If you're a small business owner chances are you spend several hours per week developing strategies that will increase revenue. You're pouring in tons of hard work. I GET it. I own a small business that provides trainings, workshops and consultation services. Through personal experience and the scope of my work I've noticed a theme. It's not uncommon (particularly for businesses in the early stages) to overlook a few steps that are potentially costly. While factors that impact the financial earnings for a business cannot be reduced to a single article, below are 3 things small business owners do that may be costing them money.
1) Dispensing FREE information. "Can we grab some lunch?" "I would love to pick your brain about a few topics." Once upon a time I was flattered by the idea of business owners wanting to get my opinion on a new venture. In my state of flattery I would dispense tons of advice from how to obtain corporate sponsors to effective marketing strategies. I was too green to realize that I was providing FREE consultation. Scratch that, it wasn't exactly free because they typically paid for the meal. So actually I was providing amazing consultation in exchange for a chicken salad and water. Which is probably more embarrassing than providing a free consult. If you're a business owner chances are you are pretty knowledgeable about your service/product. Inevitably people are going to want to chat you up for information. Weather people realize it or not they are asking for a free service. If you are faced with this situation a great way to respond would be to say something like "actually I would be happy to sit and discuss this with you. This is one of the areas I typically consult on and I have the availability to add you as client." Chances are you may gain a client or create an additional revenue stream.
2) Forgetting the barter system. While an immediate financial payment is the preference for any business owner, bartering also has its share of benefits. If your business is low on capital it's smart to consider what services you can offer another company in exchange for something that will fill one of your business voids. Before I continue let me be clear. I am not suggesting having a business lunch at a restaurant then offering to wash the dishes as payment when the check is presented. Nope. In fact that may result in an arrest. What I am suggesting is analyzing your business for strengths and struggles. If you recognize that a section of your business is struggling it would be helpful to engage in a mutually beneficial agreement with another small business owner who thrives in that area. Please note, that bartering also offers tax advantages and tax reporting requirements.
3) Too many discounts and free services to friends and family. Extending a discount or the occasional free service/ product to family and friends is perfectly fine. In fact, this can help generate business if said person will eventually become a costumer that pays your asking price or will spread the word about how great your business is. However, be careful to navigate this in a way that is beneficial to your bottom line. If a great portion of your time or service is being allocated to non-paying costumers (or costumers that pay a discounted rate) this can become dangerous. I am not advocating a Nancy Reagan "just say no" policy, I am just suggesting that you perform a cost benefit analysis on how they are allocated. While the recipient of the service (or product) may view this exchange as a "favor", you should view it as potentially giving away money. If guilt is your dilemma and you're afraid of hurting their feelings just remember that genuine supporters seek opportunities to help your business, not continually ask for freebies.
It goes without saying that building a small business is time consuming. However, regardless of the size and years of operation it's helpful to pause and conduct an internal analysis to help ensure that the empire you are building doesn't have a few holes in the bottom. If it does just redirect for a moment, plug the holes and keep building.
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1) Dispensing FREE information. "Can we grab some lunch?" "I would love to pick your brain about a few topics." Once upon a time I was flattered by the idea of business owners wanting to get my opinion on a new venture. In my state of flattery I would dispense tons of advice from how to obtain corporate sponsors to effective marketing strategies. I was too green to realize that I was providing FREE consultation. Scratch that, it wasn't exactly free because they typically paid for the meal. So actually I was providing amazing consultation in exchange for a chicken salad and water. Which is probably more embarrassing than providing a free consult. If you're a business owner chances are you are pretty knowledgeable about your service/product. Inevitably people are going to want to chat you up for information. Weather people realize it or not they are asking for a free service. If you are faced with this situation a great way to respond would be to say something like "actually I would be happy to sit and discuss this with you. This is one of the areas I typically consult on and I have the availability to add you as client." Chances are you may gain a client or create an additional revenue stream.
2) Forgetting the barter system. While an immediate financial payment is the preference for any business owner, bartering also has its share of benefits. If your business is low on capital it's smart to consider what services you can offer another company in exchange for something that will fill one of your business voids. Before I continue let me be clear. I am not suggesting having a business lunch at a restaurant then offering to wash the dishes as payment when the check is presented. Nope. In fact that may result in an arrest. What I am suggesting is analyzing your business for strengths and struggles. If you recognize that a section of your business is struggling it would be helpful to engage in a mutually beneficial agreement with another small business owner who thrives in that area. Please note, that bartering also offers tax advantages and tax reporting requirements.
3) Too many discounts and free services to friends and family. Extending a discount or the occasional free service/ product to family and friends is perfectly fine. In fact, this can help generate business if said person will eventually become a costumer that pays your asking price or will spread the word about how great your business is. However, be careful to navigate this in a way that is beneficial to your bottom line. If a great portion of your time or service is being allocated to non-paying costumers (or costumers that pay a discounted rate) this can become dangerous. I am not advocating a Nancy Reagan "just say no" policy, I am just suggesting that you perform a cost benefit analysis on how they are allocated. While the recipient of the service (or product) may view this exchange as a "favor", you should view it as potentially giving away money. If guilt is your dilemma and you're afraid of hurting their feelings just remember that genuine supporters seek opportunities to help your business, not continually ask for freebies.
It goes without saying that building a small business is time consuming. However, regardless of the size and years of operation it's helpful to pause and conduct an internal analysis to help ensure that the empire you are building doesn't have a few holes in the bottom. If it does just redirect for a moment, plug the holes and keep building.
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