Business Money Management
Learn how to keep more of what you make with these business finance tips!
If you are a business owner these words probably make you cringe… I’m looking for a product or service that is “reasonably priced”, “inexpensive”, “affordable” or heaven forbid “cheap” … OR “I don’t want to spend too much, can you change your price?” Um What!?!? Am I right? We all hear these words and phrases “too many” times in our careers. Some come back with the cliché, “You get what you pay for”, but that one isn’t often welcomed as often as, “I want a deal!”
I have a dear friend who is a phenomenal baker… and when I say phenomenal, I mean it! (Seriously if you want her number let me know!) But I digress… Recently this fabulous baker posted her frustration on social media about this very subject. She was shocked that again, someone was trying to negotiate her set price. At first, I was relieved that someone else feels that way too and I’m not the only one! She got DOZENS of comments commiserating and a few bringing up similar atrocities (but that’s another blog post for another day!) I sat with it for a few days and couldn’t let it slide… this isn’t right! Do the people know how rude it is when they question pricing or come right out and ask for a discount? Every entrepreneur and business owner struggles over providing fair pricing for what it really takes to provide the service or product expected. Pricing is by far something we most question and re-evaluate, then question again. It’s enough to drive you insane! The bottom line is… If what we offer was “easy” you wouldn’t need to HIRE someone else to do it for you. Therefore, there is talent and skill involved, not to mention time consumed to provide the product.
It makes me wonder, is it that they don’t value what we are offering, or is it that they want to make sure they aren’t taken advantage of? Or maybe they’re just jerks and want everything free or at a discount?
High Quality – Low Price??
As a service provider, I sometimes get insulted when someone questions my price. Heck, I am literally one of the least expensive coaches I know! I have been told I should raise my prices by colleague many times. I offer a lot of value, customized and precise information that can help my clients drastically change their business (and their life) for the better… isn’t that worth paying for? The best one is, when I offer exactly what they are looking for, but they “have to think about it”. Sometimes I ask… What do you think a fair price is? I rarely get an answer.
I don’t have a magic secret to keep this from ever happening, but I do have some tips to include in your sales conversation to reduce the chances of a “misunderstanding”.
If you sense there is an issue with price, here are a few questions you can ask to determine if you want to continue to try to work with this client…
- On a Scale of 1-10 how important is this to you and/or your business?
This is a great question to determine how serious they are in looking to buy your product or service. If they are a 9 or a 10, then ask more questions to see if you can get them to the buying stage. If they are an 8 or below ask them why they are that low.
- How would it feel to reach your goal through my services? Or How would it feel to have my product solve the problem or fill the need for you?
Here we are trying to help them see the value in what you are offering. You can discuss why you are so talented and skilled in your field and reassure that you believe they will be in great hands with you!
- Would you be open to help finding the money in your budget for (Product or Service)?
Sometimes they just need help problem solving. They may not have considered other ways to find the money to pay for your excellent product or service. If they agree, you can offer suggestions and brainstorm in where they can free up some funds to take part in your services or purchase your product.
- What would it cost you to remain in the same place or not accept my product/services? Cost in Time? Cost in Money? Cost in Stress?
There are more costs than money in some cases. Sometimes you offer a peace of mind that it is taken care of. Sometimes you save the client tons of time in the process. Ask them why they thought to hire someone in the first place and how much the savings in time, money and stress is worth to them.
- What do you think is a “fair” price?
I mentioned earlier I sometimes ask this. This is kind of a loaded question. I find I get to this point when I have gone through several other questions and feel I am not getting anywhere. This can help you determine if they are being realistic or just plain unreasonable. If they don’t have an answer, I usually follow up with how I came to set my pricing, I explain my training and my level of expertise. At that point either they will purchase, or it is time to move on as they don’t see your value. You could go so far to give them a scenario to consider… ask if their boss didn’t pay them or took some money out of their paycheck because they wanted a “deal” or they didn’t have the budget for the time they put in at work… how would that feel? Well, maybe that is too far. LOL, but I’d love to know how they answer. Sometimes I think people forget this is our livelihood… we can’t pay our bills with “thank you’s” and positive reviews.
- Tell me why you believe can’t afford it at this price… Spouse doesn’t see the value? No $ in Account? Paying for other things? Business not making enough?
Getting to understand their hesitation can be eye opening. Maybe it isn’t about the money after all. Maybe they need more information to decide. Maybe it is the money and they are not able to afford your caliber of service. If that is the case, try to help with another solution… refer them to a lesser expensive provider… they will not get your quality, but you will leave a positive impression by trying to be helpful without compromising your standards.
- What is your WHY? Why are you doing this?
Why did they seek you out in the first place? What problem are they trying to solve? Reminding them why they need help can sometimes help them see the value.
The bottom line is… Don’t compromise your pricing or your value to land a client… 9 times out of 10 they will be more hassle than it is worth. You are Talented, you are Skilled, you bring VALUE, and you Deserve to be paid! Entrepreneurs and small business owners unite! Each situation and business model is unique. Keep providing high quality products and services and stand behind your pricing! The clients you are meant to work with will come!
We have all been there… We are expecting payment and something “goes wrong”. Sometimes it is as simple as a digital “glitch”, but there are times when a client does not pay on time. As an entrepreneur or a small business owner, you are most likely managing your cash flow by the contracts you have or the invoices you have sent. At times, a missed or unpaid invoice can send your whole budget into a tizzy. There is a lot of emotion around money on both the business owner and the client’s part. The best thing you can do is create a plan for how you will handle this when it happens, to avoid reacting in an emotional way instead of a professional way. Here are some tips to help you create your system for non-payment.
Be sure you have a full system! Think your payment process through from start to finish. Be sure to let your clients know the following:
1. Be as basic and specific as what forms a payment do you accept… Cash, Check, Credit Card, PayPal, other merchant services, etc… As well as lengths and terms for payment plans.
2. Have a written refund policy. Have it clear, concise and in regular print (not fine print). If you have a contract or a standard invoice have it print it on that. You can even consider having them initial that they read it.
3. Past due/Late payment policy with set fees. This should be consistent throughout your business. Have a set late fee, with a set period that you consider a payment to be late. 3 days, 5 days, 7 days? My suggestion is no longer than 14 days.
4. What is your returned check/payment policy and fee? Be sure you know what your bank will charge YOU. Bank fees have gotten out of hand… you want to be sure you recoup at least the bank fee along with a little extra for your administration costs to reach out to collect the debt. If you have a recurring payment option, how many payments need to fail before your recurring stops. Will your system retry the payment in a few days? Check with your merchant provider for guidelines to this.
5. If you provide a service, make it clear that services will not continue until the client payments are up to date. You want to also be clear as to if you are willing to make up sessions or time that the client was past due.
6. Decide the length of time you plan to attempt to collect the debt before taking legal action.
7. All your expectations, terms and conditions should be readily available to your client… it should be written in contracts or on receipts and can be listed on your website. Always include your contact information so that if there are any questions you can be reached easily.
8. It is a great idea to have your lawyer look over your contracts and Terms & Conditions to make sure you are compliant. You will also have someone who is familiar with your terms to contact if you need to take legal action.
Once you have your system I place… there may be a time you need to enforce it. Here are some tips on how to not burn bridges as you try to collect payment…
1. Always give your client the benefit of the doubt. Reach out to them and ask if they are aware they missed the payment. Sometimes it was a complete oversight, problem solved… sometimes they are having a financial hardship. See if there is a way you can work together to get the payment made. Be careful of breaching your own policies… if you change the terms of a contract be sure to send it to them in writing and save a copy for yourself.
2. Be sure the client understands the policies and the contract they agreed to. Offer to answer any questions they have. Be available.
3. Be diligent about follow up. Tell your client when the next payment is due, if another late fee will be assessed, etc.
4. Do not be standoffish… like I said early… money is emotional. You can feel devalued, taken advantage of… even betrayed. Understand that threatening, badmouthing or the silent treatment is not going to resolve the issue. Keep open lines of communication if you can and do your due diligence for the time you set before you begin to take legal action.
5. When it is time to take legal action, the best practice is to first send an official letter stating when you will be taking the issue to a lawyer or the courts. Be sure you have all our ducks in a row… copies of signed contracts or invoices, print outs of emails with date stamps, etc.
6. Most of all…. STAY PROFESSIONAL. Your feelings are hurt, but if you start mudslinging or talking badly about a client… it just makes YOU look bad.
I hope you never find yourself in this situation, but if you do, having a plan in place can be a sanity saver!
6 things all Entrepreneurs can learn from Shark Tank – by Mindy Lipsky, CTACC
As an entrepreneur myself, and the fact that I coach dozens of entrepreneurs regularly… I LOVE the show Shark Tank! It is a Friday night staple in our house. The whole family watches and critiques from the couch each person’s pitch to the Sharks. We can all learn a lot about business just from watching the show. The sow had undoubtedly inspired countless people to take a chance on their dream. In honor of tonight’s episode when the Sharks reach $100 Million in investments… I thought I would share with you my observations of what any seasoned or budding entrepreneur can learn from the show and of course the Sharks themselves.
- You’ve got to know your numbers!
So many times, for entrepreneurs on Shark Tank this is the nail in the coffin before they even get off the ground. Someone comes into the tank and… well… tanks! All because they didn’t come prepared. I work with many business owners and one thing I noticed… the successful ones know their numbers and the struggling ones don’t. It is critical to not only know your income, but know your expenses too. It is required by the IRS to keep business books and it is also a great idea to evaluate them often! You have to know your breakeven point before you can ever take a profit. The simplified formula is Income minus Expenses = Profit. But if you have run a business you know it isn’t as cut and dry as that! Knowing your numbers will make a huge difference in your growing business.
- Numbers don’t lie!
Another thing that trips people up… they know their numbers but didn’t take care of them! What I mean by that is… they got themselves in debt or their margins are awful! Maybe they already have backers that own a part of their company so they are limited in how much equity they can offer the sharks. ALL of this leads to an increased chance of not getting a deal. As an entrepreneur, you must measure risk. Investing in education, product or marketing isn’t always a bad idea… but you need to weigh the ROI (return on investment). If you are spending $10K and getting a return of $2K, something has to change or you will be in a tough situation financially and FAST! The moral of this observation… Know your numbers and take care of them!
- Passion doesn’t pay the bills!
It is necessary to be passionate about what you sell or do… but that is not enough. You need strategy, planning, marketing, number crunching, etc. etc. You need business skills. Not everyone who starts a business has business training. You must do your research and continue to educate yourself on the current state of the market, changes in technology, changes in trends… and I may be biased here… but hiring a coach can help a lot! One of the perks of Shark Tank is when you get a deal, you get a Shark! They know the “how to’s” the average entrepreneur doesn’t.
- Just because you love it… doesn’t make it a business! I say this one with a “But” to it. It really depends on what your goal is… if your goal is to be a millionaire… you need to be sure what you are offering fills a need on a large scale. You may have heard the Sharks say, “You came in too early” or “This isn’t a business it’s a hobby” or “it’s not scalable”. What your ultimate goal is matters. If you are looking to help people and make a comfortable living for yourself and family that makes a difference. Your business doesn’t need to be “scalable” it just needs to be treated like a business (not a hobby). If you think your business is worth Millions… you need to be sure your product or service in needed by millions! It comes down to supply and demand… you’ve got to supply what people are demanding. Fill a need or solve a problem. The key here is to make money you must be intentional. A business needs to be set up and managed to generate income.
- Know your Pitch!
When watching the pitches on Shark tank, you can tell who prepared! They practiced that initial pitch hundreds of times! Even if you aren’t going on Shark Tank, you need to be able to clearly and concisely explain what you do to a potential buyer/investor. Although many of us are not looking for capitol… you need to be able to tell people what you do… more importantly what’s in it for THEM! Practice your 30 second intro. Be a natural as you can and showcase what’s in it for Them.
- Success doesn’t happen overnight!
We live in an “instant gratification” world! Impatience is a part of being a business owner. We work hard and want to see instant results. But success takes time… it is a dance of stepping forward, stepping back and sometimes falling. You just have to get up, dust yourself off, and try again. You only truly fail if you quit!
So, I hope you enjoy the show as much as I do… Share with me what YOU have learned from the show (or even from being an entrepreneur!) Congratulations to Shark Tank!
It was November of 2013. I had opened the doors to Innovative Coaching services just 4 short months earlier. Things were moving along and I was learning a lot each day about being a Solopreneur! It was a Tuesday… November 12th to be exact. I had gotten the mail and found a letter addressed to “The Legal Department of Innovative Coaching Service”. I said out loud… “Oh isn’t that cute someone thinks we are big enough to have a legal department!” I chuckled and opened the letter. My laughing quickly turned to panic and I admit… tears! I was being SUED for copyright infringement of a photo I used on the blog portion of my website. (The Blog had been written and posted way back in JUNE!)
Of course I called my attorney, which began the months long process finally ending in a settlement of a reduced fine, yep… a fine plus now attorney fees to boot! So what happened?? It is a case of “I didn’t know what I didn’t know” I THOUGHT I was searching for “FREE” images when I used Google Image search. Turns out the image may be free… but you may need a license to use it. There are also people out there who plant seemingly “Free” images then hire an agency to follow it’s “rights and recovery”… in plan words… these images are planted on the internet waiting for someone to use it… they hire college students to troll the internet to “find” them… then sue people for using them without permission or the proper consent. It’s a legal loop hole that makes them thousands, sometimes even millions!
It was a horrible experience so when it was all said and done I asked my attorney and numerous web designers how I can protect myself from that happening again. The only REAL way is to ALWAYS take and create your own images. ALL of them! You can either get pretty good at taking creative photographs or you can hire a photographer to help you create stock photos for yourself. You can purchase pictures online, BUT I warn you to be sure you have the proper licensing for distribution if you plan to post it on your website or blog. My suggestion is to hire someone you trust to take relevant picture for you! If you need referrals just ask! I know a ton of Fantastic Photographers… even some who specialize in stock photos!
There are some sites that are 100% free. As long as you read the fine print and can ENSURE you are using them up to the terms intended… maybe give it a try. I must admit I am a little gun shy even with those sites!
My new plan when I am not feeling creative is to browse Google images and find one I like… then recreate it! I am not a perfect photographer, but it sure beats getting sued! So I encourage you… take a moment to check your website… take down any images you don’t OWN or own the rights to distribute. I don’t wish that letter on ANYONE!