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Industry Analysis

Industry Analysis

What is an Industry Analysis? An industry analysis, also known as a market analysis, is used to provide information about an industry’s customers, competitors, financial characteristics, and other important variables that influence a company’s decision to enter the market. Using these insights, a company can make informed financial, operational, and marketing decisions. The Importance of Industry Analysis Industry Analysis defines the potential liquidity, solvency, and profitability for you and your competitors in the industry. It focuses on analyzing market trends and therefore also helps your business prepare for any future shift in economic patterns of the market. Entrepreneurs considering entering an industry should conduct their own industry report beforehand to ensure the industry activities align with their business’ long-term goals. Key Variables Considerations Something to consider is the consolidation trend of companies in your industry. Consolidation is the process in which a larger organization merges or purchases a smaller business and combines it into a single entity– operating under one organization and combining financials. If you are looking to eventually sell your company, an industry with a high consolidation trend might be a good fit. Most Effective Strategies One of the most effective strategies to understand your competition within an industry, along with that industry’s weaknesses and strengths, is Porter’s Five Forces. This strategy can be used for a more comprehensive analysis of the external factors of the industry. Its main objective is determining profitability prospects for an organization. Steps To Take Model out each of the factors that affect your business according to Porter's 5 Forces using this template. Strategize on the ways that you can pivot your entity if factors change. Key Questions to Consider Threat of New Entrant Are the barriers to entry in your industry high or easy to surpass? Is profitability in your industry dependent on economies of scale? Economies of scale are the cost advantages a company attains when increasing production. A company can enjoy a lower cost per unit as production increases because costs are spread out over more units. Does entering your industry require a large investment? Supplier Power How many suppliers are in your industry? The fewer the suppliers in your industry, the more power they have over what they can charge for their products or services because they know you rely on them. Are there any risks of suppliers joining the industry as producers? What are the costs associated with switching suppliers? Threat of Substitution What are products/services that could compete with my product/service? What are the steps that I can take to ensure that my product can be differentiated? Having a product or service that cannot easily be replicated is key. What is my competition doing that I am not doing? Is there a competitor with a large portion of the market share at the moment? Buyer Power Who are the customers that are purchasing your product or service? How sensitive are customers to price changes? Are customers brand loyal or are they willing to substitute with other competitors? Arizona Microcredit Initiative (AMI) has consulting and microloan support for yourself and your business. If you have any more questions, you can schedule an appointment today through https://www.azmicrocredit.org/schedule-a-consultation-1 or reach out to us at info@azmicrocredit.org.

Pricing

Pricing

What is Pricing? Pricing is a way for a brand to communicate a product’s value to consumers. Pricing can also help sellers determine their net profit margins, demonstrating how much a business earns from their goods and services. Increased prices can infer a higher quality product, whereas lower prices can target consumers looking for cheap products. To determine the price of a product, you must first establish your target demographic and their preferences. Setting A Price When selling your product or service, it is important to develop pricing objectives, to help determine what price to set for your product. During this process, you must decide what you want to communicate to consumers about the price of your product. When shopping for phones, do you look for the cheapest phone or for one that is high quality? Because different prices appeal to different consumer tastes, buyers are attracted to strategically priced products. There are multiple ways to price a product. A price-competitive product is a lower-cost alternative to competitors, particularly in comparison to more developed brands. While being aware of market prices for similar products is important, you must remain conscientious about continuing to make a profit after costs are incurred. For example, Walmart is known for their price competitive products in comparison to other department stores like Target. Alternatively, pricing higher than competitors can be a pricing strategy. A higher price can communicate a higher quality and more developed brand than competitors. However, you must be careful not to overprice your product. The higher price a product gets, the lower consumer demand it receives. An example would be generic prescription drugs vs brand name drugs. Many people choose generic drugs because of their affordability in comparison to their competitors. It is important to maintain your price at an amount your target demographic is willing to pay. Regardless of your pricing strategy, it is necessary to remain aware of your competitors’ prices. Why is Pricing Important? By using the Profitability Framework, you can break down your profit into two basic components: revenue vs costs. Profit is only able to occur if a business has more revenue than its costs. The difference between a business’ revenue and cost is called the contribution margin. Understanding your contribution margin as a business is crucial to understanding the profitability of your business. Revenues can be further broken down into price, volume, and product mix. Costs can then be broken down into fixed and variable. Here you can demonstrate how price will affect your revenue and then your profitability. There are many effective methods to changing your pricing strategies to increase profitability. Common Pricing Strategies Many pricing strategies are cost-based, meaning they take your cost per unit into account when determining what price you should charge for the unit. Cost-plus pricing and markup pricing are two examples of cost-based pricing strategies. Cost-Plus Pricing - Cost-based pricing are strategies to set a price amount based on the cost to produce each unit. This ensures that you are making a profit on your product. Example: If baking a loaf of bread costs $2.00, a baker will sell their loaves of bread for more than $2.00 to make a profit. To use cost-plus pricing you first need to determine your cost per unit. Next, you add a specified dollar amount to this number to determine your price. (Cost per unit) + (Expected % of return) = price Cost-Plus Pricing In order to calculate the expected rate of return, multiply the potential outcome of profit loss by the probability rate. After taking into account all potential outcomes, you add them all together to get the total expected rate of return. Markup Pricing - Using markup pricing you add a predetermined percentage to the established unit cost. This consistent amount is your markup rate. (Cost per unit) + (Markup rate) = price Markup Pricing Demand-based vs Competition-based pricing Demand-based pricing - based on the amount consumers demand Example: Hotels are cheaper in Arizona in the summer because people want to avoid the extreme heat. With fewer people visiting, Hotels decrease their prices to remain competitive. Example: Airfare is more expensive around holidays due to individuals traveling to visit their family. In order to supply the need for travel, airfare prices increase. Competition-based pricing - based on competitors’ prices Example: Burger King setting hamburger prices based on nearby fast food prices such as McDonald’s. Example: Pepsi lowering their prices to match Coca-Cola’s Using the Right Pricing Strategies Captive pricing - pricing the base product in a product line at a low cost, but increasing the price of necessarily related products. This strategy encourages consumers to buy your initial product and increase profits as they continue to purchase the higher-cost item. For example, printers are relatively inexpensive, but ink cartridges are priced higher. Keurig machines are another example. The Keurig itself is priced lower, but the K-cups needed to make drinks are pricier. Premium pricing - Pricing the higher quality or most desirable product higher than other products in your product line. This communicates to the consumer that the higher price version is the best or most advanced option. It also capitalizes on the customer’s demand for that product. An example of this pricing strategy is TV cable services. The most requested package, which often includes the most channels, is priced higher than the other options. Usually, this is also by a larger margin than other packages. Price lining - Selling goods at certain predetermined prices, reflecting definite price breaks. When using this pricing strategy, customers must often buy your product in quantities and not in individual units. A pack of ties, for example, could utilize this strategy. For one set of four ties, you might be charged $11.99 but for a pack of ten ties, you are charged $21.99. Package discounts are important because the increase in the volume of a product increases revenue which leads to higher profits. Pricing Psychology Odd-number pricing - using odd numbers and prices just below whole dollar amounts, makes consumers more likely to pay more.Ending prices in .99 called “charm pricing” because it makes the consumer believe they are paying less for goods and services whereas they are paying the same amount. Multiple unit pricing - packaging together multiple units of your product and selling them at a single price. Deals like buy one get one free or buy one get one 50% off are ways to use this strategy. This strategy is effective because it creates a sense of urgency by pushing customers to take advantage of the sale and purchase a product or service. Reference pricing - pricing a product at a moderate amount and displaying it next to a more expensive brand. This communicates your product as a lower-priced alternative to leading brands. Grocery stores utilize this when they place their own branded products next to more expensive name brands. Walmart and Kirkland are examples of this. Bundle pricing - packaging two or more complementary products and selling them together. These don’t have to be the same product, but rather two products that might be used in tandem with one another. Cox tv services often offer phone lines and wifi as part of their bundles. Spotify also uses bundle pricing, offering Hulu subscriptions as part of one of their premium plans. Adjusting prices due to changes in consumer demands Special-event pricing - during holidays, or seasons associated with buying special items it might be beneficial to adjust your prices. When selling office supplies, one might drop their prices during the back-to-school season to encourage customers to buy their brand. During Black Friday and Christmas, many companies offer lowered prices for their products. Arizona Microcredit Initiative (AMI) has consulting and microloan support for yourself and your business. If you have any more questions, you can schedule an appointment today through https://www.azmicrocredit.org/schedule-a-consultation-1 or reach out to us at info@azmicrocredit.org.

Business Plan Writing

Business Plan Writing

What is a Business Plan? A good business plan guides you through each stage of starting and managing your business. You’ll use your business plan as a roadmap for how to structure, run, and grow your new business. It’s a valuable way to think through the critical elements of your business. Business plans can help you get funding or bring on new business partners. Investors want to feel confident they’ll see a return on their investment. Your business plan is the tool you’ll use to convince people that working with you — or investing in your company — is an intelligent choice. Why is a Business Plan important? A Business Plan will outline your business’s mission, vision, and goals, in addition to expanding on the topics detailed in the Business Model Canvas. The beauty of the Business Model Canvas is that the BMC can directly translate to a full-fledged business plan to tell your business’s story. It gives entrepreneurs the ability to lay the foundation of their business and analyzes each aspect of their business. A business plan will also let the entrepreneur track their goals and measure their success as the company develops. Traditional Business Plan Format Executive Summary The executive summary is an introductory paragraph or two that gives the reader an overview of your business. It contains the business’s “elevator pitch” and explanation of its brand, competitive advantage, goals, and time frame. The executive summary should be written last, after completing all other portions of the Business Plan, so that you can effectively summarize your business. Below is an outline of how you can potentially format your executive summary. Please consider that this is an outline and should be expanded upon in greater detail. [Business name] is a [describe business in 2-3 sentences]. This business is unique in that [elaborate on the value proposition and your competitive advantage in 2-3 sentences]. Our goal is to [describe business goals and future outlook 1-2 sentences]. This document describes the various aspects of the value chain and [Business name] model from a high level. This document will include the following key components of the business discussed in detail: Value Proposition Customer Segment Channels Customer relationships Key Activities Key Resources Key Partnerships Industry Analysis Financial Situation Through discussion of these areas, we believe that [Business name] has a crucial understanding of the entire business process and will be able to compete readily with its industry rivals. Business Overview The business overview is where you get to showcase the operations of your business. It's essentially the “meat and potatoes” of your Business Plan. The business overview section can be broken down into 3 main components: mission/vision/goals, organizational personnel & structure, and operations of the business. Mission/vision/goals This subsection should not be very lengthy, 1-2 pages at the most. Simply list your mission statement and develop your vision and goals for the business moving forward if you have not already done so. The mission statement describes the long term goals of your business by addressing what your business does for its customers and employees and what you want out of your business. Often confused with the mission statement, the vision should describe the future outlook of the business if the mission statement is achieved. The goals or key objectives are specific activities and results that can be measured and tracked. Goals are arguably the most important part here as it conveys a lot about you as a leader and where the business is headed. Organizational personnel & structure Organization – Here, briefly indicate the type of business registration. Additionally, you should outline your business’s organization, essentially how the business is set up. Structure – In this subsection, be sure to showcase any members of the board, owners, founders, and staff roles that you deem relevant and appropriate. This includes background information, qualifications, responsibilities, why that person is a value-add to your business, etc. One way to express the organizational structure is by creating a chain of command diagram Operations of the business In business operations, you should elaborate on all of the components detailed in the Business Model Canvas, excluding cost structure and revenue streams. They are listed below: Value Proposition Customer Segments Customer Relationships Channels Key Activities Key Resources Key Partnerships Industry Analysis and Strategy The Industry Analysis and Strategy sections demonstrate your knowledge of the strengths and weaknesses of the industry and how you hope to capitalize on these opportunities while avoiding threats. The goal is for you to thoroughly understand the competitive landscape and articulate a strategy. Industry Analysis This subsection provides you the opportunity to prove that the components in your business overview are founded on and backed by data, statistics, trends, themes, and more. The types of analyses to consider including in your business plan are listed below: Structural Analysis (Porter’s 5 Forces) – the primary objective here is to understand the intricacies of the industry and convey them through your business plan. This includes how businesses in your industry are succeeding or failing and analyzing your target customers as well. Competitor Analysis – this analysis details the various direct and indirect competitors in your industry by addressing who they are and what they are good at. Here, you can evaluate how your business compares to established and emerging businesses. Be sure to highlight why your business is better than the others. Competitive Strategy After analyzing the fashion industry, your business plan should outline the strategies your business will employ. Be sure to focus on your brand, your business’s differentiation, and the benefits of a particular strategy. The types of strategies to consider are listed below: Porter’s Generic Strategies (Competitive Strategies) Sales & Marketing Strategies Financial Situation In the final section of your Business Plan, you should primarily focus on the bottom portion of the Business Model Canvas: cost structure and revenue streams. For investors, loan associates, or other entities, this is one of the most important sections of your business. In a typical business plan, this section is composed of financial statements and calculated projections. However, since your business is still in the introductory stage, financial statements are not necessarily relevant yet. However, it is applicable and important to discuss your anticipated revenue streams, initial expenditures, and financial goals and expectations. These projections should be founded on research and analysis that you have conducted. Revenue Streams Monthly subscription boxes Product on website Cost Structure (Expenditures) Startup costs, permits/licenses, business operational costs Fabrics, machines, shipping, and packaging Financial Projections & Goals: Anticipated revenue Anticipated profits or alternatively, when you hope to break-even Additional financial goals or expectations you may have Arizona Microcredit Initiative (AMI) has consulting and microloan support for yourself and your business. If you have any more questions, you can schedule an appointment today through https://www.azmicrocredit.org/schedule-a-consultation-1 or reach out to us at info@azmicrocredit.org.

Introduction to Competitive Analysis

Introduction to Competitive Analysis

What is Competitive Analysis? Competitive Analysis is a crucial aspect of business development. Analyzing and understanding who are potential competitors of your business and idea can help you take the right steps to develop a unique value proposition. It is a process in which a business identifies its competitors and engages in analyzing their strengths, weaknesses and future strategies. Understanding your competitors and doing competitive analysis well sets the business at the correct path to develop their go-to-market strategy. If a go-to-market strategy is successful, that significantly increases the chances of business success. Every business should identify both direct and indirect competitors. It is always important to understand competitors that are easy to identify and also the ones who might not compete with your business at one glance. In order to hold a competitive advantage over your competitors, it is necessary to conduct detailed research about their products, sales, and marketing plans/tactics. 5 Steps for conducting a Competitive Analysis How to identify a market competitor First things first – are they realistic? To decide what competitors will be included in your competitive set, you need to outline them by type. There are three major competitor types: direct (realistic and aspirational), indirect, and perceived. Direct competitors: Companies that sell the same product or service in the same category as you (ex. Chipotle and Qdoba). Realistic direct competitors: Those on par with you in geographic reach, employees, breadth of services, etc. Aspirational direct competitors: Leading companies in the space that can inspire marketing opportunities but that you don’t go head-to-head within sales conversations. Indirect competitors: Key players in your industry that sell the same product or service as you, but it is different enough to act as a substitute (ex. Chipotle and Wendy’s). Perceived or replacement competitors: Businesses that sell a product or service that is different from yours, both in category and type, but one perceived by your audience as a replacement to spend their money (ex. Chipotle and Hot Pockets). Perform a SWOT Analysis As you evaluate each component in your competitor analysis (business, sales, and marketing), get into the habit of performing a simplified SWOT analysis at the same time. This means you will take note of your competitor's strengths, weaknesses, opportunities, and threats. Some questions to get you started include: What is your competitor doing well? (Products, content marketing, social Where does your competitor have the advantage over your brand? What is the weakest area for your competitor? Where does your brand have the advantage over your competitor? What could they do better with? In what areas would you consider this competitor a threat? Are there opportunities in the market that your competitor has identified? You'll be able to compare their weaknesses against your strengths and vice versa. By doing this, you can better position your company, and you'll start to uncover areas for improvement within your own brand. Example of Competitive Analysis Competitive Analysis is extremely important for a correct development of business. Doing high quality competitive analysis allows you to understand the market well as well as your competitor and your main advantage over them. This also allows you to get an understanding of how the competition works in the market and make correct decisions for your business. Arizona Microcredit Initiative (AMI) has consulting and microloan support for yourself and your business. If you have any more questions, you can schedule an appointment today through https://www.azmicrocredit.org/schedule-a-consultation-1 or reach out to us at info@azmicrocredit.org.

SEO Fundamentals

SEO Fundamentals

What is SEO? Search Engine Optimization or SEO is the process of making a website more accessible through organic search results, meaning the unpaid listing found at the top of search results that the search engine deemed most relevant to the user’s question. For example, if a user were to search for “coffee,” Starbucks would pop up first! Why is SEO important? SEO helps drive traffic to your site; it puts you at an advantage over the competition. Users are more likely to click on the website links that are toward the top of the page. It also establishes your website’s credibility. When users see a result closer to the top of the page they subconsciously acknowledge that the search engines are listing their best results first. How Do I Start? Step 1: Assess Page Speed Page speed is important because who likes waiting for a page to load? Page speed measures how fast your page would load. Here are a few ways to improve your page speed: Compress pictures (under 1 Megabyte) File Formatting for Pictures Graphics=PNG’s ; Photographs=JPEG’s Utilize “Lazy Loading” Loads everything as you scroll so time to interact decreases significantly Put applications & pictures on our website towards the bottom Remove big pictures from Mobile Limit animations Enable “Sticky Headers” Google page see insights states “A score of 90 or above is considered good. 50 to 90 is a score that needs improvement, and below 50 is considered poor.”

Domain Authority Domain Authority is a measure of a website’s authority in regards to its back link profile. It's graded from 0-100, the higher the number, the better! Your domain authority score is important to see where the search engine would rank you in comparison to other websites. It improves your reputation and builds trust in the users. Create a spreadsheet of relevant websites to reach out to that have high domain authority Draft a letter to send to websites that comes across as personal Offer ways that your website can provide value: Blog collaborations Social media shout outs References Networking Key Words Keywords help your page stand out! They provide the user with the direct information they are looking for via search engines! Here’s how: Research some keywords that are relevant to your website Regularly update your keywords Use a Keyword Planner to find keywords with low competitiveness and moderate traffic Google Keyword Planner (Account needs to be set up) WordStream Free Keyword Tool Keyword Surfer Chrome Extension Ubersuggest (Paid) Use 1 topic per page and 1-3 keywords per page Keyword(s) should be variations of the topic Arizona Microcredit Initiative (AMI) has consulting and microloan support for yourself and your business. If you have any more questions, you can schedule an appointment today through https://www.azmicrocredit.org/schedule-a-consultation-1 or reach out to us at info@azmicrocredit.org.

Projected Income Statement

Projected Income Statement

What is a Projected Income Statement? A projected income statement shows an estimate of the profits and losses in a future period of time – the next quarter or the next fiscal year, for instance. It uses the same format as a regular income statement, but projects the future rather than recording numbers from the past. So, what does an income statement look like? Think of it as a set of stairs. You start at the top with the total amount of sales revenue made during the accounting period. Then you go down, one step at a time. At each step, you make a deduction for certain costs or other operating expenses associated with earning revenue, which brings you to a specific subtotal. At the bottom of the stairs, after deducting all expenses, you learn how much you actually earned or lost during the accounting period (can be either a calendar or fiscal year, but also a week, month, or quarter, etc). People often call this “the bottom line.” Components of Income Statement A typical income statement for a small business will include the following steps, though they are not limited to using only these three: Gross Profit Operating Income Net Income Gross Profit Generally the first major subtotal on an income statement, Gross Profit is calculated by deducting Cost of Goods Sold from Revenues. Operating Income The next major subtotal, Operating Income, is calculated by deducting Fixed Expenses (also known as Operating Expenses) from Gross Profit. Operating Expenses include costs such as the salaries of any employee personnel, as well as any research and development costs, marketing costs, and more. These are considered operating expenses because, unlike the costs included in Costs of Goods Sold, they cannot be directly linked to the production of products or services being sold. We also deduct depreciation from Gross Profit in order to determine Operating Income. Depreciation takes into account the wear and tear on assets, such as machinery, tools, and furniture that are used over the long term. Companies spread the cost of these assets over the periods they are used. This process of spreading these costs is called depreciation or amortization. The “charge” for using these assets during the period is a fraction of the original cost of the assets. Net Income Though larger companies may have additional subtotals or steps on their income statements after the calculation of Operating Income, much of this is outside the scope of our discussions. After we have determined Operating Income, the last thing we need to do before determining the final subtotal, Net Income, is figure out our income tax expense. Though income tax expense varies widely depending upon how a business is structured, it can generally be estimated using publicly available tax brackets. Once income tax expense has been deducted from Operating Income, we are left with the “bottom line” figure of Net Income, or Net Loss if the number is negative. This figure tells us how much a company has earned or lost during an accounting period. Projected Income Statement Walkthrough Let's say you are a small business owner and are considering an expansion into the widgets business. You have decided to put together a projected income statement for the following year to see if the new product is worthwhile. Revenue The first item you need to estimate is your revenue, also known as sales to customers. You estimate that you can sell 1,000 widgets at an average price of $50 each, so your revenue estimate is $50,000. Cost of Goods Sold Next, you need to estimate your cost of goods sold. This is the cost of buying or producing the widgets. In this case, you have already located a supplier who will sell them to you at $1,500 for 100 widgets, or $15 each. So, your estimated cost of goods sold for the 1,000 widgets you anticipate selling will be 1,000 * $15 = $15,000. Since Gross Profit is simply Revenue - Cost of Goods Sold, in this example, the Gross Profit is $50,000 - $15,000 = $35,000. Next, you need to estimate the additional operating costs you’ll incur by offering this product. You’ll need to pay a salesperson a 10% commission on sales of your widgets, which is $5 each. For the 1,000 anticipated sales, this will be $5,000 for the year. You also anticipate spending $500 a month for brochures and $1,500 a month for additional office costs, such as office supplies, telephone calls, and other odds and ends. Operating expenses are generally shown in broad categories, so your operating expense projection will be: Commissions: $5,000 Marketing costs: $6,000 ($500 a month * 12 months) Office costs: $18,000 ($1,500 a month * 12 months) Total: $29,000 Net Income Finally, we can estimate our net income. Reminder: Net Income = Gross Profit - Operating Income Net income is our gross profit of $35,000 minus our operating expenses of $29,000 = $6,000 for the year. The Final Projection Now that you've put together the revenues and costs of this venture, it’s time to create your projected income statement. Here is the final projection, in standard income statement format: XYZ Company Projected Income Statement For the Year Ended December 31, 20XX Arizona Microcredit Initiative (AMI) has consulting and microloan support for yourself and your business. If you have any more questions, you can schedule an appointment today through https://www.azmicrocredit.org/schedule-a-consultation-1 or reach out to us at info@azmicrocredit.org. Return Home Continue to Expand Playbook

Creating Financial Statements

Creating Financial Statements

What are financial statements? Financial statements are reports that summarize important financial accounting information about your business. There are three main types of financial statements: the balance sheet, income statement, and cash flow statement. Together, these statements provide you—and outside people like investors—a clear picture of your company’s financial position. Common Types of Financial Statements 1. Balance Sheets A balance sheet is a snapshot of your business finances as it currently stands. It tells you about the assets you own, and liabilities (i.e., debts) you owe, at a particular point in time. How often your bookkeeper prepares a balance sheet for you will depend on your business. Some businesses get daily or monthly financial statements, some prepare financial statements quarterly, and some only get a balance sheet once a year. For example, banks move a lot of money, so they prepare a balance sheet every day. On the other hand, a small Etsy shop might prepare a balance sheet every three months. This sheet contains information about the company's liabilities, assets, and shareholders' equity, and is based on this accounting equation: Shareholders’ equity is a term that refers to the net worth of a company. It reflects the amount of money that would be left if all assets were sold and all liabilities paid. This money belongs to the shareholders. Assets are anything the company owns that has quantifiable value. This may include physical property (vehicles, real estate, unsold inventory, etc.), as well as non-physical property (patents, trademarks, etc.). Liabilities refer to money the company owes to a debtor. This may include outstanding payroll expenses, debt payments, rent and utility payments, money owed to suppliers, taxes, bonds payable, and more. Sample Balance Sheet Walkthrough Let’s say you run a food cart selling ice cream. At the end of June, you get a balance sheet from your bookkeeper. It looks like this: June Balance Sheet Not bad! It’s summer, your busiest time of year. One month passes. At the end of July, your balance sheet shows this: July Balance Sheet Nice. You’ve added $1,000 to your retained earnings by saving more cash, even though your liabilities haven’t changed. This is useful information. But it’s not the full picture. Does your balance sheet tell you… …how much ice cream you sold? No. …how much cash you received? No. …how much it cost you to make the ice cream you sold? No. …how much you spent on expenses? No. This is where the income statement comes in. 2. Income Statements An income statement is a report that a company generates to communicate how much money the company has earned over a period of time. It shows you how much you made (revenue) and how much you spent (expenses). Revenue: how much you earned from selling product or service Cost of Goods Sold (COGS): the total amount it cost you to make the product or service Gross Profit: tells you how profitable your products are Gross Profit = Revenue - COGS Operating Expenses: the cost of running your business, not including COGS Net Profit: tells you how profitable your business is Net Profit = Gross Profit - Operating Expenses Sample Income Statement Walkthrough Suppose we have an income statement for July that looks like this: July Income Statement You sold $1,000 worth of ice cream. If ice cream costs $4 each cup, that means you sold 250 ice cream cups. What does the income statement tell us that the balance sheet doesn’t? With this info, you know how many more ice cream cups you have left in inventory - and how many more you should be prepared to make next July. What else? There are two expenses here besides interest expense: electricity and maintenance. Looking back over your income statements, you’ll be able to see which months you spend more on electricity, and roughly how often you need to pay for maintenance on your ice cream cart. More importantly, you’ll be able to plan ahead for more expensive months (electricity-wise) and know roughly how much money to set aside for maintenance. You can only get this kind of information from the income statement. But what’s missing? Does your income statement tell you… …how much money you have in the bank? No. …how much money you owe to your credit card company? No. …how much equity you have in the business? No. …how much money you had one month ago vs. six months or a year ago? No. To get that info, you need snapshots of your business’s finances. You get those from the balance sheet...or you may need a third type of statement. 3. Cash Flow Statements A cash flow statement is a report that details how a company receives and spends its cash. These are also called cash inflows and outflows. A company can only operate when it has the money to cover its expenses. Cash flow reflects a company’s ability to operate in both the short- and the long-term, and is used by investors, creditors, and regulators to determine whether a company is in good financial standing. Cash flow statements are typically split into three sections: Operating activities, which details cash flow generated from the company delivering upon its goods or services, including both revenue and expenses Investing activities, which details cash flow generated from the buying or selling of assets, such as real estate, vehicles, and equipment (using free cash and not debt) Financing activities, which details cash flow from both debt and equity financing Here’s an example cash flow statement, using our ice cream stand from before: Why are financial statements important for small businesses? Arizona Microcredit Initiative (AMI) has consulting and microloan support for yourself and your business. If you have any more questions, you can schedule an appointment today through https://www.azmicrocredit.org/schedule-a-consultation-1 or reach out to us at info@azmicrocredit.org. Return Home Continue to Expand Playbook

Operational Analysis and Measuring Employee Effectiveness

Operational Analysis and Measuring Employee Effectiveness

At the core of every business is a set of steady-state assets that keep the whole operation running. These assets include everything from employees to equipment. These assets take a fixed amount of money from your profits every month, and ensuring these assets are necessary and beneficial is crucial. Operational analysis is the process of measuring the performance of a steady-state or operational asset against an established set of metrics, usually a set of costs, performance parameters, and schedule. Conducting operational analysis allows you to determine if the employees you hire, the equipment you buy, or the spaces you rent are contributing to your business goals. Why it's important Operational analysis has a multitude of benefits that help a business operate to its fullest capacity by uncovering any harmful business practices. Operational Analysis allows a business to: Optimize efficiency of employees - by identifying employees strengths and weaknesses In a small business, employees have to perform a variety of different jobs. By analyzing each employee’s skill set and finding their strengths and weaknesses, you can delegate tasks in such a way that each employee is working on a task they are best suited for, allowing for work to be completed in an efficient manner. Unify the organization with defined rules/organization By creating an organizational structure with designated team leaders, the business will be able to function efficiently as employees will better understand what their responsibilities entail. Additionally, with a team leader, different departments can communicate with each other in an organized manner as each leader will have a comprehensive view of what their department is working on. Find strengths and weaknesses of business operations - see where you can make changes An operational analysis can also help detect any inefficiencies that could be wasting company time. This can lead to corrective measures that help optimize the way the business operates so that no superfluous tasks unnecessarily waste the energy of employees. Instead, the company can focus on doing things that help the business function and meet its goals. Detect sources of financial waste In every organization, resources are scarce and there is always a need to reduce as much waste as possible. It’s important to weed out any unnecessary costs to ensure a good financial state of the business. Conducting an Operational Analysis An operational analysis can help you identify unproductive investments and processes and nip them in the bud before they prove detrimental to the business. We at Arizona Microcredit have written this guide to teach you how to conduct an operational analysis. First, we explain four metrics of measurement. Then, we describe a checklist for the process, complete with examples. A good operational analysis should measure your assets against the following measures: Customer Results: This measure focuses on whether the asset is meeting customers’ needs. For example, if you are conducting an analysis on new employees, measuring customer satisfaction and worker efficiency against wages and hiring costs would be an ideal model. Strategic and Business Results: This measure focuses on whether the investment is aiding the realization of your business goals and values. For example, if you have yearly growth targets, measuring how much each employee and/or machine contributes to sales and production growth would be a good place to start. Financial Performance: This measure is an extremely quantitative one that focuses on measuring current financial performance against an established baseline. For example, compare your business’s finances for this fiscal year against the last to find points of improvement. Innovation: This measure encapsulates the previous three and tries to find ways to change business operations to improve efficiency and profitability. For example, if your analysis found that there were too few employees on the front end serving customers and thus slowing sales, you would begin the process of hiring more employees as an innovation measure. Conducting an operational analysis may seem like a formidable task. However, it breaks down to a series of manageable steps. We can use the example of the hypothetical company Joe’s Bagels, LLC to explain the process Step 1: Establish a Timeline This timeline should establish what assets are being analyzed, what data is collected, and how long it will be collected for. Joe sits down and chooses to analyze if his 2 cashiers and 2 cooks are delivering the best returns on investment. The data he chooses to collect is the number of customers served, customer satisfaction, and bagels made and sold. He plans to collect data over a one month period to mitigate the impact of any particularly bad or good days. Step 2: Begin Data Collection Process The second step is to begin the data collection process. This can take many forms. Joe creates customer surveys that ask about wait time, bagel quality, and ease of ordering. These surveys are given out with each purchase, and returning one earns you a $5 credit with the store. He gives all employees a survey that asks about their satisfaction with their responsibilities. Lastly, he takes the data on bagel sales and production and stores it on a massive excel sheet. Step 3: Gap Analysis This is where you sit down with the data you’ve collected and try to identify inefficiencies and redundancies. Joe compiles the customer and employee data, and finds that the most common customer complaint was slow orders, and that the employee surveys from the cooks showed them to be dreadfully overworked. In this case, Joe's workers are not providing the best returns because the bagel shop operates in a way that places too many responsibilities on them. Arizona Microcredit Initiative (AMI) has consulting and microloan support for yourself and your business. If you have any more questions, you can schedule an appointment today through https://www.azmicrocredit.org/schedule-a-consultation-1 or reach out to us at info@azmicrocredit.org. Return Home Continue to Expand Playbook

A/B Testing

A/B Testing

What is A/B Testing? The primary principle behind A/B tests is creating two versions to see which version users respond favorably to - Version A or Version B? Questions to Consider Why is it important? AB testing has proven to increase profit, revenue, and help narrow your target audience, as seen in the following two studies: In a study conducted by Indow Windows, a custom window inserting company, A/B testing was utilized, stressing awareness rather than focusing on conversions to address their recent dip in revenue. Though a vague variable, Indow Windows experienced an 1800% increase in lead volume and a 94% decrease in cost-per-lead in only two weeks following the change they made according to the A/B test. In a case study done by Harvard Business Review, a Microsoft employee discovered a new way to layout the headlines on Bing. Utilizing AB testing to measure if this was an improvement from the original display, the company found a 12% increase in revenue. These studies have proven that A/B testing can help target and narrow your audience by decreasing the cost per lead enhancing your profit. To visualize, think about fishing with a net. With the results you gather from A/B testing casting a “more efficient net.” This “net” allows you to gauge what your audience likes in your advertisement, which is why there was an increase in revenue in the Harvard Business study. Your Pathway to Benefits How to Maximize Effectiveness A/B testing is quickly becoming a frequented tool in the business industry due to its low cost and high impact. It’s overwhelming benefits are a no-brainer to most online-competing companies. With this, creating an effective campaign is just as important as utilizing the tool. For A/B testing, certain aspects can make or break a successful campaign. Step 1: Research Research serves as the foundation of any test. By using existing site data, you can identify what a page does well, and where it’s struggling. There are plenty of resources at your disposal to scrape this information. Some include: Heatmap tools Google Analytics Session Recording Tools Step 2: Create Hypothesis Formulating a hypothesis is a great way to give direction to your campaign. In essence, it will serve as the backbone of your testing. Using the data gathered in the previous step, analyze, observe, and look for patterns. The final result should be something imperative to your larger goals and easy to set up. Step 3: Variation Variations want to create a noticeable difference, but not a significant change. Including too many metrics can hinder the effectiveness of your testing. The key is isolating one to two variables. These variables can include: Color Layout Image Formatting Number of Images Text Step 4: Run Test The testing method is just as important as testing itself, and should reflect the analysis and trends found during step 2. When creating it, make sure to be as detailed as possible. Factors to keep in mind include. Duration Controls Participants Step 5: Analyzing Results and Making Changes This is where the winner is decided. When looking at results, consider every metric present. These will let you decide whether a change should be made. Though a test may produce insignificant results, valuable insight can still be drawn from it. Common Mistakes Arizona Microcredit Initiative (AMI) has consulting and microloan support for yourself and your business. If you have any more questions, you can schedule an appointment today through https://www.azmicrocredit.org/schedule-a-consultation-1 or reach out to us at info@azmicrocredit.org. Return Home Continue to Expand Playbook

Finding and Retaining Investors

Finding and Retaining Investors

Investors provide starting capital for businesses, guidance for business development, and ensure that capital is invested correctly. Finding investors is often the key to starting or expanding a successful business. Partnering with investors is very important for fostering the growth of a business. Therefore finding and establishing strong relationships with investors can result in growth in your business which will increase revenue. There are several types of investors: Angel Investors, Personal Investors, and Venture programs. These are different types of investors who will have varying goals, but they all share the same purpose and goal: investing in a company because they believe it will grow and become profitable. Many established companies have started as small projects and expanded with the help of investors. Investors can be very beneficial partners for small business owners as they have knowledge of the difficulties of developing a business. In addition to this, they may have valuable input for future business decisions. What are Investors looking for? It is important to understand what Investors are looking for before they provide capital. There are several things that all businesses should consider before reaching out to investors and asking for a specific amount of money. All the above-mentioned things are very important and they should definitely be considered before approaching investors. Investors want to be sure that their investment will be profitable. They should clearly see that the company has developed an effective business model, a clear understanding of its target audience, and an adequate marketing plan. Investors are especially interested in new, innovative ideas. In other words, they enjoy the idea of investing in something that is new to the market and has a huge potential for growth. Investors expect businesses to have a straightforward answer to their needs from the investment firm. It is always helpful if the individual that is approaching them has experience working in a specific field as investors will find value in the experiences. It is also essential to define what issue your business will solve and what its competitive advantage is. For example, if your company provides a solution to a common problem, communicate this to the investor as it shows your value. Debt Investors vs. Equity Investors When looking into potential investors, it is important to understand the difference between debt investors and equity investors. When working with a debt investor, they are lending you money with the expectation that you will pay it back in full with interest. Usually, your company will be put up as collateral to secure this loan. When dealing with equity investors, they are purchasing a percentage of your company and will make a profit whenever they sell their share of the business. Debt investment can be good in many cases as you retain full ownership of your business. However, it has a few disadvantages as you need to pay back the debt and you usually need to provide collateral. Equity investing also has advantages such as not having a loan to repay and forming a partnership with your investors. This also comes with some drawbacks such as having to share profits and losing control of parts of your company. Angel Investors An angel investor is a person with a net worth of a few million who is interested in supporting small businesses/startups by offering investment. They are often former entrepreneurs who make investments to make a return on their money and to participate in the entrepreneurial process. Platforms like AngelList, FundersClub, CrunchBase can be very helpful for finding an investor that fits your needs. Many angel investors also specify the type of businesses they would like to invest in. They will usually ask for a pitch deck and one-pager to get an idea of your business before beginning to request more information about your business. Venture Programs Venture capitalists are considered to be the most selective type of investors. In order to receive their funding, companies must fit into their strict criteria of target companies to invest in. Venture capital is most effective when companies are trying to become powerful enterprises. Their goal when investing in your company is to facilitate as much growth as possible. Keeping this in mind, it is very important for companies to identify their goals for the future of their endeavors. If you are attempting to develop your business into a small family-owned company, venture capital is not the correct choice. In addition to this, timing is crucial to receiving their investment. The company needs to be established enough to promise a successful future but can not be too big to the point where the investors think your rapid growth period has already passed. However, if you reach out to them too early, they might determine that the risk of investing in your company outweighs the reward. It is important to note that this is one of the most difficult types of investment to obtain. In addition, the process of seeking this investment is very time-consuming. Arizona Microcredit Initiative (AMI) has consulting and microloan support for yourself and your business. If you have any more questions, you can schedule an appointment today through https://www.azmicrocredit.org/schedule-a-consultation-1 or reach out to us at info@azmicrocredit.org. Return Home Continue to Expand Playbook

Loan Resources

Loan Resources

This regularly-updated guide gives an overview of funding resources available to small business owners in Arizona. Arizona Microcredit Initiative Microloans Overview Arizona Microcredit Initiative (AMI) is a 501(c)(3) nonprofit that empowers underserved entrepreneurs to start or expand businesses through low-interest microloans that are tailored to fit your business needs. Qualifications Loan funds must be used to purchase revenue-generating assets Fulfill collateral Agree to AMI’s loan schedule Person of good character Application Process Fill out a loan interest form with your basic contact information and business details Meet with an AMI staff member to discuss your business and its needs Fill out a loan application with your personal and business information Include required documents in your application submission Required Documents Personal Federal Tax Return (2016 and 2017) Last 6 months bank statements (personal and business accounts) Active tradeline (utility bill or landlord reference) Employer ID Number or Tax ID Number for business Planned loan budget Complete authorization to pull a credit report form from our partner Marisol (Phase II only) www.azmicrocredit.org/loans Desert Financial Credit Union Small Business Emergency Loan Overview This loan program is designed to help cover operational expenses such as payroll, utilities, rent, and taxes for businesses negatively affected by the pandemic. Qualifications Business must be physically located within Desert Financial’s field of membership. Business must be independently owned and operated. Business must have been established for a minimum of 3 years. A personal guarantee is required Application Process Fill out a loan information request with your basic contact information. A representative will reach out to discuss your options. Walkthrough the loan application process with the representative. Required Documents Information is not available to the public https://www.desertfinancial.com/health/small-business-emergency-loan Kiva Crowdfunding Loans Overview Kiva is an international nonprofit, founded in 2005 in San Francisco, with a mission to expand financial access to help underserved communities thrive by crowdfunding loans. Qualifications Business be based in the United States Must be over 18 years old Loan must be used for business purposes Business must not be engaged in multi-level marketing/direct sales, illegal activities (e.g. gambling, scams), or pure financial investing (e.g. stocks) Cannot currently be in foreclosure, bankruptcy, or under any liens Must be willing to demonstrate your social capital by having a small number of friends and family make a loan Application Process Fill out a loan application If your application is approved, prove your creditworthiness by inviting friends and family to donate to you Go public on Kiva for 30 days, lenders crowdfund in increments of $25 or more Borrower repays the loan based on the repayment schedule and the borrower’s ability Required Documents Business proof Approximate credit score Income Major monthly payments PayPal account www.kiva.org/borrow Growth Partners Arizona Small Business Success Loans Overview Growth Partners Arizona helps nonprofit leaders and small business owners who create change in economically distressed communities gain the operational resources and business guidance they need to improve the lives and economic wellbeing of Arizona residents. Qualifications Do business in Arizona (valid business license and be in good standing with the state of Arizona) Annual revenues in excess of $50,000 In business for at least two tax filing periods; no start-up businesses Minimum FICO score of 660 Priority is given to businesses located in CDFI investment areas Application Process Fill out a loan application with your basic information and loan request details Include required documents in your application submission Before submitting these materials, please contact Lesli Pintor at (520) 382-9218 or Lesli@GrowthPartnersAZ.org for further instructions Required Documents Copy of business license Confirmation of business registration and certification of Good Standing with the State of Arizona Office of the Corporation Commission Two years of historical business financial statements Two years of business and personal federal tax returns Interim business financial statements (current within 45 days of application) Business debt schedule dated consistent with the interim business financial statement Personal financial statement dated with 45 days of application www.growthpartnersaz.org/small-business-success-loans/ U.S. Small Business Administration Disaster Loan COVID EIDL Overview The SBA provides low-interest disaster loans to help businesses and homeowners recover from declared disasters. *Amount Varies Qualifications If you are a small businesses, nonprofit organization of any size, or a U.S. agricultural business with 500 or fewer employees that have suffered substantial economic injury as a result of the Coronavirus (COVID-19) pandemic, you can apply for the COVID-19 EIDL. This loan applies to all businesses based in any U.S. state, territory, or the District of Columbia. Application Process Check disaster loan declarations in your area Apply for a disaster loan on the SBA website Check your loan status online for updates Required Documents Information is not available to the public https://www.sba.gov/funding-programs/disaster-assistance Business Development Finance Corporation Loan Overview We are one of Arizona's most experienced SBA lenders, and we have tools and resources that simplify the SBA 504 loan process. Qualifications Facing immediate pressure because of COVID-19 SBA 504 Eligible SBA 7(A) Eligible Application Process Contact BDFC to have a team leader assist you with our SBA applications and loan process https://www.bdfc.com/small-business/ CARES Act Readiness Program for Small Businesses Overview Arizona Small Business Association and the Arizona Chamber of Commerce & Industry have teamed up to launch a free training program to help small business owners navigate the different programs and relief funds offered as a part of the CARES (Coronavirus Aid, Relief, and Economic Security) Act. The program focuses on financial planning and helps with submitting documents. It is self-guided and can be completed at your own pace, in some cases in less than an hour. Courses are offered in both English and Spanish. Program Details elect either the novice or experienced borrower track based on your experience with borrowing from the Small Business Administration Enroll by creating an account with your basic contact and business information Depending on your selected track, you will go through two to five online classes that can be accessed from a desktop, tablet, or mobile device Upon completing the program, you will receive a Certificate of Participation that grants you access to a live webinar with business experts www.caresactaz.com/ Arizona Microcredit Initiative (AMI) has consulting and microloan support for yourself and your business. If you have any more questions, you can schedule an appointment today through https://www.azmicrocredit.org/schedule-a-consultation-1 or reach out to us at info@azmicrocredit.org. Return Home Continue to Build Playbook Continue to Elevate Playbook

Problem Solving 101

Problem Solving 101

How to Handle Your Business Issues with the Most Efficiency and the Least Stress Learn how to develop your critical thinking skills so you will be able to overcome any problem that may arise when starting a business. Problem-solving is a business skill that often takes time and experience to learn to do effectively – this is just a beginners’ guide on how to structure that process. AMI’s Consultants have robust experience in solving problems, and are willing to help! To work with us 1:1 to solve your most pressing business problems, send us an email at consulting@azmicrocredit.org or schedule a free appointment at www.azmicrocredit.org. This guide has been published by Arizona Microcredit Initiative, 501(c)(3), an Arizona-based nonprofit organization dedicated to supporting underserved entrepreneurs in the Phoenix area through microlending, consulting, and education services. Visit our website to learn more! An Introduction to Business Problems You probably don’t need anyone to explain what a business problem is – you deal with them daily and have a much better understanding of where they come from, how serious they are, and, to a degree, how to solve them. The purpose of this document is to provide you, the prospective or current entrepreneur / small business owner, with tools to structure your thinking about problems so that 1.) you can more smoothly tackle them yourself and 2.) train others on your team who aren’t as involved as you to solve problems on their own. Business problems arise in all sizes and in all aspects of business. Here are a very select few, but the ones you might encounter may be much larger or smaller in size, scope, and importance to your business. This is just a list of examples: My sales this month have been lower than usual The supplier is planning on hiking his prices, which will lower my margins The landlord is planning on increasing rent There's a new competitor opening soon nearby Some customers left negative reviews about my business The fact is, there’s no want for business problems in entrepreneurship. Real, practical, and impactful solutions, though, are much rarer. We at the Arizona Microcredit Initiative can’t guarantee that this guide will lead to the perfect solution to all your problems, but what it can do is give you the tools to maximize your chances that you do find it. The process of identifying a problem could be called problem discovery – it’s the realization that there’s a gap between the businesses’ perfect condition (its ideal state) and where the business is now (its current state). To put it simply, business problem solving is the process of bridging the gap between those two. The Stages of Problem Solving Problem-solving can be thought of as a cycle with five distinct steps, the first of which we’re already familiar with – problem discovery. It’s where we identify what exactly the problem is. The other stages are developing a hypothesis, framing your thinking, research & analysis, and generating solutions. Below is how we at AMI visualize problems that we solve for entrepreneurs. It’s important to remember that problem solving is cyclical – you’ll never run out of problems to solve, but they should be tackled one at a time. You may have heard the saying “smooth is fast, fast is smooth” – that applies to problem-solving, too. Tackle one at a time, and more problems are likely to be solved that way. The Stages Explained Step 1: Problem Discovery This is the stage in which problems should be identified. Some tips we have for stating your problem are the following: •Pick exactly one problem – it’s easy to combine two or three into one, but solving that many at once is more complex •Identify the source of the problem – where is it coming from? Who or what is causing it? This can help identify stakeholders •Know your timeline – some problems you have months solve, some just weeks, and for others you may have just days. Understanding the timeline can help save your efforts in terms of finding a usable solution Step 2: Formulate a Hypothesis This stage feels more academic than it really is. What we’re really doing here is making a claim that we can test about the problem that has been identified. Here’s an example: if the problem is “my revenue numbers are lower than normal,” then an example of a hypothesis could be, “my revenue numbers are lower than normal because my prices are too high.” A hypothesis is an explanation for the problem, which is the most important part. Exercise: My business problem is _______________________________________________________________ My hypothesis is _______________________________________________________________ Step 3: Framing Your Thinking For most people, this stage is the trickiest part of problem-solving. Framing your thinking essentially involves making a list of those factors that would influence your hypothesis (in other words, all the considerations that matter) and prioritizing those factors so you can identify where to start with your analysis. If this sounds abstract, it is; here’s an example to better illustrate: Problem: Revenue has declined this month Hypothesis: Revenue has declined this month because of new competition Framing your Thinking: •What is the number of competitors I have? Is it different than it was before? •What is the pricing level of each competitor? Is it different than before? •What changes did I make internally over this period? Is anything different? • This list is neither perfect nor comprehensive but should give you a flavor for how to make your list of considerations. Next is the task of prioritizing these things. Finding out the number of competitors is easy – a quick internet search would give us that answer. The pricing level of our competitors would need a bit more research. Understanding internal changes would require making a log of business decisions to find what could have triggered this. Exercise: Make a list of all the reasons or factors that could help uphold or disprove your hypothesis •_________________________________________________________________ •_________________________________________________________________ •_________________________________________________________________ •_________________________________________________________________ Step 4: Research and Analysis If Step 3 is the most difficult to understand in this cycle, Step 4 is the most difficult to actually do, because it usually entails the most work out of the 5 Steps. The research and analysis phase consists of doing whatever analysis needs to be done about the factors you identified in Step 3. For example, for the factors outlined above (number of competitors, pricing strategies, and internal changes), the analysis could look like this: Use the internet to understand what competitors are in my area or space now. Is this number different than before? If so, who are the new players? Based on this line of questioning, you might need to do a fresh round of market research. Use the internet, chambers of commerce, professional associations, or other contacts to understand what products or services the competitors offer, and at what prices. How different are these prices from your own? Compile a log of all the business decisions made in the past month. Did any of them have a tangible impact on revenue drivers? Did I make inventory changes? Did I change prices? Did I change the quality of any of my products or services? This phase can multiply quickly if left unchecked. That’s why it’s important to make a fixed list of analyses that you’re going to do before you do them. When AMI begins consulting, we use a document called a “Scope of Work” that outlines what we’re going to do, and by when. This helps us keep problem-solving from getting out of hand. Another tip is to make sure that you’re focusing on conclusions. Knowing the number of competitors is somewhat useful, but knowing the competitors compared to before, identifying their strengths and weaknesses, and knowing where your business needs to change is far more useful. Step 4: Identifying a Solution Now is when you can solve the problem! The reason we recommend doing all the research first is so that less time is spent making changes, which can be costly or risky, and more time figuring out exactly where and what the problem is. When you visit the doctor, they don’t operate on you without knowing what’s causing the issue. As an example, if you saw your revenue falling, the first instinct might be to increase your marketing or lower your prices. But if the real reason for your declining revenue was that the latest batch of inventory had blemishes that caused customers to be dissatisfied with them, then neither of your actions would have solved the problem, meaning you’ve incurred costs without addressing the problem. Using this framework helps address that. The solution stage is the most creative phase and the one in which we have the least guidance. Some tips we can give are as follows: Know what you can reasonably accomplish – if money, time, or support were no object, we could solve almost anything. Entrepreneurs often have runways, however, and finding solutions that fit within our constraints is often challenging Be creative and have alternatives – while your first plan may seem like it checks all the boxes, it’s important to have backups. Have plans A, B, and C, and be willing to try all of them if needed. Having backups is almost never a bad idea. Leverage your network – it takes a community to make a business successful. Think of mentors, professional partners, friends, associates, or any other supporters you may have. The path forward is your decision, but perspective can help. Make a plan and execute – after you make a plan, it’s time to execute it. We recommend thinking through the steps, how long each step should take, and the specific actions you’ll need to take. Breaking things down can make this less overwhelming. Arizona Microcredit Initiative (AMI) has consulting and microloan support for yourself and your business. If you have any more questions, you can schedule an appointment today through https://www.azmicrocredit.org/schedule-a-consultation-1 or reach out to us at info@azmicrocredit.org. Return to Start Here Return to Build

Social Media 101

Social Media 101

Social Media is a vital part is reaching out to customers on an online platform. Here the AMI team will walk you through how to set up a social media account for your business! Basics of Instagram for Small Businesses In today’s digital world, entrepreneurs (like you!) have the opportunity to expand their reach with the use of social media: Instagram, Facebook, Twitter, YouTube, and more. The days of the ever time-consuming door-to-door sales and sole word-of-mouth advertising are gone. Expanding your digital footprint will enable your potential customers and other interested parties (think local news stations or local entrepreneur-empowering organizations like us) to more easily find your business. It helps customers understand what your business is all about, and allows you to establish a platform to more personally connect with your customers. This tutorial is the first part of an Instagram mini-series: it will take you through the basics of building and setting up an Instagram account for your business. How to Create an Instagram Account Step 1: Go to your smart device’s app store, look up Instagram, and download. Use the red circles as a guide if needed. If you already have a personal profile, great! However, let’s make a second account specifically for your business. Step 2: Select an email and password that you will remember and use often. Select a username that should clearly reflect your business, such as your business name if it's not already taken. (Hint: if it is already taken, try adding “AZ” to the end of it!) Tip: Unless your business has a number, try to refrain from using numbers in your username. For example, our Instagram is @azmicrocredit, not @ami480. Step 3: Upload a profile picture—this should be a picture of your company logo. Once your account information is created, you will be prompted with some of the following options. If you have contacts with any current or potential customers, it would be a great idea to let them know you have created an Instagram! Also, you should upload a profile picture of your company logo. Step 4: Lastly, you will be taken to your account where you may once again be prompted to sync contacts and/or be given suggestions on accounts to follow. How to Navigate Instagram Setting up Notifications How to Post Posting on Your Page The next section of this article, “Content Creation Tips,” details what you should post specifically. Posting on your Story What is an Instagram Story? Unlike a regular post, an Instagram Story only lasts for 24 hours. You can use this to your advantage by posting about special daily deals or events your business is participating in. Posting on your story is the same process as a normal post, except you will click on the top left icon labeled “Your Story”. Content Creation Tips Branding Your Business Define your brand. What is at the core of your business? What are your business’s values and mission? What do your customers value, and who is your target demographic? These questions can guide how you think about your business. If you run a food business that is centered around delicious meals with a fun and vibrant community, you can showcase your food with bold colors. Occasionally show gatherings of people-centered around your food. If your business is driven by your team and your employees, feel free to showcase your team members and write about the awesome work that they’re doing! Take and edit great pictures. Although you don’t need to be a professional photographer to run an Instagram, it still helps to have clear, quality photos. Make sure that your photos are lit properly, not blurry, and focus on the subject that you want your customers to see. Create compelling captions. Tell a story through your caption—it makes the photo more meaningful, and if your picture needs a bit of explanation, the caption can give your potential customers clarification of what is in the photo. Captions can carry your personality—make them anywhere from punny, whimsical, down-to-earth, informative. Building an Audience Liking, Commenting, Following Instagram is not just about the content that you produce: it’s about the community that you establish on the platform. To begin growing and expanding your Instagram audience, one simple trick is to Like and Comment on the posts of related IG users, and even Follow them as well. For example, if your business is located in the Phoenix area, you can follow @downtownphoenix, @downtownchandler, @downtowntempe, and other cities’ pages. If your business sells food, then you can follow Arizona-specific food Instagrams (such as @azfoodie) to start building the base of users you follow. Interacting with closely-affiliated accounts will help others (your potential customers!) in the community find your business through their Instagram pages as well. Hashtags Another way to build your audience is to search and follow hashtags in addition to using them in your post. What is a #hashtag? A hashtag is a keyword phrase with a pound sign in front of it, and it helps to label and identify your post. It helps other Instagram users find your content easily on that same topic—for example, if you have a food business in Arizona, you can utilize #AZfood #Phoenixfoodie to help steer traffic towards your post. Additional Resources AMI will be continuing our Instagram mini-series to help you establish the best Instagram presence for your small business. In the meantime, we’ve curated a list of some of the best articles that you can continue to read to improve your business’s digital presence. General Business Instagram Tips https://blog.hootsuite.com/how-to-use-instagram-for-business/ https://sproutsocial.com/insights/instagram-for-business/ Content Creation https://www.hopperhq.com/blog/produce-epic-instagram-content/ https://blog.iconosquare.com/create-quality-instagram-content/ Instagram Stories https://later.com/blog/instagram-stories-for-business/ Instagram Analytics https://www.wordstream.com/blog/ws/2018/11/01/instagram-analytics https://www.socialmediaexaminer.com/4-ways-to-use-instagram-insights-to-improve-marketing/ Instagram Advertisements https://blog.hootsuite.com/instagram-ads-guide/ About AMI: Contact Us Arizona Microcredit Initiative is a 501(c)3 nonprofit that strives to empower the underserved entrepreneurs around the Phoenix valley through business instruction, microloans, and consulting. If you have any questions or comments about the article/want to learn more about how to leverage the digital world for your small business, please feel free to contact AMI at info@azmicrocredit.org. Subscribe to our newsletter to keep updated on the Instagram mini-series and receive more educational material for your small business! Arizona Microcredit Initiative (AMI) has consulting and microloan support for yourself and your business. If you have any more questions, you can schedule an appointment today through https://www.azmicrocredit.org/schedule-a-consultation-1 or reach out to us at info@azmicrocredit.org. Return to Start Here Return to Build

Small Business Upskilling

Small Business Upskilling

Customer Obsessed Taking customer relationships to the next step through customer and market information allows you to take your business to the next level. Utilizing readily available statistics can help small business owners with market research and competitive analysis. References General Business Statistics NAICS USA.gov Statistics Statistical Abstract of the United States U.S. Census Bureau Consumer Statistics & Demographics Consumer Credit Data Consumer Product Safety American FactFinder Bureau of Labor Statistics Economic Indicators Consumer Price Index Bureau of Economic Analysis Employment and Unemployment Statistics Marketing Upskilling Facebook Blueprint Facebook Blueprint is a one-stop shop for everything there is to know Facebook Business Page including best practices for posting and advertising on Facebook and Instagram. Social Media Monitoring Learn actionable social monitoring takeaways for people of all skills levels related to keyword filtering, Google related searches, monitoring strategies for Facebook, and more! Email Marketing for E-Commerce Create engaging email marketing campaigns and learn to optimize your strategy in order to increase business revenue. Inbound Marketing Certification This HubSpot certification will teach the basics of email marketing, content marketing, SEO, reporting, and more to cultivate modern-day inbound marketing strategy. Analytics Upskilling Microsoft Excel Basics Introduction to Analytics Data Analytics with Excel PivotTables Google Analytics Academy SEO Training Arizona Microcredit Initiative (AMI) has consulting and microloan support for yourself and your business. If you have any more questions, you can schedule an appointment today through https://www.azmicrocredit.org/schedule-a-consultation-1 or reach out to us at info@azmicrocredit.org. Return Home Continue to Elevate Playbook

Building Customer Relationships- Promotion Strategies

Building Customer Relationships- Promotion Strategies

The best way to grow your followers, and thus your business, is to provide a value-add for them. Ask yourself what would make someone want to connect with your business. For example, running promotions or giveaways from your social media page can provide a benefit to those who connect. What is a Promotional Strategy and why is it important? Promotional strategies are designed to generate interest in your product or band. They use a unique combination of advertising, sales promotion, and promotional platforms, such as social media, to encourage customers to buy your product. It is a useful method to get more people to try your products, keep customers loyal, and identifying potential customers. What are some examples of Promotional Strategies? There are a wide variety of Promotional Strategies that are available for one to use. An example would be the use of coupons, which consumers can go and use to redeem a discount. Another one would be Buy One Get One Free, BOGO’s are a great way for one to get their product into more people’s hands as these deals are often time-sensitive and it will incentive people to get the deal. And lastly, one of the most popular strategies from a consumer’s perspective is a giveaway. A giveaway gives people an opportunity to use a product for the first time. With all of these strategies, ensure that your strategy matches your business’s brand standards. For example, Trader Joe's does not give out coupons but does have seasonal items as a promotional strategy. Everyday examples of promotion strategies In this example, Ritz Crackers has partnered with Costco and is doing a giveaway to get their product into the hands of more people as a Promotional Strategy. In this example, Subway is offering a BOGO deal on their Subs. This is an example of a Promotional Strategy in Action. How to use Social Media to promote your product Social media platforms, such as Facebook and Instagram, can be a useful tool for increasing awareness and generating interest for your products. Introducing promotions on your business’ social media will inform existing customers as well as those already interested in your products of new opportunities to try your products at a discounted rate. This both rewards your loyal customer base and introduces new customers to your business. Reaching your target demographic While using your business’ social media platforms is an effective method of reaching customers, creating targeted ads on social media will enable you to reach more prospective customers. Identifying those who might be interested in your products, either by cites they interact with or recent searches, will reach prospective customers that might not have heard of your brand. You can learn more about how to create social media ads at https://www.azmicrocredit.org/single-post/social-media-ads Arizona Microcredit Initiative (AMI) has consulting and microloan support for yourself and your business. If you have any more questions, you can schedule an appointment today through https://www.azmicrocredit.org/schedule-a-consultation-1 or reach out to us at info@azmicrocredit.org. Return Home Continue to Build Playbook

Networking 101

Networking 101

An Introduction to the What, Why, and How of Entrepreneurial Networking What is Networking and Why Should I Do It? AMI exists to make an impact, and it was with that enthusiasm that I marched into a local networking event for small business owners. I was nervous, to be sure – it’s not easy going somewhere unfamiliar surrounded by strangers to peddle your ideas, but I learned quickly that the business community is a friendly place, and within minutes, I had gotten to chatting with another attendee, one who was incredibly passionate about his olive oil business. This passion for business is infectious – and in being receptive to that passion, and sharing my own, AMI was able to build a relationship with him. Networking means a lot to AMI – it helps us connect with the community, our reason for existing. But as a small business owner and entrepreneur, why should it matter to you? Consider this: Forbes reports that half of all small businesses fail within the first 5 years, mostly because of the following reasons: No market need Not enough capital Not the Right Team Competition Pricing Each of these falls into a few major categories that demonstrate the value of networking: Knowledge Sharing, Financial Resources, and Building Your Business Network. Let’s take a closer look at each: Knowledge Sharing Starting a small business is difficult, especially if it’s an entrepreneur’s first time. While you might have a detailed understanding of your product and the problem it solves, running a business requires a wealth of knowledge to do correctly; finding customers, best accounting practices, how to price your products, finding suppliers and distributions, and changing your business to remain relevant are just a few. Other entrepreneurs have experiences that you can learn from and vice versa. Learning from and sharing with others is a great way to grow without making mistakes yourself. Financial Resources Whether through your own savings, investors, donors, or grants, businesses need capital to start, stabilize, and grow. Networking is a great way to collect information on what financial resources are available in your local and greater community. Small business organizations, professional development groups for entrepreneurs, and individuals who want to help are all common players. Networking is a great way to find them. Building Your Business Network Businesses thrive on the support of people and meeting them through networking is a great way to help take your business to the next level. Networking could lead to a new business partner, a key supplier or distributor who understands the value chain, or it could lead to meeting other like-minded individuals who can support you through your entrepreneurial journey. There are so many ways people can support you, whether by improving your business operations or through moral support – building the relationships to help make these things happen is key. How to Network Have an Objective Are you looking to learn from other entrepreneurs? Meet business partners? Connect with suppliers? It’s important to have a clear objective of what you hope to get out of networking; this can change with your needs, but deciding on one helps shape your next steps. Practice Your Pitch When networking, your opener should convey who you are, what you do, why, and what you’re looking for. This introduction should be no more than 30 seconds long but should give others a quick overview. Practicing this can make delivering your intro easier Conduct Research If it’s a single person, learn about their background using the internet or LinkedIn. If it’s an organization, learn more about what they do, why, and how. If it’s an event, try to learn who will be there. Being prepared can make conversations go more smoothly. Have Conversations Ask questions about others’ experiences and share your own. Remember your objectives and the research you conducted. Networking is a two-way street: exchange information and resources and ask how you can help in addition to how they can help you. Always Follow Up Make sure to exchange contact information after your conversation; always try to get theirs so that you can be proactive and continue the relationship. Remember to follow up via phone or e-mail a few days after your initial meeting; hopefully there’s a lot to talk about! Where to Network in Arizona One of the most difficult parts of networking is finding out where to network. A good place to start is by looking at your local small business associations, chambers of commerce, or other entrepreneurial groups, especially on social media platforms like Facebook. For our readers in the Phoenix Metro area, here are a few resources to get started: Local First Arizona Local First Arizona is a nonprofit focusing on community and economic development. Local First connects people, businesses, and communities to achieve a more prosperous Arizona*. If you do not live in Arizona, look for similar nonprofit organizations that foster connectedness in business. Fabric FABRIC is a fashion incubator, business accelerator, design studio, academy, and manufacturer for the fashion industry. Their resources include classes, business services, and a community. Industry-specific organizations are a great place to find like-minded entrepreneurs in your field. Tempe Chamber of Commerce The Tempe Chamber of Commerce represents over 600 businesses and supports business owners through advocacy, connection, and visibility. TCC hosts network development and panel events to meet entrepreneurs and experts in your field*. Almost all cities have a Chamber that serves its communities in similar ways. Consider becoming a member and engaging in the business community. *Some of these organizations may have membership dues; make sure to visit their website or contact them to find out more about the membership process. Arizona Microcredit Initiative (AMI) has consulting and microloan support for yourself and your business. If you have any more questions, you can schedule an appointment today through https://www.azmicrocredit.org/schedule-a-consultation-1 or reach out to us at info@azmicrocredit.org. Return Home Continue to Build Playbook

Vision and Mission Statement

Vision and Mission Statement

Setting the foundations for the purpose of your operations. Overview Mission and vision statements are short descriptions of a business or organization that articulates the goals, objectives, and values of an organization; this is an important tool for making decisions and plans about a business. An organization can have one complete statement that describes its mission and values or two separate mission and vision statements. Mission Statement vs Vision Statement The mission is what the company is and what they do; vision is what they hope to be. Mission statements are more action-oriented and serve to describe the purpose of a company or organization. It expresses the business’s functions and objectives. Having a developed mission statement is necessary to create an accurate vision statement. The vision statement describes where you want your company to go. It provides insight into a business’s values. An understanding of both of these statements is necessary for developing your company’s brand. Necessary Elements What Goes in a Quality Mission Statement? A good mission statement should be one nice sentence at the most. The mission statement should consider the long-term future of the organization and not be limiting. Employees should be asked what they think of the statement and the organization shouldn’t be afraid to alter the statement if circumstances change. 3 Major Components According to Professor Chris Bart, notable authority of organizational mission and vision statements, a mission statement consists of three essential components: Great Examples AMI "The purpose of Arizona Microcredit Initiative is to empower underserved entrepreneurs to start or expand businesses through business instruction, consulting services, and microloans.” LinkedIn “To connect the world’s professionals to make them more productive and successful.” Amazon “We strive to offer our customers the lowest possible prices, the best available selection, and the utmost convenience.” What Goes in a Quality Vision Statement? A good vision statement should also be short like a mission statement. The statement is an optimistic outlook about the current state of the organization as well as the future objectives. The vision statement is goal-setting and it should be what the entire organization’s work is looking to create. It should be inspiring. Common Traits Great Examples AMI “An Arizona where neither a challenging background nor lack of resources can stand in the way of a passionate, entrepreneurial spirit.” Apple “To make the best products on earth, and to leave the world better than we found it.” Shopify “Make commerce better for everyone, so businesses can focus on what they do best: building and selling their products.” Decision Making Based on Statements A mission statement should be the ethos of what your company does, and thus should be emphasized in the actions that the company takes within its culture. Whenever there are decisions that you as a leader of an organization are making, the company’s mission statement should align with the actions the organization is taking. The 3 Steps To Take When Decision-Making Step 1 Ask yourself, Why Are You Making The Decision? Understand what the short and long-term implications of the decision are. Step 2 After evaluating the implications of your decision, ensure that that your decision fits your Vision and Mission Statement. Step 3 Ensure that your decision makes business sense. Ask yourself, will this be a net benefit for my net profit in the long-term? If the answer is no, re-evaluate the decision because the long-term profitability of your business will allow you to sustain your business. Great Example Tomm’s Shoes has the goal of ensuring that every person that needs a shoe can get a shoe. This mission statement is embedded into the ethos of the company and that is why for every pair of shoes a person purchases from Tom’s, another shoe is made for a person in need. Toms was able to do this because they could afford it and they deemed it as a business decision that would increase their long-term profitability. Create Your Mission and Vision Statement Mission Statement Below begin brainstorming what your mission statement might be. Think about the three major components of a mission statement and what those are in your business. Feel free to refer back to the page about what a quality mission statement looks like. Vission Statement Below begin brainstorming what your vision statement might be. Go over the 6 common traits and reflect on what values your business holds. Again, feel free to refer back to the page about what a quality vision statement looks like. Arizona Microcredit Initiative (AMI) has consulting and microloan support for yourself and your business. If you have any more questions, you can schedule an appointment today through https://www.azmicrocredit.org/schedule-a-consultation-1 or reach out to us at info@azmicrocredit.org. Return Home Continue to Build Playbook

Building Customer Relationships- Customer Feedback

Building Customer Relationships- Customer Feedback

Customer feedback is vital for business growth. Your business is, after all, built entirely around your customers. This is why whenever you log on to websites or use an application, you are asked to provide a review or give some sort of feedback: the customer’s opinion is the most important piece of information a business can have. Customer Feedback: Your Greatest Source of Learning What is Customer Feedback and Why Does It Matter? Think back to the last time that a cashier handed you a receipt with the link to a survey at the bottom of it. Or the last time that you bought something online and were sent an email asking you to leave a review for the product. Both the receipt with the survey and the request for a review are examples of companies asking you, their customer, for feedback. Customer feedback is information given by customers about their experience with a company’s products or services. It provides insight into their satisfaction level and paints a picture of how they feel about the product or service that they received. Collecting feedback empowers businesses to improve the customer experience through informed decisions. It allows you to know what you’re getting right and what you’re getting wrong in the eyes of the customer. Everyone loves to receive praise, but negative feedback is especially powerful, as it reveals where there is room for improvement. Microsoft founder Bill Gates took this idea to heart, as seen in the quote on the right. Collecting customer feedback is an essential practice for any companies that wants to put customer satisfaction at the forefront. Collecting Customer Customer Feedback Before you can begin collecting feedback, it is important to identify the reason that you’re looking for feedback. Having specific goals in mind that sets the groundwork for the entire process, it can help you determine how to reach your customers, what to ask them, and what to do with the answers that you receive. After all, data collection is great, but it becomes overwhelming and futile without any idea of what to look for in the data. Some examples of goals include the following: Understanding trends in customer satisfaction Identity customer service issues Uncover product performance deficiencies Improves a specific aspect of the customer experience What to Ask and How to Ask It There are a variety of different tools that can be used to gauge how customers feel about their experience with your business. The best way to measure this depends on what you want to learn from your customers and how you want to reach them (more on channels in the next section). 1. Net Promoter Score (NPS) Net Promoter Score (NPS) measures the likelihood that a person will recommend your product or service. It’s one question with a scale of 1 to 10. NPS is calculated by subtracting the percentage of detractors (customers who would not recommend you) from the percentage of promoters (customers who would recommend you. 2. Customer Satisfaction Score (CSAT) Customer Satisfaction Score (CSAT) measures how satisfied a customer is with a specific interaction with a company. Like NPS, it’s only one question. 3. Customer Effort Score (CES) Customer Effort Score (CES) measures how much effort was required by your customers to get their problem solved. 4. Social Media Monitoring Social media monitoring allows you to learn what customers are saying about your business in an organic way. Tools like Google Alerts and Mention help you identify mentions of your brand on websites like Facebook, Twitter, Quora, Yelp, TripAdvisor, and other third-party review sites. 5. Feature Request Board If your goal with customer feedback is to improve your product, a feature request board is a helpful tool to gauge product feedback from existing customers. It allows customers to submit their own requests and ideas on how to improve the product. How to Reach Your Customers Now that you’ve decided what you will ask your customers, you need to figure out how to reach them. Oftentimes, the ask and the channel are intertwined; some channels are more appropriate or more effective than others for eliciting responses. Point of Service: Asking for customer feedback at the point of service allows for rapid feedback. However, the customer journey may not have ended yet at this point, so information may be incomplete. Email: When customers’ email addresses are collected, follow-ups can be sent requesting customer feedback. These may include surveys (NPS, CSAT, CES) or open-response questions. Typically, incentives are offered for completion. Business Website: For online websites, embedding opportunities for feedback into the business’ website gives customers the chance to respond at any point during the customer journey. Social Media: Integrating opportunities for feedback into a business’ social media presence can be an easy way to generate responses. Many apps, including Facebook, Instagram, and Twitter, have in-app polling abilities. Phone Call: When customers’ phone numbers are collected, customer feedback can be requested via a call. Calls are associated with low response rates, but conversations can open the door to qualitative feedback. Bringing It All Together So, what would generating customer feedback actually look like for your company? Below are three examples of how to execute the methods covered in this guide. They escalate in both implementation difficulty and the quantity and quality of potential insights. Scenario 1: Informal Inquiry at the Point of Service As customers finish their shopping and pay for their products, you can ask them questions about their experience. Documentation and data collection are difficult with this method, but organic conversations are a great way to start receiving feedback. Many businesses use their point to service interactions to encourage customers to leave feedback online through sites like Yelp, Angie’s List, and Foursquare. Scenario 2: Follow-Up Email Survey This method requires the collection of customer emails. After the customer has finished their interaction with your business, send a follow-up email asking for feedback via a survey. Here, you can apply what you’ve learned about NPS, CSAT, and CES. Survey creation tools include Google Forms and SurveyMonkey. This process can be simplified through email automation services such as HubSpot, Mailchimp, and Campaign Monitor. Scenario 3: Social Media Monitoring To effectively monitor social media, you will need to use a tool. Google Alerts keeps you informed of any time your brand is mentioned online, while tools like Hootsuite can help you manage and understand your business’s social media accounts. Data from both can be collected and analyzed for insights. Arizona Microcredit Initiative (AMI) has consulting and microloan support for yourself and your business. If you have any more questions, you can schedule an appointment today through https://www.azmicrocredit.org/schedule-a-consultation-1 or reach out to us at info@azmicrocredit.org. Return Home Continue to Build Playbook

A/B Testing

A/B Testing

Learn how you can test two different advertisements to see which one is the most effective in obtaining consumers. --- COMING SOON --- Arizona Microcredit Initiative (AMI) has consulting and microloan support for yourself and your business. If you have any more questions, you can schedule an appointment today through https://www.azmicrocredit.org/schedule-a-consultation-1 or reach out to us at info@azmicrocredit.org. Return Home Continue to Elevate Playbook

Supplier Scorecard

Supplier Scorecard

Choosing a supplier is a critical step for any business. Our Supplier Selection Analysis guide breaks down how to compare suppliers and ultimately choose the best one for your business. Overview Supplier selection analysis typically requires the following five-step process. 1. Identify Component The process will begin with identifying the separate components that contribute to your final product and categorize them accordingly. An example has been outlined below for your reference for items that may pertain to a local coffee business. 2. Purpose of Component Identify how this product helps your business deliver exceptional product/service and the functional purpose of the component. For example, you are an owner of a local coffee small business and the packaging of your coffee beans requires a label. Providing a label is not only important for allowing customers to identify the product, but it would also include design aspects that would attract the customer to pique their interest in the product in the first place. Therefore, it is important that the design of the logo and label accurately reflects the business values and is attractive to its targeted audience, as it is the first impression a customer gets of the product. 3. Sourcing Requirements Use a bulleted list of at least 4 requirements for the product being sourced and explain why this requirement is in place. The purpose of this section is to start to narrow your supplier search by defining exactly what you need. 4. Supplier Selection Scorecard Based on the categories of components, analyze and weigh each based on the importance to the final product. In this example, we evaluated four categories: cost/pricing, delivery, quality, and service of three label suppliers. Based on the needs of the business, we have weighted these categories respectively: 40%, 35%, 20%, and 5%. In terms of upfront cost, Uprinting definitely had the lowest price which was 100 labels for ~$30 depending on the customized print; however, OnlineLabels.com offered a price match service where they will match a competitor’s price and beat it by 10%. In lead-time, OnlineLabels offers the greatest service of having the product ready to ship in a workday of the order being processed. Most of the vendors' locations were based on the east coast, which is not the ideal location. A strength of customer service was UPrinting’s 24/7 chat which I found useful in asking questions and getting a response right away. 5. SWOT Analysis Create a SWOT analysis identifying the strengths, weaknesses, opportunities, and threats for each supplier. After comparing the SWOT analyses, proceed with the best supplier. Strengths Strengths are the areas your organization does particularly well and may distinguish you from competitors. Weaknesses Weaknesses are areas for improvement within your organization, which are essential to your resources, systems, and procedures. Opportunities Opportunities are chances for something positive to happen whether that is in the market space or directly for your organization. Threats Threats can relate to anything that negatively impacts our business externally such as market shifts or supply shortages. Arizona Microcredit Initiative (AMI) has consulting and microloan support for yourself and your business. If you have any more questions, you can schedule an appointment today through https://www.azmicrocredit.org/schedule-a-consultation-1 or reach out to us at info@azmicrocredit.org. Return Home Continue to Build Playbook