Getting started - the price break transition

[harryn]

Figuring out how to sell is the number one problem for most businesses, small or large. It's great being a small business owner, because you're in charge. But on the other hand, "Who you gonna call?"

I'm frankly surprised we don't see more threads on how to help small businesses succeed. PM has a forum for the purpose, and there are some interesting posts there, but from what I can tell, there's a much bigger demand for help than supply of answers.
Cheers,

BW

Hi Bob,


I have had a few people contact me from my sig line on this forum on helping them get started. I have a nice, short survey form I give them to help them write down (for their own benefit) why they want to get into business, what they are good at, and if their family situation actually can handle it.

So far, only one has ever replied back after getting the form, even though it is not very long and I charged them NOTHING for the help.

My impression is that anyone that isn't willing to write down "I am good at making xxx" isn't really interested in being in business or willing to listen to advice, free or otherwise.

[BobWarfield]

Hi Bob,


I have had a few people contact me from my sig line on this forum on helping them get started.

...

So far, only one has ever replied back after getting the form, even though it is not very long and I charged them NOTHING for the help.

Maybe they decided based on the questions they didn't want to be in business for themselves. It's not for everyone. Heck, it's not for most people. For some of us, it is a curse. I keep going back and starting small companies. Just finished my 5th, which had an unhappy ending (that's gonna happen too, learn to roll with blows).

People ask me why I don't go get a cushy big company executive job. It just isn't as much fun. I'm an entrepreneur--way too big and haughty a word for doing what just seems like more fun. But, if you can do it well, not only is it a lot of fun, but it is also a very nice living.

Heck, boxing seems very not fun to me. Getting your A** kicked in the ring, man, why would I do that? Yet Mickey Rourke (wicked in Ironman 2) put his successful acting career on hold to go be a professional boxer for a while. He loved it, and it cost him, but I bet he wouldn't trade it for the world.

Meanwhile, for those that do honestly love their small businesses, or want to start one up, it helps to get good advice and information. Just because you do have to wear all the hats, and one of those hats is a learning hat. I learned a ton from each and everyone one of my 5 small companies, and I expect to learn a lot from my 6th, 7th, and 8th.

Cheers,

BW

PS For a great small business marketing and sales book, check out "Referral Marketing", by John Jantsch. I just did a review of it on CNCCookbook.

[bajaru]

Thanks for all the replies. They have certainly given me something to think about. As far as being the guy in front of the customer making the sale... That part is really hard for me. I'm just not the glad-handing sales guy type of person, like at Toyota dealerships. I've tried selling different things in the past and I've learned I'm just not a great salesman. The best I can do is demo the goods and explain the benefits. For example, when selling stuff on CraigsList and the person arrives at my house I say: "There's my motorcycle. It has a few scratches but it runs well. It's never given me any problems. I feel like I need to sell it because if I have to kick start it one more time, my knee's going to blow out. So, yeah... There it is... Would you like to buy it?" That's about the extent of my sales skills. It's how I like to be sold something.

Regarding wearing lots of hats as a business owner: That is the part I look forward to the most, when I make that giant leap from a garage-based hobby to full time business. I have an unwavering faith that in this country a basically intelligent person with the proper drive can make a solid go at it. Some people are telling me this is an awful time to start a business. I tell them that if I can make it in this economy, everything else will be a cake walk. And then I am reminded these are the same people who told me it was an awful time to start a business when times were good because there was too much competition.

I've been starting to look at shops and rental rates around my area. I drool with desire when I see what's available these days and then choke when I hear the rates. The sad thing there's a lot of vacancy and closed-up shops out there. During today's scouting mission, I perused a local industrial area and I'd estimate there's a 60-75% vacancy rate. I think: Perhaps this could be to my advantage... Maybe the rates are more flexible now. Wouldn't the building owner prefer something, even it's less than the regular rates, rather than nothing? I plan to find out the answer to that question soon....

-Brian

[BobWarfield]

Being straightforward and honest as a salesperson rather than too much of a hard sell isn't necessarily a bad thing. The bigger issue will be in reaching your customers: how will they hear about you?

And then second, once they hear about you, why you and not some other?

Best,

BW

[gmfoster]

I built a light duty CNC router from buildyourcnc.com and got busy mostly making signs. My plan was to start out with low prices and then once I figured out what I was doing and got my name out there, I would raise my prices and eventually turn this into a full-time endeavour.

I'm at the point where I basically know what I'm doing and I'm getting repeat business, which is awesome of course, but I really need to raise my prices if this is going to work out. A short while back, I made a sign for a fella for $40 and now he wants another one. That $40 sign took me 5 hours to make the first go 'round, which was OK at the time, seeing as how I was still learning and all. I bet I could do it in 3 or 4 hours now, but that would still be around $90 - $160 if charge what I think my time is really worth. I want his business, but I can't justify it now for what I charged the first time.

Should I raise the price a little, and hope he comes back for more work later and raise the price again later, or stand my ground to make it worth my while now, which would be 2x - 4x the original price I gave him and I fear might scare him off?

Has anyone else gone through something like this?

-Thanks

-Brian

The question I have is what did you do for five hours on the sign. How much of this was your time and how much machine time? You need to set a rate for you time and a rate for machine time. If you machine is slow and you sit and watch it cut for three hours that isn't time you can charge for. Your Time should be design and setup. Machine time should be cutting time. If I can make your sign by conventional methods in an hour then you shouldn't expect 4 hours pay for that. Your CNC has to serve you and work for you. I used to go in shops quite a bit doing calibrations. I remember one shop in particular where the guy had a wire edm cnc set up. It was older and he even had the old paper tape reader set up for show. However when he had dies to cut the machine could run 24 hours a day if needed. It often ran all night while he was home and the shop didn't even need the lights on. So I think a real question I never say anyone address on this thread is how much time did you really need to spend on this job, You should really be able to cut a sign for one customer while designing one for another customer or even selling what ever. And is the second sign he wants cut like the first one, if so then you shouldn't have any time in other than sales time and setup. If it uses the same background but different lettering then it should require much less time to design. You need to be developing and saving some canned templetes for these signs as you go so many jobs in the future take you even less time..

And as far as some of the suggestions to give price break to new customers. There is nothing that makes me madder than to be a customer of someone for years and they go and give some newcomer a better deal than they do their loyal customers... I leave phone company's, Isp's and others at the drop of a hat if they won't give me the same deal they will give a new customer.

[WLee]

Thanks for all the replies. They have certainly given me something to think about. As far as being the guy in front of the customer making the sale... That part is really hard for me.

Go read a book or two on sales. I'm the same "type" as you, but I have learned that even I CAN "sell" things... as long as I actually believe in the product/service (and the more passionately I believe in it, the more I can extol it's virtues and benefits and the better "salesman" I am -- if I don't believe in something, then I typically don't even want to try and the results end up accordingly.)

I've been starting to look at shops and rental rates around my area. I drool with desire when I see what's available these days and then choke when I hear the rates.

Just like sales, you need to learn a bit about negotiation as a buyer. First of all, everything (and I mean EVERYTHING) is negotiable.

And when you're dealing with the current type of low vacancy rates -- ALL of those places are losing money sitting empty -- you just need to find someone who is smart enough to REALIZE that he's better off cutting his losses and giving you a "super-sweet deal" than he is losing even MORE money letting the place sit empty and unused. (Which even increases some costs -- for example, in some areas insurance on unoccupied, empty buildings is HIGHER than for buildings that are even partially occupied and in-use).

Back in the mid 1980's (previous recession) I rented a half-a-floor of offices for my business in a town with a high-vacancy for an unbelievably low price -- in part because the owner knew that if he didn't have at least ONE renter (called an "anchor" client), then he was unlikely to get any others, and he was losing his shirt -- and more importantly he knew that *I* knew all of that (including that he'd been "empty" for a couple of years) -- my rent didn't give him any profit, but it DID cover his expenses so he was no longer "empty" and losing money. (He later had a "full house" and then tried to jack the rental rates on me but since my business had fallen off, I moved out when the lease ended... he ended up "vacant" a few years later on again... go figure.)