Do you really have a business? Part 3

Holiday cottage

Putting all your eggs in too small a basket

Leisure renting is popular. Those who know me better are aware that I have an interest in let property. There is quite a boom in buy-to-let even in these difficult times. One of the most potentially profitable rental opportunities is what is known as “furnished holiday lettings”. In the UK that means renting out holiday cottages, houses, flats and apartments.

The minus side of letting holiday property is that the season may not be all that long. There is potential for a lot of money to be made in the high season through short-term lets. This should leave a tidy profit even allowing for periods off-season when the units might be empty, or let at a much lower rent usually to tenants staying longer.

Being the best

Of course the services provided must be excellent whether you do the work yourself, or employ an agency. The secret of making money from any holiday letting or indeed even from a guest house is location. The accommodation has to be in place where people would normally want to be , so near the sea or in picturesque countryside for walking. You get the picture.

If you don’t have a location like that you have to be very good at marketing and persuading customers of the merits of your local area. You also have to have very attractive and spacious accommodation. If you don’t, however much money you put in the business you will end up working for nothing.

Do your research

Ask yourself:

  • Is the accommodation large enough?
  • Will I get a good return on investment?
  • Am I in the right place?
  • If I am not in the “right place”, can I compensate through marketing an by being exceptional and different?

If you can plan for the worst and you would still make a profit, then think how much you can make if the worst never happens. Usually it doesn’t. Have you thought about being in the holiday business?

Enhanced by Zemanta

How will your customers find you?

It struck me the other day while I was waiting for a hair cut that there are different ways of attracting customers. Some businesses are totally passive in their marketing, some can get away with only a little marketing, and there are those who will not be noticed without taking the trouble to market in the ways that suit them.

A men’s hairdresser (barber if you prefer) on a main street may come into the first category. They open a shop, potential customers notice it and decide to give it a try. If they have a good experience they will come again and will recommend the place to their friends. Following on from having a business in the right place for its type in geographical terms, a good service will bring its rewards. A convenience store in a good location has the same attributes, but in a popular location this sort of passive marketing has its cost in the rents or cost of the premises.

Then there is the sort of business that needs recommendations, but also needs a fairly central location, though not necessarily in a prime position to catch passing trade. A firm of solicitors (lawyers) or indeed a useful hardware store might be in this category. They need to advertise, could do with some networking to build a reputation, and have to provide great customer service to get great recommendations and word of mouth referrals. No one just drops in to a firm of lawyers on the off-chance. People go because of a name they have heard through advertising, or on recommendation.

Then there is the third type of business. It does not have the main street location. It may be out-of-the-way. It relies on the ability of the owners and employees to provide a great product or service. It might be a country restaurant, it might be a firm of accountants and it might be a country farm shop selling local produce. Then, there will have to be very active marketing to get known, a concerted campaign, publicity, networking with many other businesses, a good website and so on. Again, great customer service is essential to build reputation and gain word of mouth referrals, but a business like this needs to get customers in the first place.

All this seems obvious, but many new businesses do not understand which category they are in. Across the road from the men’s hairdresser is a new gift shop in place of a jewellers which went out of business. On the same side of the road as the hairdresser was another gift shop which also went out of business. Are the new gift shop owners marketing as they should, getting out of their premises to meet people to tell them about the business and helping others along the way?

The trouble is that what might be a prime location for a hairdressers with ready-made business and trades people passing is not a prime location for a gift shop, which is less likely to benefit than the hairdresser. A gift shop needs to differentiate itself from the rest, perhaps rely on the personality and personal touches of the owners. If people don’t know about it the business will fail. Are they treating their marketing seriously?

It worries me and when I have a minute I will visit the gift shop to see if I can help.

Do you agree with my perspective? What do you think?

© Jon Stow 2010

Related post:

Why we need to have the right business in the right place

Enhanced by Zemanta