This is what not pricing your worth can do to your business.
Starting a business is not always pretty. At the beginning, I was a like a ship without a course, pushed here and there, at the mercy of the winds and waves. And as you know some of these waves can be quite gentle and take us to sunny, lovely places, but mostly they take us to the spiky rocks.
My waves sometimes took the form of customers. I would take any customers who came my way. I was not choosy, they baited me with the possibility of a sale and I bit. I was constantly worried about not getting the next sale. So when someone came around and asked me for a discount because that’s all they can afford; I’d say yes. Sometimes someone would order a lot of invitations and felt they should get a discount; I’d say yes. The price is too dear, they want to pay this much, because they could get it from so and so for this much; I’d say yes. They wanted a free sample to see in person before they pay lots of money… and of course you guessed it; I’d say yes.
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Then I’d feel guilty.
I was giving them money off, free samples and I’d feel guilty because other customers would pay my price. I felt like I was cheating those couples paying full price. To make matters worse, the couples who happily paid full price were the nicest ones!! They were the ones who appreciated me and were grateful. That made me feel so rotten.
Then there was also anger.
Anger because these discount couples were taking advantage. Weren’t they? Of course they were! How dare they?! Don’t they know I spend hours of labour on their wedding stationery? That I spent hours researching for the best suppliers? Hours and materials designing new invitations and honing my skills? Don’t they know I’ve got a family to feed too? That this is my job, what I do for a living?
Then there was lots of hard work and little return
Then I started to get really busy, I was working hard, staying up until early morning. I even had a sense of misguided pride that my business was taking off… But I was not seeing the results!! All my hard work, but in terms of cash, it did not show much. My increased work load was not in proportion to my rise in income. I was in fact working for below minimum wage; the money I was getting in was paying for the materials but was not covering my hours and hours of work. I would have been better off taking a part time job stacking shelves in a supermarket. I would then be earning more and working less hours too.
And finally, there were the most damaging feelings of them all, self- doubt accompanied by his best buds failure and stress.
My motto was : ‘I never know when I’ll get the next customer, so I must take on whatever work that comes my way’. I actually used to say this regularly to everyone, when I got too busy and could not go out to see family and friends.
I thought it made me sound all grown up, with a successful business and lots of responsibilities. In fact, I was out of my depth. I was the Titanic heading for the iceberg of failure.
I know what you are thinking. You are feeling sorry for little ol’ me and probably want to give me a good kick up the backside too… I know I want to!
My definition of a ‘successful business’ was wrong, so fundamentally, hair-pulling, head-butting-wall wrong. I defined ‘busy’ as ‘successful’.
Are you doing this too? Then stop, stop, stop right now!
Because you don’t need to, there is a better way.
You see, I was worried and did not know where my next customer will come from. But I was doing nothing to actually ensure that I will have a constant flow of customers. I did not know I could do this, let alone what and how to do it.
My problems were solved by:
Firstly: Not giving up and persevering
This I could do, because deep down with all the fibre of my being I wanted to work from home. I never wanted to go back to work for someone else again. I wanted to be at home and raise my children, especially in these early years. I wanted to have power over my income, to be able to afford a nice comfortable life. I wanted my job to be something I love. I enjoy making invitations, and love designing them. I knew if people were buying, there was a demand, and there must be a way to make things work. So I started doing research, looking online for help, joining business forums, etc.
Joining a community of like minded entrepreneurs can really help you avoid these mistakes,
I then I stopped giving discounts I could not afford
I started asking for deposits, and once I had 3 months worth of secure income. I stopped giving discounts to everyone who asked. I did not stop discounts completely though, as I was still worried I would not get sales. I worked out my costing and how much I should be pricing my products. I then, started to offer discounts on large quantities. It was 10% off on orders of 100+ units and 15% off on 300+ units.. and this was because I could see other people offering discounts, not because I wanted to and not because it benefited my business. I also started charging for my sample per unit price, then refunding the sample cost when a customer placed and order. I thought this added an incentive to place an order, remember I was still worried I would not get sales.
When I told the first customer who asked for a discount, about my new discount policy, they actually never replied to me. That made me rethink the whole lot. For days afterwards, I was very tempted to email them back and give them a discount, but I could not. Because when I worked out my pricing, I knew at what price I must sell in order to pay myself and make a profit. And giving out disproportionate discounts meant I was working for very little money all the way to working for free. In fact I should be increasing my prices to have a healthier profit margin.
Do you know what working out my pricing and sticking to it meant?
It meant that I was charging everyone the same, no more guilty feelings.
There was no more anger towards my customers for paying me less, because I did not give them the opportunity to. How would they know that I could not afford to give them discounts and still earn a living, if I said yes and gave them a discount? They only asked. As the saying goes, ‘don’t ask, don’t get’. There is no harm in that, in fact it worked for them and they got a bargain!
The only harm was done by me, I did myself harm by saying yes. I did not value my work, I did not value the hours I spend making an order and everything else to go with running my business. Yet I expected everyone else to value my work. I did not set boundaries to protect my income and keep my family fed. But, I blamed my customers; I resented them for not valuing what I provided while I in fact handed them the opportunity and allowed this to happen.
I did this not because I set out to not value my business, make a profit or to not get paid for my hours of labour and skills. It was because:
I did not know any better!
I did not know that I should have worked out my pricing and stuck to it.
I did not know how damaging it would be to give discounts, because I did not know how to cover my cost (including my own labour hrs) and make a profit. I was too amazed, (and surprised), by the fact that I could earn money doing something I love. I did not want to blow it.
I did not know that I had to value my business first and I did not show my potential customers its value to them: what my business and product did for them.
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I did not know that not everyone will be my Perfect Customer. I did not know that not everyone needs or wants what I offer enough to pay for my products. I was attracting the bargain hunters, the low budget couples. I did not know who was most likely to buy my products. I had no idea of the concept of Perfect Customer.
I thought that I had to attract and sell to everyone and everyone, as many customers as possible.
I thought that ‘marketing’ was just a big word for big companies, and involved lots and lots of money. I had no idea how to use free or low cost marketing solutions to attract consistent customers.
I did not know that I should be consistently making an effort to reach out to potential customers (my perfect customers) and build a trust relationship so that when they are ready to buy, they will come to me.
I had no idea that I could reach a customer and build a relationship with them, before they were even ready to buy wedding invitations; this is what will result in a constant stream of customers.
I had no idea that business success did not always equate to a busy business.
I was scared of money. Yes, it sounds a little bit silly, but I did not believe that I am worthy to earn money for what I offer. Especially when I was selling something I love and take great joy in making! It seemed a little bit too easy, a little bit like cheating and cheating is icky, so I unconsciously looked for the hard way.
I believed that running a business = busy + stress
At the beginning I did not realise that the way I was doing business meant that I was harvesting exactly the opposite of what I was in business for. I was not in control of my income. I had less and less time to spend with my family, which was the very reason why I started my own business. I was usually working until the early hours of the morning and was constantly tired, stressed out and unhappy.
And I felt guilty for being unhappy as was staying at home with my children, unlike a lot of mothers who had no choice but to go back to their jobs and I had a business with lots of sales… see the vicious circle there?
I did not realise I was playing at business, like I played at being a shop owner when I was a little girl. While I should have instead been in business.
So are you playing at being a business owner? Or are you in business?