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The Pitfalls of Reaching $1M in Revenue and More of Your Questions Answered

Like how to make the best of your small advertising budget – Billboards?!? – and formally settling ownership in a family-owned legacy business.

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The Pitfalls of Reaching $1M in Revenue and More of Your Questions Answered

We are a small eyewear business in our second year. We need to advertise more but can’t figure out the best use of our limited ad dollars. Traditional media seems to be becoming anachronistic. What do you recommend?

Don’t be too quick to give up on traditional media — some of the most basic ways of getting your message out are still the best. From the hundreds of small opticals and marketing experts we’ve talked to over the years, we’d suggest you be wary about investing heavily in new media until you’ve fully maximized the potential of some traditional advertising, starting with:

1. A good sign that people can actually see. Yes, there’s nothing more fundamental, but if you have good drive-by traffic this should be the first thing you get right.
2. Direct mail. Build a mailing list and send customers a postcard every few months. Announce sales, offer eyewear maintenance tips and promote your services. Ironically, the more pervasive email has become, the more willing people have become to take a second look at the “junk mail” in their mailbox.
3. Invest in a really good website and sign up for a smart e-mail marketing service (Constant Contact and Chimpmail are widely used and very affordable) to keep customers updated with your events, sales offers and new products.

Your goal should be top-of-mind awareness in your market. Eyewear is still a trust business. You want people to think of you first when they need to need a new pair of glasses.

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Last year, we hit our longstanding goal of reaching $1 million in sales for the first time. Are there any special considerations to be aware of at this point of my business’s growth?

“Welcome to the Badlands,” says Greg Crabtree, a CPA and small business expert who has been helping entrepreneurs through this stage of their growth for 30 years. Despite your impressive growth, you’re actually entering risky territory where, if you don’t have sufficient capital, you’re going to either perish or be forced to scale back to a smaller operation. The biggest danger comes from labor expenses. At the $1 million mark, it is no longer possible for you to wear all the hats, taking care of sales, marketing, IT, finance, customer service, HR and so on. You will have to hire people to help. But if they aren’t as efficient as you, or take too long to get up to speed, the higher payroll may wipe out your profit. Crabtree’s advice is to stay on top of any sales duties so you’ve got a finger on the store’s pulse and to keep an eagle eye on your pre-tax profit margin. If it drops below 5%, be quick to make adjustments, or you could be in trouble, he says.

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