Having just wrapped up our extension returns for 2015 (on returns for 2014 income), we’re finally able to fully set our gaze upon the 2016 tax season (which, of course, deals with the income you are bringing in now).
And, as we do so I’m noticing a disturbing trend among some of my business owner clients, and I wanted to address it in this week’s Strategy Note.
Marketing based on “price”.
Now look — in some business categories, this *seems* unavoidable, but I’ve got a few “tricks” for you to consider, even if you think you’re in the most commoditized category on the planet.
I welcome your thoughts … and also want you to know that we’d love to be a resource for you in this conversation.
Stephen Venuti Reveals An Expert Strategy For Your Business Positioning
“You are a product of your environment. So choose the environment that will best develop you toward your objective. Analyze your life in terms of its environment. Are the things around you helping you toward success – or are they holding you back?” – W. Clement Stone
With all the current talk about “possible” economic recovery (or impending economic disaster), let’s take a look at YOUR business.
How can you create a sustainably-growing business that allows you the freedom for which you started your business in the first place?
Firstly, this needs to be said: the main motivating reason to be in whatever business you’re in should be profit.
If it’s not … you don’t belong in business. Yet as a small business tax professional, I find all sorts of people in all types of businesses who are not primarily profit-motivated. And they have their priorities mixed up. Business decisions made with something other than profit as the prime consideration are almost certain to be bad decisions.
Now look — I’m being a bit strong here, because I want to make a point. Even if you run a “non-profit”, or have what you believe to be a “different” business, I believe there’s a lesson here for you. After all, the oxygen by which any organization breathes is revenue and cash.
I love philanthropy (and have written much about it), and I even believe in giving when it’s not convenient.
But that doesn’t mean you shouldn’t steward your products and services as effectively as possible.
In fact, I find that most business people under-price their products and services. And they often do this from a faulty perspective that it will help their sales. (“What we are lacking in profit, we’ll make up for in VOLUME.” Ouch.)
And it’s my experience that price either isn’t or doesn’t have to be a very important factor in a consumer’s decision, or in the success of a business.
We should all seek to be positioned at the high-end of a price scale and have our competitors focused on selling from the perspective of being “cheaper” instead of being better.
I know of a chiropractor that is surrounded in his area by other doctors who charge$35.00 to $55.00 less per typical treatment. Yet his practice is bigger and more successful than three of his close competitors added together.
In my experience that’s not an exception — that’s a rule of business. Almost every time I consult with a business, one of the very first things we look to do is raise prices or fees. Sometimes the adjustment is pretty dramatic.
We keep our prices as close to the “middle of the road” as possible because we have learned that price is the laziest and riskiest advantage to market with. Buying business with lower prices is relatively easy … but keeping business obtained purely because of price becomes much more difficult. So, one way that you can immediately increase profits is by increasing your prices.
You might say, Okay, just how do I go about doing that?
Well, the first (and easiest) answer is to simply do it. If you have a good relationship with your customers or clients, I guarantee you’ll be happily surprised by what happens. It won’t be the disaster you feared it would be.
Another smart strategy is to re-package what you currently provide in “bundles” or packages, and watch your average transaction value concomitantly increase.
Lastly, much of the success of this comes down to your business positioning. Are you drawing “price shoppers” with your marketing? Or, do you emphasize relationship and value — which are *not* tied to price? When you put structures into place that ensure a strong, personal connection to you or your staff, you will find that your customer list can weather an increase.
So, try it out — and let me know what you think. You (and your books) might be pleasantly surprised.
And if you’d like to talk it over, we’re always here for you.
Feel very free to share this article with a Newtown Square, PA business associate or client you know who could benefit from our assistance — or simply send them our way? While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for Newtown Square, PAfamilies and business owners. And we always make room for referrals from trusted sources like you.
Warmly (and until next week),
Stephen J. Venuti, CPA, MST, LLC