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  • A Non-technical Guide for Investing in a SaaS Startup

    Investing in a software-as-a-service (SaaS) startup can be a lucrative opportunity for those looking to diversify their portfolio and support innovative companies. SaaS businesses provide subscription-based access to software over the internet, rather than traditional one-time purchases or licensing. This business model allows for recurring revenue streams and the potential for long-term growth. However, it’s important to thoroughly research and evaluate the potential risks and rewards before making any investment decisions.

    Investing in a SaaS startup can be risky, but it can also be very rewarding. By choosing a strong, well-established company, you can set yourself up for long-term success and potentially earn a significant return on your investment.

    In this article, we will explore some key considerations for investing in a SaaS startup, including the market landscape, financial performance, and management team. This article is exactly about that. We will go top to bottom about everything that one needs to know before investing in a SaaS startup.

    What Is a SaaS Startup?
    Things to Know Before Investing in SaaS
    How SaaS Is Different From Other Startups
    The Business Model of a SaaS Startup
    Growth and Potential
    Best Practices Before Investing

    What Is a SaaS Startup?

    A SaaS (Software as a Service) startup is a company that offers a software application on a subscription basis. Instead of purchasing the software outright and installing it on their own computers or servers, customers pay a recurring fee to access the software over the internet. This business model allows customers to use the software on a pay-as-you-go basis, without having to make a large upfront investment in hardware or IT infrastructure. SaaS companies typically host the software on their own servers and provide access to it through a web browser or other means. Some examples of SaaS startups include cloud-based productivity tools, customer relationship management platforms, and e-commerce platforms.

    Things to Know Before Investing in SaaS

    If you are considering investing in a SaaS (Software as a Service) startup, it’s important to understand some key aspects of the business model and the industry. Here are some things to consider

    Business model: SaaS companies typically sell subscriptions to their software, rather than selling it as a one-time purchase. This means that the company’s revenue is generated from ongoing customer payments, rather than from upfront sales.

    Target market: It’s important to understand who the company’s target market is and whether there is a large enough demand for the product.

    Competition: It’s also important to understand the competitive landscape and how the company’s product compares to its competitors.

    Growth Potential: Look for signs that the company is growing quickly and sustainably, such as a growing customer base and increasing revenue.

    Team: Consider the quality and experience of the company’s management team and its ability to execute its plans.

    Financials: Review the company’s financial statements to get a sense of its financial health and future potential.

    Risk: As with any investment, it’s important to consider the potential risks involved. These may include technological risks, competitive risks, and regulatory risks, among others.

    It’s also a good idea to seek the advice of a financial advisor or professional before making any investment decisions.

    How SaaS Is Different From Other Startups

    Even though these sorts of startups are also startups and they too become unicorns, there are some inherited differences between these. There are several factors that make SaaS startups different from regular startups

    Business Model

    SaaS startups typically operate on a subscription-based business model, where customers pay a recurring fee to access the product or service. This is different from traditional startups, which may sell products or services on a one-time basis.

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    Customer Acquisition

    SaaS startups often rely on digital marketing and sales tactics to acquire customers, while traditional startups may rely more on traditional marketing and sales methods.

    Customer Retention

    SaaS startups typically have a higher customer retention rate due to the recurring nature of their subscription model. Traditional startups may have more fluctuation in customer retention due to one-time purchases.

    Revenue streams

    SaaS startups often have steadier revenue streams due to their recurring subscription model, while traditional startups may have more unpredictable revenue streams.

    Scalability

    SaaS startups are often more scalable than traditional startups due to their ability to easily add new customers through their subscription model.

    Overall, SaaS startups differ from traditional startups in their business model, customer acquisition and retention tactics, revenue streams, and scalability.

    The Business Model of a SaaS Startup

    A business model is a way a company generates revenue and profits by selling products or services to its customers. It outlines the different elements of the company’s operations, including its target market, marketing and sales strategies, and financial projections. Business models can vary widely depending on the type of industry and the specific needs of the company. Some common business models include subscription-based models, pay-per-use models, and freemium models.
    There are several factors that you can consider when evaluating the business model of a SaaS (Software as a Service) startup

    Revenue Streams

    A SaaS startup typically generates revenue through subscription-based pricing models, where customers pay a recurring fee to access the software. Look for a startup with multiple revenue streams, such as upsells and cross-sells, as this can increase the overall stability of the business.

    Customer acquisition costs

    It is important to consider the costs associated with acquiring new customers, as these costs can impact the profitability of the business. Look for a startup with a high lifetime value (LTV) to customer acquisition cost (CAC) ratio, as this indicates that the company is generating a high return on investment for each customer it acquires.

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    Churn rate

    The churn rate is the percentage of customers who cancel their subscriptions over a given period of time. A high churn rate can be a red flag, as it indicates that the startup is having difficulty retaining customers.

    Scalability

    Look for a SaaS startup with a scalable business model, meaning that the company can easily expand its customer base and increase revenue without incurring significant additional costs.

    Market demand

    Consider the size and growth potential of the market in which the startup operates. A startup with a product or service that meets strong demand in a growing market is more likely to be successful.

    Competitors

    It is also important to consider the competitive landscape in which the startup operates. A startup with a unique value proposition and a competitive advantage over its competitors is more likely to succeed.

    Growth and Potential

    The growth and potential of a SaaS startup are determined by a variety of factors, including market demand, competitive advantage, customer acquisition and retention, financial stability, and scalability. Companies that are able to effectively address these factors are more likely to experience growth and success. For example, a SaaS startup with a unique product that addresses a specific need in the market and has a strong customer acquisition and retention strategy is more likely to experience growth than a company with a generic product and poor customer service. Similarly, a SaaS startup with a strong financial foundation and the ability to scale its operations is more likely to experience growth than a company with weak financials and limited scalability. Overall, the growth potential of a SaaS startup is largely dependent on its ability to effectively address the key factors that drive growth in the industry.

    There are several factors that can be considered when evaluating the growth potential of a SaaS Startup

    Market Size

    A large and growing market can provide a strong foundation for the company’s growth. Look for a market that is large enough to sustain the company’s growth over the long term.

    Product-market Fit

    Does the company’s product or service solve a real problem for its target market? A product that meets a strong customer need is more likely to experience growth.

    Competitors

    Analyse the competitive landscape to understand the company’s position in the market. A company with a unique value proposition and minimal competition is more likely to experience growth.

    Pricing

    Consider the company’s pricing strategy and whether it is sustainable over the long term. A company that charges a higher price for its product or service may have more room for growth than one that charges a lower price.

    Customer Acquisition Cost

    Look at how much it costs the company to acquire new customers. A company with a low customer acquisition cost is more likely to be able to scale its business.

    Customer Retention

    High customer retention rates can be a sign of a strong product or service. A company with a high retention rate is more likely to experience growth.

    Revenue Growth

    Look at the company’s past revenue growth to get a sense of its potential for future growth. A company with a history of strong revenue growth is more likely to continue growing in the future.

    Overall, it is important to consider a variety of factors when evaluating the growth potential of a SaaS startup.

    Best Practices Before Investing

    While the best practices that you can follow before choosing a SaaS startup to invest in can be a lot easier than it looks. As a rule of thumb, you can look for these check pointers in any Startup that uses software as a service.

    Financial Stability: Look for a company with a strong financial track record, including steady revenue growth and profitability.

    Customer Base: Look for a company with a diverse and growing customer base, as this can indicate a strong demand for the company’s products or services.

    Product Differentiation: Consider whether the company’s products or services stand out from the competition, as this can be a key factor in attracting and retaining customers.

    Management Team: Look for a company with a strong and experienced management team that is capable of executing the company’s business plan and driving growth.

    Scalability: Consider whether the company’s products or services can be easily scaled to meet the needs of a growing customer base.

    Market Opportunity: Consider whether the company operates in a growing market, as this can provide a strong foundation for long-term growth.

    Intellectual Property: Look for a company that has strong intellectual property protections, such as patents or trademarks, to help protect its products or services from competitors.

    Exit Strategy: Consider whether the company has a clear exit strategy, such as an IPO or acquisition, as this can help you maximize your investment returns.

    Conclusion

    Investing in a SaaS startup can be a lucrative opportunity, but it also carries its own set of risks. It is important to thoroughly research the company and its business model before committing any funds. Look for a company with a clear mission and vision, a solid customer base, and a track record of success. Additionally, be sure to consider the financial stability of the company and its ability to generate steady revenue streams.

    Just remember to do your due diligence and weigh the pros and cons before committing any funds. With the right approach, investing in a SaaS startup can be a smart move that pays off in the long run.

    FAQ

    How do I fund a SaaS startup?

    The four types of SaaS funding are as follows

    • Venture capital
    • Angel investment
    • Incubators/Accelerator
    • Revenue-based financing & MRR Lines

    Why SaaS is a good investment?

    SaaS software lives online and there is no physical product to manage, ship, store, and manufacture. That significantly reduces the time, cost, and manpower required. That allows SaaS businesses to launch with less capital and increases their profit margins.

    Why is SaaS so profitable?

    SaaS companies tend to have low churn and high renewal rates, resulting in high customer lifetime values with a good sales team selling a product that works should be able to generate customer retention rates above 90% and revenue retention at or above 100%.

    What percentage of SaaS startups succeed?

    Over 90% of SaaS startups fail, only 35% get past the 10-year mark, and only 40% of these ever become profitable. To avoid product failure a good product positioning helps achieve customer fit and reduces customer dissatisfaction.

  • The Dos And Don’ts Of Starting A Business

    Every entrepreneur dreams of starting a thriving business and making huge profits and returns. When measuring the business performance, the profit and loss account significantly assists you in telling whether you’re on the right track. A simultaneous increase in returns indicates progressive growth by the close of books annually, while an increase in losses depicts poor performance and could lead to the venture’s premature closure.

    To this end, you should follow the rules of thumb when starting a business. Below are insights on typical dos and don’ts:

    Do’s

    Get off on the right foot by practicing these critical things for your startup:

    Register Your Business

    The first order of business is to choose a business structure. There are three primary forms of business structure; a sole proprietorship, a company, and a partnership. Each business structure has its advantages. After identifying your startup’s goal, it becomes easy to form a structure.

    The next thing is choosing a name for your company. For most entrepreneurs, a company’s name could be a family name or a combination of the partners’ names. Getting a fancy name helps your customers quickly identify with your company. So, be cautious when choosing one.

    After this phase, you’re ready for company registration. Luckily, you don’t have to go through all the trouble alone. You can hire consultants for your company registration as you take on other administrative duties. The process of registering your company includes some easy-to-follow steps:

    • Preserving your company’s name
    • Getting a business number
    • Providing a company constitution and shareholder agreement where applicable
    • Registering for goods and service tax
    • Storing of key business information

    Once you’re done with the registration process, your business will hit the ground running. You’ll have little to no reason to worry, and it gives you ample time to concentrate on your business operations.

    Measure Your Performance

    The goal of measuring your startup’s performance is to identify areas that need improvement. It also points you in the direction of the startup’s strength. With business performance metrics in place, you can predict your future. This way, you can prepare for potential risks and evaluate the success of your strategies.

    In measuring your business performance, you can keep track of your numbers. Note that numbers are vital when starting a business. You should be able to tell how many customers you’ve served, how many products you’ve sold, and so forth. It’s better to work with raw data than to create a hypothesis. From your analysis, you can research the best solutions for every problem. For instance, you can find the top affiliate marketing software to boost sales. With the numbers in mind, you can find a way to adjust and evaluate expenses versus reality.

    Create Solid Work Ethics

    Work ethics form your business policies; without them, you’re planning to fail. They’re beliefs and guidelines on what’s acceptable and what isn’t for your company. They help in guiding your employees towards achieving your goals.

    Aim at forming a solid work ethic for your startup. This way, your employees have a code of conduct while working for your startup.

    Hire Competent Employees

    You can’t meet and handle every customer that shows up at your business premises. Your employees interact more with them and thus should be able to forge a good working relationship with your clients. For this reason, you should hire the best.

    Besides academic qualifications, hire employees with other essential values and skills. For instance, honesty and excellent communication skills are critical, especially in the service industry. Hiring the best is vital so that prospective customers can become your clients, and eventually, you win their loyalty. It’s only achievable if you invest in the face of your startup, which includes your employees.

    Forge Strong Relationships With Your Suppliers

    In business, you can’t make it alone. You should forge vital relationships to take your startup to the next level. When starting a business, you hardly know your way around. If you’re in the manufacturing business, you should value business relationships. For instance, for a continuous flow in production, you need a consistent supply of raw materials to turn them into finished goods. Raw materials are in the initial stage of production. To produce high-quality products, you need high-quality raw materials. Your supplier can mess you up if you’re not in clear communication.

    As such, supplier relationships are essential for your business. Ensure you pay them on time and commend them when they do a good job. This way, they’ll treat your startup with all the seriousness it deserves.

    Differentiate Your Products

    Carving out a niche for your business is essential. Don’t be basic; let your customers find something unique about your products. Therefore, ensure you differentiate your products or services. It’s going to win you customers for your business. They go where they get value for their money. Differentiating your brand is a strategic way to grow your business. Other than the price, ensure there’s something unique to your products. You can use your imagination and creativity to set you apart, and voila! More customers will be knocking at your door.

    Don’ts

    In business, it’s more about how you avoid getting into pitfalls. Here’s what to avoid at all costs:

    Don’t Underestimate Competitors

    You must be careful about your business operations in a market where it’s a race for customers. First of all, market your brand extensively. Become a visible brand such that you’re the go-to brand for customers who need a product from your line of work.

    Secondly, ensure every customer interacting with your business has enough reasons to return. For instance, you can invest in technology to cut their waiting time. Also, fairly-priced goods are a quick way to lure customers. This way, you’ll have reduced the competitor’s value which is good for business.

    Businesses evolve all the time. Advancements in technology make it challenging too, but it’s worthwhile. Your business needs to keep up with emerging trends. Make your business the first place your customers check for unique and original products. In other words, be the first to know about trends. If customers are sure they’ll find what they’re looking for from your store, you’re on the right track.

    Conclusion

    Starting a business involves applying several rules that form a strong foundation. After a while, you’ll look back and be glad you took the risk. However, it’s not a walk in the park. It’s a rollercoaster filled with dos and don’ts. Follow them to the letter, and you can rest assured you’ll remain in business for a long time. Follow the correct procedure when starting a business. Put your house in order on matters registration as early as possible.

  • How to Use Debt to Make Money?

    Money is a medium of exchange used to purchase goods and services. It has been used as a medium of exchange for thousands of years and is still in use today. Money is essential for most people in order to purchase basic needs such as food, clothing, and shelter. Money is also used to buy luxury items such as vacations, cars, and jewelry.

    The value of money is determined by the demand for it and its supply. The demand for money is affected by the level of economic activity, the rate of inflation, and the interest rate. The supply of money is determined by the government, which can increase or decrease the amount of money in circulation by printing more money or buying back existing money.

    Money is also used to store wealth. People save money in banks, investments, and other financial products in order to have money available in the future. Money can also be used to borrow money from a lender in order to purchase something that is not currently owned. In this article, we will discuss how you can use debt to make money.

    What Is Debt?
    Good Debt
    Bad Debt
    How to Use Debt to Make Money?
    Investing with Debt
    Start a Business Using Debt
    Expand a Business Using Debt
    Credit Card Arbitrage
    Leverage

    What Is Debt?

    Debt is money owed by one party (the debtor) to a second party (the creditor). Debt is usually evidenced by a contract or a promissory note and can be in any amount. It is usually repaid over an extended period of time with interest. To have debt, you can borrow money from a bank, credit union, or other lender and agree to repay the loan with interest over a set period of time.

    You can also take out a loan from a family member or friend or use a credit card to make purchases and pay off the balance over time. Debt is generally subject to contractual terms regarding the amount and timing of repayments of principal and interest. Debt can be secured by collateral or be unsecured.

    Robert Kiyosaki is an American businessman, investor, self-help author, and motivational speaker. He is best known for his Rich Dad, Poor Dad series of motivational books and other material. His books advocate financial independence and building wealth through investing, real estate, starting and owning businesses, and increasing one’s financial intelligence. He has a lot to say about good and bad debts.

    Key Debt Statistics for US Consumers

    According to him, “good debt” is debt that is used to acquire something that will increase in value over time or generate income. Examples of good debt include student loans, mortgages, business loans, and investment loans. On the other hand, “bad debt” is debt used to finance something that will not appreciate in value or generate income. Examples of bad debt include credit card debt, car loans, and payday loans.

    Robert defines debt as mainly consisting of two kinds, good and bad. Here we are going to learn how to differentiate between them.

    Good Debt

    Good debt can be defined as money borrowed to purchase items or services that will increase in value over time. Examples of good debt include mortgages and loans taken for education or starting a business. These debts are considered good because the goods purchased, such as a house or an education, will increase in value over time and can be used to generate income or provide other financial benefits.

    Good debt helps individuals build wealth, increase their financial security, and become more successful. When used responsibly, good debt can provide individuals with access to new opportunities and help them achieve their financial goals.

    It helps individuals manage their finances better by allowing them to spread out their payments over a longer period of time. Good debt can also help individuals build better credit, which can help them get better rates and terms on future loans. By taking on a smart loan, individuals can build a better credit score, which can open up new financial opportunities.

    However, good debt should be managed responsibly and individuals should be mindful of the amount of debt they take on, the terms of their loan, and the interest they will pay. Individuals should only take on debt that they can comfortably manage and that will help them achieve their financial goals.

    Bad Debt

    Bad debt is a term used to describe debt that a person or business is unable to pay off. It is also known as a “non-performing loan” or “uncollectible debt.” Bad debt is typically the result of a debtor not being able to repay a loan or financial obligation due to either an inability or unwillingness to pay.

    When a loan becomes delinquent or a debt is written off as uncollectible, it typically falls into the category of bad debt. This could be the result of the debtor being in financial distress, fraud, or an inability to pay the loan due to some other factor. It is important to note that bad debt is not necessarily the result of a bad decision on the part of the debtor but could also be due to circumstances out of their control.

    The consequences of bad debt can be significant, especially for businesses. When debt is written off as uncollectible, it reduces a company’s income and profits, which can lead to decreased financial stability.

    In addition, bad debt can affect a company’s creditworthiness, making it more difficult to obtain financing or loans in the future. For individuals, bad debt can also have a significant impact. It can reduce an individual’s credit score, making it more difficult to obtain credit cards, loans, and other forms of financing. It can also lead to increased stress and anxiety, which can have a negative effect on an individual’s health and well-being.

    Fortunately, there are strategies that can be used to help manage bad debt. One of the most effective strategies is to negotiate with creditors to reduce the amount of debt owed. Additionally, it is important to keep track of payments to ensure that all debts are paid on time. Finally, it is important to develop a budget and stick to it in order to make sure that all debts can be paid in a timely manner. By utilizing these strategies, it is possible to successfully manage bad debt and improve one’s financial health.

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    How to Use Debt to Make Money?

    Generating income from debt involves taking out a loan and using the borrowed funds to invest in an income-producing asset. This could include buying bonds, investing in stocks, or purchasing real estate. The income generated from this investment can then be used to pay off the debt. Other ways to generate income from debt include taking out a loan and investing it in a high-yield savings account or a certificate of deposit (CD).

    Income generation through the use of debt involves borrowing money and using it to generate income through investments or other business ventures. This can be a risky strategy, as it involves taking on debt with the potential of not being able to pay it back.

    Average Credit Card Debt of Top 6 Counties

    There are several ways that individuals and businesses can use debt to make money:

    Investing with Debt

    Borrowing money to invest in stocks, real estate, or other assets that are expected to appreciate in value is a great way to make money using debt. This can be a way to leverage limited capital and potentially generate higher returns. Borrowing money to invest in stocks involves taking out a loan or using a line of credit to purchase shares of stock in a company. The hope is that the value of the stocks will increase over time, resulting in a profit when they are sold. This is known as “leveraged investing,” as the investor is using borrowed money to amplify their potential returns.

    For example, if an investor has $1000 to invest and borrows an additional $1000 to purchase $2000 worth of stock, the investor is leveraging their investment by 2x. If the value of the stock increases by 20%, the investor would make a profit of $400 ($2000 x 20% = $400). If the investor had not borrowed any money, their profit would only be $200 ($1000 x 20% = $200).

    Start a Business Using Debt

    You can also generate income via debt by starting a business. Yes, it has its own benefits to start with little money and use debt to fuel growth. Debt financing allows a business to access capital that it may not have on hand, enabling it to invest in growth opportunities or cover unexpected expenses. It is also often more flexible than equity financing, as it does not require giving up ownership stakes in the business.

    You can also expand your current business by leveraging debt to finance investments or expansion; a business may be able to generate higher returns on its capital. However, it is important to carefully consider the risks and potential drawbacks of using debt financing.

    Expand a Business Using Debt

    Taking out a loan to start or expand a business. If the business is successful, the income generated from the business can be used to pay back the loan and potentially generate additional profits.

    Credit Card Arbitrage

    Using credit cards to make purchases that can be resold at a profit. This is known as credit card arbitrage and can be a way to generate income, but it also carries the risk of high-interest rates on unpaid balances.

    Leverage

    Leverage is the use of borrowed money to increase one’s potential returns on investment. It can be used to increase the potential return of an investment, but it can also increase the potential risk of that investment. Leverage can be used to purchase assets, increase the return on existing assets, or hedge against risk.

    Benefits of Leverage
    • Increased Buying Power: Leverage increases buying power, allowing traders to open positions much larger than their account balance would otherwise allow.
    • Reduced Margin Requirements: Margin requirements are substantially lower when using leverage, which means traders can open larger positions with a smaller account balance.
    • Increased Potential Profit: Leverage allows traders to increase their potential profit by investing more money than what is initially deposited.
    • Increased Risk: Leverage also increases risk as it amplifies potential losses just as it does potential gains.
    • Increased Liquidity: Leverage increases liquidity in the market as it allows traders to open large positions with a small amount of capital.

    Harms of Leverage

    Leverage’s primary harm is its potential to increase losses. Leverage magnifies both gains and losses, meaning that a small change in the underlying asset can result in a large change in the returns of a leveraged position. This makes leveraged positions more volatile than traditional investments, and losses can quickly spiral out of control.

    Additionally, leveraged positions can be subject to margin calls, meaning that traders are required to add additional capital to their positions at short notice or risk having their position liquidated. This can cause significant financial losses in a short period of time. Finally, leveraged positions may incur higher costs due to the additional fees and charges associated with using leverage.

    Conclusion

    In conclusion, generating income from debt can be a viable strategy for investors. By carefully selecting the right debt instruments and using appropriate risk management techniques, investors can earn a steady stream of income while potentially also benefiting from capital appreciation. However, it is important to note that investing in debt carries risks, such as the risk of default or changes in interest rates.

    Thus, as with any investment, it is crucial to thoroughly research and understand the risks and potential rewards before making any investment decisions. Additionally, it may be wise to diversify one’s portfolio to include a mix of debt and other asset classes in order to manage risk. Overall, generating income from debt can be a useful tool for investors, but it is important to approach it with caution and due diligence.

    FAQs

    What is debt?

    Debt is money owed by one party (the debtor) to a second party (the creditor). It is usually repaid over an extended period of time with interest.

    What is good debt?

    Good debt can be defined as money borrowed to purchase items or services that will increase in value over time. For example, mortgages and loans are taken for education or to start a business.

    What is bad debt?

    Bad debt is a term used to describe debt that a person or business is unable to pay off. It is also known as a “non-performing loan” or “uncollectible debt.”

    What is leverage?

    Leverage is the use of borrowed money to increase one’s potential returns on investment. It can be used to increase the potential return of an investment, but it can also increase the potential risk of that investment.

    How can I use debt to make money?

    There are several ways that individuals and businesses can use debt to make money, like:

    • Investing with Debt
    • Start a Business Using Debt
    • Expand a Business Using Debt
    • Credit Card Arbitrage
    • Leverage

  • How IKEA Dominates the Retail Market with the Psychology of Selling

    Ever wonder what happens behind the scenes of a successful sale? It all starts with understanding the process of selling. Sales are the process by which goods and services are sold. When business and sales are combined, it is possible to create a powerful combination that can be used to drive success.

    It is also important to understand the strategies and tactics that can be used to make the most of these two forces. With the right knowledge and understanding, business and sales can be used to generate success in any organization. There is one organization that has taken the principle of sales to new heights. That company is Ikea and is so famous that its tricks are a benchmark in the sales world.

    The IKEA effect is a cognitive bias in which consumers place a disproportionately high value on products they partially created. Consumers tend to have greater satisfaction with the products they partially assembled than with the same products when fully assembled by the manufacturer. The IKEA effect is seen as a form of the endowment effect, in which people overvalue things simply because they own them. Shocked by this? There are plenty more business tricks in the belt of  IKEA.

    What is IKEA?
    IKEA’s Psychological Tricks
    The IKEA Effect
    Location
    The Long Maze
    Guiding arrows
    Fully closed stores
    Listing help
    In-house dining
    Mirrors everywhere
    Colour Coding
    Limited Edition Products
    Smells

    What is IKEA?

    IKEA is a multinational group of companies from Sweden that designs and sells ready-to-assemble furniture, kitchen appliances, and other home accessories. It is one of the most popular eCommerce and recognized home furnishing brands in the world. It is famous for its modern designs, low prices, and innovative flat-pack assembly system. The company’s furniture is designed to be disassembled and reassembled easily so that customers can fit it into their homes.

    IKEA has become a global leader in home furnishings and is renowned for its commitment to style, affordability, and sustainability. It is also famous for its wide selection of stylish yet affordable furniture, along with its clever and efficient use of space. Products are easily recognizable for their modern, minimalist design, and its reputation for providing quality furniture at a low cost has made it a favourite of consumers around the world.

    Additionally, IKEA’s flat-pack furniture, which is designed to be easily assembled by customers, has made it a popular choice for those who want to save money on furniture, as well as those who prefer to build their furniture themselves.

    IKEA’s Psychological Tricks

    IKEA, like many retailers, uses a variety of marketing techniques to attract customers and encourage them to make purchases. These techniques can include creating a visually appealing store layout, offering discounts and promotions, and using persuasive language in advertising and signage. Some specific psychological tricks that IKEA use are as follows

    The IKEA Effect

    The IKEA effect is a cognitive bias in which consumers place a disproportionately high value on products they partially created. It is named after the Swedish furniture company IKEA, which sells many do-it-yourself products. The effect implies that consumers typically place a higher value on products that they have invested effort into assembling or creating themselves, rather than products that are sold pre-assembled. This is because they feel a greater sense of ownership or pride in the product they have created.

    The IKEA effect named after the Swedish furniture retailer IKEA, which sells many ready-to-assemble furniture products that require the customer to assemble them.

    IKEA worldwide Retail Sales Share

    Location

    Store locations: Stores away from the town centre often have lower overhead costs due to the lower rent and property taxes. Store location is one of the key factors to attract more customers. This allows them to pass those savings on to their customers, resulting in lower prices and more competitive offerings.

    Less Competition: Many stores located away from the town centre may have less competition, as most local businesses tend to be located closer to the town centre. This can benefit business owners as it allows them to have a more competitive edge in their local market.

    More Space: Stores located away from the town centre often have more space for customers to move around and for the store to be laid out more attractive and organized, which can help boost sales.

    Better Parking: Stores located away from the town centre often have more dedicated parking, making it easier and more convenient for customers to park their vehicles.

    Better Customer Experience: Stores located away from the town centre may be able to offer a better customer experience with less rushed shopping as there may be fewer customers in the store at any given time.

    It is through sales that customers are attracted to a company’s products and services, and it is through sales that a company can generate revenue and profits. It is through sales that a company can increase its market share and gain a larger share of the market.

    The Long Maze

    The IKEA stores are designed in a labyrinthine fashion, with customers having to pass through several sections of the store before reaching the checkout. This encourages customers to stay in the store longer, exposing them to more IKEA products. The layout of IKEA stores is often referred to as a “maze” design because it guides customers through a series of winding paths and corridors that lead them through the different departments and product displays.

    The purpose of this layout is to encourage customers to spend more time in the store and to expose them to a wide range of products. One reason IKEA uses this layout is to create a sense of discovery for customers. By guiding them through different areas of the store, IKEA can showcase different products and create a sense of excitement and surprise as customers encounter new items.

    Another reason for the maze design is to increase the likelihood that customers will make impulsive purchases. By leading customers through a series of twists and turns, IKEA can expose them to more products than they might see if they were able to walk straight to the items they came to purchase simply. This can increase the chances that customers will see something they hadn’t planned on buying and decide to add it to their cart.

    The maze design is also intended to create a sense of disorientation for customers, making it harder for them to keep track of where they are in the store and how much time they have spent there. This can make it more difficult for customers to make quick decisions and leave the store, encouraging them to spend more time browsing and potentially causing more purchases.

    IKEA Global Retail Revenue

    Guiding arrows

    When you see directions, you relax and give your decision-making skills to the GPS. This is the same with IKEA. Its stores are designed to guide customers through a series of winding paths and corridors that lead them through different departments and product displays. To help customers navigate the store, IKEA provides a variety of directional aids, including:

    Maps: IKEA stores typically provide maps near the entrance that show the layout of the store and the location of different departments and amenities. These maps can help customers plan their route through the store and find the products they are looking for.

    Signage: IKEA stores use a variety of signage to help customers find their way around. This includes directional signs that point the way to different departments and product displays, as well as signs that indicate the location of restrooms, customer service, and other amenities.

    Floor markers: IKEA stores often use floor markers or markings to help customers follow the correct path through the store. These markers may be arrows, dots, or other symbols that show the direction to follow.

    Staff assistance: IKEA stores also have staff members who can assist customers with directions or help them find specific products. Customers can ask for assistance at any time if they need help navigating the store or finding a particular item. All these tricks help not only the customers to navigate but also the company to navigate to higher revenues.

    Fully closed stores

    Customers lose the sense of time while shopping at IKEA. The combination of the store’s layout, the wide range of products, engaging displays, and customer amenities can all contribute to people losing track of time while shopping. The stores offer a wide range of products, including furniture, home decor, kitchen and dining items, and more.

    This can be overwhelming for some customers and make it more difficult for them to stay focused on shopping goals. These stores often use visually appealing and interactive displays to showcase their products. Customers may be drawn to these displays and spend more time exploring them, which can cause them to lose track of time.

    Listing help

    Writing down a shopping list can be a useful psychological sales trick for retailers because it helps customers focus on their specific needs and goals and can encourage them to make more thoughtful deliberate purchases. Some specific ways that writing down a shopping list can be a psychological sales trick include:

    Clarifying priorities: By writing down a shopping list, customers can prioritize their needs and focus on the items that are most important to them. This can help them make more targeted, efficient purchases and avoid unnecessary or impulse buys.

    Creating a sense of commitment: When customers write down a shopping list, they are more likely to feel committed to sticking to their plan and making the purchases they have listed. This can reduce the likelihood of them being swayed by other items or promotions that they encounter while shopping.

    Increasing perceived value: By writing down a shopping list, customers may perceive the items they purchase as being more valuable because they have taken the time to carefully consider their needs and make a plan. This can increase their satisfaction with their purchases and their loyalty to the retailer.

    In-house Dining

    IKEA offers free meals in its restaurant, which encourages customers to stay in the store longer, increasing the chance of them making a purchase. In-store dining is a common amenity offered by retailers, including IKEA, and it can be used as a psychological sales trick to encourage customers to spend more time in the store and potentially make more purchases. One way in-store dining can be used as a psychological sales trick is by creating a sense of comfort and relaxation for customers.

    When customers feel comfortable and relaxed while shopping, they may be more likely to spend more time in the store and explore different products. This can increase the chances that they will make impulsive purchases or simply spend more time browsing and potentially making more purchases overall. In-store dining can also create a sense of community and socialization, which can be appealing to customers. By offering a place for customers to sit and relax, retailers can create a sense of belonging and encourage customers to stay in the store longer.

    Another way in-store dining can be used as a psychological sales trick is by providing an opportunity for retailers to upsell or cross-sell products. For example, If a customer is dining in an IKEA cafe, the retailer may suggest that they purchase a particular item or offer them a special promotion while they are there.

    Overall, in-store dining can be a useful tool for retailers to create a positive shopping experience for customers and encourage them to spend more time in the store, potentially leading to increased sales.

    Mirrors everywhere

    Mirrors are a common feature in retail settings, and they can be used for a variety of purposes. One psychological sales trick retailers may use mirrors is to create the illusion of more space in the store. By strategically placing mirrors, retailers can make a small space feel larger and more open, which can be appealing to customers. Another psychological trick retailers may use mirrors is to create the illusion of increased activity or interest in the store. For example, If a store has a lot of mirrors, customers may see reflections of other customers and perceive the store as being more popular or busy than it really is. This can create a sense of social proof, making customers more likely to feel that they should be in the store too.

    Retailers may also use mirrors to influence how customers perceive themselves and the products they are considering purchasing. For example, if a customer sees themselves in a mirror while trying on clothes, they may be more likely to focus on their appearance and how the clothes look on them, rather than just considering the clothes themselves. This can make the customer more likely to make a purchase.

    Overall, mirrors can be a powerful tool for retailers to use in their marketing efforts, as they can create the illusion of increased space, activity, and self-perception, all of which can influence customers’ behaviour and purchasing decisions.

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    Colour Coding

    IKEA color codes its products and store sections to reinforce brand recognition and make it easier for customers to find what they’re looking for. One way that color coding can be used to influence customer behaviour is by creating a sense of order and organization. By using different colors to indicate different categories of products, retailers can make it easier for customers to navigate the store and find what they are looking for. This can create a sense of calm and control for customers, which can make them more likely to make purchases.

    Another way that color coding can be used in marketing is to associate certain colors with specific emotions or meanings. For example, Retailers may use the color red to indicate a sale or special offer, as it is often associated with feelings of excitement and urgency. Retailers may also use color coding to create a cohesive brand image by using specific colors consistently throughout the store.

    Limited Edition Products

    IKEA releases limited edition products to create a sense of urgency among customers and encourage them to buy the items quickly. The principle of scarcity is based on the idea that people value things more when they perceive them as being rare or hard to obtain. By creating a sense of scarcity around a product, retailers can increase its perceived value and encourage customers to make a purchase. They may look like these headings

    Limited-time offers: Retailers may create a sense of urgency around a product by promoting it as a limited-time offer. This can make customers feel like they need to act quickly to take advantage of the deal, which can increase the likelihood of a purchase.

    Limited quantities: Retailers may create a sense of scarcity by promoting products as being in limited quantities. This can make customers feel like they need to act quickly to secure the product before it runs out, which can increase the likelihood of a purchase.

    Rare or hard-to-find items: Retailers may promote certain products as being rare or hard to find, which can increase the perceived value of the product and make it more appealing to customers.

    Sold-out items: Retailers may promote products as being sold out or unavailable to create a sense of scarcity and encourage customers to purchase similar or related items.

    Smells

    IKEA uses the smell of cinnamon buns in its stores to encourage customers to stay in the store longer. It is common for retailers, including IKEA, to use various sensory elements, such as smells, as part of their marketing strategy. The use of pleasant smells in retail environments can be a form of sensory branding, which is the practice of using sensory elements to create an emotional connection with customers and strengthen the brand’s identity.

    In the case of IKEA, the use of smells can be an effective way to create a positive shopping experience for customers and influence their behaviour. Some specific ways that IKEA and other retailers might use smells in their marketing include

    Creating a welcoming atmosphere: Retailers may use pleasant smells, such as the aroma of coffee or baked goods, to create a warm and inviting atmosphere in the store. This can make customers feel more comfortable and encourage them to spend more time shopping.

    Enhancing the appeal of products: Retailers may use smells to enhance the appeal of specific products, such as by using the scent of freshly baked cookies to draw attention to a display of kitchenware.

    Triggering memories and emotions: Smells have the ability to trigger memories and emotions in people, and retailers may use this to their advantage. For example, the scent of pine trees may be used to create a festive atmosphere during the holiday season, or the aroma of lavender may be used to create a relaxing atmosphere in a bedding department.

    Conclusion

    Business and sales can be used to attract customers, generate revenue, and increase market share. In order to be successful in business and sales, it is essential to understand the power of these two forces.  IKEA uses a variety of psychological tricks to attract and persuade customers to make purchases. These techniques include creating a visually appealing store layout, using scarcity and loss aversion to create a sense of urgency, and leveraging the power of social proof to encourage customers to follow the lead of others. IKEA uses techniques to create positive shopping experiences and inform customer purchasing decisions, as part of their overall marketing strategy. These techniques are not deceptive or unethical.

    FAQ

    What is unique about IKEA’s strategy to attract customers?

    Using mono-segment, adaptive and aesthetic types of product positioning. The furniture retailer targets a cost-conscious customer segment that prefers to get value for the money they pay. Accordingly, IKEA has adapted as the unique selling proposition of the brand.

    What is the Ikea effect in psychology?

    The IKEA effect, named after everyone’s favourite Swedish furniture giant, describes how people tend to value an object more if they make (or assemble) it themselves. More broadly, the IKEA effect speaks to how we tend to like things more if we’ve expended effort to create them.

    What are the key factors for the success of IKEA?

    At the heart of Ikea’s success is value: You know what you’re going to get when you shop at Ikea, and it’s going to be affordable. In fact, price is so important to Ikea’s strategy that the company first decided on the price of a piece of furniture and then reverse engineers the construction.

    What is unique about IKEA’s business model?

    IKEA uses the services of around 1400 suppliers from over 60 countries. These suppliers form a big chain and also help IKEA in venturing into fresh markets. Additionally, it uses semi-skilled and skilled labour that becomes an integral component of its supply system.

  • How to Increase the Likability of Your Brand and Content?

    Likability is an important factor in building a successful brand. Customers are more likely to continue doing business with and recommend a brand that they like. In today’s competitive market, it’s important for companies to differentiate themselves and build strong, likable brands that resonate with their target audience.

    In today’s competitive marketplace, building brand likability is more important than ever. A likable brand can differentiate itself from competitors, build customer loyalty, and drive sales and revenue. But how can a brand build likability with its target audience? In this article, we’ll explore the various factors that contribute to brand likability and offer tips on how companies can create a likable brand.

    What Is a Brand?
    Importance of Brand Likability
    Role of Branding in Building Likability
    Ways to Increase Brand Likability and Content Reach
    Role of Social Media in Building Brand Likability
    Role of Customer Experience in Building Likability
    Impact of Likability on Customer Loyalty
    Brand Likability Example

    What Is a Brand?

    A brand is a combination of a company’s name, logo, and messaging that is used to identify and differentiate the products and services it offers. A strong brand can help a company stand out in the marketplace, build customer loyalty, and increase the perceived value of its products and services.

    Importance of Brand Likability

    Brand likability is the extent to which a brand is perceived as appealing and enjoyable by its target audience. A likable brand can have a number of benefits for a company, including:

    • Increased customer loyalty: Customers are more likely to continue doing business with and recommending a brand that they like.
    • Higher customer satisfaction: Likeable brands tend to have higher customer satisfaction levels, which can lead to increased customer retention and positive word-of-mouth marketing.
    • Improved brand image: A likable brand is often perceived as more trustworthy and credible, which can enhance its overall image and reputation.
    • Greater market share: A likable brand can differentiate itself from competitors and may be more successful at attracting and retaining customers.
    • Increased brand value: A likable brand can be more valuable to a company, as it can drive customer loyalty and positive word-of-mouth marketing, which can lead to increased sales and revenue.

    Role of Branding in Building Likability

    Branding Elements Contributing to a Brand’s Likability
    Branding Elements Contributing to a Brand’s Likability

    Branding plays a significant role in building likability for a company and its products or services. Here are a few ways that branding can contribute to a brand’s likability:

    • Brand name: The name of a brand can be a powerful tool in building likability. A memorable and unique brand name can help a brand stand out and be more memorable to its target audience.
    • Brand logo: The visual identity of a brand, including its logo, color palette, and fonts, can also contribute to its likability. A well-designed logo can help a brand stand out and be more visually appealing to its target audience.
    • Brand messaging: The messaging and language that a brand uses in its marketing and communication efforts can also impact its likability. A clear and consistent brand message that resonates with its target audience can help a brand connect with its customers and build likability.
    • Brand values: The values that a brand stands for can also impact its likability. Brands that align with the values and beliefs of their target audience are often more likable and can create a sense of connection and shared purpose.
    • Brand personality: The personality of a brand, or the way that it is perceived by its audience, can also impact its likability. Brands that have a strong, distinct personality that resonates with their target audience are often more likable.

    Ways to Increase Brand Likability and Content Reach

    Here are a few ways in which you can make your brand and content more likable:

    Be Authentic

    Show your true personality and values in your content. People are more likely to connect with and like brands that are genuine and transparent. Being authentic as a brand can help you connect with your audience and build trust and credibility. You can be transparent with your audience, clearly define brand objectives, and practice what you preach.

    Show Your Human Side

    Let your audience see the people behind your brand. Share personal stories and experiences, and don’t be afraid to show vulnerability.

    Provide Value

    Offer valuable information, tips, or resources to your audience. Whether you’re a business or an individual, people are more likely to like and engage with content that helps them in some way.

    Be Consistent

    Consistency in your messaging and branding helps build trust and credibility with your audience. It is an important factor in building a strong and effective brand. It’s important for companies to be consistent in all of their branding efforts in order to build trust and credibility with their customers and enhance the overall customer experience.

    Engage With Your Audience

    Respond to comments and messages, and make an effort to interact with your followers. This helps build a sense of community and makes your brand more likable.

    Use Humor

    Humor can be a great way to connect with your audience and make your content more likable. However, be mindful of your audience and make sure that your sense of humor aligns with their values and preferences.

    Be Positive

    Positive energy is contagious, and people are more likely to like content that is uplifting and positive.

    Remember that likability is subjective, and what works for one brand or audience may not work for another. It’s important to test and experiment to see what resonates with your particular audience.

    Role of Social Media in Building Brand Likability

    Leading Social Media Platforms Used by Marketers Worldwide
    Leading Social Media Platforms Used by Marketers Worldwide

    Social media is an important tool for building brand likability. Here are a few ways that brands can use social media to connect with their audience, increase content reach, and build likability:

    1. Engagement: Social media is a great platform for brands to connect with their audience and engage with them. Brands can respond to comments and messages, ask for feedback, and ask questions to encourage interaction and build likability.
    2. Storytelling: Social media is a powerful tool for storytelling. Brands can use social media to share personal stories, experiences, and behind-the-scenes glimpses that help build a sense of authenticity and connection with their audience.
    3. Humor: Humor can be a great way to connect with an audience and make a brand more likable. However, it’s important for brands to be mindful of their audience and ensure that their sense of humor aligns with their values and preferences.
    4. Authenticity: Social media can be a great platform for brands to show their true personalities and values. Brands that are authentic and transparent on social media are often more likable.
    5. Customer service: Social media can also be a useful platform for brands to provide customer service and address any issues or concerns that their customers may have. This can help build likability by demonstrating a commitment to customer satisfaction.

    Overall, social media is a powerful tool for building brand likability. By using it to engage with their audience, tell stories, use humor, be authentic, and provide customer service, brands can build strong, likable brands that resonate with their target audience.

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    Role of Customer Experience in Building Likability

    The customer experience with a brand plays a significant role in building likability. Here are a few ways that the customer experience can impact a brand’s likability:

    1. Quality of products or services: Customers are more likely to like a brand that offers high-quality products or services that meet or exceed their expectations.
    2. Ease of use: Brands that make it easy for customers to use their products or services are often more likable. This can include factors such as clear instructions, intuitive design, and responsive customer service.
    3. Responsiveness: Brands that are responsive to customer needs and concerns are often more likable. This can include things like timely responses to customer inquiries and prompt resolution of any issues that arise.
    4. Personalization: Brands that personalize the customer experience, such as by remembering their preferences or offering tailored recommendations, can be more likable. This can create a feeling of connection and relevance for the customer.
    5. Consistency: Brands that are consistent in their messaging, branding, and customer experience are often more likable. This helps build trust and credibility with customers.

    Overall, a positive customer experience can be a key factor in building likability for a brand. It’s important for companies to focus on delivering a high-quality, personalized, and consistent customer experience to build strong, long-term relationships with their customers.

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    Impact of Likability on Customer Loyalty

    Likability is an important factor in building customer loyalty. Customers are more likely to continue doing business with and recommend a brand that they like. Here are a few ways that likability can impact customer loyalty:

    • Positive associations: Customers who like a brand are more likely to have positive associations with it. This can include things like feeling good about supporting the brand or feeling a sense of connection to the brand’s values.
    • Emotional connection: Likeable brands often create an emotional connection with their customers, which can drive loyalty. Customers may feel a sense of belonging or attachment to the brand, which can make them more likely to continue doing business with it.
    • Trust and credibility: Likeable brands are often perceived as more trustworthy and credible, which can help build customer loyalty. Customers are more likely to continue doing business with a brand that they trust and believe in.
    • Positive word-of-mouth: Customers who like a brand are more likely to recommend it to others, which can help drive customer loyalty and attract new customers.

    Overall, likability can be a powerful driver of customer loyalty. Brands that are able to build strong, likable brands that resonate with their target audience are more likely to build long-term relationships with their customers.

    Brand Likability Example

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    One example of a brand that has successfully built its likability is Airbnb. Airbnb is a company that allows individuals to rent out their homes or apartments as vacation rentals. Here are a few ways that Airbnb has built its likability:

    • Authenticity: Airbnb has positioned itself as a platform for people to share their homes and experiences with others, emphasizing the personal and authentic aspects of travel. This has helped Airbnb connect with its target audience and build trust and credibility.
    • Community: Airbnb has built a strong sense of community among its users by encouraging hosts and guests to review each other and by featuring local experiences on its platform. This has helped create a feeling of belonging and connection among its users.
    • Responsible travel: Airbnb has also positioned itself as a company that promotes responsible and sustainable travel, which has helped it appeal to socially conscious consumers.
    • User-generated content: Airbnb has leveraged user-generated content, such as photos and reviews, to showcase the unique and authentic experiences that its users have had on the platform. This has helped create a sense of community and authenticity.
    • Personalization: Airbnb has also invested in personalization, using data to recommend personalized experiences to its users and allowing them to search for specific types of properties and experiences. This has helped create a feeling of connection and relevance for its users.

    Overall, Airbnb’s focus on authenticity, community, responsible travel, user-generated content, and personalization has helped it build a strong, likable brand that resonates with its target audience.

    In today’s competitive market, building a likable brand is more important than ever. Customers are drawn to brands that they connect with and that align with their values and preferences. By focusing on authenticity, value, engagement, and other key elements, companies can build strong, likable brands that stand out and drive customer loyalty.

    Remember that likability is subjective, and what works for one brand or audience may not work for another. It’s important for companies to test and experiment to see what resonates with their particular audience.

    Ultimately, building brand likability is about creating a positive, authentic, and valuable experience for customers. By focusing on the customer experience and consistently delivering on their needs and expectations, companies can build strong, likable brands that drive customer loyalty and success.

    Conclusion

    In conclusion, building brand likability is essential for companies looking to stand out in the marketplace and build long-term relationships with their customers. By focusing on factors such as authenticity, value, and customer experience, companies can create a likable brand that resonates with their target audience. Remember to be consistent and authentic in your branding efforts, and don’t be afraid to experiment and test different approaches to see what works best for your audience.

    FAQs

    What is a brand?

    A brand is a combination of a company’s name, logo, and messaging that is used to identify and differentiate the products and services it offers.

    What is likability in marketing?

    Brand likability is the extent to which a brand is perceived as appealing and enjoyable by its target audience. Likability is an important factor in building customer loyalty.

    How can I make my brand and content more likable?

    Ways to increase brand likability and content reach are:

    • Be Authentic
    • Show Your Human Side
    • Provide Value
    • Be Consistent
    • Engage With Your Audience
    • Use Humor
    • Be Positive

  • What Is Workforce Analysis? | A Guide to Workforce Analysis

    The workforce and skills of an organization are critical to its success and competitiveness. A highly skilled and capable workforce can drive innovation, productivity, and efficiency, while a workforce with gaps in skills and knowledge can hinder an organization’s ability to achieve its goals.

    Workforce analysis is a crucial component of workforce planning, as it helps organizations identify and address any potential gaps or surpluses in terms of skills, knowledge, and experience. By examining the current and future workforce needs of an organization, and identifying any potential skills shortages or oversupplies, organizations can develop strategies to ensure that they have the right people with the right skills in the right roles at the right time.

    In this article, we will explore the key components of workforce analysis and discuss the importance of this process in enabling organizations to achieve their business goals.

    What is Workforce Analysis?
    Benefits of Workforce Analysis
    How to Perform Workforce Analysis?
    Tools and Techniques for Workforce Analysis

    50+ Tips to Remember While Creating Your Workforce Plan

    What is Workforce Analysis?

    Workforce analysis is the process of examining the current and future workforce needs of an organization, and identifying any potential gaps or surpluses in terms of skills, knowledge, and experience. This analysis can be used to inform workforce planning, which involves developing strategies to address these gaps or surpluses and ensure that the organization has the right people with the right skills in the right roles at the right time.

    There are several key components to a workforce analysis, including:

    1. Identifying the current workforce: This involves gathering data on the size, demographics, and skills of the current workforce, as well as any potential areas of surplus or deficit.
    2. Assessing future workforce needs: This involves examining the organization’s business goals and objectives and determining what skills and capabilities will be required to achieve them. This may involve forecasting future demand for certain types of employees or identifying potential skill shortages.
    3. Identifying potential gaps or surpluses: Once the current workforce and future needs have been identified, it is important to compare the two to identify any potential gaps or surpluses. This may involve looking at factors such as skill levels, experience, and demographics.
    4. Developing strategies to address gaps or surpluses: Based on the findings of the workforce analysis, the organization can develop strategies to address any potential gaps or surpluses. This may involve training and development programs, recruitment and retention efforts, or workforce restructuring.

    Overall, the goal of workforce analysis is to ensure that an organization has the right mix of skills and capabilities to meet its current and future needs and to enable it to achieve its business goals.

    Benefits of Workforce Analysis

    Workforce analysis is the process of evaluating the current and future needs of an organization’s workforce in order to align its human resources with its business goals. Before moving on to the process of analyzing and pulling off the workforce analysis stuff, we need to check if we really need it. We really do need it, every venture that is planning to go big in the future needs workforce analysis.

    There are several reasons why it is important for an organization to regularly perform workforce analysis:

    • Align human resources with business goals: Workforce analysis helps to ensure that an organization’s human resources are aligned with its business goals. By identifying the skills and competencies that are necessary for the workforce to succeed, an organization can make informed decisions about how to allocate its resources and invest in its employees.
    • Identify skills gaps: Workforce analysis helps to identify any gaps in the organization’s current workforce, including areas where employees lack the necessary skills or knowledge to perform their jobs effectively. This can help the organization develop a plan to address these gaps through training, hiring, or other means.
    • Improve efficiency and productivity: By identifying and addressing skills gaps, an organization can improve the efficiency and productivity of its workforce. This can lead to increased competitiveness and profitability.
    • Attract and retain top talent: An organization that is proactive in developing its workforce and investing in employee skills is more likely to attract and retain top talent. Workforce analysis can help the organization maintain a strong and capable workforce over the long term.
    • Stay ahead of industry changes: Workforce analysis can also help an organization stay ahead of industry changes and anticipate future skills needs. By regularly evaluating the current and future needs of its workforce, an organization can be proactive in developing the skills and competencies necessary to meet the changing needs of the business.
    Revenue for Workforce Management Applications Worldwide in 2020, With a Forecast for 2025, by Segment
    Revenue for Workforce Management Applications Worldwide in 2020, With a Forecast for 2025, by Segment

    How to Perform Workforce Analysis?

    The process of evaluating the current and future needs of an organization’s workforce in order to align its human resources with its business goals is really important. This process can help an organization identify the skills and competencies that are necessary for its employees to succeed, as well as any gaps in its current workforce that need to be addressed through training, hiring, or other means.

    To perform a workforce analysis, follow these steps:

    Identify the Current Workforce

    Gather data on the size, demographics, and skills of the current workforce, as well as any potential areas of surplus or deficit. This may involve conducting a workforce audit or survey. You can collect data on the size, demographics, and skills of the current workforce. This may include information such as job titles, job functions, education levels, years of experience, and any specialized skills or certifications.

    Conduct a workforce audit, which is a systematic review of the workforce to identify areas of surplus or deficit in terms of skills, knowledge, and experience. This may involve gathering data on the skills and experience of current employees, as well as analyzing job descriptions and job requirements to identify any potential gaps or surpluses. Trying to engage with stakeholders such as HR professionals, line managers, and employees can provide valuable insights into the current workforce and any potential areas of surplus or deficit. Then finally, you can assess future workforce needs. This may involve forecasting future demand for certain types of employees or identifying potential skill shortages.

    Developing scenarios of different potential future outcomes can help organizations identify what skills and capabilities may be needed in different circumstances. Modeling tools, such as workforce planning software, can also be used to help organizations forecast future workforce needs and identify potential gaps or surpluses.

    Identify Potential Gaps or Surpluses

    Compare the current workforce with future needs to identify any potential gaps or surpluses. This may involve looking at factors such as skill levels, experience, and demographics. By understanding what the organization hopes to achieve in the short and long term, it is possible to determine what skills and capabilities will be required to meet these goals. This may involve forecasting future demand for certain types of employees or identifying potential skill shortages.

    Once the current workforce and future needs have been identified, it is important to compare the two to identify any potential gaps. Utilizing data and analytics tools can help identify trends and patterns in the workforce and highlight areas where there may be potential gaps in skills or experience.

    Develop Strategies to Address Gaps or Surpluses

    Based on the findings of the workforce analysis, develop strategies to address any potential gaps or surpluses. This may involve training and development programs, recruitment and retention efforts, or workforce restructuring. You have to analyze trends in the labor market and in your industry to identify potential future skill needs and shortages. This can be done through research and analysis of industry data, as well as through consultation with industry experts and stakeholders.

    You can forecast gaps and surpluses by examining the tasks, duties, and responsibilities of each job role within the organization, and determining the skills and knowledge required to perform them effectively. This can be done through job descriptions, job task analysis, or focus groups with employees and managers. Developing strategies can also be done by engaging with a variety of stakeholders, including employees, managers, and HR professionals.

    Monitor and Review

    You have to regularly monitor and review the effectiveness of the workforce analysis and any strategies implemented as a result. This will help ensure that the organization’s workforce remains aligned with its business goals and needs. This can involve following sub-points in disguise.

    Set specific, measurable, achievable, relevant, and time-bound (SMART) goals. Determine what you want to achieve through your workforce analysis and set SMART goals to track your progress.

    • Collect and analyze data: Gather data on the effectiveness of your workforce analysis and any strategies implemented as a result. This may include metrics such as employee retention, training and development participation, and performance.
    • Engage with stakeholders: Involve a variety of stakeholders in the monitoring and review process, including HR professionals, line managers, and employees. This can help ensure that the analysis is comprehensive and reflective of the needs of the entire organization.
    • Identify and address any issues or challenges: If you identify any issues or challenges during the monitoring and review process, take steps to address them. This may involve adjusting your workforce strategies or revisiting the initial analysis.
    • Review and update regularly: Regularly review and update your workforce analysis to ensure that it remains relevant and aligned with the needs of the organization.

    Overall, the goal of monitoring and reviewing your workforce analysis is to ensure that it is effective in helping the organization meet its business goals and objectives and to identify and address any issues or challenges that may arise. By regularly reviewing and updating the analysis, you can help ensure that the organization has the right people with the right skills in the right roles at the right time.

    It may also be helpful to involve a variety of stakeholders in the workforce analysis process, including HR professionals, line managers, and employees. This can help ensure that the analysis is comprehensive and reflective of the needs of the entire organization.

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    Tools and Techniques for Workforce Analysis

    While we discussed why workforce analysis is important, it is also important to know what techniques we can use to pull it off. There are various tools and techniques that can be used for workforce analysis.

    These can include data analysis, which involves studying data on employee demographics, job performance, and other metrics to identify trends and patterns within the workforce. Surveys and focus groups can also be helpful in gathering feedback and insights from employees on a wide range of topics. Interviews, both one-on-one and in focus groups, can provide valuable information on employee experiences, attitudes, and career goals.

    Job analysis involves examining the tasks, responsibilities, and requirements of each job within the organization to understand the skills and competencies needed for each role. Performance evaluations and exit interviews can also provide valuable insights for workforce analysis. Benchmarking, or comparing the workforce data of an organization to industry benchmarks or best practices, can provide a sense of how the organization compares to others in the industry. Here are some common tools and techniques that can be used for workforce analysis:

    • Data analysis: This can include analyzing data on employee demographics, job performance, turnover rates, and other relevant metrics to identify trends and patterns within the workforce.
    • Surveys: Surveys can be used to gather feedback and insights from employees on a wide range of topics, including job satisfaction, career goals, and areas for improvement.
    • Focus groups: Focus groups involve bringing together a small group of employees to discuss and provide input on specific topics or issues.
    • Interviews: One-on-one interviews with employees or managers can provide valuable insights and information for workforce analysis.
    • Job analysis: This involves examining the tasks, responsibilities, and requirements of each job within the organization to understand the skills and competencies needed for each role.
    • Performance evaluations: Performance evaluations can provide information on employee strengths and areas for improvement and can help identify training or development needs.
    • Exit interviews: Exit interviews can be conducted with employees who are leaving the organization to gather insights on the reasons for their departure and any issues or concerns they had while working at the company.
    • Benchmarking: Comparing the workforce data of an organization to industry benchmarks or best practices can provide a sense of how the organization compares to others in the industry.

    Conclusion

    There is no doubt about the fact that workforce analysis is a crucial process for any organization that wants to ensure it has the right people with the right skills in the right roles at the right time. By examining the current workforce, assessing future needs, and identifying any potential gaps or surpluses, organizations can develop effective strategies to address these issues and achieve their business goals.

    Whether through training and development, recruitment and retention efforts, or workforce restructuring, a thorough and well-informed workforce analysis can help organizations build a strong and capable workforce for the future. These little analyses on the way to make way for the future often make big differences. A venture that is able to fulfill its needs for workforce and skills is all set to become the venture of tomorrow and change the landscape of business.

    FAQs

    What is workforce analysis?

    Workforce analysis is the process of examining the current and future workforce needs of an organization, and identifying any potential gaps or surpluses in terms of skills, knowledge, and experience.

    What are the benefits of workforce analysis?

    Benefits of workforce analysis include:

    • Align human resources with business goals
    • Identify skills gaps
    • Improve efficiency and productivity
    • Attract and retain top talent
    • Stay ahead of industry changes

    What are the tools and techniques for workforce planning?

    Some common tools and techniques that can be used for workforce analysis are:

    • Data analysis
    • Surveys
    • Focus groups
    • Interviews
    • Job analysis
    • Performance evaluations
    • Exit interviews
    • Benchmarking

  • 10 Ways to Drive Targeted Traffic to Your Ecommerce Store

    The internet and online infrastructure in India have expanded exponentially resulting in the corresponding growth of the eCommerce industry. As per Statista, there are over 658 million active internet users in India.

    While the pandemic acted as a stimulus for people to switch to online modes of shopping, government policies also have played a major role in strengthening the online market.

    It is estimated that the size of the Indian eCommerce industry will reach around $350 billion by 2030. However, with bigger opportunities come bigger challenges. If you too are thinking of starting an online store or already have an eCommerce store website possibility is that you are aware of the challenges associated with this field.

    With the rise in internet users, there is an equal increase in the number of eCommerce stores. In this situation, it becomes extremely difficult to attract the target audience without which it is impossible to run a business. After all, how will you make money without any customers?

    If you are struggling to get traffic on your eCommerce store website, we are here with the right guidance.

    In this article, we will share with you the most amazing ways that will help you attract traffic to your website just like a magnet.

    So, let’s begin!

    Optimize Your Ecommerce Website
    Offer Discounts and Sales
    Start a Referral Program
    Run Facebook Campaigns
    Indulge in Instagram Marketing
    Provide Quality Content
    Invest in SEO (Search Engine Optimization)
    Focus on Email Marketing
    Advertise on Google
    Use Influencer Marketing

    How to Make an Ecommerce Website?

    Optimize Your Ecommerce Website

    A study conducted by Amazon states that 88% of online buyers do not prefer a site if they have had a bad experience with it once. Therefore, it is highly crucial to design your website to provide the best user experience.

    Ecommerce Website Traffic Sources by Visitors
    Ecommerce Website Traffic Sources by Visitors

    So what should a nicely optimized website have?

    • To begin with, a simple and clear structure is a must. It allows the users to navigate through the website easily. Further, it helps the shoppers to look for the products of their choice without any trouble.
    • The product in the offer should be clearly listed as users do not prefer the website where they have to take a tour of the entire site before getting to know what is on offer. It is always a great idea to incorporate your catalog on the homepage.
    • Also, considering your part, it must have a direct and prominent Call to Action button right in front of the shopper such as “SHOP NOW”. This will prompt the visitor to become a customer.
    • Use informative yet interesting language that appears attractive to your target audience. For example, if your target audience is children use bright and colorful themes and fun language to get their attention.
    • A picture is worth a thousand words. Use high-quality images of the products. This not just makes the site look attractive but the customer is also able to ensure they are buying the right product. Believe it or not, photographs play a very significant role in a buyer’s final purchase decision. You can also add videos wherever possible.

    Apart from these, it is extremely important to maintain the goodwill of your website. This can only be achieved when you only offer quality products to your buyers.

    So, before you list a product on your website, make sure you have gone through the product description and other details thoroughly. Choosing high-quality products for your website will also save you from future troubles.

    Offer Discounts and Sales

    No buyer can actually resist the temptation to at least go through the products listed for sale. Discounts and sales can really get you the traffic you have been looking for. A sales campaign if created rightly can help boost your website’s popularity several folds overnight. A good deal always charms the customers.

    You can create campaigns for first-time buyers or may offer free shipping, or coupons that have exclusive prizes. This will motivate the customers to shop from your website.

    Creating coupons that work exclusively on your website is also a great idea. Coupons offering discounts on the next purchases encourage the customers to visit and buy again.

    Further, like always, creating urgency is a sure way to lure customers into making a purchase. It can be created through tags like offer ends in 24 hours, limited stock available, etc. You can also offer a buy one get one scheme, or create product combos with special discounts when purchased together.

    However, the big question here remains, how does the audience get to know about your sale? This is where marketing comes into the picture. Whether paid or unpaid, marketing and promotions are a must for you to make your eCommerce store a success.

    In the coming sections, we have shared several marketing techniques that can help you promote your creative campaigns.

    Start a Referral Program

    Tell me, you are more likely to trust a friend while buying something or some random advertisement you saw while browsing the internet? The answer obviously is a friend.

    Most people buy products based on the suggestions they receive from friends and family. This is how the referral program works.

    As per a study by Invesp, the conversion rate for customers coming through referral programs is 30% higher than any other marketing strategy. Moreover, these customers have 37% higher retention rates and are more likely to refer and bring in more customers.

    Ask your existing customers to refer your products to their friends and family while you offer them rewards in return for every customer they brought to your site. This works as a kind of chain if you have the right products and deals on offer.

    If you are still new to the business you can also ask your family and friends to refer your website to people known to them.

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    Run Facebook Campaigns

    With its ever-increasing number of users, Facebook has grown to become the most used social network across the globe. As per Statista, as of the third quarter of 2022, there are around 2.96 billion monthly active Facebook users worldwide.

    A survey conducted by Business wire states that around 75% of customers visit Facebook for recommendations and suggestions before they buy a product. Therefore, having a Facebook page for your eCommerce store is no more just a suggestion it is rather the need of the hour.

    This page should contain all the necessary information about your store like website links, customer support, product list, reviews, etc. Also, you use this page to promote your products or grab buyers’ attention towards the sale or other campaigns.

    If you are willing to spend some money on promotions you can also opt for Facebook pay-per-click ads. You simply have to set the duration for which you wish to run the advertisement, your budget, target audience, and other campaign objectives after which you make the payment and your ad is on roll.

    The advantage of using Facebook advertisements is that while you will only be able to promote your products and campaigns amongst your followers through your own page, an advertisement allows you to target anyone on Facebook.

    Moreover, Facebook has an enormous amount of stored data. Paying for your promotion will make the platform use this data to target your customers more specifically.

    You can also integrate with the Facebook shop so that your customers can browse your products on Facebook itself, and when they finally decide to buy one, they are automatically directed to your website.

    Indulge in Instagram Marketing

    Not just Facebook, a Crowdtap study reveals that 71% of shoppers turn to social media before actually buying a product. Hence, Instagram being one of the most upcoming and admired social media platforms can really help you get more customers.

    You can simply link your website to your Instagram account and give people a glimpse of your products. Optimize your Instagram bio by providing all the necessary information such as website links, contact information, etc.

    You can also use Instagram features such as reels and stories for the promotion of your products or campaigns. Craft fun and entertaining content for your website that attracts customer attention and conclude it with a clear Call To Action.

    Instagram allows verified business accounts with more than 10,000 followers to add link stickers through which you can direct users toward your website. You can also integrate your Instagram account with your website so that users can make purchases both through your Instagram account and website.

    Market Size of the Ecommerce Industry Across India With Forecasts Until 2030
    Market Size of the Ecommerce Industry Across India With Forecasts Until 2030

    Provide Quality Content

    Content marketing is a great way to attract more traffic to your website. It allows you to interact with your customers who eventually start to trust your knowledge and thus, your products.

    The key is to provide valuable and engaging content regularly. This can be done through any medium you feel comfortable with, such as blogs, videos, or infographics. Remember that the target of the content is not always to influence the customers into buying a product, but to establish you as an authority in the field.

    Blogging is one of the most classic and reliable forms of content. The value of content that provides useful information will keep your customers returning to your website.

    Moreover, SEO-friendly blogging attracts Google and your potential customers more convincingly. It helps you build your brand and promote your products at the same time.

    Simply choose the topics that sound interesting to your target audience, jot down the most crucial and lesser-known information and get it published through the media focused around your field.

    You can also create entertaining and informative videos on topics relevant to your field and post them through your YouTube channel or other social media accounts.

    You can also post videos on your website answering FAQs from customers or alongside products highlighting their benefits or providing other useful information.

    Infographics are one of the latest and most attractive forms of content. They allow you to share statistics and other insightful information in a visually appealing manner.

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    Invest in SEO (Search Engine Optimization)

    As per Statcounter, Google controls as much as 92.58% of the search engine market worldwide. Hence, investing in SEO is one of the best things you can do for your eCommerce website.

    When done right SEO will help your website rank on Google bringing it to the eyes of your target audience. You will have to find the right set of trending keywords best suited for your potential customers.

    There are a number of paid and unpaid tools available for keyword research. Although remember not all keywords are equally important so ascertain that you make a thorough analysis before making the final decision.

    Once you have the list of keywords use them in writing the content for your website. For example, titles, product descriptions, etc. Optimize each page of your website for great results.

    Focus on Email Marketing

    According to the Lyfe Marketing survey, email marketing offers the highest i.e. 40% return of investment in comparison to any other marketing channel. It allows you to nurture your potential customers.

    You can collect the information of the customers as soon as they land on your website. You can add a lightbox to your site that offers discounts or coupons in return for the user information.

    Later, you can use this information to send them emails offering products of their choice at attractive rates or including offers like buy one get one, etc. Even if many of them may not be ready for immediate purchase you can lure most of them through sales.

    You can also use email marketing to promote various campaigns that you start on your website, for example, a holiday sale, a flash sale, end-of-season discounts, etc.

    While designing an email, it is important to include three main ingredients. First, an attractive email subject line is sure to grab the reader’s attention. It should be provocative for the reader to open the email.

    The second is a clear CTA. This will motivate the user to do what you expect them to do, i.e., make a purchase or visit your website. Also include important links, photos, and texts from your website to provide a better picture to the buyer.

    Last but not least, create simple yet engaging content. It is always good to keep it crisp so the user does not just refuse to read merely by looking at the length of the text. Including more visuals in your content is always a good idea.

    Keep adding to your email list and never stop sending these emails, as no matter how slowly it appears, the process is certainly worth your time and effort.

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    SEO is the organic way of attracting traffic to your website; however, it isn’t the only way to make your website visible on Google.

    Google also allows paid promotion of websites through Google ads. Just like Facebook, they also offer pay-per-click ads, and the rate per click depends on the keywords you choose.

    It can be quite expensive in comparison to other methods, especially if your keywords are more popular, as Google uses a bid system for the target keywords. This means you have to compete with other similar businesses, and if your bid is the highest, your ad will be displayed on top.

    However, it is equally powerful, as you have Google’s assurance to make your brand popular. So, if you have the budget, we will definitely recommend this for your business.

    While selecting the keywords, you can add specifications such as location, demographics, etc. that will allow Google to find your potential customers more effectively.

    Basically, Google displays your product or website to users searching for similar products. It also allows you to display your ads on Google search or maps.

    The pay-per-click model ensures that you only pay for it when a potential customer clicks on your ad to reach your website or explore your products.

    Use Influencer Marketing

    Basically, influencers are the people who have established themselves on social media and have a large number of followers who trust them with their suggestions and advice.

    All the different social media channels have several influencers who are working in your or related fields. You can collaborate with them to reach a wider and more diverse audience.

    Also, coming from a source reliable to your potential customers, your product appears much more trustworthy, and there is a high possibility of more traffic reaching your site.

    You can simply look for accounts that are active in your field of business and are highly popular among the audience. Make a list of such accounts and try to approach them through DM or other means possible.

    Send them your product samples and provide special discounts to make them talk about your brand through their channel. You can also send them coupon codes that may be applicable only to their followers.

    The best part is that you can work with as many influencers as are available and reach a far greater audience than is individually possible.

    Through your social media accounts, where you stand as an authority, you can also get engaged in activities like guest blogs or videos to expand your reach.

    Conclusion

    These were some of the most reliable methods that ensure bringing more targeted traffic to your eCommerce store. Depending on your budget and requirements you can choose a few or all of the above-mentioned tips to increase the number of visitors to your website.

    FAQs

    How do I bring more traffic to an e-commerce website?

    The best ways to bring more traffic to your e-commerce website are:

    • Optimize Your eCommerce Website
    • Offer Discounts and Sales
    • Start a Referral Program
    • Run Facebook Campaigns
    • Indulge in Instagram Marketing
    • Provide Quality Content
    • Invest in SEO
    • Focus on Email Marketing
    • Advertise on Google
    • Use Influencer Marketing

    Is the eCommerce industry growing in India?

    The eCommerce industry is growing rapidly in India, and it is estimated that the size of the Indian eCommerce industry will reach around $350 billion by 2030.

    What is a referral program in eCommerce?

    A referral program involves asking your existing customers to refer your products to their friends and family while you offer them rewards in return for every customer they brought to your site.

  • What Should a US Startup Go For – Business Loan or Funding?

    Building your own startup is a craze nowadays, people in the USA with innovative ideas are ready to take a risk and start their startup once. But there comes a stage in the journey of every startup when they need huge capital to sustain and boost their business growth, and this is where they start looking for ways to get those funds.

    Business loans and Equity fundraising are the two main ways to accumulate funds to start or grow a business. Since both of them have their advantages and disadvantages, as a business owner, it depends on you which one you choose.

    To choose the best option from these two, you need to be aware of their pros and cons. For some people, business loans come out to be the best option while for others Funding is the best option. So, here in this article, we mentioned the advantages and disadvantages of business loans and funding. This will give you a roadmap for choosing the best one.

    What Is a Business Loan?
    Advantages of Business Loan
    Disadvantages of Business Loan
    What Is a Funding?
    Advantages of Funding
    Disadvantages of Funding
    Business Loan vs Funding: Which One Is Better for You?

    What Is a Business Loan?

    A business loan is a kind of loan which you take from lenders to fulfil your working capital needs. The lender may be a bank, financial institution, or investor. They charge a fixed interest rate on the principal amount of money, after a certain period of time. Interest rates are not fixed and it varies from lender to lender. you might get a loan at a low-interest rate from any lender or sometimes you need to pay a high-interest rate depending on different factors.

    Advantages of Business Loan

    Flexibility for loan repayment

    Paying off the existing loan amount will remove a huge burden from an entrepreneur. You’re more focused on your business growth and management when you are not in debt. Although you’ve taken a loan to fulfil the working capital need for your business, if your business performs very well and you are capable of paying the existing debt, then a business loan has the flexibility to repay the loan early.

    Keep in mind that when you pay the loan early, many lenders charge a prepayment fee, which is around 1% of your loan amount. Also, you might miss the benefit of tax exemption on the interest you pay for your loan. So do your math and decide whether you should pay the loan early or not. If the total interest on the loan is higher than the prepayment fee, then you can pay the loan early and free yourself from debt.‌‌

    Availability of Government scheme for loans

    US Government always tries to promote businesses because they give a boost to the economy. The ways are different but the intention is the same, to promote the business. Providing loans to small and medium businesses is one of the ways the American government supports the newly born business.

    In 1953, the Small business administration (SBA) was formed in USA to support small businesses in terms of capital and counselling. So you can leverage the benefit of this government scheme to easily get a loan from an SBA-accredited lender. The interest rate may vary from lender to lender based on your credit score and other factors.

    Ownership remains intact

    One of the most important benefits of taking a business loan is that your ownership remains intact, and there is no dilution of your equity. You have full control of your business and you’re free to take any business-related decisions without the interference of any investors.

    You are the decision maker and you don’t have to share your profit with any third-party investor. So go for the business loan if you have faith in your business plan and at the same time you don’t have to dilute your ownership.

    Disadvantages of Business Loan

    You need to prove your creditworthiness

    Everyone wants to earn some money and the same is true for lenders also. They are providing you with the money because they expect some interest in it. so to make sure that they are not giving their money to the wrong person, they see your creditworthiness.

    A credit score is the one factor that every lender considers, but at the same time, they also see your assets and your past credit behaviour. Your business plan doesn’t put much influence on the lender because they don’t have to do much with your business, they only need their money back with interest. So you need to prove your creditworthiness to the lender to get a loan, otherwise, you might end up taking a loan at a higher interest rate.

    Difficult to acquire a loan

    Since you need to prove your creditworthiness to the lender and if your credit score and credit history are not good, then most probably your loan application will be rejected. It is not easy to get a loan at a cheaper interest rate without proper credit behaviour.

    Lenders also check your assets, and if you lack in this also, then it’s very difficult to get a loan. You might arrange a loan from somewhere but the chances are the interest rate would be higher than expected.

    Lenders have the first right to your assets

    Finally! After so much hassle and paperwork, you get your loan money in your hand and you are now using this money to fund your business. But suppose, your business is not performing well and doesn’t meet your expectations. If you are not able to repay the loan in time, then you might be shocked but the lenders have the first right to your assets.
    They have the right to sell your assets and recover their loan. So these are the few disadvantages of taking a business loan you must be aware of.

    What Is a Funding?

    Funding is one of the most prominent ways to raise funds for your business in the USA. You have to approach an investor and showcase your business plan. You need to convince the investor that you and your business plan have the potential to convert this startup into a giant company.
    Once the investor is ready to invest in your business, then they will become a part owner of your startup by owning some equity shares.

    Advantages of Funding

    No burden of repayment

    Equity fundraising comes with many advantages and the most prominent one is – you don’t need to repay the money you’ve raised. By giving equity shares to investors, you basically made them part owners of your company. Hence, if there is any loss in the business, it’s not only your loss but the loss of investors also. Similarly, if there is any profit, then that is not only your profit but also the profit of your investors. Since you don’t have the burden to repay the capital you’ve raised, then you become more focused on your business growth.

    Guidance and help from the investor

    As a new US-based startup, you might not have much experience with how this startup economy works, here the guidance and expertise of an investor will help you to accelerate your business growth. Since investors have some sort of experience in the field, their guidance and help will act as the cherry on the cake for your business.

    You are the one who is responsible for your business, investors don’t only invest their money in your business potential but also in you and your faith in your business growth. They will help you with their valuable advice, but at the end of the day, it’s your business and you have to take care of it.

    Increase in the valuation

    Whenever you raise money from funding, the valuation of your startup increases simultaneously. The valuation of a company is the clear-cut indicator of business growth, revenue, and size. In different funding rounds, you and the investor agree on a certain valuation of your company based on how your business is performing.

    If the business growth is extraordinary then you can ask for a large number of funds by diluting less equity. The higher valuation of your startup will help you in future fundraising and also provide benefits in acquisition and merger.

    Disadvantages of Funding

    Equity is diluted

    In simple words, Equity means ownership, how much you have the right in a company. Whenever you raise money, the dilution of equity shares happens, which will decrease the percentage of ownership in the company. So you need to be conscious that you should not be the minority shareholder in your company, because this is your startup.

    Let’s take an example, suppose there are a total of 100 shares in your company and 5 shareholders with 20% each. It means each of them has 20% ownership of the company. Suppose you want to raise money and offer 100 extra shares, and a single investor comes and buys all the shares.

    Now understand the new shareholding pattern, the total outstanding share becomes 200. Since the new investor has 100 shares, so he becomes a 50% owner of the company while the other 5 shareholders become 10% each. As you can see, the ownership of the existing shareholders reduces from 20% to 10% because of share dilution.

    You need to prove your business potential

    To win the trust of the investor and convince them to invest in your business, you need to prove the potential of your business. For example, how your business is different from other businesses in the industry, what is your USP, what is your future plan, and a lot more.

    Investors only invest in the businesses where they see growth in their investments. Now it’s your duty to convince the investor that you and your business have the capabilities to generate multi-bagger returns on their investment.

    Decision conflicts

    When there are more decision-makers in the company, there are chances of conflicts in the decision. Everyone has their point of view, some might agree with your point and some might not agree, hence more decision-makers turn out to be conflicted in their decision-making.

    Lengthy and Complex process

    The process of equity funding is complex and lengthy because a lot of paperwork goes hand in hand. Before pitching the investor you need to take care of the financial reports of your business that indicates your business performance.

    You need to take care of the different compliance before and after funding. It’s better to hire a professional who takes care of all the paperwork and focuses on pitching the investor efficiently so that they become ready to invest in your startup.

    Business Loan vs Funding: Which One Is Better for You?

    Both options have their advantages and disadvantages as we have mentioned above. Which one is better for you depends on which type of convenience you want, like, if you don’t want any burden of a loan repayment then go for funding but if you don’t want to dilute your equity shares then go for a business loan.‌‌

    Figure out which type of advantage you want and select the option based on that. Every coin has two sides, if there is a benefit in something then might be they have a certain downside.

    Conclusion

    The US government always tries to promote businesses with different schemes. Business loans and funding, both are great options. Because you are a startup and creating a foundation to build your empire, so you must choose the option very carefully. If you take care of all the above-mentioned facts into perspective, then most probably you will make a better decision.

    FAQ

    Is it a good idea to get a loan to start a business?

    Loans help your business grow and a business loan will cover the upfront costs of expansion and allow you to make profitable growth.

    ‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌How much can I get for a startup business loan?

    Startup loans typically range from $9,000 to $20,000. Startup loan decisions are made differently from other forms of business financing.

    What do I need for a startup business loan?

    If you’re starting a business, you need money. So having a strong personal credit score and stable income will help you qualify for financing. A good credit score starts at around 690 to get a loan.

  • Mamaearth’s IPO – A Beautiful Dream or Disaster?

    Mamaearth is an Indian company engaged in selling Health, Wellness and Fitness products.  The company was founded by Varun and Ghazal Alagh in the year 2016 and is headquartered in Gurgaon. It grew exponentially and reached a net worth of INR 115 crore in just four years.

    Mamaearth is the flagship brand of Honasa Consumer Limited, which started as a digital-first consumer brand. Its other brand portfolio includes brands such as BBlunt and Aqualogica. The brand is planning to launch an IPO and has filed the Draft Red Herring Prospectus (DHRP) with the Securities and Exchange Board of India (SEBI) on December 20, 2022.

    IPO Details of Mamaearth
    The Grey Area
    How an IPO Is Valued or Priced?
    IPO Valuation of Mamaearth

    IPO Details of Mamaearth

    The company has proposed an IPO worth INR 2900 crores.  The IPO will consist of a fresh issue of shares worth INR 400 crores and an Offer For Shares (OFS) of approximately 46.8 million shares. The funds raised through the IPO will primarily be used for improving brand visibility and advertising as well as opening exclusive brand outlets.

    The company’s founders Varun and Ghazal Alagh along with other investors like Sofina, Fireside Ventures, Evolvence India, Stellaris and angel investors like Kunal Bahl, Rohit Bansal, Rishabh Mariwala and actor Shilpa Shetty will sell a part of their stakes in the company through the OFS.

    Mamaearth's Shareholding Pattern and the Angel Investments in the Startup
    Mamaearth’s Shareholding Pattern and the Angel Investments in the Startup

    The list below gives a detailed view of the angel investments in Mamaearth.

    Angels Invested YOI Valuation
    Suhail Sameer ₹15 lakh 2016 $2 million
    Vijay Nehra ₹15 lakh 2016 $2 million
    Shashank Shekhar ₹15 lakh 2016 $2 million
    Kunal Bahl ₹69.6 lakh 2017 $5.16 million
    Rohit Bansal ₹69.6 lakh 2017 $5.16 million
    Shilpa Shetty ₹75.1 lakh 2018 $4.85 million

    The Grey Area

    There are several concerns floating on social media regarding the high valuation of Mamaearth.  The company which was valued at INR 120 crore in January 2022, is seeking a higher valuation of INR 300 crore through its IPO.  This target valuation is almost a thousand times higher than its registered profits.

    Mamaearth's Financials in FY22
    Mamaearth’s Financials in FY22

    The company does not have a consistent record of profitability.  While it posted a revenue of INR 932 crores with a net profit of INR 14 crores at the end of FY22, it registered a loss of INR 1332 crores in FY21 and INR 428 crore in FY20.  In the six months ending September 2022, Honasa Consumer posted a revenue of INR 722 crore with a net profit of INR 3.6 crore.  Apart from this, Honasa has also recorded a high advertising spend.  In FY22, the company spend approximately INR 391 crore on advertising, which is 40% of its revenue.  It has spent a similar percentage of its revenue on advertising in FY21, FY20 and the six-month period that ended in September 2022.

    All this information has led to a lot of speculation about the price MamaEarth will set for its IPO.  

    Sunil Damania, Chief Investment Officer of MarketsMojo says – “We doubt that management will go ahead with the higher price because there has been a lot of backlash on social media, especially given the amount of money Mamaearth is asking; whether you look at the market cap to sales ratio or the price to earnings ratio, which appears to be a little high.”

    Tech stocks globally are witnessing a downturn and many IPOs in the recent past have failed to maintain their initial high valuations, falling significantly since their listing.  Some prime examples include Zomato, Paytm and Nykaa.

    Sunil Damania continues – “Something similar could occur if Mamaearth opts for such a high valuation.  However, these are all speculative at the moment because neither the merchant banker nor the company has confirmed that they will proceed with this pricing.”

    Anirudh Damani, Founder of Artha Group has a different take.  He says – “I am jittery about all IPOs where more than 25% of the money getting raised does not go to the business i.e., it is an OFS from early investors and celebrity backers of the platform.  I have understood that almost 80% of this IPO will go towards OFS which does not bode well for public market investors.  It will be challenging to see any upside in the stock price with so many questions on super-premium valuation that will primarily provide exits to current shareholders.”

    How an IPO Is Valued or Priced?

    An Initial Public Offering or IPO listing is when a private company issue shares publicly in the stock market for the first time.  This is done either to raise more funds for expansion or to recover from losses or debts.  An audit is conducted for the company where all data regarding the company’s financials is carefully scrutinized.  This data includes the company’s assets, liabilities, revenue generation, market performance, etc.

    There are several methods in the IPO valuation process to define share value.  These methods are

    1. Relative Valuation through which the company’s share value is measured by considering the value of similar companies
    2. Absolute Valuation that measures the strength and financial status of the company
    3. Discounted Cash – Based Valuation that analyses expected cash flows, future performance, investment, potential revenue sources and more
    4. Economic Valuation considers various parameters like the business’s residual income, debts to be paid, assets value owned and liabilities, risk-bearing potential, etc.
    5. Price-to-Earning Multiple Valuation that compares the company’s market capitalization to its annual income.

    Mamaearth: Bringing Toxin-Free, Natural Skin Care Products To India
    Ghazal Alagh and Varun Alagh founded Mamaearth in 2016. Read on to know more about Mamaearth’s success story, business model, funding, and other aspects.
    StartupTalkyRishabh Rathi

    IPO Valuation of Mamaearth

    There are various factors that affect the price of shares offered in an IPO.  In relation to Mamaearth, these factors are:

    Financial Performance Over the Past Few Years

    Mamaearth’s financial performance has been erratic and it has not been in sustainable stable growth.

    Most of the tech stocks have failed to maintain their high valuations and have seen sharp declines in the recent past.

    Number of Stocks Issued by an IPO by a Particular Company

    The biggest concern is the OFS offer which is being seen as an exit strategy by many of the promoters of the company.

    Company’s Potential Growth Rate

    The amount raised from the IPO will be used to increase brand awareness and advertising but there is no clear direction.

    Company’s Business Model

    Mamaearth is primarily a digital-first company.  Its Return on Ad Spends (ROAS) has not improved in the last three years suggesting it has very few returning consumers.

    Recent Market Price of Companies Listed on the Stock Exchange

    Tech companies like Paytm, Zomato and Nykaa have all failed to sustain their stock prices.

    Conclusion

    MamaEarth is showing great courage by announcing an IPO at a time when tech stocks are witnessing a global slump. However, rising digital penetration, high disposable income, as well as growing awareness in the beauty and personal care segment give the company room for growth and expansion in the future.

    FAQ

    What is an IPO?

    IPO [Initial Public Offering] takes place when a private company issues share publicly for the first time in the stock market. Once the company declares an IPO, the stocks no longer remain private and are collectively owned by all shareholders.

    What are the Factors Affecting IPO Valuation?

    Here are several major factors that affect the price of the shares offered in an IPO

    • Company’s financial performance over the past few years
    • Share market trends
    • Number of stocks issued in an IPO by a particular company
    • Company’s Potential Growth Rate
    • The Recent Market Price of Companies Listed on the Stock Exchange

    How can you tell if an IPO is good or not?

    Thoroughly review the company’s business model, management credentials, and historical performance. A good starting point when evaluating the best IPO to buy is the red herring prospectus. It contains most of the information you need to evaluate the company.

    Is Mamaearth a private company?

    Yes, it is a Gurugram-based D2C babycare and skincare unicorn. Mamaearth could be converted into a public company as it readies for an IPO.

  • How to Record VoIP Calls Effectively?

    As per the report published by Persistence market research, the global VoIP market is estimated to achieve the mark of $194.5 billion in revenue by the end of 2024. Almost every small business to the big giant company is using VoIP for communication and at the same time using VoIP call recording to ensure accountability.

    Since VoIP is an advanced technology that comes with amazing features at a low price compared to traditional ones, the recording of calls is also different. Some VoIP service providers offer a call recording feature in their plans, but some offer this feature as an add-on at additional costs.

    Here in this article, you will get to know the procedure to record a VoIP call.

    What Is VoIP?
    Why Do Companies Need to Record VoIP Calls?
    Steps to Record VoIP Calls

    What Is VoIP?

    Voice Over Internet Protocol (VoIP) is a technology that enables seamless transmission of audio and video conversation over the internet. Using this technology one can easily avail the benefit of communicating with people using the internet connection. The audio or video data is converted into digital data in small data packets, then it is transmitted to the destination using the Internet network. The receiver receives this data packet combined to listen to the conversation.

    It provides the ability to make business calls from any location from any device through an internet connection. Unlike the traditional phone system, it saves a lot of money on normal calls and also on Long distance International calls.

    Not only voice calls but other mediums like video, chats, sending or receiving images, videos, and documents everything is possible because of VoIP technology. There is no boundation to stick with only one tool for communications but one can easily switch to their smartphone and make or receive a business call on it.

    Why Do Companies Need to Record VoIP Calls?

    VoIP is widely used by today’s businesses because of its flexibility and low-cost infrastructure. But while running business communication on VoIP, companies strongly need to record their every call. There are certain reasons companies do record the calls and some of the most prominent reasons are the following.

    • To prevent the business from future misunderstandings with clients. Sometimes when clients refuse their words, your call recording works as strong evidence.
    • Businesses also use call recordings for quality assurance. As a business owner, you always want your customers to be happy with your service. So it helps to ensure, no of your employees misbehaves with your customer.
    • Call recordings are also used by the companies for the training of the recruit. You might have heard the voice ” your call may be recorded for quality and training purposes” while communicating with any company.
    • It helps to reduce the legal risk if you have proof of any verbal commitment as a recording.
    • While working on a project for a client, sometimes you might require clarification from the previous conversation, and automatic call recording acts as a miracle at that time.
    Mobile VoIP Market size by Region

    Steps to Record VoIP Calls

    Coming back to the topic, below is the step-by-step process to help you to record VoIP calls. Since you can choose different software for your VoIP call recording but more or less the procedure is the same.

    Step 1: Choose the Right Software

    Choosing the right software to record calls is the first and most prominent step in our list. There could be many VoIP service providers available that are offering VoIP call recording features. Some include it in their plan while some offer it as an add-on. Here is a list of a few software providers who provide the call-recording feature.

    • RingCentral
    • 8×8
    • Nextiva
    • Vonage

    Choose any of the providers which suit your needs the best.

    Step 2: Configuration of Basic Settings

    Once you are done selecting the provider, the next step is configuring the basic call recording setting. To provide you with the context of how to use the call recording feature, we have taken the example of Nextiva.‌ Let us discuss how to record a call on Nextiva.

    Homepage

    ‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌Once you are on the homepage dashboard of the software, you need to click on the manage option under the user’s tab.‌

    User Overview Page

    ‌‌‌‌‌‌‌‌‌‌After clicking on the user’s tab you’ll enter the user’s dashboard. Here you’ll see all your users and various options to configure. Just select the desired user for whom you want to record the call.‌‌


    Click here to get Nextiva

    User Manager Page

    ‌‌‌‌Once you click on any user, you’ll find the monitoring section, under this section there is an option for call recording. Just enable this call recording option for the user.

    You’ll find this option in different places based on your service provider.

    Step 3: Configure Call Recording Policies

    After completing all of the above steps, you need to choose your desired call recording policy from the dropdown menu. Below I’ve explained these policies in brief.

    Call Recording Options

    Always On

    When this option is selected, every call for that user will automatically start recording. The user will have no control over the recordings to start, stop, pause or resume. You can select this option if you want to record all the calls without giving control to the user.

    Always on With Pause and Resume

    This option also records all the calls automatically as soon as the calls start, but this option empowers the user to pause and resume the call recording whenever he/she wants. You can select this option if you want to give some control to the user.

    Users can pause the call recording by dialling *48 and resume the paused call recording by dialling *49.

    On-demand

    As the name suggests On-demand, which means VoIP call recording will start as soon as the user initiates the call but it will automatically get deleted if the user does not place the call on hold and dial *44.

    It means if the user wants to save this call recording, then he/she needs to put the call on hold and has to dial the feature code *44. This option will give much more flexibility to users.

    On-Demand With User-Initiated Call

    When this option is enabled, calls will not start recording automatically. In order to start the call recording, the user has to put the call on hold and dial *44. Another alternative is also available, user can dial this code before making the outbound Call to record the call.

    Never

    This option doesn’t allow the user to record any of the calls. Even the user can’t record any call using any of the feature codes like*44.

    Step 4: Good to Go

    After selecting your recording policy for the user, you can select the other option which is easy to configure. Like if you want to make the announcement that the call recording is being started or stopped, then you can check the option. Similarly, you can easily configure other basic settings.‌‌

    Now you are good to go to record all your business calls. Keep in mind that I’ve taken the example of Nextiva but you can choose any provider, settings and features might be up or down but the functionality is the same.

    Conclusion

    Call recording is a widely used feature in the business. empower your business by leveraging the feature of call recording. Call recording, even today, is quite challenging if you don’t have the right tools. Follow our step-by-step guide to record your VoIP calls and run your business with full accountability. It helps individuals and companies maintain accountability for verbal commitments. Automatic call recording using your VoIP phone system helps you run a more successful business.

    FAQ

    Can VoIP phone calls be recorded?

    VoIP calls can be recorded via streaming audio recording applications. Streaming audio recorders can be useful for home-based recording.

    How do I record a VoIP call on Windows 10?

    The keyboard shortcut Windows+Alt+R allows you to record VoIP calls on your PC quickly.

    What is the best free app for recording phone calls?

    The List of some of the best software is

    • RingCentral
    • 8×8
    • Nextiva
    • Vonage

    Can we automatically record all calls?

    Some VoIP call recording software allows you to manually select which phone conversations you want to record, while others support automatic audio recordings of all phone calls.