In business, most pertinent is to sell off goods and effectively market services as quickly as they are available on the market.
Some services and businesses offer perishable goods that can expire on the shelves. However, it’s different for the hospitality industry. While it is almost as though the services that hospitality businesses offer can never expire, this simply isn’t true.
There are periods where the usefulness of a service runs out as long as it remains unused. In the hospitality industry, services and products are only useful when utilized and, of course, paid for. Plane tickets, train tickets, hotel rooms, etc., are only useful if people pay for and use them.
However, these services’ market demand is not fixed and can go for long periods with minimal requests. The fixed prices of these services do not allow the business to make up for the losses incurred on days where demand is deficient.
To remedy this situation in the hospitality industry, a new pricing strategy was developed; the Yield Management strategy.
A simple answer will be that Yield Management is a pricing strategy developed for the hospitality, air travel, tourism, and related industries that helps to produce maximum returns from their services. However, that may be an answer that barely scratches the surface.
So, really, what is yield management?
Yield management runs mostly on the tilt of the supply and demand of the market. When the demand exceeds supply, the prices increase, and when the supply exceeds the demand, it drops. It first began from the air travel industry.
Have you ever tried to book a flight at the last minute and found that the price of the ticket is now jaw-droppingly higher than it was a few days ago when you procrastinated on concluding your booking? You most likely have been affected by yield management.
Many passengers aboard the same plane are most likely not paying the exact fare for the flight. Many took advantage of some unique early-bird discounts and other special pricing plans offered to passengers for booking early.
Unfortunately, a few people would still have to pay higher than those who booked early flights.
Yield management involves strategically editing prices of goods and services in the hospitality industry to match with the right customer in varying instances of demand and supply.
This works in such a way that businesses can balance their lost revenue by tweaking their prices when demand is less than supply and vice versa.
Factors that may help to influence yield management
Numerous factors are responsible for the change in demand and supply in business
Services in this industry that have benefitted from yield management include car rental services, railroad services, tourist services, cruise lines, hotels, and airlines. Many factors can influence the need to change prices in business.
One factor that influences yield management is the weather. For example, you would find that Uber prices get spiked when it’s raining because everybody is looking to be dry and safe in a vehicle and still get to their destinations.
Paying a little bit extra for this service that would ease their inconvenience at that moment would seem insignificant. The time of the year is also another critical decision-influencer when it comes to the prices of many services in the hospitality industry.
During Christmas, passengers are willing to pay exorbitant prices as long as it guarantees that they would get home to celebrate festivities with their families. Another one is the level of demand.
Tell people that only two available planes are willing to take them out of a virus-ridden town and watch flight tickets get sold out in minutes, no matter the price cap.
Competitors can also create a distortion in the level of demand for a product or service. Is there a new company on the block offering similar services like yours? Depending on the glitz and affordability attached to that new company, yours might suffer a drop.
With yield management, you can rectify the situation and show the new kid on the block who’s the boss. In a nutshell, yield management offers different clients different prices for the same product at different times based on varying factors to maximize business returns.
How do you implement yield management in hospitality businesses?
Find an equilibrium price zone where you can maximize your revenue
Yield Management has a very streamlined focus and approach to profit-making in business. It ensures that you get the best possible revenue or returns by critically analyzing your volume of sales and selling price.
In the hospitality industry, businesses use this demand-forecasting technique to determine how to offer prices to their customers and still make the highest profit possible. Many companies offer the highest prices to customers and examine how many clients are still able to book for their services despite that high price.
If they find that the demand for the service drops below the supply, they modify the price again to accommodate more customers who can afford the new, reduced price.
To be a great yield manager, finding an equilibrium price zone where you can maximize your revenue is key. Once you’re able to get this equilibrium price, your business is already working at its max capacity.
The best way to do demand-forecasting is not by guesstimating but doing thorough research from existing data and trends gathered from customer behavior and purchase patterns. Using historical data to calculate how much price should vary to accommodate fluctuating demand should be your go-to strategy.
It helps to effectively predict and make demand-forecasts so that you can strike a balance between the availability of your product/service and the price.
Why is yield management so important?
For hotel managers, cab hire services, tourist agencies, etc., being able to manage your yield effectively can not be overemphasized. It has so many benefits for your business that boosts revenue significantly.
Let’s examine a few of them below:
1. Flexibility of pricing
Yield management boasts of a flexible nature, and this affects both customers and the business positively. Suppose there’s a drop in demand for any product or service, with accurate yield management, the company can modify its rates to an equilibrium price to accommodate more bookings or orders.
This way, you can serve more clients and bring in revenue at the same time. Offering discounted rates or double-service in one package at a slightly reduced price can be an effective way to entice your customers back.
While you may not make as much as you would during a busy period, you’re able to make some revenue, unlike when there are no bookings at all. You also manage to satisfy your clients who may feel like they got a great package at lesser rates. It’s a win for both ends.
2. Improved seasonal pricing
This is also an offshoot of the flexibility of this concept.
Because customers are willing to do anything for some particular services in some peculiar seasons, a hike in price during these periods will not affect demand, such as high costs of flight tickets and hotel rates during the rush-hour Christmas season.
In this period, where the business is in high demand, you can make more revenue than when there was lesser demand for the service. Customers can also receive the services they need, howbeit that they have to pay slightly higher for it.
3. Enhanced forecasting skills
WIth accurate historical data analysis and customer purchasing patterns, your business is able to accurately demand-forecast. This way, you learn to know how to better prepare for times where business may not function at a high.
By using automatic forecasting strategies and techniques to keep track of the different parameters or factors that affect demand, you are able to make more accurate predictions. Tracking these parameters by hand may lead to errors or inaccurate data.
You would find useful cloud solution software like Bedvine.com to help you monitor a wide range of these factors simultaneously for the best results.
4. Enhanced coordination among sales channels and the customer relations team
With accurate yield management, there becomes uniformity across board, from the front desk to the prices on the different sales channels. There’s no case of one price from the customer relations team and a different one at the website or on the travel advisory.
You’re also able to make planned and coordinated responses about prices when guests or clients call to place reservations or inquire about bookings. It helps to plan ahead to determine when there will be discounted prices or not and how much discounts to take off the prices.
It’s easy to make losses in the hospitality industry, and it’s also easy to make gains. When you realize that it’s impossible to run at the same demand level throughout the year, the need for a middle ground becomes essential.
Yield management serves as an in-between for customers and businesses where you try to create a balance between demand and supply.
The goal is to make a maximum profit in business while also satisfying your customers by offering a reasonable price in exchange for your services as the market demands.
All kinds of businesses can benefit from using integrated human resource software. It helps in managing processes, information, and employees. With the advancement in technology, businesses can boost the efficiency of the workforce and improve productivity. The company can automate its processes and will inevitably realize more profits in the process.
Reasons that Businesses need HR Systems
Management needs systems that make it easy to run and operate a business. Small companies can use the primary forms of human resource management systems to handle employees’ attendance and payroll. Larger corporations will utilize a more complex system inclusive of all the aspects of human resource management. This read will discuss some of the most common software to use and how they are beneficial to the venture. Here are a few reasons to use HR software;
- Data management: the software eliminates the clumsiness of documentation in business. Officers can store data virtually and retrieve it any time that they need it. Data is easily manageable and accessible to management.
- Automation: it leads to a reduction in errors since the system automates some of the services. Automation helps to schedule meetings with employees, and the system ensures that you get a reminder before the event.
- Better Planning: when using HR management software, it is simpler for the management to plan to execute tasks. The system can assist in operational tasks while the management engages in strategic planning.
Types of HR Systems
Developers of software for HR management in companies will consider the needs of the business first. Let us look at popular software in the market and how they differ from each other;
HR Information Systems
The software helps enter data into the system where individuals with rights can edit the information. An employer can see the personal information, remuneration, and performance of an employee. Employees also get a portal where they can apply for leaves and also access other human resource services. They can log into the self-help menu and download payslips. On the other hand, there is a wide array of data that HR managers can store in the system. It includes keeping track of attendance and the benefits that employees are entitled to.
In other forms of the system, HR officers can store files and attach documents to an employee’s profile. It helps to link documents to the relevant individuals for efficient storage. The tool helps to manage documents and provide security against unauthorized access.
HR Management Systems
The software is not different from the information systems that we have discussed above. However, the system allows human resource managers to conduct more data analysis and use the information for decision making. Due to recent technological advancements, management tools are becoming available in all other types of human resource systems.
It assists the process of paying wages and salaries to employees. Before casual and full-time employees get their payslips, the system will automatically handle any statutory obligations. It helps to generate payments and storing of payment records for the future.
The human resource department is responsible for the recruiting and onboarding of new employees. Applicant systems are meant to assist the officers in the process. Since companies receive high numbers of applications for vacancies, it is essential for management to utilize the HR tools. Unlike the management embarking on a manual process, it is easy to filter and sort out applications through the applicant systems.
Benefits of using the HR System
When a company grows, it is difficult for them to operate without professional human resource software. Depending on the business’s size and needs, one can choose the system that works for their company. However, it is advisable to have a system that makes use of all the above HR tools. Let us look at some benefits of using the HR system;
Ensures compliance with the regulations
HR software help in the storage of data and information relating to the employees. Management can ensure that the workforce complies with all labor laws by including their identification documents in the system. Having the information at a centralized location makes it easy to pay out any statutory and personal deductions. The software helps to flag items for the HR officers to act upon.
Assists in the decision-making process
In any organization, reporting becomes difficult whenever there is no organization in data and information. HR software offers cloud options for their storage needs. With enough capacity to hold all kinds of employee data, it is easy to locate the information. HR software offers an authentic representation of the workforce, and it is wise for managers to use the information to improve workers’ productivity. As a result, the process of analyzing data and making a decision becomes simpler.
It is Cost-effective
Purchasing a system for human resource management is a one-time thing. There are no monthly subscriptions unless when organizations are outsourcing storage facilities. With the software, companies can employ a few human resource officers to handle a large workforce. The use of technology in human resource management operations significantly reduces the chances of errors. With an inefficient system, companies might lose money from unwarranted payments. In the long run, human resource systems will save the business a lot of money.
Improves service to employees
Employees can easily access human resource services when the company is using automated processes. They can log into the portal from any place as long as their mobile devices have an internet connection. The system allows personnel to apply and receive approval for their leave days.
Improves efficiency in the Human Resource department
Human resources software offers an immediate impact on the department. It helps to streamline departmental operations and reduce the number of employees making their way to the office. The automated tools offer self-services that improve efficiency and productivity.
Employees are the most critical resource in any business. On the other hand, HR software helps recruit, manage, and remunerate talents for any organization. Small and large companies will benefit from the technology.
Staying modern is something that every business needs to do, but many struggle with. Those that are able to stay current will be able to satisfy the fast-changing needs and expectations of today’s consumer, streamline their business and stay ahead of the curve. Meanwhile, those that struggle to keep up will get left behind and could find it hard to compete. It is clear that staying modern is im-portant, but how can you go about doing this? It is hard to know in today’s day and age as there are so many different ways to do this – read on to find out a few of the most effective areas that are worth focusing on.
Remote working has been on the rise years, but in 2020 it has become widespread due to the pan-demic. In most cases, this has shown to be a success for companies with many reporting an increase in productivity as well as a boost in morale. Having the right tools and learning how to manage re-mote teams is important if you want to find success and you may want to have some flexibility as some people will prefer working in the office at least part time.
Outsourcing is becoming increasingly more common in today’s day and age and made much easier through the rise of remote working. It makes sense from a business perspective because outsourc-ing allows you to use experts to handle certain aspects of the business operation without the need to pay a full salary and other employee costs. This makes it a cost-effective option and could allow you to scale up with ease, and there are many areas that you can outsource, such as:
- Digital marketing
- Social media management
Use Video Marketing
Video marketing is a highly popular and effective ways to promote your business and can be much more engaging than other formats. Video marketing will capture the attention of your target cus-tomer; it allows you to use both audio and video as it can make it easier to communicate your mes-sage and it is a chance to impress and show your expertise. The key is to have any videos made by an experienced professional as amateurish videos can have the reverse effect in a time where peo-ple are used to seeing so many videos every day.
Another popular form of digital marketing to use right now which could have a huge impact on the success of your business is influencer marketing. This involves getting someone with credibility in your field to promote your products/services on social media which will help to boost your reputa-tion, advertise your company and allowing you to reach a much larger audience.
Automation is a word that can create some strong reactions in the business world, as some argue that it leads to job losses. While this is the case in some circumstances, you can actually use automa-tion alongside employees which can be a great way to boost efficacy, reduce workload for staff and speed processes up. Using automation to handle simple, repetitive tasks will allow your team to fo-cus on other areas. They could help you to work at a much higher capacity than before so it should certainly be looked into.
Another type of technology that was once seen as futuristic but is now becoming common in a range of industries is artificial intelligence. AI can be used in all kinds of creative and innovative ways, such as:
- Process automation
- Collecting data
- Optimizing logistics
- Predicting performance
Update The Company Website
If you have not updated the company website for a few years, then this is a smart way to modern-ize. It is amazing just how quickly web design trends can change, and a dated website will quickly deter any visitor. Therefore, it is a great idea to use an experiment web design agency that will know the latest trends to deliver a modern, attractive and easy-to-use website which will impress any visitor.
Cloud computing can bring many benefits to a business and is a great way to modernize. Despite this, many people are struggling to get to grips with cloud computing which is understandable as a relatively new type of technology. This is why you should look into cloud-based training for enter-prise teams which will help get your team up to speed about using the cloud. This will help you to get the most out of cloud computing and modernize your workforce so that everyone can excel in their role and work with confidence each day.
Understandably, business owners are focused on the threat of the pandemic in 2020, but one area which you must not overlook is cybercrime. Cybercrime is a massive problem that affects business-es of all sizes and in all industries, and there are constantly new threats being developed. This means that this needs to be a priority, and you need to invest in high-quality cybersecurity products in addition to learning about the latest threats and how you can stay safe.
Be Environmentally Friendly
Every business should be looking at how they operate and find ways to be more environmentally friendly. This is important in terms of doing your part to reduce impact, but also because consumers are becoming increasingly eco-aware and selective of the brands that they use, so it is important for your reputation. Not only this but often you will find that being more environmentally friendly can help to lower your operating costs too.
If you are wanting to modernize your business, then these are a few of the best ways that you can do this. Businesses need to stay current and ahead of the curve so that they can find success, appeal to their target customer and stay ahead of the competition but it is also an area that many struggle with so hopefully this post will help.
In this article, we’re going to discuss why you should place your business in the online world, even if you’re just starting up. Also, you’ll find a list below of helpful pointers that are important considerations when readying your business to go online.
Why you should venture into online business
If you prefer to operate a traditional business in brick-and-mortar, there is absolutely nothing wrong with that. But, you’ll be well served to take into account that the world is changing, and people’s buying patterns are changing as well.
With over four billion users as of July 2020, diving into an online business venture is not a bad idea. This might even be your business’ salvation during this ongoing COVID-19 pandemic.
Aside from working remotely, an online business is cost-effective and competitive (based on your marketing strategy). This gives your company, no matter how small, a fighting chance against mammoth industries in your niche.
This is one reason why we recommend starting your online business sooner, rather than later. And here are the five easy steps that you’ll need to do to kick-start your online business:
Five easy steps when starting a small online business
1. Create a business plan
Identify what problem you are solving
Your business is a solution to your potential customers’ problems. But first, you need to define the problem at hand. What problem does your business want to solve? What need do you seek to fulfill?
Take some time to think about whether your skillset solves real-world problems. If it does, check if your competitors offer the same strategies. And if they do, what makes your solutions unique?
This will be your leverage against your competitors. Analyze these factors to see whether your market is thriving or nonexistent.
Manage your startup budget
When you’re starting a small business online, you will need startup capital to cover a range of necessary expenses. For beginners, you need to estimate the budget by having a good guess of your operating expenses.
Pay attention to the expenses that must be covered and make sure they are budgeted. The more cost-effective your startup, the more income you will have to work with.
2. Choose your business structure
When you’re starting your business online, you should define your business structure. You can operate solo (sole proprietorship), or with partners (LLC or corporation).
This is the simplest type of business structure. You can operate this on your own even without filing a lot of paperwork. However, there are risks to this business structure.
Your business won’t have protection from liabilities of debts and business obligations. You will be personally responsible for all of these. That’s why you only choose sole proprietorship when you can handle your business on your own with little need for liability protection.
Limited liability company (LLC)
This business structure allows you to share your business liabilities and obligations with other individuals. If things go south, a LLC protects your personal assets from the liability of business debts.
Through a LLC, you share your liabilities with other individuals. The business is owned by you and these individuals share in profits and liabilities.
You’d want to use this business structure if you choose to gain investors for your business. Corporations are like LLCs, but with outside funding possibilities and more personal protection.
In order to interest possible investors in purchasing your stock, you’ll need to arrive at a business arrangement. They will need to trust that your business will deliver. You can close more deals with investors if you know how to write a winning RFP response.
3. Market research and analysis
By the time you write your business plan, you’ve already done your market research. You know what is missing from the puzzle, and how your business can provide this missing piece. But you’ll need to dig deeper in order for your business to succeed.
You need to understand how your target market works. Do market research and analyze their buying patterns, market needs, etc. Know your market’s queries on search engines, what keywords they use, and other competitive advantages that you can use as leverage.
4. Poise yourself as an expert in your field
Contribute to your niche by providing expert ideas and solutions that come from trusted sources. Build your profile in your community. This builds trust between you and your potential consumers.
5. Design and optimize your website
Your website will be your online storefront. This is where you will communicate and exchange products/services online with your consumers. Thus, your website should be customer-friendly in order to give users a good experience. Some tips that you’ll need to keep in mind when designing a website:
- Keep your website clean and simple
- Make your website easily navigable
- Every element on your website should contribute to converting your visitors to sales.
When you’re starting a small online business, you want to begin with your best foot forward. Get a step ahead of your competitors when you start your online business using these five easy steps!
Starting an online business has many advantages. You can work from any location, it requires very little capital, and it provides you access to a wide range of customers. Most people fail to realize that it requires just as much strategic planning as setting up a brick and mortar office.
So, if you want to learn how to start an online business, these are the best steps to follow.
1.The Right Work Model
The best online business to start will go nowhere without the right company model. Like most people, you probably want to indulge in something you are passionate about, but passion might not pay your bills. So, what do you do?
Before you settle for a job idea, familiarize yourself with Ramit Sethi’s Demand Matrix. It will help you choose a business model that is in demand and scalable.
2. Choosing Your Business Idea
There are numerous online business opportunities in the market today. The good news is, you don’t have to do something completely new; you can freelance using the skills you already have. Otherwise, you should make up a list of company ideas that best suit your talents.
What comes easy to you? In what ways do your friends often seem to rely on you most? Can you turn that skill into a profit? If yes, then you can jump to the next step.
3. Get Validation
Before you start an online business, make sure your chosen idea is validated. Do you have a website? Set up a landing page where you can promote your brand. Do you have competitors? Look through their customer reviews to get an understanding of your potential client’s interests. If you still feel unsatisfied, create your survey and send it to prospective users.
Their honest opinion will give you positive or negative validation. Use the feedback to determine whether the idea is worth the investment or to devise a solution for the current gaps in the market.
Once your idea is validated, the next step to take is an online business plan. It is crucial because it will determine where you get the funding you need and the amount you require. It also serves as the backbone for your work foundation.
Draft a simple work plan. Then conduct a SWOT analysis. Use the information from the business survey you received earlier to define your competitors, price models, market type, and distribution methods.
Then analyze the cost of your venture and determine the appropriate methods to fund your idea. By the time you are doing the final review, you should have a solid business strategy.
5. Develop a Website
Setting up an online business will not work if you do not have a website unless you are on social media. This is the perfect online representation of your products, services, and brand.
A good website with Google Analytics will help you generate customer traffic and analyze your job performance. The process of creating a site might be a challenge, as well. You have to decide on a unique and memorable domain name, choose the perfect host, and figure out the design that will best work for you.
If all this is too much to handle, you can enroll a web developer instead of doing it yourself. Make sure your website is mobile-friendly and has excellent image quality.
6. Legalize the Business
Start an online business only if you can make it legal. Read the online business regulations on the SBA. Once you decide the legal structure you want your business to adapt, register the brand.
Don’t forget to do thorough research on your tax obligations. If you have a shopping cart, configure it so that it can collect your sales taxes automatically.
Online Business Ideas
Sometimes, getting a business idea might be difficult. Those listed below are already making money for many online entrepreneurs. One might be just right for you.
- Online Gaming Business: Have you played the Double Triple Chance online? Was it addictive? That’s how you know that the online gaming business is making money. To start one, first, prepare yourself for legal issues. Then, consider whether you want to locate your company in offshore countries or not, based on your government jurisdiction. Choose the right gaming software, marketing strategy, and set your budget. Make sure that your games are worth playing.
- Affiliate Marketing: If you already have a website, affiliate marketing will be an easy transition for you. All you require to do is to pick a product niche for your business and a partner like Amazon or CJ Affiliate that sells that product. Use the traffic on your site to market the service and provide the CTA for customers. You will receive a commission from every successful order.
- Drop Shipping: Like affiliate marketing, you only need a website and marketing/advertisement capital to start a drop shipping company. Pick a product niche and partner with platforms like Amazon and Etsy. Once a customer purchases the product you are selling, buy it from the manufacturer at a lower cost and sent it to the customer through your drop shipper for free.
- App Developing: Are you a coder with a great new app idea? Then becoming an app developer should be a no brainer. Start working on it, and once it is done, sell it to customers directly through social media and advertisements or to a more prominent company for an instant payday. If you do not know how to code, you can enlist a certified software developer to collaborate with your genius.
There are many other online business ideas that you can go for. Freelancing is especially a cost-free way to earn money online. If you have the experience, you can become an online business manager and help manage other companies.
The bottom line: don’t work on the model, idea, validation, website, and then forget to maintain the business. Management is just as crucial as any other aspect.
Have you started an online business? Let us know what your experience was like in the beginning.
About the Author
Thomas Glare is a passionate freelance content writer, always striving to inspire others and bring insight into the endless possibilities of the modern times we are currently living. He also spent a lot of time collaborating with some prestigious online casinos, thus being No. 1 expert in matters of gambling. He continues to improve his knowledge and is the co-designer of casinos online, Novomatic Games Representative.