6/11/08
Excess inventory- during my 20 years of working with all kinds of small businesses I found that most have inventory they either have forgotten about because it is either out of date or out of style, or an ordering mistake. If that inventory has been laying around in a corner for years covered up by other junk, take a look at it, it is an asset that is worth something.
Example: years ago when I was working in the radio business there was a carpet/furniture store that I sold advertising to. While talking to the owner one day he mentioned he had a large roll of purple carpet he couldn’t sell and had put it in the back if the warehouse and forgotten about. I ask to see it and it looked to be in pretty good shape. The store owner said no one wants purple carpet. I said let’s find out. We ran a schedule of radio spots featuring a “Purple Sale.” We marked down the purple carpet 50% and he sold every bit of it. He turned useless carpet into an asset that brought him several hundred dollars. He assumed no one would want it but didn’t really check it out.
Example: I also consulted a client who had a hardware store that also sold lumber etc. As she told me about her store’s property, she indicated there were some materials in the yard that had been there for years. I told her to have a sale, or put it on eBay and turn it into cash.
Customer list- Almost every business has a list of customers. Some businesses have hundreds, even thousands of customers on their list. Sure they sell to that list, at least to the main regular customers, but many are inactive. You can maximize your customer list by determining what other business sells to your customers.
Example: An insurance agency usually has hundreds, even thousands of customers on their list. They sell mostly to home owners and auto owners. Who else is interested in selling to those customers? How about financial advisors? How about attorney? How about realtors? Your customer list is an asset worth more than you think.
You contact one or all of the businesses above and make an arrangement allowing them to mail to your customers with a special offer, approved by you of course. If it’s a lawyer, he could offer a special deal or even free info on wills and trusts. Every will or trust set up will pay you a finder’s fee, maybe even half.
Financial advisors with your help set up a free seminar about retirement, or setting up IRA’s etc.
Dead customer list- Every customer list has past customers who are inactive. Could they be an asset? Sure.
Example: I had a client who owned an online natural health college. They sold many different programs to customers over the Internet. We were talking about ways to get some of the local residents to buy his programs. His target customer was primarily women age 20 to 55 years old. I thought about other businesses that had the same target customers. There was a massage therapy school only a few blocks away. Now when schools like massage therapy schools have a recruiting promotion, most of the attendees don’t sign up. The school will follow up with calls but ultimately most of the list is “dead.” I suggested he contact the owner of the massage therapy college asking to let him market to the dead list and my client would pay the massage therapy owner half of the sales. A good deal. The massage therapy owner got money from a dead list, and my client got access to a list of his exact target customers. Dead lists are assets.
Example: If you have a good customer list you may be able to rent your list to other businesses. My ecommerce business has 7,000 customer names. I can rent that list for .25 cents a name and sometimes more. Just be sure you have not told your customers you will not use their names. Otherwise it is fine.
Unused time, equipment, or services- Many businesses have unused capacity, time or equipment.
Example: I know a company that did packaging of products but the equipment only ran from 5 a.m. to 1 p.m. found another company that needs packaging that could be done at your facility. The same for delivery trucks.
Example: I had a client who owned a new spa. It had everything, hair, nails, massage, facials, tanning etc. Her new business was slow and had not developed like she expected. Her employees weren’t selling products and services like they should. She had 4 tanning beds that weren’t being used…always empty. I told her those empty beds were a good asset. We created a promotion to use the empty beds as incentive to get people to visit the spa. With every waxing and nail job, get 10 free tanning visits. She said she sells a ten tan package for a good amount of money and didn’t want to give it away. Think about it. Tanning beds empty. She is already paying for the equipment, overhead, and labor. It cost nothing to give a tanning package away, but it does bring in new customers to experience her spa and opportunity to sell her services and products.
Increase the perceived value with little or no cost- Every business has hidden services or products that can be given away to increase the value to a customer.
Example: I have an e-commerce business where I sell “G” rated videos. In addition to my website, I also sell them on amazon.com and some other selling sites. On Amazon, all the movies with the same titles are grouped on the same page. There could be 10 different videos of the exact same movie, all with different prices from $2 to $14 each. This causes downward pressure on prices. I decided to make my videos have more value by offering something other sellers could not. I offered a Free life-time replacement guarantee on each of my videos. I then raised the prices of my videos. The guarantee increased the perceived value of the purchase so I could charge a higher price. I recognized that new videos only get played a few times over a year which is not much. Therefore there is little chance they will break. Knowing that, I could offer the free life-time replacement guarantee with little or no risk to me. In nine months I have had only one request for a replacement. Every business has something that can be used in the same way.
Example: I also coached a man who was an electrician. He wanted to get more customers. He decided he could provide additional services free that increased the perceived value of doing business with him. In his ads he could put an offer of Free 15 point safety check with each visit. Or when he does some work for a customer, to do the 15 point safety check for free. He is already there, and it takes less than five minutes to check all the electrical outlets in the house, the breaker box, smoke alarm etc. It takes only five minutes but increases the perceived value to the customer substantially.
Example: Another client I coached built custom grandfather clocks. Very nice quality. As we tried to find some ways he could increase the perceived value of his clocks I ask him how long the competitor’s warrantee was. He said two years. I ask him if he felt like he could offer a 5 year warrantee. He said there is little chance something would go wrong in a five year period with his clocks so he felt OK offering the five year warrantee. It cost him nothing, and increased the value to the customers.
In summary:
Every business has hidden assets. I’ve just showed you some ways to find them. Try the increasing the perceived value exercise with your business or with a business you know of. You will surprise your self.
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