By Ben Kinsey, CPA
|Image courtesy of Max Pixel|
Can you sell your business right into the ground?
To get started, let’s address my last statement first. Is it possible to have too much of a good thing? Can a business have too many customers and can that cause a business to fail? The answer on both accounts is Yes! Depending upon the type of business you run, you and your staff can only handle so many customers at any one time. If you were to suddenly double the number of people who wish to do business with you, neither they nor your employees are going to be happy. Unlike retailers who routinely add more staff to handle the holiday rush, what would it take for your business to do the same overnight?
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How to sell your business right into the ground without working up a sweat.
Another thing that gets many businesses into a financial jam is pricing their work too low. Sure, you want to be able to compete with the big guys. But if price is the only way you can think to gain a competitive edge, you could quickly find yourself going broke, no matter how well your salespeople do. Especially if your competitors are well-financed and you aren’t, it won’t take long for them to let you sell yourself into the ground. A better approach is to find a unique sales proposition or value-added-benefit that will allow you to offer prices at or above those of the competition. Just as there’s a big difference between a Nissan Versa and Mercedes S-Class, if you find your coffers are empty even though you have plenty of clients, you should think about your price structure and how you can change the way customers view your business so you can find a way to upsell your services.
Customers from hell
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If you want to defang D-Clients and other financial vampires, here’s what you need to do:
1. Raise their prices. Instead of simply dropping the bomb and telling the client you don’t ever want to hear from them again, a more diplomatic solution is to raise your prices such that the client will choose not to work with you any longer.
2. Tell them you’ve decided to either retire or move to Bora Bora.
3. Refer them to your biggest competitor.
Customers from hell part 2 – Slow pay or no pay
Back in the mid-1990’s search engines used to give their advertising clients 90-days to pay for online ads. In fact, at the time, it was pretty standard for advertisers to offer 90-day net rates. The problem was, it didn’t take long for some advertising clients to take advantage of the fact to run up huge advertising bills, then refuse to pay. Today if you want to start a Google Ads account, you’re required to give them your credit card information before a campaign begins.
If you have noticed lately that some of your clients are slow to pay, here is what you need to know:
1. You need to get a better accounts receivable plan in place. Since selling your services without getting paid is never a good thing for a business, if you find yourself selling your business into the ground because of slow or no pays, it’s the system that’s broken. While you can always hire a collection agency to chase after delinquent clients, this usually doesn’t work well for either party. I suggest either changing your policy by limiting a client’s ability to buy on credit or do what all the search engines did by getting your clients to pay up front.
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3. If credit card fees are eating your lunch, consider other options. One of these is available to Quickbooks subscribers. Instead of paying a percentage of the sale when a client uses a credit card, QB gives you an option that allows clients to pay via wire transfer. For a flat 50-cents per transaction, this is a payment option that’s hard to beat if you want to offer a point-and-click method of payment that won’t bleed you dry.
If you’ve noticed your client base is increasing and your profits aren’t following suit, you owe it to yourself to plug the leak by considering whether the problem is yours or whether you’re letting your clients ruin your business.
Ben Kinsey, CPA of Small Business Group works with owners of closely held corporations in the Northeast Florida region. If you work in the North Florida area we offer a FREE initial Consultation at our office, please contact Small Business Group if you would like to know more about strategies for your business.