New York is often regarded as one of the best places to do business in the world. It’s a leading city for both the national and global economy, has a rich tradition of big and small businesses, and is known for having one of the most professional workforces in the world. There are certainly worst places than New York to serve as the headquarters of your business.
That being said, no city is perfect, and New York is no exception. From a business standpoint, business owners in New York face some unique challenges that owners in other cities don’t. While many may rise to the challenge, others struggle, losing money simply because they don’t know how to address these unique issues. If your New York business is loosing money keep reading. Discover these four common reasons why New York businesses lose money, and how you can fix the problem.
1. Trying Too Hard to Underbid Competitors
One of the most common business strategies to beat out competitors is to price goods or services lower than the other guy. The problem is that this strategy often fails. It’s been proven time and again that consumers are willing to pay more,if the business produces a high benchmark of quality. Underpricing your goods and services may win you some additional converts, but not enough to offset your operating costs, especially in a city as expensive as New York.
Build Your Value Instead
The name of the game in New York’s fiercely competitive economy is branding. Through a combination of marketing and advertising, your goal should be to differentiate yourself by building brand value. There are many other values that people derive from businesses besides price. Just a few examples are:
- Wish fulfillment
- Saving time
- Avoiding hassle
- Quality service
By building a brand name in line with your target demographic’s values, you can charge a competitive rate and still enjoy steady growth.
2. Owning Too Much Real Estate
One common mistake that New York businesses, especially those just starting out, make is renting or buying too much office space. Space is scarce in the City that Never Sleeps, and office space comes at a premium. Market Watch reported that New York had the highest rental rate for office space of any major city in America, at around $74 per square foot. For businesses with few employees and a small customer base, this expense isn’t worth it.
Go Remote in Every Way
The best solution to this problem is to simply not have any office space or storefront at all. New York maintains a thriving small business community. It’s not unusual to see small teams meeting at local coffee shops or cafes to work, and those owners don’t mind a bit (so long as you buy something throughout the day). You could either go this route or just let your employees work from home.
The same can be said of your core business functions. Digital sales are starting to match in-store sales. Some economists believe that by 2025, online sales will surpass in-store sales. Whether your business deals in retail products or is service-based, you can completely eliminate your storefront costs by taking your business completely online.
3. Logistics That Don’t Move
New York isn’t in any danger of being called the most spacious city in the world. The city features some of the most cramped, congested roadways of any city in America. That’s bad enough for people trying to commute but it also impedes your ability to ship to local customers. Additionally, just getting in and out of the city can be a total nightmare.
Scale Your Logistics Footprint Down
Rather than storing a warehouse full of goods that have to be shipped via a semi-trailer, consider the benefits or micro-sizing your logistics. In the online retail world, many businesses opt to use drop-shipping to fulfill customer orders. This would help you reduce the cost of maintaining a warehouse and trim the need for large vehicles to transport your goods.
Alternately, you can follow the example other companies have been setting recently. Amazon has started hiring locals to make deliveries with their Amazon Flex program, while Uber has started offering drivers the chance to deliver groceries rather than taxi people around. You can take advantage of these smaller, localized shipping methods to reduce your overall costs.
4. Not Focusing On Marketing
In the movie Field of Dreams, Kevin Costner plays a farmer who builds a baseball field in his cornfield after he hears a voice tell him, “If you build it, they will come.” It was a fantastic premise for a great movie. The problem is that many businesses have adopted this quote as their guiding business philosophy – get the business running and customers will come.
We’ve seen that strategy fail time and again. Lacking a well-planned and budgeted marketing effort is one of the most common reasons why new businesses fail, and established ones shut down. This is especially true in New York where let’s face, you’re far from the only one offering whatever it is your business does. We also suggest a few Facebook Carousel Ad Hacks that may give your business a marketing edge over competitors.
Get the Word Out – Then Keep Talking
Your marketing efforts shouldn’t just be a part of your business – they should be a coreaspect. We touched a little bit before on why distinguishing your business in other ways besides price is essential. Marketing is not only how you help establish those differentiating factors – it’s how people know you’re in business in the first place.
Additionally, how you market is just as important as what you market. A 65-year-old retiree is most likely going to get their information differently than a 22-year-old Wall Street broker. When you research your ideal customers, one of the key data points you need is how they learn about new products and services. There are several different options
- Banner and pop-up ads
- Radio Ads
- Television Ads
- Print Ads
Additionally, marketing today goes far beyond just publishing ads. Young consumers, especially, want an experiencewhen they shop for products and services. They want to buy from authoritative sources within the industry. With that being said, items like an online blog, your participation in local events, and any philanthropic work you do is just as much a part of effective marketing as your ads.