Overwhelmed

Here’s a business parable for your consideration.  An interesting definition of a parable is a story that never really happened… and yet it happens all the time.

The business owner slumped in his chair as he described his sense of despair.  He and his wife have owned the business for 9 years.  The owner’s wife does the bookkeeping and some administrative work, but also has a full-time job, which contributes significant income to their family and more importantly provides health care insurance that they don’t feel they can afford without her job.  The owner would like his business to be more profitable so that his wife could leave her job, but neither one sees that as realistically happening in the next year.

The owner works long hours; on average 12-15 hours per day.  Evenings are spent catching up on “paperwork”… usually emails, quotations, or other followup.  During the day, he handles dozens of phone calls, while also fitting in the key operation task that only he can perform.  Weekends are taken up by business projects that he doesn’t have time for during the week.  The family hasn’t taken a vacation in five years. 

The employees are a mixed bag.  Their individual wages usually exceed what the owner pays himself.  One of them is quite loyal and dependable, but the others are unmotivated and uninspired.  One of these is a particular concern, showing up late, calling in sick, and usually has a poor attitude when she is working.  But she does perform an important function for the business that seemingly would be hard to replace.

The owner feels tired, trapped, and betrayed by his dream of creating a life-supporting and wealth-creating business for himself and his family.  He is overwhelmed by the work, and doesn’t see a way to break free.  His sense of responsibility to his customers and employees won’t let him quit the business and get a job working for someone else.

Along with this sad story comes a sad truth, which is that there is no easy way out of this sense of being overwhelmed.  But who said it would be easy, anyway?  The good news is that there is hope, and even a certainty that this business and this owner’s life can be much better.  A business coach might be a good place to start, because the change that is required will be difficult to implement alone.  If that were the case, it would have already been done.  But if the owner is really motivated by the goal of a better business and life, they can certainly handle the extra effort it will take.  After all, the one thing that is evident in their life is their work ethic and dogged determination.  They just need to channel that into the changes needed.

If this parable sounds like you and your business, please ask yourself if you are at a stage where you could use some help to make the changes that will transform your situation.  And also ask yourself if you are willing to actually change yourself to accomplish your goals.  If the answer to those two questions is yes, you’ve already made the first step on a path to a brighter future and a new, fun story about success.

Are You Giving It Away?

Many of my clients… it doesn’t matter the industry… complain that competitors often low-ball price, thus forcing them to discount themselves in order to compete.  In the shaky economy of the past 8-9 years, discounting is almost an addiction, and continues to lower the expectation of what the customer is willing and able to pay.  Universally, when I suggest that it is time for a price increase, the reaction I get is fear, and it’s based on the perception that a price increase will cause a loss of customers.

I get it.  It’s not like we have the magic ability to charge whatever we want and have customers flocking to our doors.  (That’s called monopoly.)  But I’d like small business owners to consider their feelings on this topic seriously against the backdrop of these reflections:

• Your business costs have risen, haven’t they?  In my experience, operating costs continue to creep up.  Why?  You name it… phone & internet charges, utility costs, insurance (health, worker’s comp, liability), office supplies, professional fees, etc.  It’s unsustainable to absorb these costs without an offsetting rise in revenue.  One of the few areas where costs have come down is fuel costs, but who among you thinks that will last?

• More to the point, we’ve recently seen a growing problem with employee shortages.  The demographics of this is real simple… more people retiring than coming into the workforce.  Simple supply and demand tells us that because of this labor rates will rise.  It’s already started.  And since labor cost is usually our greatest expense, how will you pay for the help you need to run your small business if your prices are barely providing a profit at current wage rates?

• In practice, reasonable price increases do not cause a loss of customers.  Oh sure, you may have an example where someone left you for a lower price, but in nine years of coaching, I have seen only one client report the loss of one customer directly due to a price increase.  Instead the feedback is more like “Surprisingly, I’m not aware of any customer who has left.”

• What are you selling… low price or high quality & service?  Selling on price is the result of “dumbing down” our sales process.  What I mean is that we fail to comprehend and communicate the value in what we offer, and that our price is worth it.  Instead we take the easy way out and offer a discount.  Think about it.  The message you convey is then that your product/service is the same as anyone else, but you can sell it cheaper.

o   The irony with this is that many who sell on price (yes, I mean you!) will say about their competitors that their service is terrible, their products are inferior, their business pitch is dishonest, customers tell us about their horrible experiences with them….  And yet we try to match or undercut their prices!

• It comes out of your pocket.  What I mean is that when you discount, you don’t offset the discount by negotiating better supply costs, or cutting back on wages or commissions, or implementing improved efficiencies in your operation.  Instead, you pay yourself less as the owner of your business, don’t you?  Is that really what you wanted when you got into business in the first place?

Nobody wants to pay more than they have to for things, nor to see higher inflation in our economy.  But at the same time, it sure doesn’t help the economy if small businesses are not making money to buy things, hire people, and invest in growth.  Don’t give it away.