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Business Tips – 8 Tips on Stuff you Should Know Before you Start a Business – Part 2.

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Last time we looked at how vital it is to get clarity and to put a Business Plan into place. Today we will be looking at a few more issues.

I can’t begin to tell you the number of times that I ask people who their target markets are and they look at me as though I have come from a different planet and have lost my way because of course, their product or service is for everyone! Yeah right and the Pope is Jewish!

The reality is that you have to do some research. Whether the research is on who the target market is or whether there is any market at all is obviously dependent upon what your product or service is and of course the geographics, the demographics, etc., must also come into play. The old adage of ‘selling ice to an Eskimo’ in this case really does apply.

You see it doesn’t really matter how much you love and believe in your product or service, you have to find out if the people with the money to spend, feel the same way about it.

Then of course there will always be issues around cost. Firstly and most importantly, you cannot sell your product or service for less than what it cost you, that’s just insane! So make sure that you do all the numbers correctly to ensure that you know what your “break-even” point is. Once you have ascertained that you are in a better position to set your margins.

Again – be careful if your price is too low, prospective clients will question the value add or the quality or you may even attract the wrong type of clientele. Too high and you may well price yourself right out of the market.

So where possible you need to do some research on your competition to ascertain what they are charging and what their value add is, for you to (at the very least) match their prices and their offerings or indeed better them.

This was a trap that I fell into when I first started out and hopefully, you will learn from my mistakes.

Firstly, I had priced my services too low, which attracted the wrong type of clientele. They were in desperate need of my services but they were also too far down the road to ruin and the stark reality was that they could not afford to pay me at all. They negotiated and haggled and I lowered my already low prices even further. The result – I ended up having to ‘write-off’ a great deal of money in bad debts that year because quite honestly they could not have afforded to pay me even if I came for free!

Giving out discounts like this also leaves a huge psychological footprint on your subconscious and that is one of “I’m not worthy”! If you yourself think that you are not providing worthwhile value then why would your clients?

You should look at this from a different perspective – one of ‘how to’ or bringing more value to your customers rather than simply discounting your prices.

Next time we will look at a few more of these points that should be taken into consideration before you even start.