Adventures with Lyrical: Buying a Business (REPOST)

Chaotic_sl · Sep 22, 2015

Question about marketing;

My fiancee is running her own baking business. Specialized cakes, cupcakes, cake pops and all that. Being totally non-biased, she does amazing work. Literally everything is hand made (icing, cake, fillings) and looks / tastes fantastic. She does crazy artistic stuff, monster truck cakes, mine craft, minions, Disney themed blah blah - it's actually really quite impressive.

She's been going for about three months, based on just word of mouth. Everyone who has placed an order ends up loving it, putting it on social media and what not.. as a result I made a facebook and instagram page , created business cards which she gives out etc things have picked up speed as a kind of snowball effect (Really kills it on one order, that persons sister and cousin wants to place an order etc) She's gotten to the point now where shes accepting orders from strangers - so it's working.

Now, she wants to turn it into a full time gig. As is she's busy most weekends, but I want to get her more exposure. Turns out that the "direct line to person making shit" artisan / home made baked goods market is pretty big. How can I effectively get her name out there more? I considered direct mailers, but the price vs potential reward seems low. We've considered making little treats, like mini cupcakes individually wrapped with her business card hole punched and tied up with ribbon to seal as a kind of party favor to unobtrusively get them into peoples hands.

Some little fun facts from my tracking;
Orders at this point range from $45 to about $250, she's doing 3-5 a week.
Material cost is roughly %30 of quoted cost in most circumstances. Looking for ways to cut this as well, moved to online orders for bulk items such as shortening / cake boxes / fondant. Got a tax ID number for local restaurant wholesaler etc.
Most people seem most comfortable with initial contact via facebook messenger to her business page or person account. Then text message. Very few people actually call. I've setup google call forwarding so she can use her normal cell phone, but when it displays that number she knows its business related.

She's really into it and I want to support her (shes got talent) but no business sense whatsoever. I have slight business sense but could use some insight.

opiate82 · Sep 22, 2015

I've actually had a lot of success advertising my pizza restaurant on Facebook using it as a paid advertising platform. I generally can do a "promoted post" for some sort of coupon or discount and my Cost-per-redemption is about 1/2 of either direct mail or something like a Valassis RedPlum drop. For less than $50 you can get 15,000 views for a Facebook post, that is pretty good exposure for that price. Similar circulation for most print would cost several hundred if not thousands of dollars.

Of course there is always Google Adwords as well. Those are two low budget items that can be very effective.

What is important to keep in mind is you have to have an idea on how much money you need to bring into cover the cost of your advertising. Since this is a new business for her there is an intrinsic value to getting her name out there that can't currently be quantified in dollars, but it is good to try and track anyways to give you an idea of which platforms/ads are performing better. For example, for me for every dollar I spend in advertising I need to bring in $3 in sales to break even on that expenditure.

*edit: Also you already talked about this some, but nothing beats word-of-mouth. Give each customer a reason to refer a friend, whether it is something they can give to friends (coupon/freebie/etc.) or some incentive to the directly, always a good route to pursue.

BrutulTM · Sep 22, 2015

If she's just going to keep it a one person company, advertising may not make sense just because there is a limit to how much new work she can handle. Paying to bring people to you just so you can tell them no isn't a good use of money.

Palum · Sep 22, 2015

BrutulTM_sl said:
If she's just going to keep it a one person company, advertising may not make sense just because there is a limit to how much new work she can handle. Paying to bring people to you just so you can tell them no isn't a good use of money.

This.

I would grow this around a community thing and keep it more organic - the mini muffin idea is good, farmer's markets or local events like that? The other part is if you are trying to keep it hipster-local, things like EDDM and such may backfire because I automatically assume every mailer I get is a shit company that has problems getting referrals but isn't big enough to afford real marketing.

I support a lot of local businesses and every one of them I find or use based on (ideally) word of mouth but when unable to find a referral I will use google and see reviews, check their website for portfolio of work, etc. I think the only place I tried from a mailer was a local pizza place because they had a unique menu.

chantmaster · Sep 23, 2015

Just put a card in with the orders that gives 10% off the next delivery, and a second card (or at the most two) that can give a friend 10% off as well.

And make sure your prices are such that you dont mind everybody getting 10% off... now you have an exclusive feeling discount that everybody gets and shares with interrested customers.

Just make sure not to hand out cards in piles at events, as it destroys "exclusivity"

Shonuff · Sep 23, 2015

As Opiate says, with one person only working, the cheapest route may be google adwords tied to a webpage. Instead of doing this backasswards, what is her target customer? If you know who this customer is, and their income, you can target them more precisely.

Shonuff · Sep 23, 2015

Corndog_sl said:
So far my best month of the year has been Januarys.

December and January are the worst for me. But the last three January's, we broke even on two of them. The reason being that I'm spending $20k a month in advertising to get people's attention. That's a lot of money in the midwest.

Palum · Sep 23, 2015

Sounds like you should sell fish tanks with your winter snow removal packages.

Shonuff · Sep 23, 2015

Oh, I almost forgot, Google just got blasted for not blocking bots (and charging businesses for botted clicks). Personally, I think google bots for more clicks.

opiate82 · Sep 23, 2015

Lyrical_sl said:
Oh, I almost forgot, Google just got blasted for not blocking bots (and charging businesses for botted clicks). Personally, I think google bots for more clicks.

I've gotten quantifiable results using Google Adwords. Again at about 1/2 the cost-per-redemption of print. I think around 30% of my click-throughs from adwords result in an order being placed which is well above anyone organically landing on my site (which I think is around 5%). Albeit organic landings are much more likely people who are just checking out the menu/pricing and/or not really a person at all, but still.

Bots or not, very effective.

Shonuff · Sep 23, 2015

opiate82_sl said:
I've gotten quantifiable results using Google Adwords. Again at about 1/2 the cost-per-redemption of print. I think around 30% of my click-throughs from adwords result in an order being placed which is well above anyone organically landing on my site (which I think is around 5%). Albeit organic landings are much more likely people who are just checking out the menu/pricing and/or not really a person at all, but still.

Bots or not, very effective.

I get much better results from billboard, radio, TV and newspaper. Think about it, I have billboards that cost as much as my google budget, that 100,000 people a day see. In comparison, my competitors bid up some keywords to over $30 a click, and a 1% clickthrough rate is considered golden. Hell, I can target high income people on NPR for a lower monthly rate. Even newspaper is lower. TV has the highest ROI for me.

If I'm measuring ROI, those sources bring me more bang for the buck. Even looking at raw dollars spent, I get more hits from newspaper, NPR and billboard than I do on adwords. I spend less and get more.

opiate82 · Sep 23, 2015

Lyrical_sl said:
I get much better results from billboard, radio, TV and newspaper. Think about it, I have billboards that cost as much as my google budget, that 100,000 people a day see. In comparison, my competitors bid up some keywords to over $30 a click, and a 1% clickthrough rate is considered golden. Hell, I can target high income people on NPR for a lower monthly rate. Even newspaper is lower. TV has the highest ROI for me.

If I'm measuring ROI, those sources bring me more bang for the buck. Even looking at raw dollars spent, I get more hits from newspaper, NPR and billboard than I do on adwords. I spend less and get more.

Just goes to show how different our industries are to advertise for. Newspapers and Yellow Pages (which you've discussed previously) are two of my biggest losers as far as advertising ROI. I dabble in radio, but that is basically trading free pizza certificates in exchange for some advertising. I get the certificates back but never have much luck with the actual advertisements bringing in anything, but I keep doing it because there is some value into getting my name out there that can't necessarily be tracked.

Of course on Adwords I'm paying $0.30 a click instead of $30, and that is after bidding against the big chains.

Corndog · Sep 24, 2015

I'd definitely say it depends on industry for google adwords. I was setup to track calls where if you went to my site through adwords, it'd show you a different number to call. It all forwarded to my shop line. It brought in business, but 90% of the calls were, my fish is sick how do I fix it. In the end if i decided to keep it up I'd need to hire someone almost full time to answer the phone and dispense advise for free. To be fair I was only spending 1200-2k a month in adwords. And the cost of another 2k, to field the questions so actual employees could service people in store just wasn't worth it.

Shonuff · Sep 24, 2015

opiate82_sl said:
Just goes to show how different our industries are to advertise for. Newspapers and Yellow Pages (which you've discussed previously) are two of my biggest losers as far as advertising ROI. I dabble in radio, but that is basically trading free pizza certificates in exchange for some advertising. I get the certificates back but never have much luck with the actual advertisements bringing in anything, but I keep doing it because there is some value into getting my name out there that can't necessarily be tracked.

Of course on Adwords I'm paying $0.30 a click instead of $30, and that is after bidding against the big chains.

At our peak time of year, we get to $40 a word. My average ticket is $763. That's a lot of clicks needed to get to even one sale. I can own a timeslot on TV on one local network for less, and get more calls.

Shonuff · Oct 14, 2015

Lyrical_sl said:
One of my biggest customers keeps pushing me for price concessions below my marginal cost. I'd fire them, but they send a lot of referral business to me. This customer also demands a higher service level than my other customers. Pretty much, it's the big guy pushing the little guy around.

Today, we did an analysis of all of the jobs I did for them last year, and showed them where I lost money. They still tell me they are going to price shop me.

I've done my best to show them what's going on, but apparently they want me to pay for their business. We'll see how it shakes out. If they didn't send me a lot of referral business, I'd tell them to fuck off.

He's at it again. I don't know how to say it in a nice way, but I want out. This is my eighth year owning the company, and for all of those eight years, he calls me up and acts crazy after he gets a price. I've somehow let him get me down 10% below industry standard. We price jobs 10% lower before we even turn the bid into him, and we show it, and he still loses his shit.

I took your advice, and we started measuring people he sends, and it's not a huge number. He sends us one a week. The problem is that the tickets are smaller on average, and they call in wanting the same rate as he gets. One time, he even called me to make sure the customer he referred was getting that discount.

I'm tired, I'm getting ready to tell him to go fuck himself (but in a nice manner). He refuses to believe that I have costs.

I've broken every rule of pricing in my industry to keep his business, and it's just not enough. He wants MOAR!

He's got a lot of clout in the community, so I need to fire him nicely.

Picasso3 · Oct 14, 2015

Tell him you're getting blowback from other customers when they find out they're getting charged a higher rate and you're going to standard pricing and he's welcome to pull any invoice he'd like to compare and ensure he's getting a fair deal.

As for referrals, reward on a flat rate or a % of the job basis.

Your pal,
Picasso

opiate82 · Oct 14, 2015

Lyrical_sl said:
He's got a lot of clout in the community, so I need to fire him nicely.

Probably captain obvious here, but let him fire you. Just stand firm on the price, use the "we've had a great relationship for a long time but this is the best we can do, no hard feelings from me if you can find a betterVALUE(I always use value, not price) out there, I'll understand." and be done with it. Either he will pay, he will move on and discover he's NOT getting a better value then be back, or he will get a better value and you'll know that you need to readjust. From the sounds of it, most likely one of the former two things will happen.

Shonuff · Oct 14, 2015

opiate82_sl said:
Probably captain obvious here, but let him fire you. Just stand firm on the price, use the "we've had a great relationship for a long time but this is the best we can do, no hard feelings from me if you can find a betterVALUE(I always use value, not price) out there, I'll understand." and be done with it. Either he will pay, he will move on and discover he's NOT getting a better value then be back, or he will get a better value and you'll know that you need to readjust. From the sounds of it, most likely one of the former two things will happen.

When I bought the company, he'd stopped using us for six months, to go to a cheaper company. He didn't get the same level of service, so he switched back. He's done his best to replace us over the last ten years, but hasn't been able to.

Wuwei_sl · Oct 14, 2015

opiate82_sl said:
Probably captain obvious here, but let him fire you. Just stand firm on the price, use the "we've had a great relationship for a long time but this is the best we can do, no hard feelings from me if you can find a betterVALUE(I always use value, not price) out there, I'll understand." and be done with it. Either he will pay, he will move on and discover he's NOT getting a better value then be back, or he will get a better value and you'll know that you need to readjust. From the sounds of it, most likely one of the former two things will happen.

This. Different product, different price, different value. It sounds like that even with the referrals, you feel the client is being more of a hassle compared to the value he adds to your company. This kind of client will always compare your product/service with the competitors' lowest price, regardless of value. Captain obvious's solution is spot on.

Cad · Oct 15, 2015

opiate82_sl said:
Probably captain obvious here, but let him fire you. Just stand firm on the price, use the "we've had a great relationship for a long time but this is the best we can do, no hard feelings from me if you can find a betterVALUE(I always use value, not price) out there, I'll understand." and be done with it. Either he will pay, he will move on and discover he's NOT getting a better value then be back, or he will get a better value and you'll know that you need to readjust. From the sounds of it, most likely one of the former two things will happen.

^^

Adventures with Lyrical: Buying a Business (REPOST)

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