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-   -   Can I get some advice...? (http://www.sowpub.com/forum/showthread.php?t=1908)

Bea November 2, 2006 09:25 AM

Can I get some advice...?
 
As I had posted before I am just beginning an advertising flyer distribution biz in my city.
I do 5,000 flyers in a bag & hang them from doorknobs of affluent homes here.

The rub is that it is just my daughters & I to sell, bag & distribute all 5,000. In the present hours that we have to donate to this project it will take us 33 days to deliver all 5,000. We sell the project saying one batch will go out per month. That means we will work every day of the month distributing & then some. Not counting rainy days or Sundays or ANY day off for anything unexpected. I charge $120 for this service per biz in the bag.

My Q is: I really need to think about cutting it down to 2,500 homes that it goes out to, but can't really afford to do it much cheaper if any at all. If I do cut it down, what should I cut the price down to?

The business model that I took this off of charged for 10,000- $400. So I cut it down some & did 5,000 for the $120. Using that model I SHOULD charge $100 for the 2,500, BUT...and my second Q here...
Will the advertisers that I ALREADY have (I just started & am still distributing last months, which was our first month) agree to cut down to distributing only 2,500 & STILL pay almost what they were for the whole 5,000???

I hope I am being clear, I'm trying to rush to get the girls to school, but I also have to meet with a new potential client this am, & was hoping to have some answers from you pros before that to kind of guide me on what to say. (I told this man on the phone yesterday that we do the 5,000, but I'm thinking of just being honest w/him that it is taking too long & we need to cut this months run back.)

Well, thanks for the help, sowpub members!!:) I'm kind of in a spot to really need some business wisdom here & I'm sure glad we have this forum to communicate like this!:) :)

Ankesh November 2, 2006 09:53 AM

Re: Can I get some advice...?
 
Thanks for asking Bea.

Some ideas:

1. Ask the newspaper delivery person to add your envelope to all the newspapers. That way - you just collect the orders and you pay someone else to do the distribution.

2. Here is a simple idea to test with pricing without getting a lot of complaints from current clients. Give two options, then cut the one you don't like after some time.

For eg: You could raise your prices from $120 to $150 easily for 5,000 distributions. So you could do this:
Option A: People pay $150 for 5000 houses
Option B: People pay $100 for 2500 houses

After a month or two, you get rid of option A. If your clients complain - you can simply tell them that the other option was better for your business. If the difference isn't much, most of your clients will switch to the other option without a lot of fuss.

(Btw, I think $120 and even $150 for 5000 is way too cheap. You should increase your prices. Most flyer distribution services charge close to 10 cents per flyer - or $100 per 1000 flyers - even if its co-op.)

GordonJ November 2, 2006 09:59 AM

Sure, Bea, we always have a lot of advice here...however
 
it comes back to what YOU want to do.

So, let's take a look at this thing.

It's taking longer than you thought it would. You have a distribution problem. Possible solutions:

Outsource this or hire other people to do it. Problem: COST.

IF you do let others (think high school kids, maybe clubs or athletes) deliver these, you have to pay them...which frees up your time to get more ads into the thing to cover your added distribution costs.

Since it is a start-up, you don't have any ideas how many advertisers you already have will sign back up with you. That is an important thing, because retention of advertisers will mean you have to do less and less as time goes on.

You could reduce the number of homes delivered too, but you'll be hard pressed to retain any of the current 5k ads for pert near the same price.

IF they are offering a coupon, then they will know the effectiveness of your ad delivery service very quickly...and you don't have enough time under your belt to offer any stats or show the effectiveness of this advertising methods. Which makes the initial sell even tougher...especially if you reduce the number of homes.

My advice is to do a cost analysis or profit analysis sheet.

How much time is needed to deliver the 5k?
What is the cost of delivery? And you and family have time value, but would a "club" at school do this for a flat fee of say, 250.00...and if a club has 10 members, each member only has to do 500 or a one or two day effort.

In order to make up that 250 (just a figure, could be more) how many more ads would you have to include to make up the difference?

How much time will it take to get those?

IF you were to get a bigger group, say like the Soccer TEAM, with a couple of dozen members to deliver the flyers, it could be done in ONE day...and perhaps allow you to INCREASE distribution area and increase your ads cost and their perceived value.

WHERE are your advertisers currently using? A half page ad in one of those coupon booklets that comes via US Postal Service runs several hundred dollars, is your delivery more targeted and how does it compare with other advertising opportunities?

Sit down. Take a deep breath. Grab a few pieces of paper and start scribbling on them.

What did this first RUN teach you? COULD it be profitable IF.__________ and if so, then what would it take to do _________

whatever that might be.

How good are you at getting advertisers? Can you get MORE and MORE to fill up the bag to allow you to buy distribution?

Well, there are more questions than answers for you...I think it is great you started something and found out some things, like the time it takes to deliver.

There is a lady here in Akron named Ceil Bush, who started something very similar to what you do many years ago...today, her Gold Clipper Magazine is a huge success and she's branched out across the area {www.goldclipper.com }...but her first year (or two as I recall) was pretty much month to month and mouth to mouth...AH, as is often the story of success.

But Bea, only YOU know what you want from this thing? If it is just about dollars and income, I think there might be a more profitable type of "hotsheet" for you to consider, delivering those same ads, in a different format, to places where there is a "trapped audience"... only instead of one at a time, deliver 100-250 and do it in just a few hours a week.

As Phil would say, TWIST and turn what you are doing and try to see how different or profitable you could make it.

Gordon the ADVICE giver (and remember advice is like noses, almost everyone has one) Alexander

PS. GOOD ON YOU for doing a project, the lessons you'll learn will be invaluable to your future efforts.

Unregistered November 2, 2006 10:54 AM

Re: Can I get some advice...?
 
Thank You, Ankesh, Gordon & James Anthony.
I appreciate the quick replies...I'm getting there...doing some figuring.

James Anthony, you asked a few Q of me: No, I don't print - they supply whatever they want in the bag. :-)

Hours to bag were apx 22.

This month (the first) we had 4 advertisers, supposed to be 5 but one had a time problem & couldn't get her things printed in time. So $480.

Lots of promise to this biz opp. here in my city, just it takes LOTS OF TIME to distribute!!! (I loved Gordon's idea of having a school club do it. I would just have to assign certain people certain areas since I only deliver to the homes with incomes over $35,000. This is part of what makes it so hard to do, though, b/c those homes typically sit in a nice sized lot, making it harder to just 'walk it'.)

I do appreciate the replies & help. I guess my reply to Gordon's "blanks" would be it would be so much better if I just had help to distribute these things!!! lol Everything would be so much better - I'm really about to pull my hair out with it!

Thanks all - I appreciate ya!

Unregistered November 2, 2006 11:31 AM

Re: Can I get some advice...?
 
Hi Bea,

When I work my address america biz... we usually deliver 100 flyers/hour/person on average. Some more some less depending on how close together the houses are. I pay my flyer guy 10 cents/flyer. So he earns about $10/hour.

If you paid someone a similar rate it would cost you $500 to distribute 5000. I'd say you need to increase your price or get more advertiser's/bag.

One more comment... if you can find target neighborhoods that have mailbox poles by the road, you can drive the route and significantly cut your delivery time down. Just make sure to place the bag somwhere on the pole NOT ON OR IN the mailbox (against federal law).

HTH

Unregistered November 2, 2006 11:59 AM

If I COULD put them on mailbox poles...
 
That would definitely help! (Putting them on the poles).
Yes, it is 22 hrs total & then about 33 hrs total for all 5,000 w/all of us delivering, b/c I drive while they walk up to each house.

I would like to increase subscribers in the bag, but it IS disheartening that even if I have 20 (about max) that would be only $2,000 per month! :-(

Well, gotta run! Time for that appt. Wish me luck!

Don Alm November 2, 2006 12:15 PM

Re: Can I get some advice...?
 
2 possibilities;

1) Ask your local newspaper if they allow "inserts". Then show them your "package" and ask what they'd charge.

2) There's a woman in Eugene, OR who has a "Weely Route" where she makes up a "Hotsheet" of local ads around both sides and across the bottom of an 8 1/2 by 11 sheet. Her "MastHead" is at top (which says, The Weekly Dispatch, "All The News and Gossip that's Fit to Print") In the middle is her "News and Gossip" about what's happening in the local area (Downtown and College areas)...Shows in Town...Attractions.

She prints up 5,000 a week and distributes 100 or so to restaurants and mini-markets....on Monday. She gets 20 ads consistantly and charges $180/mo if they pay monthly...or, $480 if they pay for 13 weeks in advance.

There's also a "Flyer Distribution" co around Portland that charges 7cents per Flyer for 5,000 and 5cents per Flyer for 10,000 distributed. I think you need to raise your fee to at least 5cents per 5,000 ($250ea)

Don Alm

Bea November 2, 2006 03:24 PM

Re: Can I get some advice...?
 
Ok! Whew! Back from the meeting w/the new prospective client...he thinks it's a wonderful idea & told me he would be willing to pay $125 for 2500. (That's good) & his input is that he wouldn't want to be in the bag w/more than 8 other advertisers. I can see his point & kind of agree to it, although that WILL cap my income from this particular project at around $1,000. It may make it an easier sell, though & make more loyal advertisers, in turn, though.

NOW, though, I just have to "face" my other advertisers & tell them that it is just NOT working out to do 5,000 a month...any suggestions on "how" to break it to them?:confused: :confused:

Thanks,
Bea

MichaelRoss November 2, 2006 03:45 PM

Re: If I COULD put them on mailbox poles...
 
Thanks for doing something.

Seems to me you need to Run The Numbers.

At the current Rate, 55 Man Hours is giving you $480 - minus gas and bags - for an Hourly Rate of $8.77. With that kind of money, you are better off getting a job - or another part time job on top of your existing job. You'll make more money with less headache too.

To Boost Profits: Make sure one of the flyers in the bag is for your flyer delivery service. AND, if you sell a product or different service, make sure That is also a flyer - or on the other side of your flyer which advertises your flyers delivery service.

Thus, your thinking changes. You are spending time deliverying flyers for your other business - but - getting paid for it by businesses who also need flyers delivered.

Also know, you Will have a Constant Fight to get advertisers. Flyers are Not like local newspaper ads, where businesses just run them all the time. Businesses think of flyers as once or twice a year deals, or more intermittent and not regular like once a month. You need to know this, and what you are likely to face on a monthly basis, so you can make an informed decisions as to whether you want to continue this line of business.

As for appointments... Why are you making face-to-face appointments? Is it Just to Pick Up Flyers - or - is this a Sales Meetering where you Try to Convince the business owner to use your service?

Are you looking for this business to Replace your current income or be in Addition to it? If to replace, then why are you complaining about how long it takes to do the work? Because that would indicated you are not willing to spend as much time in your own business as you are working for someone else. Which is a fine way to think, if it urges you on to make the business more efficient for you. And is how most people tend to think of their sideline or income replacing projects - they are willing to work for someone else for less than they are willing to work for themselves.

If this business was how you imagine it to be... how would it be working? Would You still be deliverying or other people? If other people, how much would you be paying them? How much would you be charging the client? Why don't you charge the client that much right now?

Michael Ross

Don Alm November 2, 2006 04:36 PM

Re: Can I get some advice...?
 
..."How To Break the News to your Sponsors"

Just go to them In-Person....explain that you MisCalculated and made a Mistake and you just can't afford to do the job based on your Initial Rate. Be honest and tell them when you "got out into the field on your first delivery...you discovered the delivery would take MUCH longer than you expected.

Tell them you REALLY need to charge "X" (I suggest at least 5cents ea for 5,000 HAND-DELIVERED.....$250) You can apply their initial payment towards the NEW price.

MOST people will understand....some won't and will probably want their money back. Just replace these with new clients and chalk it up to "experience".

When I look at "Pricing" my programs....I try to bring in all my costs...then add on what profit "I" would like for my effort.

Here's a REAL LIFE situation that just happened to me...where I had to "Go Back To Clients and tell them I couldn't do what they paid for";

I had signed up 3 hotels for my "TV Channel Stands"....had gotten 5 advertisers based on the number of rooms in the 3 hotels....then...when I went to 1 of the hotels to look at my "Final Proof"....the GM told me she had "changed her mind" and was going to have her "Sister" sell the ads for HER location....because her "sister" could "use the money".

I reminded her that she had SIGNED AN AGREEMENT whereby she agreed to let ME provide Tv Channel Stands for her rooms. She said she "didn't care"...her "sister" was going to do this.

Soooo...I went back to all 5 of my clients, who had all paid me based on X rooms....told them I would return part of their money OR...if they were counting on THIS hotel....I'd return ALL their money.

The result was..... I kept all the accounts.

So....just go back to your clients and explain you can't do the job for what you charged and you would return their money for the part of the job you haven't done yet....or....they could pay an additional fee which you feel is FAIR.

I think they will understand....especially if you are "humble" and "honest" and "blink your eyes a little". (just kidding)

Don Alm


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