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Overspending Mistakes Your Small Business May Be Overlooking

Posted: 17 Feb 2020 07:00 PM PST

Starting up a new business is rarely an easy endeavor and keeping it growing and thriving for years to come will always require work and attention. Industries change and consumer spending habits can shift from year to year. How a business manages its finances to adapt to these changes is often a determining factor in its survival. 

The best way to ensure that entrepreneurs don't steer their new business ventures off a cliff is by planning ahead to avoid potential money mistakes. Hidden overspending pitfalls could be one of the more dangerous issues small businesses face.

There are some small business mistakes that are pretty common. Everyone knows that launching a business without a budget or failing to keep personal and business expenses separate spells trouble. 

 How about those less obvious and sneakier money mistakes though? The business world can be a dangerous jungle where financial pitfalls and overspending traps lurk around every corner. For this article, we'll look at some of the less obvious financial mistakes that might harm your business and how to best avoid them.

1. Poor, or even worse, no marketing 

It goes without saying that marketing for a small business is an essential component. There are thousands of ways a small business can go about marketing its goods and services, and choosing to not put careful thought into this is like playing with fire. Getting burned is a given. 

A football team wouldn't enter the Super Bowl without a game plan and no business should launch without a marketing plan. Choosing to simply wing it will only cost your business money without much of a return on your investment. In order to devise and launch a successful marketing plan, though, it's important your business understands what separates it from the competition, who its customer base is, and how to best get the message to them. 

Some businesses may see better results with traditional forms of marketing, such as a newspaper or TV ads, while others may want to consider marketing themselves at trade shows and conventions of related industries. The marketing possibilities are virtually limitless.    

Start by writing a unique selling proposition (USP) that you can refer to throughout the planning stages of your marketing plan. Pay attention to what the competition is doing wrong and doing right, and apply the relevant aspects to your marketing strategy. 

It's also vital that your marketing strategy matches the size of your business. Launching an elaborate marketing plan that's better suited for a business with a decade of success will likely prove to be more costly than effective. Your marketing strategy should evolve and change as your business grows. 

2. Choosing the wrong office space

You don't necessarily need to be a money-saving expert to know that a 15,000-square foot warehouse probably isn't the best option for a three-person travel app startup. Setting up shop in a beautiful loft in a hip zip code might appeal to your brand's ego, but that's very possibly the only benefit. 

Unless your new business happens to be a steakhouse catering to investment bankers, most new businesses simply don't need a prime location or luxury office space. While some businesses may find themselves in more image-conscious fields than others, working conservatively when it comes to office space, in the beginning, can really go along way towards saving money.  

Take the time to examine your business' needs and requirements and look for viable locations that won't drain over 20% of your monthly expenses. You may find that utilizing a co-working space or operating out of a home office is enough to get the job done. It's going to cost a new business less money in the long run if it outgrows its location, rather than struggling to grow into an oversized location.  

3. Hiring too much staff, too quickly

 Spreading yourself thin and trying to juggle every duty and role of your business can be an exercise in exhaustion. While the option of hiring somebody to handle every duty and function in-house might seem like the obvious solution, that too can be a money mistake. Aside from payroll, you have to train and manage all those employees, and frankly, some of them you might not need. 

Outsourcing certain job duties or using contractors can be an incredibly streamlined approach for small businesses, especially in the beginning. Virtual assistants can be hired by the task, or the hour and can not only help free up some of the daily tasks for entrepreneurs but they can offset the cost of hiring a fulltime secretary.  

Another option to consider is looking at independent contractors for those more specialized services. With the advent of the internet, a small business can find freelance contractors for just about everything from graphic design and writing services to tech and manual labor tasks. 

Far too often, a small business might be overspending on the payroll for jobs that don't necessarily require an in-house employee. Yes, your business may need a social media manager, director of marketing, and handyman, but it may not need a person to fill those roles on a full-time basis in the beginning.  

4. The drain of unused subscriptions and services 

Ah, the recurring bill. These can quickly begin to feel like leeches on your business if you're not utilizing the services on a regular basis or getting the most out of them. Business subscription services can vary widely from social media management to accounting software, like QuickBooks and messaging services, such as Slack. 

Yes, these services are often very valuable and many are really quite affordable. However, just like consumers with too many streaming services, your business probably doesn't need every subscription service that promises to "remove the headache associated with…" Too many underused subscription services can really add up and become a cost killer for a small business.  

The best way to prevent this from happening is to simply do a monthly audit of how much your business actually used the subscription service and compare it against how much it cost. Cutting out what your business doesn't use will free up funds for other areas of necessity.  

5. Getting caught in the latest technology trap

Some industries, like blacksmithing for example, just don't have a lot of developments in technology. Others, of course, are seeing technological advancements on an almost weekly basis. Utilizing technology can help a business rapidly increase its productivity and often cut down on costs. However, that's not always the case.  

Your business shouldn't skimp on the technology that it needs to perform to the best of its capabilities, but it should carefully examine the budget before incorporating each new technology. The fact of the matter is, that new technologies often come with a lot of kinks that take time to get ironed out. More often than not, your business isn't going to require the latest and greatest tech the day it hits the market.  

It's better to monitor emerging technologies with a watchful eye and incorporate them after consideration when the benefits match the cost. Looking out for technology traps also applies to older technologies as well. Does your business still need to be spending money on printer cartridges or can all documents be managed as PDF files?   

Every dollar counts for small business owners and if those dollars aren't utilized in the most effective and efficient way possible, well, it's only a matter of time before the writing is on the wall. Seemingly small decisions can have a major impact on a business, and if not corrected, can put a company on a course for disaster. 

By regularly being mindful of the financial mistakes listed above, small business owners can have greater peace of mind when it comes to their business bottom line.

How to Make Captivating Social Media Videos

Posted: 17 Feb 2020 12:00 PM PST

The time consumers spend viewing social media video content shows no sign of slowing down. You can leverage this trend to improve business outcomes in all areas by learning how to create social media videos.

  • Video is driving engagement in practically every social media platform.

  • 60% of Americans consume video content on Facebook, the largest social network.

  • Knowing how to create social media videos can increase your ROI.

  • You can avoid one of the biggest mistakes people make when recording by planning out your video.

 

Video content is more popular on social media than ever, especially, on mobile devices. People watch 500 million hours or more of videos per day on YouTube and 60% of Americans watch digital videos on Facebook. Those numbers have risen in comparison to recent years. In this article, I'll provide some tips and show you how to create amazing social media videos without being tech-savvy or breaking the bank.

How to quickly create quality social media videos

Many of us assume there are huge expenses and complicated tech stuff involved whenever we think about videos. However, thanks to modern technology, practically anyone can create great videos today. Think about it. 

Most of us carry smartphones around that have high-quality video cameras and good webcams are very affordable. So the real reason video production seems difficult is that few have a process in place. Once you have a process, video creation becomes really efficient and effective.

Start creating your own social media videos by using the following proven 4-step process.

1. Generate ideas

You can generate ideas for your video in many ways. However, something that continues to work for me is to brainstorm, conduct keyword research, and spy on the competition.

Brainstorm

Brainstorming is the process of coming up with ideas in a group setting or individually. Start brainstorming ideas by focusing on the solutions your products or services solve. For example, a barbershop can focus on hair care and cutting tips. Think about all the potential problems that your ideal customer deals with and note them.

Keyword research

This is the process of uncovering keywords or terms that consumers regularly use on search engines. Why this works for generating social media video content ideas is because people use the same terms on social networks.

Keyword research typically starts by typing in your offerings and seeing what shows up, which is fine. But you can greatly improve keyword discovery by also using the information uncovered during your brainstorming session. You can use free keyword research tools like Google Keyword Planner and Answer the Public to get started.

Competition spying

Spy on the competition for some more ideas. Identify your biggest competitors on social media and make sure each one regularly publishes videos. Then analyze the kinds of topics they publish but focus on the most successful ones. Pay attention to how much engagement each post has to determine its success level. Add any relevant topics to your keyword target list.

2. Plan your video

The next step is to plan out your video and the best way is to write a script. Your script should be used as a guide, not the be-all and end-all. That means it should be ok to say something in a different way or swap words during your video shoot. Also, a script forces you to think about the entire video and how your dialogue will progress.

3. Record your video

Any clear video recording device such as your HD webcam or smartphone should do, but get a microphone!

One of the biggest mistakes new video creators make is neglecting sound quality. A great microphone solves the issue of sound. I'd recommend grabbing something that can be close to you like a wireless microphone. These kinds of mics can be clipped onto your clothing to capture voice clearly and they're quite affordable. Just make sure you're enunciating your words.

4. Edit as necessary

Editing your videos accordingly can make them appear more professional. Always edit your videos as needed, especially, when starting out. In time, you'll find that the more you create videos, the less editing will be required.

Find a user-friendly video editing application. There are plenty of easy-to-use free ones online. Here are a few suggestions to consider.

  • iMovie (Mac only)

  • Photos app (Windows 10 only)

  • Blender

  • Shortcuts

  • Lightworks

  • Openshot

Unless specified, all of the aforementioned will work with both Mac and Microsoft Windows.

Tips for success

Here are some tips to help you succeed with social media video creation.

1. Social networks have different standards

Every social network has standards for video content so make sure you look them up. For example, the time limit for an Instagram feed video is 1 minute but Twitter allows up to 140 seconds on its feed. Keep this in mind.

2. Set yourself up for high-quality recording

You don't have to break the bank but you'll need a good studio setup. I'd recommend getting a tripod for stabilizing your camera or smartphone. This will prevent your video from being shaky or crooked. Also, you should grab some decent studio lighting to improve picture quality. Go for soft studio lighting and make sure your face is going to be evenly lit during the video shoot.

Furthermore, pick a video shooting spot that isn't noisy. Maybe a quiet room in the house or the office will work or perhaps, a quiet neighborhood walkway would do the trick.

3. Share your videos

Zero persons or very few will see your video if you don't share it. You can do this manually or save time by using a social media sharing tool like Hootsuite or Buffer. These tools let you schedule and submit posts (video, image, and text) to multiple social media channels simultaneously. They both offer free plans that you can use to manage up to three social media accounts.

4. Leverage existing content for topic ideas

You can use existing articles, white papers, eBooks, etc. to create social media videos. Ideally, start with the most shared or viewed content and work your way to the least. To do that, take a look at your social media profiles and website analytics data to identify the most popular pages or content. You can also consider using paid tools like BuzzSumo or Social Media Animal for social engagement analysis.

Then repurpose the best performing content pieces to create social media videos. The reason this approach works is that you'll be relying on proven content topics. I'd recommend focusing your efforts on topics that cover aspects of the buyer's journey (awareness, interest, shop, and buy). Also, stick to the most relevant topics.

5. Include subtitles

More people watch videos without sound than you'd expect. In fact, 85% of Facebook users watch videos without any sound. That's why it's important to make sure anyone can understand your video by adding subtitles. Even if there's no sound in your video, I'd recommend adding some descriptive or supporting text. For example, you can add text that describes what the audience is viewing.

6. Capture attention within the first 10 seconds

The first few seconds of your social media video is critical. On social networks, you have about 10 seconds to give people a reason to pay attention. Otherwise, they'll scroll past your video in their feed. So make sure your video captures their attention within that time. 

Some great ways to hold attention are using an engaging introduction, saying something shocking, and inspiring emotion. I'm confident you can come up with more ideas so get creative about the first 10 seconds of your video.

Video is growing year-over-year in popularity partly because the content type is easy to consume. Thankfully, anyone can create captivating social media videos. You just need a process and of course, apply some or all of the tips I've discussed here. Figure out your topic, plan the video shoot accordingly, record, and edit the content before publishing. Don't forget to start with your existing equipment and only buy what you absolutely need. Good luck and have fun.

The Lesson That Every Business Owner Learns for Growth

Posted: 17 Feb 2020 08:00 AM PST

In my experience growing a business, one of the most important lessons I've learned is that if you learn to listen to your market, it will tell you exactly what you need to be successful. 

Most business owners don't spend enough time listening to their customers. And I get it.

On the surface, listening isn't the most glamorous business strategy in the game. 

We're living in a customer-centric world, where brands compete on experience over price or product. It's through collecting feedback that brands learn how customers think about your brand, your products, your services. 

Understanding your audience means you'll need to develop a listening strategy that blends multiple types of feedback: structured and unstructured, qualitative and quantitative, solicited and unsolicited.

In this article, I'll go over some strategies for how you can develop a listening strategy that goes beyond likes and dislikes to chart a path toward improving the customer experience.

Develop a plan of attack

Turning insights into action is easier said than done. 

You'll need to be intentional about how you collect and organize feedback, mobilize your team toward action, and finally, close the loop with customers.

My recommendation is that you use the following framework as a starting point for building out your listening strategy.

Perception

  • What do customers think about the brand? 

  • Do they receive a consistent experience across all channels?

  • Do target audiences understand the brand's value proposition?

Problems

  • What issues are customers currently facing? 

  • Are there urgent issues that need to be addressed immediately? 

  • Are you having problems reaching your target market?

  • Do patterns emerge around specific problems? 

  • Is your team aware of these issues? 

Product

  • Does the company meet quality expectations?

  • Is it user-friendly?

  • Does capability development keep pace with competitors?

Act on Insights

  • Flag priorities. Identify which channels, features, and customer segments have the biggest impact on your bottom line.

  • Fix urgent problems first. Start by addressing critical issues, things like bug fixes, communication issues, or website security problems should be first on your to-do list.

  • Move down the list. Once you've bolstered the core, then expand outward from it into new segments and new offerings.

Close the Loop

Finally, it's important to make sure you have a plan in place for closing the loop after you've implemented feedback.

Make sure you don't ask for all feedback at once. Segment surveys by market or feature, and fix one issue at a time. 

Otherwise, you won't be able to review, much less follow up on the feedback received. Customers want to know that you're not just listening, but acting on the input they've taken the time to share.

The faster you can respond and implement changes, the better, According to Qualtrics data, collecting real-time feedback improved both employee and customer experiences. Customers felt like their voice made a difference, while employees were able to gain real-time visibility into their most pressing issues.

Surveys

All surveys are not created equal. You'll need to make sure you select the best fit format for your objective. Your survey might collect feedback for any of the following:

  • Why they chose to do business with you. Was it price, free shipping, a special offer, customer reviews? 

  • How they found you. Did they see an ad on social media, receive a recommendation from a friend, or find you on the first page of the Google SERPs?

  • Feedback after service was performed. quality, price, availability, others.

  • Product feedback. How do they feel about price, quality, etc.? Did the product meet expectations?

  • Experience. Was it easy to reach customer service, complete a purchase, resolve an issue?

  • Brand sentiment. What do people think about your brand on a holistic level?

Net Promoter Surveys (NPS)

Net Promoter Score (NPS) is a customer satisfaction benchmark typically used to measure loyalty. The familiar survey method asks customers one simple question, on a scale of 1-10, how likely are they to recommend your brand to a friend?

According to Bain and Company, companies with the highest NPS tend to grow twice as fast as their competitors. This survey aims to measure customer sentiment on a big-picture scale, representing overall brand perception, across multiple touchpoints. 

CSAT Surveys

CSAT surveys are used to measure customer satisfaction with a specific interaction. Where NPS measures long-term sentiment and customer loyalty, CSAT surveys are used to measure satisfaction at individual touchpoints. 

You might use CSAT surveys to follow up with a customer after closing out a support ticket, inside your app to gauge satisfaction with a particular feature, or after a customer completes a purchase to find out if they had an easy time checking out. Surveys alone don't paint the full picture. Scoring systems, no matter how simple, fall victim to individual perceptions of what a good or bad score is.

Some reviewers might say 6/10 is a "good" experience, but if you were to apply that score to a movie rating, chances are it would be considered a flop.

Some people believe there's no such thing as a perfect score and therefore, won't give you a 10/10 NPS score on principle. Others always provide a perfect score unless something went horribly wrong. For numeric surveys, adding a line or two for freeform feedback allows you to learn a bit more about why that person assigned a particular score.

Interview your customers

Qualitative stories from customers add context to quantitative feedback like star-ratings or NPS scores. Here, the goal is to understand the human emotions that drive customer decisions. 

What kinds of questions should you ask? What you ask consumers depends on what you hope to learn by talking to them. 

Write an outline in advance to ensure that questions are structured around your core objective--be it learning about how customers perceive your service team or their experience using a new product.

Open-ended questions give structure to the conversation, while also offering customers the flexibility to expand on any given question if they have more to say. Be sure to remain unbiased and avoid asking leading questions. Instead, start simple and broader questions that focus on one concept at a time. 

Here are a few examples:

  • What do you like the most about the product/service?

  • What would make this product/service better?

  • If you could change one thing, what would it be?

  • Do you have any needs in the future you would like us to help with?

Keeping things broad allows the customer to elaborate on their experience and it presents the opportunity to ask detailed follow-up questions to learn more. Asking follow up questions also shows the customer that you're listening. Repeat key takeaways back to them and ask them to clarify answers or elaborate on a specific point.

The challenge with conducting interviews is, you're working with anecdotal information, making it hard to correlate individual feedback with demographic trends. Other sources of anecdotal feedback can come from salespeople and customer service reps, as they're getting real-time, front-line feedback every day.

While these daily interactions won't typically dive deep into customer issues, they may reveal frequently asked questions, complaints, or feature requests that you can follow up on later.

Have customers perform a SWOT analysis of your brand

Another strategy you might use is running through a SWOT analysis exercise with customers. 

If you're unfamiliar with the concept, SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. Essentially, it's a way for visually assessing the pros and cons associated with a business decision.

Consider having your customers complete a SWOT Analysis to assess your solution. This allows you to gain learn how your audience views your brand in relation to their goals and pain points.

For example:

  • Strengths: What does the consumer like best about your product or service? How would they define your unique value proposition (USP)?

  • Weaknesses: Is there something your solution is missing or doesn't do as well as your competitors? Is the user-experience frustrating, somehow?

  • Opportunities: Opportunities represent the chance for something positive to happen. Here, customers should identify the benefits they'll reap from using your solution or a similar product/service.

  • Threats: Threats represent obstacles from the outside. From the customer perspective, you might seek to find out what they lose by not using your solution or something similar. Essentially, you're asking them to identify pain points/problems.

Social listening

Social listening covers your unsolicited feedback channels from social media mentions to review sites. This process includes tracking specific brand mentions, as well as industry keywords, topics, and competitors. 

Given that there's a ton of data you can track, here, you'll want to separate your social listening strategy into different objectives. Examples include:

  • Identifying emerging trends and pain points.

  • Monitoring and responding to mentions and/or public complaints.

  • Soliciting feedback from your audience.

Dig into support channels

Online chat logs, support tickets, and direct messages on social all fall into the support channel category. 

Here, you might look for the following:

  • Average Time to Resolution. According to HotJar research, long wait times were the number one cause of customer friction. How long does it take for service teams to resolve a ticket? How long do customers wait to receive a response? 

  • Frequently Asked Questions. If certain questions keep coming up, it may mean you need to create more self-serve content that answers those questions or clarify your existing messaging.

  • Common Complaints. Do customers complain about a specific touchpoint, product, service rep more than others? 

Wrapping up

Delivering a great experience is no doubt important for every business no matter the size or industry. When you make listening a priority, you'll develop a deep understanding of your customers and what they want. While it takes some time to learn the ins and outs of turning insights into tailored solutions, listening – actively and with empathy – is the first step toward success.

Boost your Brand with These Four Best Practices

Posted: 17 Feb 2020 07:30 AM PST

 

You may have a great product and decent sales, but if you really want to get to the next level of growth – regardless of whether your company is a start-up or a $10-million business looking to become a $100-million one – it's key to invest as much effort in your brand strategy as you do in product development.

Simply put, brands outlive products. Long after this year's flavor is replaced with next year's innovation, your brand is what determines whether customers keep coming back. No matter what your industry, end-users want to know what you stand for as a company, quickly recognize you as a brand they trust and see that you're bringing value to the world over and above the specific benefits of your product.

The new year is a perfect time to refocus, energize or chart a new course for your brand. Having helped companies of all sizes across multiple industries to elevate their customer experiences and increase sales through better branding, here are what I've found to be four best brand-boosting practices:

Be relevant.

Research shows that nearly nine out of every 10 consumers stay loyal to brands that share their values. That means the more you can demonstrate that your core values align with theirs, the more you can count on them to use your products. The first step is to get clarity on what people already like or dislike about your company and its offerings through targeted market research, including focus groups, surveys or man-on-the-street interviews. It could be that your product packaging needs to be massaged or an ingredient changed in your formula, or that you need to start communicating the steps you're taking to be sustainable or give back to your community.

In recent years, we've seen many brands take a strong stand for a cause, like AT&T's social initiative to curb texting and driving, Airbnb's pledge to provide short-term housing for 100,000 people in need, the Adidas pledge to make shoes of recycled ocean plastic or Unilever's mission to improve health.

When you decide to back a cause or join one side of an argument, be sure to identify an issue that aligns with both your customers and your brand. The more effort you put towards building an emotional connection with your user base — even if it requires repositioning your brand from the ground up — the more successful your brand will have in this new age of conscious consumerism.


Be consistent.

When companies come to me with lagging sales or low brand awareness, it's often because they're not taking a deep dive into their overall brand architecture to ensure all brand assets are promoting a clear, consistent and succinct message. With Forbes reporting that company revenue increases by as much as 23 percent when a brand is consistent, it's important to take a step back and identify where you may be confusing your audience with disconnected brand elements. When a Mexican food producer approached us for help getting their business to the next level, we recognized immediately that each individual SKU was living on its own plane.

We worked with them to reinvent their brand, journeying back to their Mexican family roots and telling a strong story about their rich heritage through unified assets across the entire line. The result was a premium brand that had people asking the CEO of the company was raising new investment capital, as it felt like he was taking the company in a new, exciting direction they wanted to be part of. When you take the time to identify a consistent message and deliver it in one thematic expression, consumers not only start to see you as a family of products they trust, but your employees and investors also have messaging they can believe in. 

Be transparent. 

Consumer demand for honesty and authenticity has never been higher. According to a recent consumer behavior study by Label Insight, a whopping 94% of consumers are likely to show loyalty to a brand that offers complete transparency, and nearly 40% would start using a brand if it offered full transparency. The reality is, people are more informed and empowered than ever before. Before engaging with your company, consumers will put you under the 'online' microscope and that means you need to be proactive.

Take steps to show that you are being honest about different aspects of your business, from how you treat employees or how you protect customers, to the ingredients you use or the processes you apply. If your product is packaged, demonstrate transparency by using clear, to-the-point wording or see-through cut-outs that reveal what's inside. Whole food protein bar maker RX Bar, for example, gained trust by listing ingredients in large font on the front of its packaging, followed by 'No B.S,' enabling consumers to quickly identify the product as a healthy choice.

Be innovative.

When you're willing to invest in the creative process, shaping your brand with a stand-out unified, on-point story, you may be surprised to see where it leads. From beverages that use RFID sensors to 'speak' to personal devices and enable health-conscious consumers to track their consumption, to beautiful glass orb packaging for medical marijuana, to leafy garden greens that no longer lie flat on store shelves, disruptive ideas are grabbing consumer attention across industries.

Innovation doesn't have to be costly or challenging. You may be selling a run-of-the-mill item, but when you place it in the hands of out-of-the-box thinkers, it just might become something unexpected.  A new ice cream line, for example, is turning heads with its innovative concept of delivering a "sleep expert-approved" formula that is a healthy choice for nighttime snacking.

Similarly, when we worked with Maple Hill to strengthen the authentic grass-fed, organic benefits of their dairy product line, going the extra mile to use actual photography from the company's farms, and include each cow's name, backstory and farm locations as part of the new product icon, sales grew exponentially.

When you start down the path towards elevating your brand, expect the journey to be aspirational. Sometimes you uncover one little nugget that's not only going to be good for you and your brand but may transform an entire industry.

Are you going to be a rebel brand based on unconventional thinking or a sage brand providing knowledge and wisdom? Are you the naturally empathetic and resilient friendly neighbor brand or the passionate and committed producer brand?

 

When you know who it is you aspire to be, these best practices will get you there.

 

####

 

Josh White is Principal and Creative Director of NYC-based brand and design agency, OffWhite Co. With more than two decades of transforming some of the world's most successful consumer product companies through the intersection of brand strategy, creative product development, innovative packaging and technology, White's award-winning holistic creative systems have played a key role in reinventing brands and helping clients find the secret sauce to advance their companies to the next level.

 

 

Cannabis Investing 4.20

Posted: 17 Feb 2020 07:15 AM PST

If you're watching the marijuana sector trying to anticipate your entry (or for early adopters, your exit), nobody can miss the carnage that the cannabis industry is experiencing. However, most investors can agree this will be a roughly $180 billion industry in the future and the industry is growing. So, rather than be depressed by the current negative readings, investors need to focus and make better choices. 

The American market

The U.S. is the pioneer in modern-day cannabis legalization but is in danger of falling behind due to federal illegality. It still is the overall heavyweight in legal cannabis sales with more than $18 billion sold in 2019 and the most diverse array of manufactured cannabis products in the world. 

State-by-state legalization and inter-state growth will continue as federal laws inch their way to getting much closer to changes. The U.S. is still ranked the most favorable market for cannabis consumption and investments, even though large investment companies, pensions, and fiduciary bound investment firms have yet to enter investing in the U.S. market. 

The largest multi-state operator is CuraLeaf, and there are a few other large operators which will clearly be the significant players in the US. Large and mid-sized multi-state operators went on a tremendous buying spree through 2018 and part of 2019. However, there are still many private, as well as smaller public companies, that are showing significant growth and upside. At the low end of size, there are thousands of smaller independent grows which compete with the larger and mid-sized companies for their slice of the pie in each state.

The Canadian market

The Canadian market was only at $2 billion for 2019, with giants like Canopy and Aurora posting severe losses this past year and highlighting large debt risks. Companies like Tilray are suffering because the European market is still largely inoperable. Most large Canadian grows built relying on export models to EU and other continents/countries, as a large influx of money forced spending and they knew the actual Canadian market was limited. They took on tremendous amounts of institutional money and debts very fast and built gorgeous huge technologically advanced grows. But the EU still remains fairly anemic growth and even 2020 doesn't look so hot still. 

Regardless, the sheer infrastructure of Canada is vastly superior for international commerce, while the U.S. markets remain largely closed to smaller sized grow that operate within State boundaries. Investors got burned by thinking markets like the EU and the US would just open up to imports, and the companies misjudged the speed of governmental adaptation of rules.

Canadian companies were also caught off guard as their own market went from months of undersupply to massive oversupply and stockpiling as large growing facilities came online. Limited medical sales in the EU of around 150 Million Euro didn't help either for 2019 as regulatory framework develops and most facilities in Canada and elsewhere are still getting GMP certified. 

The European market

This leaves basically only the Netherlands as a current European supplier to Europe, who is still fixing their regulations and must build to go from a domestic supplier in order to reach the higher demands of the total EU markets. European grows are developing and coming online, like Tilray and smaller start-ups but the regulatory framework is still not ready for large scale distribution. 

Germany has emerged as the first mass consumer with roughly 100 Million Euros in total sales and is expected to double by next year. Small pilot programs in Ireland, France, Italy, and Poland have developed but are catering to a small array of very serious health issues and largely avoiding chronic pain and other more commonly prescribed uses for cannabis. Countries like Denmark and Luxembourg have started limited recreational testing for internal consumption. Portugal and Greece have adopted legal frameworks for growing and exporting to other countries, but no real internal market for consumption. 

By late 2021, a European framework for the growing and distribution of cannabis is expected to catch up to the corporations that which to enter. 2020 will be a year of announcements as more and more countries cautiously embrace medical cannabis sales but will remain anemic throughout the next two years. Infrastructure will start increasing as will demand which will largely be satisfied in the short term by non-EU exporters from Canada, the Netherlands, and Tilray of Portugal facility.

One of the more interesting models to come about in 2019 has been the export from countries in South America to Canada, and then Canada to the EU and Australia. This is an early adaptive innovation and may lead to further sales channels, in-roads and more approvals of genetics and products. However, the cost of transport far outweighs the infrastructure that will be created directly in the EU in the next coming years.

Specific avenues for investors to explore

Supplying the industry has been a bright spot as the growth in companies requires servicing them. Brick and mortar sales like hydroponics and greenhouse suppliers are on the rise and profitable. Large supply companies like Kush Co have dominated everything from selling jars to bags and anything dispensaries or manufacturers need. 

Sales and distribution will be clear winners as they are less capital intensive and more predictable than farming. And farmers need help navigating a multitude of complexities because only the largest companies have the capital to do everything. Even labs are great money makers despite the higher upfront costs of equipment and professional staffing. These entities supplying and helping the industry are currently profitable. And for anyone at Bizcon Las Vegas this year saw, the industry is growing around the world.

Profits in cultivation and manufacturing of cannabis have been elusive for 2019 as growing was the main thrust in the last few years. Besides government-driven delays, there are high taxes that have discouraged legal growth and encouraged the black market to increase in areas like California and Canada. And as decriminalization sweeps legal States and countries, there are fewer rules to prohibit black market growth further putting pressure on legal growing profits. This pressure will persist until costs come down low enough to make the black market too expensive and dangerous for consumers. We are already seeing the effects of the vape scares in profits, sales, and industry confidence. 

Most markets actually aren't properly regulated making consumer safety a need to confront by governments. The rules need to not only be relaxed for growth but intensified to protect consumers. States and countries with the clearest rules are seeing the most growth because it gives investors and consumers confidence in the legal framework. These things are not at odds with one another. Consider the recreational industry versus the medical industry, where one is fairly lax and lacks education for the general consumer and one is too strict for something that a large majority currently uses.

Conclusion

Some of the winners in 2020 will be the larger to mid-sized companies that have profitable models that can attract capital and are showing organic growth. Private equity will be a winner in well-capitalized start-ups by experienced industry professionals that have learned tough lessons and are applying those lessons to a freshly capitalized company. Companies that understand how to navigate the legal pharmaceutical style sales style of most countries in the world will also emerge as winners. 

Cannabis has drawn a lot of attention, but also a lot of bad management. Some say the money came too quickly for Canadian growers forcing them to spend fast before the markets were ready. Farming is an unpredictable model that even the best cannot always control. One thing is certain: this industry has a long way to go upwards.

Public company failures have led many to turn to private equity start-ups without the baggage. Whatever you choose, make sure you are well aware that this industry is young and there are many forces – from old perceptions to governments to large corporations – that don't want cannabis to succeed. But it doesn't matter because the train has left the station and consumers are demanding changes that will soon start driving decisions of governments.

What is the Cost of Software Development?

Posted: 17 Feb 2020 07:00 AM PST

The costing for software development depends on a variety of different factors. The complexity and size of the project, the technology used, and even the geographic location of developers. All of these aspects are reflected in the final price.

Factors that affect the costing for software development 

1. The complexity of the project

This is defined by the logic of software and the number of various features it has. Note that not all features have the same cost of implementation. Push notifications and video calls, for example, are completely different in terms of price because of the complexity of code and time required. Complicated real-time data analytics with multiple permission levels will require different resources than, let's say, a fitness app with a calorie calculator. 

How much time and money the various pieces of software development costs

To provide a frame of reference, here are some of the common features of software development, along with their approximate time and cost (based on $25 per hour):

  • Search: $300 to $500 over 12 to 20 hours

  • Push notifications: $625 to $875 over 25 to 35 hours

  • Login: $750 to $1125 over 30 to 45 hours

  • Edit profile: $1125 to $1500 over 45 to 60 hours

  • Payments: $1500 to $1875 over 60 to 75 hours

  • Calls: $6500 to $9250 over 260 to 370 hours

These numbers can vary greatly depending on the company and even on individual projects. These are just the rough guideline of what to expect at this hourly rate. Some teams don't even use such estimates and evaluate purely on a case-by-case basis.

2. The size

Before describing software size, first, we need to understand the definition of a screen in this context. A screen is a page, open menu or anything that a user sees after they made an interaction. For example, a "login" page and a "change password" one are two different screens with different functions. In this context, it becomes fairly straightforward. The more screens the software has, the more the project will cost.

In general, small apps have somewhere in the range of 10 to 25 of them and run upwards of $75,000. Larger projects with 50-plus screens can cost $250,000 and up.

3. The design

Custom design makes your software stand out and just simply pleasant to use. Long gone are the times of bright lime green text on black backgrounds (although it certainly is an aesthetic used to this day). UI/UX is what makes the application user-friendly. That's what the "U" stands for. 

This process itself can be quite complex depending on how extravagant you want the elements to be and how many iterations it will go through. The best designs aren't created perfectly from the start. They are developed after several feedback-redesign cycles. In addition, the number of high-quality custom pictures will further drive the price up.

4. Supported platforms

Take into account how many platforms you want your software to work on. If you want a mobile app, do you want it to work on iOS or Android, etc. Maybe you require a cross-platform solution. A desktop tool has its own nuances, as do purely web-based services. All of this is is reflected in the price. 

5. Technology

The stacks of technologies aren't equal as well. Some applications can be written in a single API. Others require front-end development done in one programming language, the back end in another, and they need to work together seamlessly. This correlates with the complexity of the project since different features often require different technologies.

6. The development team

The number of people working on your project directly correlates with its cost. It is the same principle if you were paying for a dedicated team. The time of each developer, QA-engineer, and project manager costs money. It's as simple as that.

The type of team matters a lot when it comes to cost for software development. If your organization has a specialized IT team already on the payroll, then you will have to spend substantially less money for the creation of software. However, the ongoing wages can add up and cost more in the long run. Not to mention, many teams don't have the necessary knowledge or there simply aren't enough people available. In that case, you can augment your staff with a dedicated team. There is outsourcing. It's the most expensive option, but the quality of the project you receive will also be higher.  

7. Their location

The location of the development team also has an influence on the price. The rates differ drastically. In the US you can pay up to 5 times more for the same job done somewhere else. The key is to figure out a balance between cost and quality. We have done an analysis of Russia and Israel markets that you can check out in more detail.

8. Ongoing maintenance

The thing about software is that it's never truly complete. There is always the possibility to add new features, improve the performance, and fix unnoticed bugs. This is the benefit of time and material payment plan that we'll discuss later in the article. You don't have to wait until you get the final product to request changes.

There is a saying in the industry that you should multiply all costs threefold. That's largely the result of people choosing the fixed-price payment model when they don't have a clear vision of the project in mind. The product they get is different from what the client envisioned and then they need to spend extra.

The best payment model for software development

Since we mentioned payment models in our previous point it makes sense to explain them in more detail. The two most common ones are fixed price and time and material. Which one is more suitable for you largely depends on the size of the project and how defined your needs and requirements are.  

A fixed price

This option is better suited for projects with clearly defined requirements that aren't subject to change. In short, you pay the entire development cost upfront. This can work for many clients but has more risks attached. It's easy to lose control and communication with the team will be limited. Also, it's not uncommon to face delays when working on a large project. This model is more suitable for small and simple projects.

Time and material

It's the more flexible method of the two. Payments are made incrementally and not in a lump sum upfront. Depending on the agreement, the client can pay every two weeks, every month or whatever time period is preferred. This approach allows for more control of the team and the development process as a whole. The client can see the project whenever the payment is made. This way, there is an ability to check the reports, ask for extra features, and make other suggestions.

A client's story of software development

While researching for this article, we remembered the story of one client, so we contacted him to get his perspective. Here is what they have told us about their experience.

"I got burned on the fixed price model. It was my own fault really. I guess, this is why you shouldn't rush business decisions. I've got a bit of experience with software development, we had a dedicated team helping us create an ERP system. After it was completed I was elated. I wanted nearly all of my software to be custom made. I had big ideas and little patience. After the success that was my previous venture, I didn't see any reason to wait. In fact, I even hired the guys from the company I mentioned before.

So here I was, with what I thought was a clear vision of the project asking to get it developed. Out of all payment options I chose the fixed price one. I had enough money, I had an idea, so I didn't even think about it. I trusted the guys and I didn't feel like controlling their process. In the end, I got the software I asked for. 

The tool that they made worked perfectly, but it lacked the main features I wanted because I thought they were a given from my requirements. The specifics are more complex than that. 

Thankfully I wasn't short on budget and could afford to do it properly. We discussed the matter with the developers and came to an agreement. We were going to use the tool they made as a foundation for the one I wanted. This time I chose the time and material option. 

Every two weeks the guys showed me what they have done. I could play around with, test things and more importantly make suggestions and guide the direction of the project. It wasn't a hassle that I thought it might be. It didn't take up much time at all, and I enjoyed the back and forth conversation.

In the end, I got not just the software I wanted but better. Experts from the team offered additional features that they knew I could use. They explained the costs of everything and just were overall very transparent. That's why if I'm ever going to order more software I know how I'll spend my money and where it will go."

The bottom line

Now that you have a better understanding of what does the costing for software development consist of, your resources won't be wasted. Transparency is the key to a successful partnership. We value our clients and aim to make their experience as hassle-free as possible.

Financial Formulas Businesses Can Use in Excel

Posted: 17 Feb 2020 06:30 AM PST

  • Use Excel to track your business's financial health by calculating debt ratio, the future value of money, the cost of loan payments and more.
  • Consistent recordkeeping is the biggest predictor of your success in using most basic financial math calculations.
  • Check out our handy financial math glossary for help understanding the language commonly used to describe different numbers.

There are lots of financial formulas businesses can use in Excel. Some are simple, some are complex, but all of them can give you a fuller picture of your business's financial health. Appropriately deployed, financial formulas can also aid you in decision-making, projecting costs and income, and long-term business planning.

If you find yourself overwhelmed upon consulting Excel financial formula how-to guides, it might have more to do with the concepts than it does with the technology. Many successful entrepreneurs have managed to get their businesses off the ground without delving too deeply into financial math, but a baseline understanding of financial math concepts (if not the math itself) is necessary to harness a powerful tool like Excel or other business finance products.

In this guide, we'll not only point you in the direction of valuable step-by-step Excel resources, but also explain the types of functions that exist in financial math and how they can be used to inform real-world decisions. Think of this like a primer to exploring the power of financial functions in Excel, or the accounting software of your choice.

1. Debt ratio formula in Excel

The total amount of debt a business has compared to its assets comprises its debt ratio. Your business's debt ratio is an important indicator of your overall financial health, and it's a number that investors and lenders will probably want to know. A beautiful office, well-appointed staff and even excellent sales don't mean much if the debt ratio of your business is greater than 1. A lower debt ratio is better than a higher one, with around 0.4 representing the threshold between an excellent debt ratio and an OK debt ratio. Most investors will have concerns as the debt ratio creeps toward (or surpasses) 1.

The calculation for a debt ratio is simple but, like other calculations that can be done in Excel (or on paper), only valuable if the numbers you start with are correct. Consistent recordkeeping, rather than high-level math skills, is the biggest predictor of your success in using most basic financial math calculations.

Debt ratio calculation

For the basic debt ratio calculation, you divide your total debt amount by your total assets. You can easily divide in Excel using =number1/number2. (Just make sure you use the correct numbers.) This is how the calculation would look on paper:

  • Debt ratio = Total debt/Total assets

2. FV functions in Excel

Future value (FV) functions comprise a large family of financial formulas that can be used in Excel. Before you dig through all the possible FV calculations you can run, it's wise to get a handle on the concept of the future value of money, especially if you don't have a basic background in financial math.

Future value of money

The future value of money is a concept that can be applied to financial investments (like investing in the stock market) or business investments (like investing in an advertising campaign). At its core, the future value of money is a projection of growth based on the initial investment amount, time and interest or assumed growth rate.

FV family of functions

Anytime you calculate compound interest on an investment, you are calculating future value. There are variations on future value functions in Excel, which makes it impossible to recommend one formula over the other, because there are lots of variables to consider. A better approach is to start with a goal in mind (e.g., to analyze growth of X investment over Y years) and find the best FV function for your purposes.

Some investment types offer the same return year after year, while others are variable or scale with each year, and there are ways to either include or exclude additional payments into the investment when considering the future value. With all that in mind, you can select the right FV function for you. To learn more about utilizing specific FV functions, consult an expert resource with step-by-step instructions and definitions.

Compound interest formula

Calculating compound interest is also quite easy with a standard calculator or online compound interest calculator. If you're anxious about doing the math on your own, a fill-in-the-blank calculator like this one from the U.S. Securities and Exchange Commission is a great alternative. Compound interest is important not only for businesses but also for individual investors, and the calculation process is exactly the same whether you're projecting the future value of a business investment or of your individual 401(k).  

3. The cost of loan payments

Being future-oriented is important when you're building a business. That means taking advantage of the future value of your money by not only investing it wisely, but also by budgeting and planning out future expenses. A business loan or financing plan is often negotiable, but it's impossible to negotiate if you don't know how much your monthly payment will be.

Using the =PMT function in Excel, you can play around with interest rates and loan lengths (via total number of payments) and find out what your monthly payment would be as those numbers change. The =PMT function also allows you to see how much of your monthly payment will go toward the principal of your loan versus interest on the loan. Naturally, shortening the term of a loan will save you money on interest, but it will also increase the monthly loan payment.

To learn how to execute the =PMT Excel formula, check out this excellent step-by-step guide.

4. Break-even point formula

A business's break-even point is the point at which a business is making exactly enough money in sales or contracts to cover its fixed and variable expenses. New business owners are especially concerned with achieving a break-even point, as it's an early indicator that a young business is becoming more stable and hopefully en route to profitability. It's not unusual for a small business to temporarily operate at a loss as it finds its footing, but knowing your break-even point can help you strategize on how to achieve it by increasing sales, lowering expenses or both.

To accurately calculate your break-even point, you must first know the ins and outs of your business's fixed and variable expenses. These expenses should include not only things like cost of goods and salaries, but also taxes, depreciation and interest payments. Once you know all the pertinent numbers, you can easily calculate your break-even point, which can be expressed like this:

  • Fixed expenses + Variable expenses = Revenue

When the equation is perfectly balanced, you have hit your break-even point. If your revenue is higher than your fixed and variable expenses, you have surpassed it. Typically, the issue people run into when calculating their break-even point isn't about the math itself; it's about incomplete tracking and excluding expenses that should be included. To learn more about using Excel to track fixed and variable expenses as well as revenue, check out this Excel break-even guide.

Financial math glossary

The formulas we've outlined here are just the tip of the iceberg for what you can calculate using Excel. Financial math is a huge field, and even small businesses can benefit from utilizing a wide variety of calculations. The most confusing part of financial math isn't the calculations themselves, but the language used to describe different numbers. With that in mind, we've created a basic financial math glossary, with resource links included, to help you get better acquainted with the language of business finances.

  • Annuity: This is a set payment made repeatedly at a specific interval, like a monthly direct deposit to an investment or a monthly loan payment.

  • Cost of goods sold: Also called COGS, the cost of goods sold includes the cost of everything associated with producing and selling a product, like labor and materials.

  • Depreciation: This is the gradual reduction in value of an asset over time. Depreciation of physical assets is important to consider because it can impact your business's taxes as well as your overall financial planning.

  • Gross profit: This is the profit from selling goods after the cost of selling the goods has been deducted, but before associated costs of running the business have been deducted.

  • Net income: This is the total profit (or loss) a business has made after all the expenses related to the business have been deducted.

  • Net profit: This is the profit from selling goods after all the costs of running the business and selling the goods have been deducted.

  • Profit margin: This is the amount over the break-even point that your business is making in revenue.

  • Revenue: This is the income a business receives from providing goods or services. Revenue is calculated based purely on incoming money and does not account for the costs of operation.

  • Retained earnings: This is the total amount a business has earned since its inception, minus any money paid out to investors.

  • Time value of money: This refers to the concept that money is worth more the sooner you have it in hand, because of its potential growth (or future value).

Tools and resources to help you manage your business finances

This isn't a comprehensive guide for all things related to financial math, as the internet is chock-full of resources to help you along the way. Here are some of our favorite learning resources and product recommendations for managing your business's finances.

Financial math resources

These PDFs and guides can help you get a handle on financial math terms and equations, both in and out of Excel.

Business finance products

Tracking all the cash flow and investments for your business can be more challenging than computing compound interest or your gross profit margin. Many small business owners rely on user-friendly SaaS solutions to help them track and manage their financials.

Here are a few of our top guides to popular products:

How to Develop a Business Plan for Your App Idea

Posted: 16 Feb 2020 10:00 PM PST

Clever entrepreneurs around the world have begun to formulate business plans for their app ideas precisely because it's the only surefire way to steer your app towards eventual commercial success. Without a reliable plan to count on when things get difficult, few entrepreneurs can expect their apps to succeed in today's competitive marketplace. After all, consumers have so many options at their disposal that only those highly-refined apps with excellent teams behind them draw their attention for long.

Here's an exploration of how to formulate a business plan for your app idea, what terrible mistakes to avoid in the process, and why this early formulation is so important towards your app's eventual success. 

The need for a business plan 

You'll never be able to formulate an excellent business plan for your app until you understand why such a plan is essential in the first place. Most business owners formulate a business plan to ensure that their startup will eventually reach profitability and become a sustainable enterprise. Many app developers refuse to see the value of a business plan in their circumstances because they think apps are somehow different, or capable of succeeding without having an excellent gameplan to rely upon.

They couldn't be more wrong; most apps fail precisely because those entrepreneurs trying to bring them into existence don't realize how difficult it is to succeed in this marketplace. Without a thorough and comprehensive business plan to help guide your decision-making process, your app's development will soon encounter countless challenges that stymie your ultimate success. Gartner has actually claimed that only 0.01 percent of all mobile apps will be considered financial successes, so realize the stakes before you dismiss the need for a business plan entirely. If you want to become one of those lucky few who enjoys success, you'll need to act carefully in the coming days. 

Now that you understand the importance of a business plan for your app, you can move onto actually beginning the formulation of such a plan. When crafting a business plan for your app, you should consider the primary basis for most regular business plans; why do you actually want to go into business doing this in the first place, and how do you intend to separate yourself from competitors in your field? You should be asking yourself how current apps fail to meet consumer demand, and how you intend to swoop in and capitalize on their failures by providing an unparalleled app experience replete with features most customers are looking for but presently lack access to. 

It's important to realize that one key role of a business plan is illustrating what problems you're going to face down the road so that you can prepare yourself amply ahead of time. You will need to address your competitors and your shortcomings, for instance, as this will both help you bolster your weaknesses while simultaneously proving to potential investors that you know what you're talking about. That last part is important because one important role for business plans is demonstrating to investors that your app is worth backing. 

Getting the money you need

Your business plan helps you get the money you need to begin or complete the development of your app by wooing potential investors over by demonstrating your business and technical savvy. You can only do this, however, if your business plan is lacking common mistakes that demonstrate to those seasoned investors that you're a newcomer not worth backing financially. Begin by familiarizing yourself with the common mistakes that jeopardize the success of many business plans.

Besides avoiding common errors in your proposal, you'll also want to demonstrate to investors that you not only recognize who your primary competitors are but also have a gameplan for dealing with them sooner rather than later. After identifying leading threats to your app's success, demonstrate how you intend to turn those threats into opportunities by overcoming them commercially and tapping into their consumer bases. 

It's imperative that you don't assume that your investors, or anybody else reading your business plan, ahs the same level of technical expertise that you do. As the developer of an app, you probably possess IT experience and knowhow that's far superior to that of the average person. It is thus essential to ensure that the language and format of your entire business plan and how you go about presenting it to others is easily digestible from the standpoint of somebody who lacks tech expertise but is interested in apps nonetheless. 

In order to do that, read up on presenting complex subjects to a non-technical audience. This can be extraordinarily difficult, but it's something you need to consider not only when developing an app but also when you want to start a business of almost any nature. Those who are incapable of recognizing the limitations of their audience will find it incredibly difficult to persuade that audience to see things from their perspective.

Nurturing your app into existence

Now that we've covered the basics of a business plan and why it's so essential, you can focus on the specifics of development one for an app in such a way that guarantees you can nurture it into existence. While your app may only be a loose idea right now, a little bit of planning and a committed execution of your business plan will help materialize it in the real world, where it can be put to work earning you a tidy profit.

Always ask yourself what solution you're providing to your audience, how that solution differs from those offered by competitor apps, and why you're uniquely capable of providing such a solution to the consumers you so desperately want to win over. If you regularly do this, you will have not only self-confidence but also the critical knowledge needed for success when it comes to the often arduous task of successfully developing a commercial app.

You should constantly be asking and answering the question of why and how it's profitable to provide a certain solution in the form of an app. If you're successful in doing this, you'll not only woo over potential investors but also attract other founders who may wish to join your cause. Few developers can churn out an excellent app without the help of others, so attracting these talented individuals who share your ideals is an important role of an app's business plan that is often undervalued. You can also use this opportunity to address other important topics like how you intend to recruit rank-and-file developers and establish a vibrant brand for your app.

In that regard, don't be afraid to do your homework on proper and successful recruitment techniques which will ensure your budding company has all the human talent it needs to succeed. In time, you'll come to revisit your business plan whenever your app hits a developmental hurdle, as it will contain those early principles and key advice, which will ensure your currently-theoretical app blossoms into a vibrant market success.

Don't think that you can make up the development of a successful app as you go. Put plenty of time, effort, and creative energy into the formulation of a comprehensive business plan for your app, and soon you'll be changing the lives of users everywhere. 
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