Never Lower Your Price

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In a nutshell: If you want to make money, you must value your services or products. And, that means you should never lower your price; merely offer less for less. When your customer wants something at a lesser price, reduce your offering to match the price, and don’t lower the price for a greater-valued service or product. In doing so, your value stays consistent, you will attract the right customers (and conversely, repel the wrong customers) for you, and you will make more profit over the long-term. Never Lower Your Price - Web and Beyond Blog

“Create different levels of service. Some people only buy the most expensive item. Avoid losing sales: offer a stripped down version of your product or service.” ~Beth Silver (in “107 Ways to Leverage Your Small Business Through Marketing & Public Relations”)

Small Business owners early on in their business’ lives find themselves with a particular dilemma. When you are starting your business you consider that any new customer is good for business! So, when they negotiate you down a third of your billable rate or 40% off your retail pricing, you accept with gleeful resignation. You have hopes that business will be different once you have a steady stream of customers. Why? After you have all these customers, you’ll have the bargaining power to raise your rates and really start to turn a profit, right? Sadly, this logic doesn’t hold muster for several reasons: you eat away at your passion by not valuing your most important asset (i.e., you), you attract the wrong customers which develops bigger problems down the road, and you create more financial problems than you solve by operating unprofitably early on in the business.

Consistent Value Is Getting Paid What You’re Worth; Ergo, Never Lower Your Price

Starting a Small Business is no joke, eh? It’s long hours, stressful, energy-consuming, and it can also be genuinely rewarding when you focus on your passion and skills, or your desire to overcome a challenge. You started your business to provide for your family, build a product or service that you can sell with the business and turn a profit, give back to your community, to fill in a gap for your retirement needs, or whatever other reason you had. In order to get up every day and do this, you need to be providing value to your customers but your motivation won’t stay very high if you’re not getting paid what you’re worth. I always tell my clients to price themselves so they are motivated to do the work. Who wants to get subpar work from you because you don’t feel like doing the work for the pay you’re receiving? This does a disservice to your new customers and to you.

The Ones Who Matter Won’t Mind and Those Who Mind Aren’t Worth the Worry

There’s a trick I learned in my teens. You take your 10 closest friends and add up their salaries, then divide by 10; this usually works out to be your salary. It’s remarkable how this works within a small margin of error for most people who earnestly do it. You are similar to the company you keep. And, that means that when you bring in customers who are all discount seekers and not best-value-seeking customers, you build up referrals to other discount seekers. Over the months and years, your business’ value gets eroded as you accumulate customers willing to keep driving down your price, not valuing you, and telling their friends and colleagues that they too can get low prices out of you. This hardly sounds like the best value for your time and effort.

Mo’ Money, Mo’ Problems…Uhm, No. Less Problems, Mo’ Money

For many years, I ran a commodity business. I was constantly pressured to lower prices and deliver the same great service. There were market and regulatory forces in play here that were beyond our control and so I grinned and beared it. Learn from my early mistakes in the business. Don’t lower your price unreasonably to save your business as it won’t actually save your business. I see this often now in coaching and consulting Small Business owners in this downward spiral, before I set them straight. Here’s what happens:
  1. You lose your passion and start cutting corners.
  2. You start to lose your best-paying customers who start to see the lower quality of your work.
  3. The decrease in good business makes you desperate to (a) bring in more underpaying and delinquent paying customers, and (b) not paying yourself and your own bills.
This cycle of lowering prices leads to lost passion, lost productivity, and lost good customers. The gains unfortunately are in greater customer service complaints, attracting worse customers, and more pressure on you to take on anything that comes your way. You’re worth every dollar you’re reasonably charging, so don’t let others tell you otherwise. You should get paid well to do your best work, and nothing less. And, you should work with good people who will refer you to good people, especially those that will pay their bills on time. Anything short of this and your business fundamentals are lacking. So, if you’re currently thinking of starting a business, or if you’re currently struggling, I hope this compels you to never lower your price.

You Really Did Learn Everything in Kindergarten

Glassdoor’s annual list of the “25 Best Jobs in America” would lead you to believe that all you need to succeed in business today is a degree in computer science, statistics, accounting, or math. Undoubtedly, the list, heavily dominated by tech and finance careers, will send thousands of anxious students (and their parents) to career counselors seeking ways to add …

Glassdoor’s annual list of the “25 Best Jobs in America” would lead you to believe that all you need to succeed in business today is a degree in computer science, statistics, accounting, or math. Undoubtedly, the list, heavily dominated by tech and finance careers, will send thousands of anxious students (and their parents) to career counselors seeking ways to add ...

Making a List and Checking it Twice: Gearing Up to Hire in the New Year

The holidays have arrived. What a wonderful time of year! Lately, I have been reflecting on the meaning of the old verse “for everything there is a season.” This oft-quoted saying reminds me that our lives are driven by a constant flow of change. I find that the key to my happiness and the health of my business can best …

The holidays have arrived. What a wonderful time of year! Lately, I have been reflecting on the meaning of the old verse “for everything there is a season.” This oft-quoted saying reminds me that our lives are driven by a constant flow of change. I find that the key to my happiness and the health of my business can best ...

We, Not I, Would Like to Help You With That Recruiting Challenge

For some time now, Frederique Campagne-Irwin of Her Corner has been challenging me to move TalentFront from a personality-driven business – selling oneself — to the next level of sustainability – selling a solution.  I understood the concept, but I didn’t really understand what that meant, at a gut level, until I passed up an opportunity because I could not …

For some time now, Frederique Campagne-Irwin of Her Corner has been challenging me to move TalentFront from a personality-driven business – selling oneself — to the next level of sustainability – selling a solution.  I understood the concept, but I didn’t really understand what that meant, at a gut level, until I passed up an opportunity because I could not ...

The Real Cost of a Bad Hire

There is nothing quite like that moment when you find and extend an offer to the right candidate! You just know that bringing her on is going to have an awesome impact on your business and you can’t wait for her to get started. Only sometimes, that impact isn’t awesome. Sometimes when the new hire starts working, she doesn’t click …

There is nothing quite like that moment when you find and extend an offer to the right candidate! You just know that bringing her on is going to have an awesome impact on your business and you can’t wait for her to get started. Only sometimes, that impact isn’t awesome. Sometimes when the new hire starts working, she doesn’t click ...

Advice to Government Contractors for Fiscal Year End

We’re less than a month away from the end of the Federal fiscal year, and we know our clients may be wondering about what they should do to prepare. So, we asked John Boulware, our Federal Government Contracting specialist, if he had any advice for our clients. His response is below: All government contractors should be… Read more »

The post Advice to Government Contractors for Fiscal Year End appeared first on Alexandria Small Business Development Center.

We’re less than a month away from the end of the Federal fiscal year, and we know our clients may be wondering about what they should do to prepare. So, we asked John Boulware, our Federal Government Contracting specialist, if he had any advice for our clients. His response is below:

Federal Contracting Fiscal Year EndAll government contractors should be bracing for another round of cuts forced upon Federal agencies by sequestration. Some contractors will be surprised at the cuts they must absorb or the option years that are cancelled as a result of painful cuts forced on many Federal agencies.

Agencies will be forced to make some more hard choices, as they have done in the last few years. Some of these choices may simply be made based on how well the Federal agencies know and trust their supporting contractors or on how closely connected contractors are with agency program staff who have the money.

If you have not maintained really close contact with your Federal client’s program staff, it may be too late for you, but don’t give up yet. Stay close to your client’s program staff in September and October. Meet with them as often as possible hoping that you can build on the good relationships you have developed over the last few years and convince your clients that your firm is the one they must protect.

In meeting with them, make sure you have a purpose your client will appreciate. For example, ask to meet with them to explain some adjustments you think you can make to bring added value to your contract. Then, when you meet with you client, be specific and show the added value.

If you have additional questions about government contracting, please visit our government contracting resource page. If you would like to set up an appointment to speak with one of our government contracting specialists, please complete our request for counseling questionnaire.

The post Advice to Government Contractors for Fiscal Year End appeared first on Alexandria Small Business Development Center.

Roundtable Recap – Identifying Your Target Market

Identifying Your Target MarketOn April 16th, Alexandria Small Business Development Center hosted the monthly Business Development Roundtable here in Alexandria, Virginia. We discussed the all-too-important marketing topic of identifying your target market. First, we defined a target market to start the discussion of identifying your target market. Some of the definitions we heard were really insightful and ranged from “finding ideal customers” and Patra Frame of Strategies for Human Resources really honed in on “who will I call” not just the broader concept of “small to medium-sized businesses.” Eliza Dolin of Ivy Quill Communications echoed Patra’s sentiment on the point and added that you’re actually “targeting individuals” because “companies are not hiring you” people are. Looking back at who has been your customer is equally important. We also discussed demographics, psychographics and understanding the individual profile of your buyer.

Director Bill Reagan noted the caveat that “we’ll serve anybody” is counterproductive; you should “narrow that down” to “help you plan, strategize and emphasize where you’re going to market and align your resources.” There is a lot of research you can do for identifying your target market before you start your business. Alexandria SBDC Business Analyst Jack Parker posited the important question: what does your client profile look like? He stated that you need to look at your core market area, as geographical data matters for most local businesses. Peter Baldwin of MarketForce Strategies looks at target markets a little different in that he looks at the “want’s and need’s” of his clients’ buyers. He noted that target markets change over time; different generations have different want’s and need’s.

Next, we tackled the challenge of actually identifying your target market. I asked the seasoned entrepreneurs in the room, “did you know that you needed to target your market? And, where did you start in identifying your target market?” Patra Frame indicated that she started off at her local library (since she started her business before Alexandria SBDC had started here in Alexandria, Virginia!) to research her audience and made a point that it’s a continual process. Director Reagan mentioned that it isn’t quite as scientific since you will likely have to adjust your target market after you start your business, honing in on the right people over time. But, as he indicated, you need to start somewhere. Assistant Director Gloria Flanagan pointed out that knowing who your buyer is can sometimes be tricky, as in the case of children who may be making the buying decision and the parents are merely providing the capital for a purchase.

Finally, we discussed tracking your customers over time so that you can create a historical record to refer back to you, and then making action upon this data for your target market. Most of the business owners found difficulty in naturally finding ways to meet hands with their direct target market so they had to get creative both in referral networking and advertising strategies. There was a consistent theme that you needed to engage with your target market where they congregated, whether online or offline, with a strong strategy. So much great conversation was additionally had in the roundtable, but you had to be there to absorb it all!

If you’d like to join the Biz Dev Roundtable, just come any third Tuesday at noon at the Alexandria SBDC; our next one is tomorrow, May 21, 2013, and the topic is “Referrals & Leads: How to Use, Get and Give Them.” Bring your lunch, or coffee, network and have a conversation with 30+ Small Business owners and professionals about a pertinent business marketing or management topic.

Small Business Evangelist. Web & Digital Technology Strategist. Business Management Consultant. Presenter | Speaker | Trainer. Evernote Certified Consultant. Google Small Business Advisor, Productivity. Productivity, Technology & GTD Enthusiast, Coach & Podcaster.

The Critical Importance of Good Advice

Alexandria Small Business Development CenterSmall businesses and small nonprofits often face situations where it may make sense to get expert guidance to avoid costly mistakes. At the very earliest concept for a business venture, there are resources that can provide objective feedback and suggest approaches you might not have considered. The Alexandria Small Business Development Center (SBDC) provides accessible and experienced resources through its staff and its new SCORE counselor. These experts are adept at identifying areas that even the best of planning might have overlooked, and every entrepreneur benefits from getting a fresh perspective. With comprehensive feedback at the earliest stages, your strategies, approaches, and next steps are much better defined. In addition, the services of the SBDC and SCORE are without cost, leaving you more resources to spend on starting and growing your business.

During these counseling sessions, entrepreneurs may identify issues that require further research. Often, these include zoning and other locational considerations. They also include licenses, permits, and potential restrictions. Forewarned of these requirements, the entrepreneur can make better plans with fewer surprises. City staff is also ready to help the entrepreneur with preliminary and detailed planning – all before leases or other obligations are signed. The City now has small business facilitators who are entirely focused on helping novices through permitting and licensing processes. They can be reached at 703-746-4199 or 4268.

For help with site selection and advice on leasing, the entrepreneur should consult the Alexandria Economic Development Partnership (AEDP). Their expert staff knows the City, the real estate market, rental rates / sales comps, and can assist you with the site selection process for leases, sales or development. Their services are free and an essential stop before anyone considers, much less signs, a lease. Additionally, the Alexandria SBDC has a “Leasing Checklist” on its website. Both AEDP and SBDC staffs can advise you on Alexandria neighborhoods, their civic and business groups, and how to make the best entry with your business.

Financing is another area where entrepreneurs may need to get advice before making a formal application. Every application you make could affect your credit score, and being declined reduces your prospects with other lenders. Meeting with the SBDC’s business analyst – a retired banker – will help you strengthen your presentation to a lender, much like preparing with a coach before an interview. The earlier that preparation takes place, the better.

In addition to the free economic development resources like the SBDC, SCORE, and AEDP, there are other professionals whose expertise will save entrepreneurs many headaches – and dollars – if they are consulted early-on. Attorneys and accountants should be part of your management team from the start, and human resources consultants can help you avoid potential pitfalls as you start hiring employees. Alexandria SBDC keeps lists of reliable professionals for a broad range of small business matters, and we welcome your contacting us for referrals.

For more information, visit www.alexandriasbdc.org or contact Alexandria SBDC at 703-778-1292 or [email protected]

 

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