Small-Business In Box: How to research the competition
Dear Karen: How can I research my competitors?
Answer: Use Google to set up alerts that tell you when your competitors are in the news. Also explore rivals’ websites and other places — newspapers, blogs and consumer reviews — where they are being discussed, said Todd Foulks, vice president of a New York investor group.
Try to get their credit reports from Dun & Bradstreet, and see what the reports tell you about their finances. Attend local and regional business events and meet your competitors face-to-face. “Get to know them,” Foulks said, “and instead of being competitors, they could become partners in a strategic alliance.”
Encouraging clients to pay faster
Dear Karen: Payments to my small business are slow. How can I speed them up?
Answer: Bill clients immediately. “Many small businesses do not send out their invoices in a timely fashion,” said Rhonda Abrams, chief executive of the Planning Shop, a publisher of books about small business.
Expect payment within 30 days and add a 1% service charge for late payments, Abrams said. But you may have to live with 45- to 90-day payment schedules if you have large corporations as customers. “Big corporate clients are good to have because they generally pay well and they look good on your client list when soliciting new work,” she said.
Will your idea pay off?
Dear Karen: How do I know if my business idea is profitable?
Answer: Decide how much monthly pre-tax money you need to earn from the business, then set your price, calculate costs and estimate your net profit per sale. See how this compares with other companies whose profit margins are public.
Figure out how many sales you’ll need to reach your monthly overall profit goal. Is that sales level feasible and sustainable? Would you sell to repeat customers or need to attract a new customer for every sale? Your analysis should make clear whether your idea can be turned into a successful business.
Questions? Write to Karen at inbox.business@latimes.com or In Box, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012.
