Category: Blog

Is cheap pricing really a problem? What price should you be selling at? After completing competitor analysis, many businesses price themselves below their competition with the belief they’ll get more business. In this blog, I’ll be explaining the problems this can cause and empowering you to charge what you’re worth!

1. The busy fool

If your pricing is too cheap, problems are plenty. Firstly, you’ll have heard the expression ‘busy fool’ and this really rings true here. You may be getting the extra business you’re craving but you’ll be working hard for it and generating very little profit. I would argue harder than you need, when the more profitable result could be achieved with a higher price.

2. Poor retention

This first issue with cheap pricing can also contribute to the second, which is poor client retention. If you’re providing a service and you’re the cheapest in the market you’ll likely be busy initially. However, if you are unable to cope with demand, the quality of service you provide will suffer. Customers who are just buying on price will move to the next cheapest at the drop of the hat.

If it’s a product you’re providing, you will likely have to use cheaper materials to sell at the lower price you’re striving for. Again, the quality will be lesser and the result? Poor client retention.

3. Getting the right clients

In a business to business environment, the right price is essential to attract your target market. Businesses know that a cheap product/service equals inferior quality.

A couple of years ago I started working with a marketing agency that was unable to attract the large corporate companies they desired. I discovered they were charging just £30 per hour for their services, which in that industry is more akin to a freelance/sole trader operation. The only work they could win was small businesses looking for stationery.

Since I started working with them, they have increased their prices in line with professional marketing companies to £65 per hour and are now able to win the business they crave.

Forget cheap pricing, charge what you’re worth!

So, don’t be a busy fool. Charge what you’re worth and you will attract better clients who value service and are prepared to pay for it. You will in turn be able to provide a higher quality product/service and this will lead to better retention, reputation and more new business. My blog on the relationship between price and value goes into more detail on this.

After all in football, the higher the price, the more skilled the player! It’s the same in business and if you are too cheap, what you’re actually saying is that you’re not very good.

As ever, if you need any help with putting this into practice then contact me for a free 2 hour business review where I will give you tools to immediately improve your business.

Have a great month!

In the process of reviewing the finances in a business, I’ll look at what clients are buying to determine their break-even point. This in depth review sparks discussion on how much is being spent and the value it brings. Very often, I discover that clients have opted for the cheapest price and as a new business that’s OK. In this blog, I’m sharing the reasons why this isn’t always sustainable.

Buying a service

There are certain functions in a business that you’ll likely outsource, such as accountancy, bookkeeping, marketing and so on. While price should definitely play a part in the decision making process, simply choosing the cheapest may not benefit your business in the long run, and could even end up costing you more than you expect.

Let me share an example of this. A client of mine needed some computer maintenance and made a quick, price based buying decision. In fact, the individual wasn’t properly qualified and created an issue with the entire system, costing thousands of pounds to put right.

So think about the your needs, check testimonials or get recommendations. Compare the services provided as well as the price when making your decision. In my example, a more expensive service initially could have prevented the huge bill.

Choosing a product

The same theory applies in practice when buying a product. Printers are a fantastic example of a product that can vary hugely in price. With small desktop printers costing less than £50 to commercial printers running into thousands, how do you know which to buy?

The answer is straightforward. For product purchases, compare initial purchase cost as well as running costs and longevity. Combine the two to give a more realistic figure on how much the product will cost over time. Not forgetting to ensure it does what you need it to! With all that information to hand, you’re well placed to make your final buying decision.

In the example of a printer, in fact the cheapest printers use the most expensive inks and often a bigger investment upfront will be more cost effective in the long term, as well as providing additional capability.

In our personal lives, we come across the same scenarios. When choosing a fridge in Curry’s, the options are from the budget basic to the dear but desirable. The extra functions combined with the improved reliability will account for the bigger price tags. So in business as well as at home, the message is very much, buy what is appropriate to your needs as well as your budget.

The only way to meet your business goals is to plan to meet them. Budgeting is a crucial stage in the planning process and it’s easier than you think. Here are my 7 easy steps to successful budgeting:

1. Plan when to complete the budgeting process

When to set your budget depends on your financial year; 3 months ahead of the start of the next financial year is the perfect time. So if your financial year runs January to December, then budgeting should happen in October.

2. Gather your information

You’ll need the details on expenditure and historical sales in order to prepare your budget so ensure you have this ready for budgeting 3 months ahead of your next tax year.

3. What to spend?

Create two lists of expenditure for the year ahead. Firstly, what MUST be spent? This might be salaries, rent, materials etc. Then, what would you like to spend? This will include marketing activity such as trade shows, a new website or advertising as well as capital expenditure such as new or upgraded equipment. Don’t be afraid to include everything you want, including a salary increase for you!

4. What income is needed?

Based on your historical sales trends and any retained work for the year ahead calculate whether this income will cover your planned expenditure. If it doesn’t, plan the growth in sales needed to meet the costs.

5. Layout your budget

Create a monthly plan of income and expenditure so you can monitor it.

6. Compare actuals against plan

On a monthly basis, review whether your sales and expenditure are meeting your plan. If you have more than you need, great! If not, then plan to reduce spend accordingly.

A bookkeeper can help with this process and is much more proactive than relying on your accountant who will provide a historical view. Budgeting and monthly reviews via your bookkeeper is more easy to work with and gives the tools to ensure your plans are met.

7. Repeat!

Of course budgeting is an ongoing task, so you can diarise each year when it will be completed. With each passing month and year you’ll build a bank of data with which to improve accuracy. However as always, if you need any help with this process then give me a call for a Free Business Review.

Cost cutting is a great exercise to send more money directly to your bottom line. However to do this, you need to have an understanding of what is being spent and where.

As business consultants, we’ll review the finances of the business but often find they’re not being tracked and managed.  Many clients leave the financial stuff to the accountant, after all they’re the experts. While this may be the case, the expert on what the expenditure is generating for your business, is YOU. Not reviewing the outgoings of a business can result in paying for services no longer used.

In this blog I’m sharing 4 tips to effectively cut costs in your business and as a direct result, increase your profits.

1. Monitor what’s being spent

It may sound obvious, but look at your cash flow on a monthly basis. It’s easy to focus on income and sales but don’t forget that your costs directly impact profit! So, review all the outgoings, do you need and are you using all of them? If not, you can start your cost cutting exercise by getting rid of them!

2. Get a bookkeeper

If bookkeeping is one of those tasks that never makes it to the top of the to-do list, then hire one. It really is that important. A bookkeeper will provide a monthly report on income and expenditure, so you can see what is being spent. With this information, you can then perform your cost cutting exercise.

3. Understand what each cost is doing for your business

Categorising expenditure will help highlight which of your costs are business essential and which are not.

Some things like rent, rate and materials are unavoidable. Marketing activity such as advertising, social media management and so on are essential only when they generate income.

Create a list of costs that should be generating income and review the return on investment for each. Create a plan for any activities that aren’t meeting your expectation, can anything be done to improve performance? If the answer is no, cull it. My recent post, Profitable Marketing will give you some advice on this process.

4. Value for money

Do take care to ensure that if you decide to change a service provider due to cost, that you’ll still get the required service. Sometimes cheapest isn’t always best. Look out for next month’s post, you get what you pay for, for more information on this.

So follow these steps and take control of your expenditure today! Keep following the advice to make sure you look after it in the long term. If you need any help implementing these tips, then call me to arrange a free business review.

Finally, with your bookkeeping process in place, read on to my next blog which looks at budgeting, for the next level in the financial planning of your business. With a budget in place, you can achieve your goals.

Have a great month!

According to a recent survey, a business owner’s average working week is 50.5 hours, 36.5% higher than the national average of 37 hours!

But the principle of putting in long hours to make a business successful is a misconception and often, productivity will suffer.

All work and no play

A poor work/life balance will lead to tiredness, misery, a building resentment of the business and the outcome? A reduction in productivity.

Relationships are affected too; although little research has been conducted, anecdotal evidence suggests the divorce rate is higher amongst entrepreneurs because they’re never at home. Of course your partner and family want you to achieve success, but they want YOU more.

The positive effect of rest on productivity

Some years ago I worked 18 hour days, 6 days a week to turnaround a failing business. After 3 months of sustained long hours, I was at work one day when I fell asleep at my desk. It was literally a wake up call. I took a couple of days out and returned refreshed and more productive. More got done in just 7 hours a day and I had time again for friends, family and me!

Hitting a deadline

There are occasions when urgent deadlines have to be met, these things happen. But you must take time afterwards to recover. Understand and recognise these as one-offs and don’t let them become the norm. That’s when productivity, the business and potentially your family will suffer.

Time management

It’s not just long hours that are commonplace, at least 70% of small business owners never take a holiday and this too impacts on productivity. My article on time management contains some great tips on scheduling and managing your workload. This advice provides the tools and confidence to take control of your working hours so you can get back more time for you!

Don’t forget, for help implementing this advice book a FREE 2 hour business review today. One of my consultants will come into the business, assess the current status and leave you with real advice to set you on a course to focus, develop and grow.

A business’ profit level can be linked to areas such as marketing activity and cost control. How much holiday taken by the business owner is often overlooked.

Taking a break

Research suggests that at least 70% of small business owners never take a holiday. In my role as a business consultant, I come across this time and time again. Catching up on emails is far more the norm than catching a few rays. While it might appear that leaving the business could be catastrophic, not taking a holiday could be catastrophic itself.

How motivated and productive are you?

Your business simply cannot afford or function long-term without you taking a holiday. Do you feel at maximum productiveness and full of motivation? I doubt it. When business owners don’t take time out, they become fatigued, directly affecting productivity. Worse, resentment towards the business can build up, impacting motivation too.

I recommend taking at least 1, 2 week holiday a year. If it’s impossible to take such a long break, then take long weekends instead. After a long weekend you’ll come back to the business refreshed, with a resulting increase in productivity meaning you can make more money!

Handing over the reins

Ensuring the continuity of service for clients is a key concern for business owners when planning a hioliday. If this is a problem area for you, take a look at last month’s article on Creating Consistency in Service. In it, I explain how to give staff the tools and knowledge to get the job done, exactly as you want it!

Get holiday ready and make more profit

So with the summer upon us, it’s the perfect time to get away. If you don’t yet have your summer break planned, get one booked! If you understand the benefit of taking a break but still feel unable to, book a free business review so we can help get your business holiday ready and more profitable!

If you’re a business owner working alone or if you have a small team you may feel you don’t have time for systems and processes or that they just aren’t necessary. If that’s the case then you may losing money. In this post, I’ll explain how to implement a system to ensure that you have transparency across the business, that you’re spending your money wisely and thus have successful and profitable marketing from which to start your business growth.

Where does your business come from?

You may think you know where your business comes from, but how often do you complete an analysis of your marketing, if at all? In my role as a business consultant I discovered a client of mine was spending thousands of pounds on Yellow Pages advertising. When I asked whether this was a successful marketing tool, the business owner didn’t know because he wasn’t monitoring the amount of business that it was generating.

Record the source of your sales!

I showed my client a simple way to record the source of his business and after 3 months we were able to see that none of it had come from Yellow Pages!

So, it’s clear why it’s so important to monitor where your customers come from. Implement a system to keep a track of the source of your new business for you and your staff to follow. Remember to record each enquiry as well as each sale, so you can determine your most successful marketing activity.

Profitable marketing

Very quickly, you’ll have some meaningful insight into the profitability of your marketing and this will give you the ability to spend your money wisely. Perhaps stopping some activity altogether and reallocating the cash to something that is really working. Imagine the results…

Understanding the outcome of your expenditure is just one of the reasons why systems and processes are so important. My next post will explain how they are also important in your efficiency and customer service delivery.

If you need any help implementing these tips, then book a free business review.

Are you about to become an employer? Perhaps you already have a team but you are struggling to delegate tasks to them or maybe you do delegate with disastrous results! If you are in any of these situations then implementing processes within your business can give you the consistency you need for great customer service delivery. Without them, your customers may not know what to expect when they buy from you.

In practice

Let’s take McDonalds as an example of this in practice. Being a huge franchise organisation with stores being independently owned, McDonalds pride themselves on their consistency in delivering products and customer service the world over. A Big Mac in London looks and tastes the same as a Big Mac in Moscow or New York! You know exactly what you are going to get.

Systems and processes are the key to delivering its customers food that looks and tastes the same. Everything has a process, from cooking times, ingredient amounts, right down to the way the store is cleaned.

McDonalds attracts young staff with a high turnover; many are students who are simply there to earn some extra money but that probably don’t see a long-term career with the company. Having such detailed procedures leaves nothing to chance and ensures the consistency required.

Training

Of course in your business your processes may not need to be so intricate, but having the right ones in place will ensure that no matter how skilled your workforce is, you can be confident they can get the job done. Written processes or checklists for specific tasks can give you the basis of staff training.

Repetition equals reputation

With established processes and checklists in place you’ll be able train staff effectively and as the old saying goes, from your repetition comes your reputation. With procedures in place your customer service delivery should be the same each time, building trust and reliability in your business and from there, business growth.

You may be the closest person to your own business, but that doesn’t necessarily mean you’re the best person to decide your USP.

I wish I could say I’m the best person, but that’s not true either!

If you want to know what will sell your product or service the best… simply ask your customers why they bought from you. You never know, the answer might surprise you! But it could also give you the edge in marketing to others.

Think about it, if ten people bought from you for a specific reason, chances are, others will too.

Do your research

If you conduct customer satisfaction surveys when you complete a job, add in the question, “Why did you choose us as your supplier?”  Allow them the opportunity to elaborate. Ask them how many suppliers they considered, what was the deciding factor, what would they tell others about your service? All of this will give you invaluable information that you can translate into an effective marketing message.

You will usually find a common theme emerging, but it’s not always what you would expect.

In my own business, I thought my USP as a business coach would be the affordability and achievability of my service to small businesses – my primary target market. Customer surveys, however, revealed it was the fact that I offer guaranteed results that appealed to them most.  Every single one of my satisfaction surveys was returned with reports of increased profits and growth which allowed me to claim the following: “We are so confident that this programme will help your small business, that we guarantee your profits will increase by at least three times its cost over the next three years.”

You’ll now see “guaranteed to increase your profits” prominently highlighted in all my marketing. Just take a look at the home page of my website.

Analyse all emerging themes

Through your research, you may find more than one theme emerging. If this is the case, think about why different customers might like different things about your product or service. How are the customers different? Does one thing stand out to a particular age group? Are certain customers buying a particular product or service because they have a specific need in their industry sector? All of this information will help you fine tune your marketing messages to a variety of potential customers.

It’s important to note, however, that this needs to be an ongoing process. You might find themes change over time, so it’s worth making sure your USP is still in-line with customer comments.

USE your USP!

Once you know and understand your USP – use it! Make it your billboard ad, your website banner, your email footer.

Everywhere customers might find information about you, keep your USP prominent and visible.

I even suggest to clients to include their USP in their answer-phone message. Listen to mine – you’ll see what I mean (01384 355 444).

Use your research

The findings of your research can be a useful selling tool in more ways, too.  Use the statistics to your advantage.  Do you remember this tagline? ‘Nine out of ten mums use Daz because it gets your clothes whiter than white’.  Or, what about, ‘Nine out of ten cats prefer Whiskers’? Although I’m not quite sure how that customer survey must have gone…

If you uncover some impressive findings, share them.

The key point is, let your customers be your guide. They really are better placed than you to pinpoint your USP.

Every business claims to have one, but how many ‘Unique Selling Points’ are actually that… unique?

It’s always one of the first questions I ask when working with a business – tell me what your unique selling point is.  Most of them give me very valid selling points, but often – nothing that makes them unique.

A window cleaner who says, ‘We clean the sills and corners too’; a builder who claims, ‘We leave the site as tidy as we found it’; a cleaning company who states, ‘We have trustworthy employees’ – all of these are great, but aren’t they what customers would expect from anyone in your industry?

Your USP has to be what makes you different. Why do people buy from you? What makes them choose YOU above your competitors? 

You may offer a unique product or service – fantastic! Finding your uniqueness is easy.  This always begs the question for me, however – why is no-one else doing it? Is there really a demand for your service? But, I guess that’s a whole other blog post about market research.

You may be able to claim you are the best at something – great! Just make sure you can qualify this statement and prove how or why you are the best.

The best way to find your USP is to look at your business from a customer’s perspective. What will resonate with them?

If you conducted market research before starting your business, take a look back at your findings with your USP in mind. Did a theme emerge about what is most important to people? Is it customer service, price or something else? Can you hook your USP on this?

It’s also good to remember that USPs aren’t always set in stone. You may want to use a different USP for the same product or service when marketing to a particular geographic area, for example, within a particular setting or to a specific demographic group.

The way you sell cleaning services to the domestic market, for example, will differ to how you sell to commercial customers.

Of course, there is an easy way to determine your USP… My next blog post will reveal all!