create a plan for managing the bookkeeping of the business so that you can be compliant and focus your best energy on income generation and customer acquisition and satisfaction.
I expect that the accountant will recommend immediately implementing software such as QuickBooks to enable you to execute critical accounting tasks while documenting financial information in a format that’s readily accessible for preparing financial statements as necessary. Another advantage abusing accounting software is the ability to manage your income, expenses, and cash flows in real time. Also, you can, on your mobile phone, quickly prepare and send invoices, payment reminders, track payments, and so on.
It might be tempting to try to reduce costs by doing all accounting yourself, but this is short-sighted as you need to be the chief income officer who is dedicated to meeting revenue targets and ensuring that parents/customers are satisfied and happy.
Know your rivals
You must understand the competitive landscape, meaning that you must know who your direct and indirect competition is, the services they offer, how they charge, and how much they charge and what makes them special, if anything.
You must understand the market you are serving: the size, estimated value, demographics, problems they face, and what they value most. For example, do parents choose a daycare based on one or more of the following: safety, quality of the facilities, location, cost, opening hours, and/or reputation and referrals from parents.
This is a short list of possibilities. If you do not know what the market values, then it will be quite difficult to be competitive.
Doing market research will allow you to understand your target market. Given your resources, you may need to execute this yourself. I would suggest doing a few focus groups or online surveys using an app like survey monkey. Please do some reading on how to do this type of market research, and review my previous articles on the topic because market research is usually very costly for a small business.
Ultimately, the creation of value that your prospective and existing customers will appreciate is where you will find your competitive sweet spot. It might be helpful to research global best practice and advancement in this area, which may provide you with some innovations and ideas to strengthen your value propositions and make them unique.
Tech tools
Based on my own research for this article, the use of technology to allow parents better oversight of their children while they are in daycare has found favour with many parents. For example, some daycares have installed cameras, which are accessible to the parents via an app, so that at any time, they can see what is happening at the facility and also be reassured that their children are safe.
Others have used technology to provide frequent updates to parents and guardians, including the time the child ate, went to the restroom, and any important updates on their temperament and health, etc.
The use of technology allows for greater transparency and control for the parents who feel more comfortable that their precious children are safe. Interestingly, in other markets, parents readily pay premium for this digital access, so it may also translate into more income.
Another possible way to establish a competitive edge and increase income is through the introduction of value-added services, such as opening on weekends, or extended weekday hours.
I left publicity for last because it makes no sense to publicise a service that is not financially viable. Therefore, please do the financial management leg-work first. It is also easier for you to promote a service that has unique value propositions and that can be clearly differentiated from the competition.
Create a competitive advantage next. When you are ready thereafter, you should, even initially, outsource marketing and public relations so that you can gain traction but also ascend the learning curve of these disciplines in consulting and working closely with experts in those areas.
Good luck and one love!
– Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: aegis@flowja.com or business@gleanerjm.com