You’re starting your own business. You know what to sell and who your customers are. But how will you decide what your marketing materials should look like or even what you’ll charge for your products or services?

You need to become an amateur sleuth and gather competitive intelligence to create an on-target marketing program and tailor your services or products to position against the competition.

It’s important to complete a competitive analysis during the start-up phase of your new business, about the time you’re putting together your marketing plan. In fact, if you get underway without performing a competitive analysis, you run the risk of creating marketing tools and product or service offerings that are way off the mark.

This can cost you valuable time and money during the critical early months. You should also plan to gather competitive intelligence as your business grows, in order to stay competitive.

Who’s Your Competition?

One of the biggest mistakes new entrepreneurs make is failing to recognize the range of competitors for their businesses. Your new company will have two types of competition-real and perceived. For example, imagine you’re a former college athlete who’s decided to start a personal fitness training business.

Your competitors will fall into two categories: other personal trainers, and gyms and health clubs that offer trainers or advisors on staff. Although you’d directly compete only with the other personal trainers, your prospects-people who want to shape up-would perceive the gyms that offer these services as a viable alternative to hiring you. So to complete your competitive analysis, you need to evaluate the marketing materials and services both types of competitors offer.

Get the Facts

The first step in your competitive analysis is to collect all the marketing materials used by your competitors-both perceived and real. Begin by clipping your competitors’ ads. Then request copies of their brochures and other marketing materials-not so you can copy their ideas, but so you can check out marketing strategies and formats, competitive pricing, special offers, the key benefits (or promises made), and clues to marketing niches that may be underserved.

If possible, you may even want to “mystery shop” your competitors-go out and actually buy their products or services so you can experience the purchasing process with their store personnel or salespeople. If your competitors are large enough, you can gather information about them on the Net.

Use major search engines to look for recent press releases and articles about them. There are even free sites on the Web that allow you to customize your own daily news page, such as NewsPage by NewsEdge Corp. (www.newspage.com).

And don’t forget to check out your competitors’ Web sites. How do your direct and perceived competitors use the Net to attract customers and sell products? This will give you important clues about information a Web site of your own should contain.
Put It All Together

Now you’re ready to draw some conclusions about the types of competitive offers and pricing your new business should use. Best of all, you’ll have clear guidelines for developing your marketing tools. Complete your analysis by answering these questions:

• What size are their materials? Do most of your competitors use standard mailing envelopes, or are they using large folders with inserts?
• Do your competitors use photography or illustrations in their materials?
• Do they have Web sites, and how deep are they? Do they sell products online or just offer information?
• How are your competitors’ products or services similar to yours? How are they different?
• What key benefits do their marketing materials communicate? Can you offer additional benefits that are valuable to prospects?
• What special product, service or pricing offers do your competitors use to stimulate responses to brochures and ads?

Once you discover the answers to these questions, create the marketing tools that will work harder than you do.

The ring of the cash register has long been the sound of music. But today the cash register of even the smallest business may be attached to a computer via “point-of-sale” (POS) systems. These systems have grown in popularity over conventional cash registers because they don’t just ring up sales. They amass vital, real-time information about your inventory and customers.

At the core of these systems are a standard-issue computers running specialized POS software, usually with a cash drawer and receipt printer, and often with a bar code scanner and credit card reader. Vendors often sell these systems pre-configured, or you can add these peripherals on as your requirements grow. The typical cost can be less than $1,500.

What do you get for your investment? Without a doubt, the biggest advantage is the ability to get an immediate, up-to-the-minute, accurate assessment of your inventory. Each time you check out a customer, the goods you ring up are immediately subtracted from your inventory list, which is maintained on the system’s hard drive.

That inventory may be surprisingly large. Many boutique clothing stores, for example, will stock SKUs numbering in the thousands, with actual counts exceeding 10,000 items. The same is true for shops selling everything from bicycles to cameras to cosmetics.

Keeping track of the thousands of items that make up a small business can be a real chore. However, consistently keeping hard-to-find items in stock can add up to a competitive advantage over much larger competitors. How to strike the balance?

A good POS system can help, allowing you to set an alert that lets you know when a given item is at the re-order point. When it’s time to re-order, some POS systems tell you both the most recent price you paid, as well as the average price you’ve paid in the past. Both can help you strike the best deal with your suppliers.

Off-hours, you can run a report that gives you inventory activity for the day, week or month. To get the big picture, some POS systems allow you to track your inventory year to year, allowing you to compare this year’s orders with those from last year. Doing so can help you anticipate where you want to head in the coming months.

Taking inventory is one of the most time-consuming and labor-intensive tasks every store owner faces. It is also one of the most crucial. Having too much stock, or too little, is costly. According to the National Retail Federation, U.S. retailers lose $224 billion due to excess inventory and $45 billion from not having inventory in stock.

While having a POS system track your inventory does not substitute for a physical inventory count, many shopkeepers find they can reduce the number of times each year they must conduct this time-consuming task. And when the time comes, the use of a wireless portable scanner in conjunction with a POS system can greatly reduce your footsteps, saving hours in the process.

In addition to tracking inventory, a good POS system will help you know who your best customers are and what they like. With the customer’s purchase history visible right at the cash register, a nursery owner might alert a tea rose lover to a new shipment of those flowers.

A camera store owner could tell a wildlife photographer about a new high-speed 35mm film ideal for capturing images of raptors in flight. Conversely, an auto parts store owner could query the POS system with a quick barcode scan to answer a customer’s inquiry about the availability of a spare part.

What it comes down to is this: In a well-run business, the point of sale is more than just the place where the money comes in. With the right equipment, it becomes your strategic service center, the place that will help you grow your business and keep your customers coming back.

And the ka-ching keeps on coming. According to Intuit market research, by using an affordable, integrated POS system, an independent retailer with revenue of $300,000 can cut costs by close to 10 percent, saving an average $30,000 a year. That’s a substantial return on a $1,500 investment. The question then becomes, How can you not afford a POS system?
Shopping for the Right POS System

In looking for a POS system, the choices are many, the price can range from hundreds to tens of thousands of dollars, and the final decision can be difficult. Here are some guidelines to help.

• Three words of advice: inventory, inventory, inventory. All POS systems ring up sales and track inventory. But a good one will let you assess your inventory easily and thoroughly. You should be able to set alerts for items running low, readily add new items when they come in, account for back-orders, and even generate purchase orders to send to vendors.
• Weigh ease-of-use against functionality. Generally speaking, the more complex your orders are, the more features you’ll need. But consider as well the time needed to bring new employees up to speed and the time you’ll invest training them. The best systems offer a balance of both.
• Look for a system that can start small and grow with your needs. If you are on a tight budget, you can begin with a basic setup: POS software running on a PC with just a drawer and receipt printer.

  Later on, you can add on as your needs dictate, perhaps a bar code scanner and credit card reader to begin with, then add an inventory tag printer, pole display, or PIN debit pad. Also, you should pick a system, based on your needs, that doesn’t require having someone set it up for you.

Here is a partial list of the most important legal issues you face on the internet. Learn them.

Age

The age of your users impacts the website. According to Federal Trade Commission regulations through the Children’s Online Privacy Protection Act (COPPA), a website must get a parent’s permission for children under 13 to disclose information.

Also, remember that children under 18 should not be permitted to view information which is adult in nature. In addition, children under 18 may not be able to agree to contracts such as your website user agreement and purchase contracts. Finally, FTC also regulates advertising and other content directed at children.

Bulletin Boards, Chat Rooms, Etc.

Any posting ability by users should be subject to site submission rules and a user agreement. The rules should obtain users’ consent not to post pornographic, defamatory or infringing materials and, through your user agreement, consent to your company not being liable for other users taking such actions.

Copyright

The footer of your site should display a copyright notice for the content of the site. The notice should read “� [date] [copyright owner name] All rights reserved.” You should also deposit a copy of the site with the Copyright Office to record ownership of the site’s content, look and feel.

Finally, under the Digital Millennium Copyright Act, depending on the purpose and the users’ activities on the site, your company may be eligible to register for limited liability offered by the act for the site. You should consult your attorney for review of the act and how to register.

Domain Name

When building your website, domain names are an important part. Often they are directly tied to your business name, your logos and your brand. Businesses often fail to give proper thought to which domain name to choose.

Picking a domain name should have the same careful thought as naming other products or services. Choosing a domain name should include analysis of trademark law in relationship to the name. Under current law, domain names may be awarded to trademark holders over others through arbitration or litigation. This means that having trademark registration in the same name as your domain name may ensure that you retain ownership of the name.

Export

If persons from other countries use your site, then you are exporting. If you sell to such persons, you are exporting the item you sell and entering into contracts with persons of other countries. If you use encryption on the site, then you are exporting technology regulated by the Department of Commerce and Defense.

Various government departments regulate the countries with which U.S. companies may do business and when a company needs an export license to transmit items, technology or information abroad. Doing business with certain countries, such as Iraq, Iran, Cuba, North Korea, Syria, Yugoslavia and others, is severely restricted.

Depending on the information on your site, what kind of business you do, the technology and information involved, your site may be subject to these regulations, and you should consult with your attorney about these business decisions.

Framing

It is important to be careful how your website frames to other sites. There have been trademark cases regarding consumer confusion over which site is which, and which site is the source of the content and data.

Also, be careful, because some sites’ “terms and conditions” and/or “user agreements” prohibit collecting and reprinting data displayed on the site–even if such data is factual, such as times and places for events.

Giveaways

Sweepstakes, contests, lotteries and giveaways are governed by state and national laws as to how they must be conducted. Florida and New York require registration with the state if the prizes are over $5,000 in value. Most important, you should have rules outlining the terms and conditions of the giveaway.

The rules are an offer from the sponsor which the entrant accepts by entering. The offer, plus the acceptance, make a binding contract covering the giveaway.

Home Page

On the footer of the home page of the site, you should have a link to your privacy policy, your user agreement or terms and conditions, and your copyright notice.

Insurance

Be sure that your business insurance covers website activities. Often website activities are excluded from errors and omissions and other business insurance.

Lloyds of London and a few other companies have insurance specifically covering materials and sales via websites, including security of credit card numbers and other important data.

Jurisdiction

One of the primary reasons for having a user agreement is to better address the issues of jurisdiction. Under current law, website owners may be subject to jurisdiction and law in any state or country where its users are located. Being subject to the law of so many different locations makes trying to comply with the law and trying to assess your risk tricky.

An attorney can help you consider which markets are your highest risk and how to lower your risks through consultation with local counsel or blocking users from those regions. Additionally, you should consider that many foreign jurisdictions do not offer protections for intellectual property which are comparable to the U.S.

Therefore, if a user in such a region steals content or software from your site, you may have little recourse by law, and a hard battle to fight on foreign soil and in a foreign language.

Linking

When linking to other sites, you should consider two factors. One is what word or image you are using for the link and whether it is a trademark of another site or company. If so, you need the trademark owner’s permission to post the company’s trademark on your site.

Second, you should always link to the home page of a website since there have been “deep linking” cases claiming loss of advertising revenue which would have been gained if the users had been directed through the home page.

Metatags

Courts have not permitted use of another company’s trademarks as metatags on competitors’ sites. These cases arose when company A used company B’s trademarked term in the metatagging of company A’s site so that when a user looked for company B, company A would come up in the listing. For example, it would not be permitted for Coke to use the metatag “Pepsi” on the Coke website.

Notification

Under the Digital Millennium Copyright Act, there are required procedures for someone to notify a website that materials on the site may infringe on that person’s copyright. If the Digital Millennium Copyright Act applies, these procedures should be outlined in a notification policy on the site.

Obscenity

Materials which are considered “obscene” by state or federal law are not permitted on the internet and, especially, may not be viewed by children. What is obscene is based on the local standards of the viewing community. This makes prior determinations of what is acceptable somewhat complex. If you have questions about your site and its content, you should review them with your attorney.

Privacy Policy

If you collect any information from users of your site, using cookies or otherwise, the Federal Trade Commission requires you to have a privacy policy. The privacy policy should contain an explanation of how you collect the users’ information, how and where the information is stored, how the user can delete or change the information, and to whom the information is disclosed and for what purpose. The European Union also has similar and strict regulations on collection of information via websites.

Rules for Mail Order

The FTC and some states have guidelines for selling items by mail which have been extended to cover internet sales. These guidelines cover return policies, customer contact and other information about how to inform your customers about your products, shipping and sales procedures.

SEC

The Securities and Exchange Commission considers a website a means of disclosing information to the public about a company. Therefore any information disclosed on your website should be given the same review and consideration that your company gives all public disclosures with regard to “forward-looking statements” and “material” information.

Trademark

Trademarking the name of your company, logo, mottos and domain name is an important part of your business development and should be reflected on your website. Your nationally registered marks should display an � and unregistered marks should display a � or SM.

User Agreement

Having a user agreement or “terms and conditions” may be the most important part of a website. A user agreement requires each user to agree to be bound by a contract governing his or her use of the site by clicking “I agree” before being permitted to use the site.

Be aware that simply posting your legal agreement without forcing the user to click “I agree” prior to use is unlikely to bind your users to the terms. The user must take an active step through which she agrees to the terms and must not be allowed to proceed to use the site without such step.

A user agreement allows a company to:

• dictate how the site may be used (for example, for reading and printing materials)
• dictate how the site may not be used (for example, reverse engineering the coding tricks, copying content, for illegal purposes)
• dictate who may use the site (for example, persons over 18, US citizens)
• dictate procedures or policies for the site (for example, return policies, complaint policies, notification of copyright infringement policies)
• dictate your company’s waiver of implied legal warranties (for example, implied warranties of noninfringement, fitness for particular purposes, etc.)
• dictate the limit of your company’s liability for the site, other users postings on your site, sites you link to, etc.
• dictate jurisdiction for any disputes relating to the site

View Source

The ability for users to view the source code of nearly all websites by using the “view source” command in browsers means that the source code for your website is not protectable by trade secret law.

For something to be protected by trade secret law, it must not be publicly known, the owner must take some effort to keep the information secret, and the information must have monetary value to the owner. If the information is publicly available on the web through “view source,” the information is not a trade secret.

Warranties

Statements on your website about your products and services are express warranties to customers. It is important to carefully review all website text to be sure that what your company promises is true and corresponds with its other policies and advertising.

When you review, look for statements that are absolute statements which may be hard to prove or verify if the Federal Trade Commission were to request that you do so. Examples of such statements are: “Our printer works with all software,” “Our services are the best,” and “We guarantee that our product will always perform perfectly.”

Also, be aware that the FTC has specific guidelines that should be followed for use of the words “free” and “guarantee” in advertising or on your website.

Also, review your website to be sure that the text matches your regular business contracts. For example, your website should not promise a 60-day money-back guarantee if your contract states only a 30-day warranty.

XXX

If your site contains adult materials, be sure to consult your attorney regarding special legal requirements regarding notice prior to entering the site, notice requirements under federal regulations and other laws applicable to the adult entertainment industry.

Your Risk

The law is all about risk. The more time and money you spend following laws and regulations governing your business, the lower your risks of fines or successful claims by government or third parties.

Which advertising plan is best: $2,000 in direct postcards reaching roughly 3,500 people, or $2,000 in a newspaper ad reaching 750,000 readers?

The answer is a simple one: It depends entirely on what you say in your ad. If your impact quotient is high enough, your best bet will be the newspaper. If the direct postcards are delivered precisely to “the perfect target” (which is not very likely), then the direct-mail route is preferable.

My guess is that neither the direct postcards nor the newspaper will work for you. My advice is that you keep your $2,000 in your pocket until you come up with an actual plan. These are the hard questions you need to answer:

1. What do you have to say that matters to your customer? I’m your prospective customer. I know you want my business, but why should I care? What’s in it for me? Most ads are written under the assumption that the reader, listener or viewer has a basic level of interest and is paying close attention to the ad. But customers tend to ignore all ads that do not speak directly to them.
2. Can you say it persuasively? Most ads are ineffective because the writer was trying to say too much, include too much and be too much. Fearful of leaving someone out, these writers write vague, all-encompassing ads that speak specifically to no one. “We Fix Cars” is a terrible headline for an ad.
3. Are you speaking to a felt need? Let’s say the “We Fix Cars” auto mechanic has a great deal of affection for older BMW 2002s. He knows that 2002 owners love their cars like few drivers on the road and that the only weakness of the 2002 is its evil Solex carburetor. Every 2002 owner knows this, too.
4. How long is your time horizon? Some ads build traffic, some build relationships and others build your reputation. If you don’t have the financial resources to launch a true branding campaign focused on building relationships and reputation among potential customers, you’re going to have to settle for traffic-building ads until you can afford to begin developing your brand. To what degree do you have financial staying power?
5. What is the urgency of your message? If you need an ad to produce immediate results, your offer must have a time limit. This technique will simultaneously work for and against you. On one hand, customers tend to delay what can be delayed, so limited-time offers generate traffic more quickly since the threat of “losing the opportunity” is real.
6. What is the impact quotient of your ad? How good your ad must be depends on the quality of your competitors’ ads. A .22-caliber pistol is a weapon against an opponent with a peashooter. But aim that pathetic pistol at an opponent holding a machine gun, and you can kiss your silly butt goodbye. How powerful is the message of the opposition? If your competitor carries a machine gun, don’t go where he goes. In other words, don’t use the media he uses.
7. How long is the purchase cycle? How long it will take your advertising to pay off is tied to the purchase cycle of your product. Ads for restaurants work more quickly than ads for sewing machines, because a larger percentage of people are looking for a good meal today than are looking for a machine that will let them make their own clothes.

Not hiring a professional ad writer is often far more expensive than hiring one. If you’d like to read more about this stuff, most libraries and bookstores are full of books on advertising.

All types of advertising will work if they’re used properly — not just “tried.” The fact that the various forms of media utilize each other illustrates that no one kind of advertising is superior.

Radio stations promote themselves on television and bus cards, TV stations list their programs in the newspaper, and newspapers use outdoor billboards to increase circulation. You’ve probably also noticed the large number of ads by dot.com companies in these traditional forms of media.

If you’re going to use advertising correctly, you must meet these four requirements:

1. Demographics. You must know what segments of the population comprise your customer base and be able to define them according to the standard age and gender groups used by the media to define their audiences.
   • Gender: Male, female or adults (includes a balance of male and female).
   • Age range: Depending on your business, you may choose more than one of these: 12-24, 18-34, 18-49, 25-54, or 50+

   Your customer base can shift with the opening and closing of other local businesses, universities, military bases, the influx or departure of university students, or just the natural aging of people in your community, and you need to keep track of these changes. This step is critical because it’s the basis of every advertising decision you make.

   If you’re not absolutely sure who your customers are, you can waste money advertising in the wrong places. Once you’ve identified your customers, you have to know where they hang out. Your reps can provide specific demographics regarding their audiences.

2. Location. Use only radio stations, TV programs or publications that can deliver your message to the right demographic groups. Ask your media reps to define the primary audiences they reach, and spend money only with those that match the demographic groups you’ve identified as your customers. Never buy advertising according to your own personal taste or because you like a particular rep!
3. Message. You have precious few seconds to tell your story, so squeeze the language. You wouldn’t say “Send assistance as soon as possible” when you could yell “Help!” You also need a hook–a reason for someone to come to your location instead of a competitor’s. Ask your media reps for copywriting help. Many stations and publications employ copywriters, but a creative media rep can do a great job. Your newspaper, magazine, and direct-mail reps will also be happy to lay out your entire ad.
4. Frequency. Without enough frequency your customers won’t see or hear your message. Radio, television and print are three distinct critters and require detailed explanations regarding schedule placement. It’s better to place a substantial schedule on one station or in one publication than to spread a small budget out and not achieve effective frequency anywhere.

Whatever you decide to do, don’t just try advertising. Use it to get results.