Get Your Engines Started!

I am not an economist, but I have noted that there is a cautious buzz suggesting that we might be at the bottom of this economic slowdown.

As a business owner and a consumer, I'm thrilled! Of course, there are many long, tough months ahead as we hopefully dig ourselves back out of this hole, but at least there is some hope.

Now is the time to focus on how you can take advantage of the slow economy for both yourself and your business. Even if you only have a tiny financial cushion left after the last 12 tight months, now is the time to use it! Here are some options to consider:

1. Services are cheaper - although it's not universal, most service providers are more flexible with their rates - and may have even dropped their rates. Just like all businesses, service providers are anxious to do some great work for you to help boost their bottom line, and you can probably get lower rates and shorter terms

2. Labor is available and cheaper - the labor market is hungry for work, and many stellar employees have been laid off. Now is a great time to fill critical positions in your own company in preparation for increased business.

3. Rents are totally negotiable - if you have ever thought about expanding your physical space, now is a great time to do it. Many retail, office and warehouse locations have been vacant for 10+ months. Assume that the rate and terms offered are much higher than you should actually pay, and bring in a seasoned negotiator to help you if necessary.

4. Your competitors are still scared - the single greatest opportunity for you right now is to take advantage of your competitors' lowered spending. They have likely pulled back on everything from advertising to customer service, and their customers know it! Now is the time to swoop in and impress everyone with your strength and moxie: show them that your business is still around and doing great!

Give me a call if you need some help!
310.453.7008

Pay Peanuts; Get Monkeys

My dad grew up in Zimbabwe, and has a great saying: "if you pay peanuts, then you can expect monkeys." Now, don't get me wrong - I love monkeys, and they are incredibly intelligent animals. That said, the saying nicely illustrates the challenge with pricing your service - price too low, and your customers perceive that you are not very good at what you do.

Products are usually a little bit easier: when you're selling a product like a banana, you know that you are going to eat it, and when you eat it, you'll have food in your belly. It's pretty simple, and most bananas are pretty much the same in terms of taste and quality. This means that pricing a banana can be based on simple economic factors like supply and demand.

Services, on the other hand, are much more complicated. Often the customer doesn't know what you are going to get, and it's hard to know whether you're buying "the best" or "the worst" because there are few benchmarks available. That's why pricing is so critical. You don't want to price yourself out of the market, but at the same time, if you price yourself too low, you automatically create an assumption in your customers' mind that you are not as good as higher-priced professionals.

Think back to the concept of supply and demand: the higher the demand, the lower the supply and the higher the price. Thus, someone with higher fees is perceived to be in high demand and, thus, the human brain deducts, must be really good.

I'm not saying that service professionals should over-charge their clients, but it is really important to remember how critical pricing is when positioning yourself.

Let me know if you have any experiences with this, either as a consumer or in business.