Preparing to sell

To be a success in business you need to sell a product or service and make profit.

But before you sell anything, you must thoroughly understand your own business, rival businesses and the market place to give yourself a competitive edge.

In this guide you will find information on the essential steps that any business must take before selling a product or service. You will find details on competition and the importance of a brand, pricing and promotions and how to sell online or in a shop environment. This guide also provides information on sales agents and distributors, licensing and setting up sales contracts. Finally this guide explains how you can take a product or service to market and how to create a sales plan.

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Factors to consider before you sell

All businesses face competition, and success is often based on how well you respond to it. You should be aware of your competitors and always strive to develop a competitive advantage over them. Download how to get to grips with your competitors [opens in a new window].

To gain a competitive advantage, you could:

• raise or lower your prices
• improve your product or service – improving or modernising features or the manufacturing process
• use creative channels of distribution – such as vertical integration or channels of distribution not normally associated with your product or service
• exploit supplier relationships

Market share

Market share is the percentage of all sales within a market that is held by one brand/product or company and can be measured in several ways, such as:

• sales revenue
• sales volume

Market share is directly linked with profitability and many companies aim to increase their sales relative to their competitors.

You can measure your company’s performance relative to a competitor by the proportion of the market that your company is able to capture – Market Share = company sales divided by total market sales.

You can increase market share by:

• providing more value for potential customers – eg improving product quality
• price cutting – to increase sales revenue, though this tactic may not succeed if competitors are willing and able to meet any price cuts
• adding new channels of distribution or increasing the intensity of established distribution channels
• promotion – increasing advertising expenditure, though competitors may respond accordingly

Customer base

The consumers that buy your business’ goods or services define your customer base.

For further information see the page assess your customer base in our guide on how to increase your market share.

Niches

A niche is a small but profitable section of a market that is often suitable for a specific range of goods or services that meet a particular need. You can create a niche market by identifying customer needs or wants that are not being addressed by competitors and by offering products to those customers

Marketing strategy

Your company will need a well-developed marketing strategy that will act as your marketing roadmap and forms an essential part of your overall business plan. For further information see our guide on how to create your marketing strategy.

Brand message

Before you begin to sell a product or service, you should ask one question of your company – what does your brand stand for?

For your brand to stand out in the marketplace it should make an emotional connection with potential customers.

You should aim to sell an experience rather than a product, for example a financial service providing peace of mind.

For further information see our guide on branding: the basics.

Wholesale value

Some products are sold via wholesalers. Wholesalers buy goods from producers at a reduced price. After adding on their profit margin, they then supply the goods to retailers who sell to the public.

Most businesses will be able to sell to wholesalers, as they can provide a good way to reach many retailers at once. However, you should look closely at the profit margin you need to make in order to remain profitable. This is important to ensure you don’t sell your products too cheaply to the wholesaler who will always want the lowest possible price from their suppliers.

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Sales promotion

You will need to use some form of promotion to encourage sales of your product or service.

Sales promotions are often original and creative and there are many popular options, for example:

• Buy-One-Get-One-Free
• incentives such as bonus points, vouchers, money-off coupons, competitions and prize draws
• promotional messages via new media including websites and mobile phones that support sales promotions
• point-of-sale materials and product demonstrations
• free gifts and loyalty points
• discounted prices
• joint promotions – between brands owned by the same company or with a brand from another company
• free samples
• fair-trade and cause-related products such as those which help charities
• finance deals – no or low finance, or buy now pay later

It is important to ensure that any promotions and offers will still make you a profit even if very successful and taken up by lots of customers.

For further information see the page on sales promotion in our guide on how to generate business from your e-marketing plan.

Pricing

Strategically, pricing is very important as it is related to product positioning and affects other marketing elements such as product features, distribution and promotion.

There are many ways to price a product, for example:

• premium pricing – a high price for unique products or services
• penetration pricing – an artificially low price to gain market share before the price is increased
• economy pricing – no-frills low price usually associated with economy brands
• promotional pricing

For further information see our guide on how to price your product or service.

Field marketing

Field marketing involves highly skilled and trained people conducting research about a specific product or service. 

There are numerous benefits of field marketing, for example:

• face-to-face contact with potential customers is a very effective way to reach customers
• marketing campaigns can reach niche markets quickly and effectively
• field marketing can be supported with other marketing techniques in-store and online
• brand building can also take place when field marketing is handled correctly – trade shows and events reinforce brand awareness

For more information, see our guide on market research and market reports.

Merchandising

Merchandising is about how you present your products to potential customers. It is an essential part of your business image and should be included in your marketing plan when your business starts.

You need to understand your potential customer and create:

• an attractive environment – inviting products/services/logo/store front/signs
• comfortable space to shop or do business in – welcoming, clean interior with appealing product presentation
• a place which encourages customers to return – professional, helpful

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Retail selling

The selling process starts with preparation. You should aim to always be prepared and look the part. Your surroundings need to be ready and you will need to have a sales plan.

Your shop should always look busy and successful. Your staff should portray a positive image that tells potential customers that this is where they should buy the product or service.

You should aim to be unique and approach retail sales in a way that positively sets you apart from the competition.

Selling is a combination of science and art, and every potential customer must answer six questions before a sale is made:

• do I want the product?
• do I want this particular one?
• do I want it now?
• do I want to pay this price?
• do I want to get it from this person?
• do I want to get it from this company?

Emphasise the benefits of your product/service and not the product or service alone. Be passionate when you describe a feature of a product or service. Explain its function and how it can benefit a customer, providing evidence and making sure the customer knows ‘what’s in it for them’.

Always address objections fully and use it as an opportunity to sell more of the product/service benefits.

Customer relations

In a retail environment, customer relations are vital. You will need to build rapport with potential customers very quickly and treat each person as an individual – offer personal assistance.

You should know your products or services inside out – stock status, delivery times, promotions etc – and be able to find a good match between customer requirements and what the product and/or service offers.

You should also know details about your competition – all of their strengths and weaknesses. When you know more than anyone else about your industry and all of the corresponding product information, there is really no need for a customer to shop elsewhere.

Always look for ways to improve skills and knowledge to help you discover new ways of increasing your effectiveness and productivity. Be determined, confident and happy. You should understand the definition of success in your industry.

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Online selling

With the improvement in modern technology, online selling – or ecommerce – is available for any business.

If you want your business to successfully sell online it should follow the same rules as any other business. You must have a product or service that potential customers want, at a price they can afford from which you can make a profit. The final step is to make sure your potential customers know about your product or service.

Online shop/e-store

You need to make it as easy as possible for potential customers to find you online and buy from you. You need to provide all the information that customers require to make a decision and make it obvious. It is very easy to drive someone away from your online shop so make sure your site is easy to find, attractive, and simple to understand and use. For example:

• avoid making customers login before they can view your product or services
• avoid long-winded self promotion
• use clear links and product images that will help customers
• keep all information up to date and relevant

For further information on planning and developing e-commerce opportunities see our section on online selling.

Marketing online and offline

To market your product or service online you need to find out how people conduct an internet search and discover the keywords that they use for your type of product. You will also need to know the alternative ways that potential customers use to search online. For further information see our section on online marketing.

You should also consider traditional forms of marketing to build up awareness beyond the internet.

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Sales agents and distributors

You can use a sales agent to act on your behalf. Although an agent may arrange a sale, the sale contract will be between you and the customer. An agent may be either an employee or self-employed. For further information see the page on using a sales agent in our guide on how to reach your customers effectively.

A distributor is a customer of yours who sells your products/services on to their own customers.

One advantage of a sales agent or distributor is immediate access to your target market without the need to build your own sales presence. They can also help you to break into new markets, such as overseas, where you may lack contacts, time, experience or expertise.

You should consider various factors to decide whether an agent or a distributor is beneficial for your business, for example:

• access to your target market
• how they will fit in with your existing operation
• rights and responsibilities
• sales process – how involved do you want to be
• customer relationship – how close do you want to be with customers

Selling to agents and distributors

You will need to base your sales pitch on what you can offer the sales agent or distributor – convince them that it will be worth their while representing or stocking your product/service, eg:

• easy to sell your product/service
• potential profit from sales
• boost their business – how your product fits with their existing range
• service and logistics – reliable supply and quality of products/services

For further information see our guide on how to choose and manage a commercial agent.

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Licensing

If you have a brilliant business idea that you would like to launch quickly and profitably, you may want to consider licensing your idea to an established company.

Before you find any licensing partners you should make sure your idea is proprietary – made, offered, or sold only under the exclusive rights of the property ownership (governed by copyright, patent and trade secret laws) of a manufacturer or seller. You should also research potential partners and industry standards.

You should seek legal advice and use a non-disclosure agreement to protect your interests. You should also obtain some form of intellectual property protection for your idea.

Proving your product

You will need to convince a company to pay you a royalty on the wholesale of your product/service by proving it is both worthy and capable of success. You must sell the benefit of your idea and not the product or service.

Proving the worth and potential success of your product or service can be achieved by creating a prototype or concept drawing of your product. If the technology used by your product already exists in the market there is no need to prove that it does indeed work. Instead you should create a sell sheet of your idea that details your fresh approach, new strategy or whatever differentiates your product from those that already exist.

See the page on how to licence your patent in our guide on how to get patent protection for your business.

Test the market

To test a potential market, your product/service and marketing plan are exposed to a carefully chosen sample of the general public to gauge consumer reaction. The results from such a test will help you to decide to continue or reject your product/service before its full scale launch.

See the page on how to test the market in our guide on how to research and develop your business ideas.

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Setting up sales contracts

A sales contract is an agreement that defines the rights and obligations of both the seller and buyer, and is an essential element in any business selling products and services.

Your business should take specific advice on creating a sales contract and tailor it to suit the specific needs of your business.

If a customer pays for an item when they buy it, they automatically accept the terms of the sale at the point of purchase. You can display your policies, terms and conditions and warranties on invoices, bills, your website or in your shop.

The key issue with a sales contract is when it came into existence – when an offer is made and accepted. Unless your terms of trade have been agreed before this, they do not apply. At the same time, anything salespeople have promised is likely to become legally binding if the customer is relying on it. This applies whether a salesperson has agreed something in writing or not.

Unfair trading and consumer protection regulations

You can comply with most sales regulations in one simple step: by avoiding unfair trading and misleading marketing. Although the detailed requirements are extensive, common sense and an honest approach to doing business covers most of the ground.

Under the Sale of Goods Act, any products you sell must at least:

• match their description
• be of satisfactory quality and suitable for their purpose

There are similar requirements that apply to the sales of services.

For further information see our guide on fair trading, trade descriptions and trading standards.

Other key selling laws

If you sell via the internet, by mail order or telephone, the distance selling regulations will apply. These regulations give consumers some rights to cancel purchases.

You should seek legal advice to understand any other regulations that may apply to your particular products or services, eg offering consumer credit (which generally requires a licence) and data protection for customers’ personal information.

For more information on consumer protection, consumer credit and terms and conditions of sale, see our section on selling and the law.

You will also need to be aware of any sales contract that you must sign when dealing with suppliers or wholesalers. For further information see the page on drawing up a contract for your purchase in our guide on how to negotiate the right deal with suppliers.

Drawing up a sales contract

Your sales contract should reflect particular aspects of your business and have clear terms and conditions, such as:

• who the contract is between and what is being bought and sold
• price and payment terms
• details of any warranties and any buyer or seller obligations

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Establishing your sales objectives

To successfully bring a new product or service to market you must follow some essential steps.

Study your competition

You should study your competitors’ marketing materials (adverts, websites etc) and identify where your product or service is similar and where it is not. You will then be able to assess if customers are likely to buy from your or your competitors.

This information will also reveal the ideal customer for your product or service that you can then target with your marketing.

A good method to use is a SWOT (strengths, weaknesses, opportunities and threats) analysis. For further information see the page on here’s how a SWOT analysis improved my business in our guide on how to measure performance and set targets.

Define your marketing strategy and tactics

You must choose the right sales and marketing channels for your product/service, eg shop, website or both.

Usually, a business that sells across many channels will achieve greater success because customers who can shop when and however they like tend to spend more and shop more often. See the page in this guide on factors to consider before you sell.

You should make sure that as many people as possible know about your product or service, including potential customers, the media and reviewers. See the page in this guide on sales promotion.

Know the lifecycle of your product or service

After introducing your product or service your marketing campaign will need to be updated as your product or service matures.

By carefully monitoring your marketing results, you will be able to see diminishing returns that will indicate when it is time to:

• revise the product or service
• alter your media message
• phase out and launch a new product/service

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Create your sales plan

In a business, your ultimate goal is to make money. To help you do this a sales plan is required.

A sales plan describes and quantifies over a period of time how sales of your products or services will be made and to whom.

A sales plan includes information about your business and customers. It can help you map out ways to increase sales with current clients as well as expand your business to attract new clients.

A successful sales plan is actionable and has a method for evaluating results once the plan has run its course.

You would normally create your own sales plan, often with the input of employees.

See our page on creating a sales plan in our guide on how to forecast and plan your sales.

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