The Blog of an Entrepreneur

When a business starts out and you go for that all so daunting meeting with your business banking account manager one of the first questions, after “do you want a loan” is usually, “what is your unique selling point”. And this can be the stumbling point for many a company.

A common mistake so many entrepreneurs make when they start their own company is to set their prices too low in the hope that a low price will attract new customers and they label this as a good USP.

In reality, what this actually does is attract the wrong kind of customer, the kind of high maintenance customer who shops on price alone and drains the supplier for every drop of blood they can get out of them.

What the entrepreneur should be doing is focusing on providing a quality service or product at a price that reflects that quality. This enables you to filter out the chaff from quality clients who you really should be concentrating your efforts and enthusiasm on. Someone who is prepared to spend sensible money on a quality product is a much better value customer than someone who haggles you down to the last penny at cost price.

And to be honest, would you not get more satisfaction if you could spend more time engaging with and helping the customers who truly value your services rather than those who are going to be beating you down on prices every day.

This is a regular hot topic on the UK Business Forums (www.ukbusinessforums.co.uk) where new business owners pop online and ask what the other members feel is a correct price to charge for their new product or service.

I recently spent some time with an IT support and computer supply company where the MD had no time to focus on growing his company as he was always running around dealing with customers all over the county. His profit margins were practically non-existent, so even if he wanted to he couldn’t afford to expand his business.

He had to finish our meeting early because he had to run out and sort out a broadband connection at one of his clients homes. I asked him how much he was going charge, and he replied £10 plus VAT. Taking into account the 30 minute drive there and about an hour on site, followed by a 30 minute drive back, that worked out a whopping £5 per hour charge, not including petrol. It’s no wonder he is making no money, and his excuse was that he didn’t feel his clients would pay any more.

Maybe some of his existing clients wouldn’t, but I responded with the other argument. Find some clients who would pay more. I, for example, would think of nothing about paying £70-80 for an engineer to come to our site and fix our office broadband connection if it ever went offline. My business relies on the Internet and it costs me more than that in lost business if I’m offline for an hour.

I’m not an exception either; I am a typical business client who realises the true value of a quality service from a professional. This is what small business owners should be focusing on, attracting the right kind of client and then once you have them look after them.

It takes courage to be bold enough to set your prices at what you really should be charging, and it will go against every instinct in your body saying “I need every order I can get”, but the realism is that you don’t need every order – you just need the good quality orders. The added bonus is that it puts true value into your service, a quality value that will reflect well when approaching potential clients. I use an example of this when I made the mistake of being too cheap myself.

I was once introduced to a large pharmaceutical company to do a contract as one of the board members at the company was a close friend who had opened the door for me. The deal was as good as mine, so I did my quote making what I thought was an OK profit but not too expensive as I really wanted this order. I was making £5,000 profit. I lost the order to a large blue chip corporate company who went in £19,000 more expensive than me!

When I asked my friend why I lost the order he explained it was simply because I was too cheap. The rest of the board was concerned that I would not have been able to provide the quality of service they wanted because I was so much cheaper than the other price. If I had been just £5,000 cheaper then the order would have been mine, and I would have made an extra £9,000 more profit on that order!

Although an extreme but very true example, the same applies on a much smaller scale. If you are running around trying to service too many customers who are not paying enough, give serious thought to raising your prices and go after a better quality of client. It is better in business to have less clients paying sensible rates and making a sustainable profit, than having hundreds of customers paying low fees and you make a loss.

You may even be surprised to find that most of your clients may actually be happy to pay you a higher fee. I know I sent this IT guys invoice back to him for my laptop repair and told him to double it! I want him to still be in business a year from now looking after my own office network.

The article may be freely distributed and copied subject on the condition that credit is given to myself with a link through to www.ozzy.co.uk

The first time I was invited to attend a business networking event was some 8 years ago by a printer. He said it would be good for my business, and that they had a slot for my business category. I had no idea what on earth he was on about, so he then explained that all I needed to do was turn up at 6:30am with a one minute presentation prepared for my business. I would then have the perfect opportunity to stand up in front of about 30 business owners and present my business to them.

That was it; I near as hell had a heart attack and made my excuses. I was busy, family issue, sorry thanks for the offer but I won’t be able to make it. The very thought of walking into a room of other business owners and standing up in front of them scared the hell out of me.

I now realise that I had already been networking since I was about 5 years old. When you start school you go into a room of other people all in the same boat as you, and you start to make friends with them, getting to know them all one by one. Business networking is no different really, and it does help to realise that everyone feels the same as you no matter how confident you think they look or sound. They were all first time networkers once and were all just as nervous as you the first time they attended a networking event, or their first day at school.

So how can networking improve your profit?
Well first of, and more importantly than anything else, networking is not about the instant win. If you expect to walk into a networking event and come away with a signed order you are likely to be sadly let down. Networking is all about building relationships; it is called “Farming” in many networking circles. You also have to take it seriously, there is no point attending a networking venue once and never going back again as no-one will ever remember you. You need to attend these events on a regular basis. It is about getting to know those other people in the room, gaining their trust and respect, and then if that goes well they introducing you to other people they know who could use your services. This is referral marketing, and it only costs the price of a full English breakfast! What’s more, these people you meet will happily refer your business to everyone suitable that they meet forever more.

Networking is also a great way to meet new suppliers, new friends and also a great way to build a great support network. Before I started networking I was as nervous as hell standing up in front of people presenting my business. I now happily enjoy standing up in front of crowds of hundred or more people and giving a presentation on anything from networking to my own business. Networking has helped boost my confidence and improve my presentation skills, and it’s all included in the price of a breakfast.

Networking doesn’t have to just be face-2-face; there are online networking communities you can take part in also. There is obviously my old website at www.ukbusinessforums.co.uk, and on that website you can network with a community of over 17,000 other business owners. There is also www.ecademy.com, a hard core networking website which is broken down into what they refer to as “Clubs”. The same principles apply to online networking as do to personal networking. It all boils down to relationships and trust, not the instant sale which so many people fail to grasp. These are the same people that say “Networking doesn’t work for me or my business”, and they wonder why.

Can you imagine how laughable it would be if some crazed lunatic ran into a hall of 80+ business people, threw his business cards up in the air shouting “Buy my great widgets off my website, they are great” and then ran back out of the room never to be seen again. Everyone would laugh at how ridiculous he was and then forget about him by the next day. No-one would look at his website, and no-one would trust him or his products. This principle is even more important with online networking. Those who visit online networking forums, post a message online saying look at my website, and then are never seen again just have their messages deleted and no-one takes any interest in what they have to offer. Now those that contribute on the forums and become part of the online networking community become trusted and known as experts in their field. They are the ones that benefit from networking.

There are hundreds of different networking organisations and events in every area around the world. I’ve pre-booked myself into every single Chamber of Commerce and FSB networking event in my area from now until the end of the year. There are professional networking organisations such as BNI, BRE and others which I’d also recommend giving a try. There are even fun networking clubs, and next week I’m going to a Networking Curry Club and tomorrow I’m playing Golf at a professional golfing networking event. I’ve even been known to try my hand at Speed Networking, which was an experience!

If you want to try your hand at networking, and I strongly suggest you do, then the following are a few good places where you can find out what is happening in your area;

• Contact your local Chamber of Commerce and ask their Events Team what networking events that have coming up.
• Contact your local FSB representative and find out when their monthly breakfast is on and where.
• By a copy of your local newspaper on that day that comes with the business supplement, they usually contain a list of up coming networking events.
• There is most likely to a business advertorial paper in your area, subscribe to receive that on a regular basis as it is likely to also contain details on local networking events.
• Look on the BNI and BRE websites for your area and contact their Chapter Directors’ saying you would like to come along as a visitor.
• Finally, don’t forget to ask everyone you meet at every networking event if they know of any other networking events in the area that you could attend.

Another couple of tips to take into account when you do start networking first don’t waste the back of your business card. Make sure your business card contains all your contact information as well as information on what your company does. I see hundreds of business cards that look really pretty, they do honestly, but I haven’t got a clue what the company does. Secondly, there is almost nothing more embarrassing than going to a networking event and not having any business cards to hand out. I’d recommend taking no less than 50 business cards out with you when you go networking, but ideally take a hundred. The last thing you want to happen is to be talking to someone who says “Ah you’re just what a friend of mine was looking for, can I take one of your cards to pass to him?” and you reply with “Oops, sorry, I don’t have any”. Always make sure you have plenty of stock of your business cards and carry plenty around with you.

Why do I network? Well in year 2004 I spent just under £100,000 on PR and Marketing in my business and did no networking, in 2005 I spent just under £80,000 in PR & Marketing and just started networking in the summer of 2005. This year I might reach £20,000 in my PR & Marketing budget and I heavily network. My turnover for those 3 years remained fairly constant so where do you think that spare £80,000 I was spending on PR & Marketing has gone?

That, my friends, is why Networking is a Cost-Effective Marketing Strategy.

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