Over Christmas, in life as in business, we reflected upon the year just past and discovered that we had plenty of reasons to be optimistic about 2020. Dad’s Place had proven that it could soak up the extra costs associated with having a premises and indeed we have gained a number of clients, that we simply wouldn’t have, had we not taken the decision to go from a home based business to whatever the term is for what we are now. But boy oh boy, with greater room, comes greater responsibility.
*Note: I hesitate to call us more professional because we have always been professional and there are some really cracking home based businesses in Cornwall who are equally professional. So I don’t really subscribe to the theory that having a premises changes our status, hence I’m not sure what the term is. I mean we can pretty much do everything we could always do, we just have more space in which to do it.. However, I do think it changes perceptions. Maybe, it’s as simple as people being more comfortable having a mooch than they would in your living room, perhaps that adds to the belief that you can do the impossible and that’s the reason for the larger orders, we’ve received.
I must quickly apologise for the title, I wanted it to relate, like one of those chain mail things you see on social media. You know buying a product from my business helps me buy food, please support local businesses. The thing is as much as people want to do this, it all comes down to price and shock horror, price is even more important when dealing with larger orders. What follows is a document of the key points I have learnt since we’ve transitioned into a “bigger business.”
The Need For Money Is Greater
I know this sounds like a horrendously simplistic statement but its true and worth remembering. Why? Simply because, if you have any intention of running a ” bigger” business, it’s important to set the ground work early and that includes being stringent when it comes to receiving payments. Of course on occasion you can show discretion, that’s your right as a business owner but ultimately, you want to avoid this notion that ” you’re a home based business and you don’t have outgoings to worry about”, so you won’t be as desperate or as pushy as other people who have staff to pay, for example. Ultimately getting paid, and maintaining a healthy cash flow is the hardest part of running a business, whatever it’s size.
I have always believed that getting paid is the ultimate recognition of a job well done. If you have provided a service then make sure you get paid promptly because: (1) essentially until you get paid a business is out there benefiting from the product or service that you have provided for free. (2). If you are lenient with your agreed payment schedule too often, then you will really struggle to move away from this fluid pay structure in future, when cash flow may become more of an issue. In short business owners will struggle to see you as anything other than the business you portray yourself as. So start as you mean to go on. (3). Cash Flow and Profit. Most importantly payment shows that customers value your efforts, and ultimately your business should (eventually) support your lifestyle. If it doesn’t, then the buzz that comes with running your own show, will soon disappear, and with it another talented and creative entrepreneur will succumb to the call of a steady wage.
Quotations, Quotations, Quotations
The bane of any business owners life. You send a quotation, and you get an e-mail back saying “yeah but what’s your absolute best price”. Well you know, I just gave it to you, I’ll tell you what I didn’t do, I didn’t just pluck an number out of thin air, I considered the variables, (material costs, wages, and time) very carefully.
Now it could be argued that if you go in at a higher price, you could negotiate down to a lower price, the price you want to charge, and (quoted for in the first place), to make the customer feel they have got a deal.
I’ve used that technique when selling a car, but with most business communications taking place over e-mail, who has time for that? Please don’t misunderstand my words, I will negotiate with anybody because ultimately I want your business and I hope we can grow together. However, I’ve learnt that you have to be very careful not to undervalue your services in search of the ‘Deal’ because again it’s incredibly difficult to negotiate prices in future deals using the “cheap as possible” quotation system.
My favorite negotiation techniques are: (1). Well what if you produce it in this material, would that make it cheaper? Well yes but you asked me to quote for high end materials. (2). If I give you x£ up front, can I have a cheaper price? Oh I’d need it cheaper that that. Sorry. That’s the best I can right now, I’ve done as much as I can (it’s okay to admit that)., it’s not a failure on your part at all. (3 and my personal favorite) Oh I can, get it for x £ cheaper from somewhere else. Not for the quality of product I’m providing (it’s okay to be confident). If you believe in your business so will the customer.
Note: Always have a quote ready for different options available because everything comes down to price and no customer truly knows what they want until they have seen the price, even if that customer trusts you and knows your work, it’s SIMPLY business. So don’t be disheartened, just be prepared. It’s a business owners job to either secure every deal you can or realise when to walk away from it. That in a nutshell is pretty much my only job. Do what’s right for you and your business and be prepared to say no, for every deal you fail to agree, if you’re good enough others will follow which just might just be right for you.
There’s no avoiding it. If you want to attract a new client, you will most likely need offer a freebie and despite the fact we have dozens and dozens of repeat customers, work for many, many companies and have lots of positive reviews, this will probably always be the case*. Which by the way they (the potential customer) will probably sell and in some (many) cases you won’t hear from them again but that’s okay because the greater goal here is to get more work in the future. Business is much like dating, you have to put yourself out there and hope that others judge you fairly.
But I just wanted to finish with a couple of funny examples of why people have said they want this freebie.
(1) Oh I need to see how my photography looks on canvas (for example). Me, you’re a good photographer, it will look mint trust me, this is what we do. Oh yes but I need to see it, I need to judge for myself. Me. Okay no problem. (2). I don’t know you’re quality, I only have your word for it, I need to see it for myself. Me. Okay (3 and a personal favorite) I’ve been referred to you by a friend, who runs company x and says you’re brilliant but (and I guess, you may not completely trust them) I’ll still need a free sample. Okay.
Whatever, ever happened to simply saying, I’ll need a sample product before I can commit to orders? Note: * Unless you change it. All samples will now carry a minimum fee.
I think the point that I’m trying to convey to any new business owners is, whatever frustrations you are facing, every other business owner (honestly) faces the exact same frustrations, irrespective of how long they’ve been in business. Because and to quote the single most annoying phase ever, business is business, it’s not personal. Here’s the thing, it is personal, it’s your business so never be afraid to do what feels right. Every decision counts and if you think it’s the right one, then the chances are, it is.
There are some things that you simply can’t legislate for but I hope this article highlights some of the pitfalls we all fall into.
Thank you for reading, best of luck with your business.