Competition or attrition?

Blog pix 21 March 11 001I am in a service business. I have all the modern advantages. I can help people all around the world because we have email and the internet. I do not have to meet my clients, although it is great if I can. However, if they are in South Korea or Chile, they are a long way from the UK. If I can check exactly who they are and give them what they need, I am happy and I certainly hope they are happy.

There are people who have businesses on the High Street or in town, and their businesses look something like mine. I do not see them as competitors. I have working relationships with some of them. We can provide each other with skills the other does not have; rather symbiotic.

However, imagine having a business very near another the same where you are competing for the walk-in customer and where the footfall is limited. In the local village, there is a long-established men’s hairdresser, or barber if you prefer. There is the owner, who is the brother of a business acquaintance. He has two very competent assistants, one female and one male. I do not have so much hair these days, but I am quite happy to have such hair as I have cut by any one of the three. It was a good business, quite busy, and open Tuesday to Saturday.

And then…. A year ago another similar business opened directly opposite. That business takes quite a lot of the walk-in trade. Our village is not that big. I doubt there is enough work to go around. Both shops are now open seven days a week, desperately trying to out-do the other. It is a war of attrition as far as I can tell. One is bound to crack. I know the owner of the longer-established business feels under serious pressure, not just because of the new lengthy opening times, but because I see him looking across the road to see how many people are in the other premises.

If I formed a business relying on walk-in trade, I would not set up next to another. I would find a parade or street lacking my sort of business. We have only one greetings card shop. Why would anyone risk setting up another next door? We did have a florist come to our village to compete with a well-established one. They failed and have gone. Why would a men’s hairdresser risk a similar fight? Even if they “won” by putting my preferred place out of business, the fight must make life and cash flow very tough in the short term.

I do not have the answers, but it all seems crazy business planning.

Freebie folly

I had an email from an accountancy firm asking if I would give free tax advice in half-hour sessions over the telephone. I thought the guy must mean free to the client, but his firm would be paying my business.

It turned out he really did mean “free” and that I would be giving this free advice in the hope of picking up start-up businesses as clients as a result of their gratitude.

Things I have learned about free advice:

  • If you give it, you will never be asked for more advice for which you get paid.
  • Your insurance position is questionable if someone thinks they had the wrong advice.
  • Someone who wants it has no respect for all the experience, study and learning you have put in.
  • You could be being paid for the work you would be doing instead, rather than giving time away free.

Yes, I sometimes do give free advice, but that is on behalf of a registered charity. Never, never, never sell your work short, and never, never, never, never work for nothing except for a cause you hold dear.

Do you have a tax issue I can help you with? Get in touch and I will guide you.

Self-belief in business

Now you can criticize...

It stands to reason that if we have our own business we need to believe in what we are doing. That means that we should believe sincerely in our product or service. If we are honest with ourselves we can be honest with our customers. Then we can sell with that sincerity.

The trouble is that self-doubt can always creep in. We are not all constantly confident. Many of us, although actually very good at what we do, cannot quite believe that we are as able as our peers and colleagues, let alone better than some. We fear we will be found out as imposters. Maybe this is a more common phenomenon in women but this was my problem for many years. I think the explanation for me lies here.

Late in my career and rather accidentally, I landed a job which was technically very difficult, and which really terrified me to start with. However, I not only found that I could do it, but that I was very good at it. That was when it came to me that I was not an imposter, but could give as good as anybody, and better than some too.

I had this revelation, but maybe you just have to realise that the feeling of being an imposter is only in your mind. I still have bad days sometimes, and maybe you do too. Just think of all the good things you have achieved in your career and in your business and build on your confidence. Go get ‘em.

Brands, value and me

Photo by Jon Stow

Photo by Jon Stow

I would normally avoid medical matters in this blog, but it is relevant that I am allergic to pollen floating about from early spring to mid-summer. You see, I buy anti-allergy pills which I find very helpful.

I needed some more, so went to one of the local supermarkets. They only had the famous brand variety, at £5.99 a packet. I am used to paying £2.00 for the generic version, which is exactly the same. Yet people must buy the well-known brand at that higher price otherwise the pharma company would not bother to maintain it. Brand power is worth a lot to big business, but I have to see value, and as far as my antihistamine requirement was concerned I did not see the value.

I crossed the road to another shop and paid my £2 for a generic version. What would you have done?

Insults, self-respect and selling by value

I had an email enquiry from someone who was concerned about possible tax liabilities should he sell a property he used to live in, but had let to tenants recently. There was one particular point he had got completely wrong. I wrote a reply as follows:

“Hi Fred (his name is not Fred)

Thank you for your enquiry. I think you are under several misapprehensions…

I should be pleased to advise you and give you estimates of any tax payable after renting out for 24 or 36 months and my fee would be £XXX (a fair professional fee) plus VAT.

Kind regards

Jon”

I received the following reply:

“Hi Jon

I appreciate you getting back to me. However, that charge is way above the figure I am looking to pay for what I understood to be 1-2 hours work.

Thanks anyway

Fred”

I responded:

“Thank you for your email, Fred. Although it was brief, it caused a sharp intake of breath this end.

From an employee’s point of view, they may think their hourly rate in a service industry reflects the value of the work provided, but the reality is that their employer has overheads and the cost to provide the service may be two or three times that hourly rate. Then there is the profit element since we all have to live.

I provide a service based on my expertise, the cost of my continuing professional development (CPD) which is obligatory for members of my professional bodies in practice, my office overheads, insurance, the services I buy in from others, and with a view to profit and tax which has to be paid. The CPD is pretty important in practical terms and there have been several changes to the taxation of let property announced even in the past year or so.

You would have had the benefit of a road map in order to plan the possible sale of your property (or to keep it), you would know the possible tax payable at various stages, be aware of all the tax reliefs which could be available and have reasonable certainty based on different outcomes. You would have had the benefit of all my long experience and learning. All this is of substantial value. One should always look at and understand the value rather than the cost of a service.

Oh, and to provide the answers to several “what ifs?”, outline the reliefs available and to put you right on your misapprehensions would have taken considerably more than one or two hours.

If you can get professional advice upon which you feel you can rely a lot more cheaply from someone else, that is fine, but you know the saying “if you pay peanuts…”

Regards

Jon”

We all know there is no point in doing unprofitable work and it does nothing for our self-respect if we provide a service which is simply not valued by our customer or client. It is much better to do less but more valuable work, and far more profitable too.

If we do not value ourselves, how are we to sell our value to others? We can certainly do without being insulted by those enquiring about our services.

Have you had this sort of comment in response to your quote for business?

Turning down work – really?

One of the mistakes many start-up businesses make is taking every project or job, no matter what. I made it myself.  It is very tempting to accept anything which comes along, but the new business owner needs to consider:

  • Is it within our expertise?
  • Will it be profitable?
  • Have we the capacity to do it?

If the answer to any of those questions is “no”, then we should decline politely.

Sometimes even more experienced business people can get this wrong too, and accept work which cannot be delivered satisfactorily. That may lead to damage to reputations. Never be afraid to say no. Feel able to refer another business for the work if you think they will be able to do it. That will make more friends too.

What does not make for a good reputation is a business owner saying “I will get back to you with an estimate or a quote” and then not doing that because they do not fancy doing the job. That is a good way of losing friends and again damaging reputation.

Never leave a prospect hanging. They will think more of you if you decline and tell them why.

The leaky tap – are your customers happy?

We all try to do the best for our customers, but do we know if they are happy? There might be something which they see as having gone wrong with our service, and we do not even know about it. We cannot put it right if we don’t know.

As someone who has many landlords as clients, I take an interest in the property rental market. Sooner or later, if a house or flat is being let, something will go wrong. Maybe the stair carpet is coming loose, maybe there is a damp patch, and perhaps there is a dripping tap which might not just be annoying but do damage.

Most tenants would tell the landlord or the letting agent, and the problem would be fixed. Strangely, some tenants never complain. They just give their notice and leave, and it is only then that the landlord finds out they were unhappy. Really, no one likes to lose a tenant and have a break in the rent.

It is the same with those of us who sell goods or services. Even if we believe we have done our best, there will be customers who have not been happy, but did not tell us. They just did not come back for more of our offering.

How do we avoid this problem? Well, we can’t altogether, because some people will not tell us even when we ask what they think about us. However, we must make sure that we always do ask, and with the right feedback, we can make amends and get even better at what we do.

Always ask all your customers and clients if they are happy or if there is anything you can do better. You can never keep them all for ever, but you can retain more for longer. Perhaps some of your “natural wastage” can be avoided.

 

The value resold

A few months ago I advised a client on some potential tax issues he was concerned about. It took a while to research; well mainly to check as I had good knowledge of the issues. It is always important to check one’s memory against the latest legislation and case law as things can change.

What my client was looking for was not a tax scheme – I don’t do those – but the answers to a series of questions. It was a “what if?” sort of project.

When I was asked to quote in the first place, as always I thought about the value to the client. How valuable could it be to him in terms of money-saving in choosing the right path? How valuable was it in terms of peace-of-mind knowing what course of action he should take, and what to avoid doing?

I quoted a fee which he accepted. It was worth doing from my point of view because I could make a decent profit taking into account my overheads and time, but the determination of price was nevertheless the value to the client.

More recently I have been asked by another new client virtually the same set of questions and “what-ifs?”. Really, subject to a few minor tweaks, I can give pretty much the same advice. However, it will take much less time and other costs will be minimal.

Should I charge less? Of course not! I believe the value to the new client is much the same as to the previous client. I can bill him the same, and he will be happy paying for the money-saving and peace-of-mind. I know that because he has accepted my quotation.

Those of us who provide advice, knowledge, or if you like, our intellectual property, have studied hard for a long time, and have constantly to keep up-to-date with the latest happenings in order to give the correct current advice.

We have earned our value and deserve our reward. Why should we sell ourselves short and think in terms of labour costs? Never undervalue your own expertise when selling to clients.

Are your prospects in harmony with your business?

I guess we can all make a splash once to get noticed, and a joke might be the way to do it. Will prospects really remember a business for the one joke, repeated over and over again, or will they get bored?

Here is eHarmony’s current ad in the UK:

 

 

 

 

I would rather that my potential clients felt they could relate to my business and feel comfortable that I could give them what they wanted.

Here is a confession. I have played the dating agency game, and did computer-dating back in the Seventies and Eighties (yes, they had computers then). I would far rather have thought that I did not need to have film-star looks, and did not need to be perfect. I was looking for a normal sort of girl, not some glamour model who would not give me a second look.

The old eHarmony ad featured real people who seemed normal to me; not ordinary, but with their own individual characteristics. Had I still been in the game, I know that this next ad would be much more attractive because I would be comfortable with it until I bought.

 

Don’t you prefer this to the joke ad? Well, I certainly do, but does the advertising agency know better?

Isn’t your prospect more likely to buy when they feel familiar and comfortable with your business and you?

If you are not special, you are not trying

Guarding the beach hut, Thorpe Bay

Be different (Photo credit: Jon Stow)

I have had my run-ins with telecoms companies in the past, and very frustrating it has been.

For the third month in a row, my business broadband provider, which is one of the smaller ones, failed to process my monthly payment and for the third month in a row I had a somewhat threatening email from their Credit Control Department. On each occasion I have logged into their website and paid on-line from the same account using the same method as they would had they succeeded in collecting my money. It is quite clear that the problem must be with them, so it is especially galling when all they can do is send me rude emails.

Following the last rude note from them and having paid the bill again, I telephoned to speak to the Credit Control people, and told them what I thought, but in very polite terms. I was advised that they could not check individual accounts. But, I said, one of the benefits of dealing with a smaller company was that I had in previous years received what seemed like a personal service. They had no response to that.

So it seems I am no longer getting the value out of dealing with a smaller, more caring company, in which case why should I pay more than I would dealing with cheaper but larger competitors? I will pay for value, but not if I don’t get it.

I asked to be transferred to Customer Services with a view to discussing my account. I expressed my unhappiness with the treatment over payment and asked why, with no better service than from a telecoms giant, I was paying more each month and with a lower download limit than I could have elsewhere. The response was “we cannot compete on price with the others”.

I have “voted with my feet”. I have taken my account to a cheaper provider. Value of service is important to me, but I am not paying for what I don’t get.

My soon-to-be-former telecoms provider is going to struggle. If they cannot compete on price and they no longer compete on value they will go out of business.

Our small businesses need to be special and different and offer that extra attention to our clients and customers, otherwise we cannot compete with the Big Girls and Boys. We need to offer value and if our customers feel special, then we have established great relationships with them leading to ongoing business.

Don’t you like to feel special? I do.