What to say when someone asks for a freebie
We’ve all had it, particularly in the early days of our business. That phone call from a “new customer” asking you to give them a freebie so they can try your product or service out before “placing a big order later down the line”. Now there are two schools of thought on this. The first is that you should give this prospect the freebie as they requested. After all, sales is all about building relationships. Relationships are based on trust and who knows what could be at the other end of this transaction if you play your cards right… a nice big juicy deal for sure. You’d be a fool not to… wouldn’t you?
But let’s just break that down. Here is a person that you don’t know, that’s phoned you up out of the blue and after a brief conversation, wants you to shoulder the cost of providing them with what they need so they don’t have to pay for it. Sound reasonable? Of course not, but for those who still think giving away a freebie is the best way to go, let’s put this situation into some kind of perspective. Let’s imagine you’re a steak lover and there’s a brand-new steak restaurant that’s opened up across the street and you really want to go. Would you walk into the restaurant and ask them to give you a free steak to try out before committing to revisiting as a paying customer in the future. Of course you wouldn’t and if you tried, you’d probably be laughed right out of the restaurant.
Now if your business is service driven you may believe that unlike steak, providing a few hours of free training or consultancy doesn’t cost you anything but you’d be wrong. If you weren’t delivering freebies, you could be working with paying customers, making sales calls to find new customers or at least working on your marketing efforts to drive more enquiries. Providing freebies costs time and as the saying goes – “time is money”. From sales and marketing, to training and tech support, there’s no limit to the services that the freebie hunter will source if they can get away with it so always be on your guard.
Of course, not all freebie requests come from people who have no interest in making a purchase. So how do you go about declining the request for a freebie without offending anybody? The answer is actually quite simple. It’s one which will put off those freebie-hunters immediately, whilst rewarding the genuine prospects who have every intention of building a long-term relationship.
The first step is to use some qualification questions in the beginning. This will help you to understand the potential business opportunity that may lie ahead so you can put together an enticing offer. If for example, you’re being asked to deliver a free training session – you could use the following questions to find out about the bigger picture:
– Is this a one-off or will there be a series of sessions / workshops?
– How many workshops will there be / over what period?
– Do you have training budget allocated already for this?
– Do you have any specifics about the long-term opportunity?
If you find that the answers to these questions are a bit vague, or worse still – you’re met with a “this is just a tester – we’re going to decide what we want to do based on the success of the first session” alarm bells should ring. The chances are, this person is a professional freebie hunter.
If on the other hand, you end up having a meaningful conversation with the prospect and are able to gain a better insight to their overall needs, you can now start to piece together an enticing offer. One which rewards the prospect with a discount equivalent to the cost of giving a freebie, over multiple bookings. Let’s say you would normally sell a day of training at £1,000 but the prospect plans on running a series of 5 workshops – charge the first one at full price and then split the value that is equivalent to a free day of training over the remaining 4 sessions. So that’s £750 per session after the first full price training day.
Of course, you can make the same offer to someone who you suspect to be a freebie hunter too. Just be sure to charge the first one at full price and provide a discount on the subsequent bookings to reward return custom. A prospect who fully intends to use your services long term will see the value in this and work with you. A freebie hunter however, that has no interest in the long-term is very likely to get pretty frustrated at this offer and hang up the phone being sure as they do, to claim that you have just lost out on a major deal and won’t be considered in the future.
Of course, there might always be the very occasional genuine prospect who insists on a freebie at the beginning of the relationship to test things out. In my mind however – any prospect who insists on getting a freebie doesn’t truly understand the value of what you offer anyway and that’s not going to make for a productive and profitable business relationship long-term.
Hopefully this article has given you some useful insight into how you can deal with prospect who expect to try your services for free. If you’ve found this article useful, don’t forget to share it with your connections.
And if you would like more information on the small business coach and how I can help with your business, why not take a look at my great value support packages. Thanks
Why planning how to exit your small business will lead to greater success
The majority of people that start a business today, and in fact, the majority of existing small business owners out there will have not have thought about their eventual exit from their company. And if that’s you, why would you? After all, you fought hard enough to start the business in the first place – you’re not about to leave it anytime soon. But the reality is, that at some point you will leave your business. You might pack it in and move on to something else, you might sell it or you might pass it on to a family member, but you will ultimately leave the business.
And this is important, because if you understand how and when you will be leaving the business, you can begin to plan the journey between now and that moment to get the greatest benefit out of it. A good example of this is when a small business owner has decided they have had enough of their business. They’re either getting too old, or the business is becoming too stressful or not profitable enough to continue with. The options are available to them are (i) close it down or (ii) sell it on. In 99% of cases, if a small business owner has the opportunity, they will choose to sell it on and take a nice lump sum of cash away with them to invest in another project or to retire on. The trouble is, unless you’ve been planning to sell your business for the last 3-5 years, your business will not be in an optimum state to receive buyer interest or receive a decent sale price. The result is that if you do sell the business, you walk away with enough to buy a new car, when you could have walked away with enough to buy a new house.
If you’re not sure when you want to exist your business, don’t worry too much. There will come a time and you’ll know when it is, when you start to get that nagging feeling in the back of your brain that it’s time to move on. In the meantime, it’s a good idea to plan your business as if you’re going to be leaving it in five years’ time. If that seems like a lifetime away, make it three years. Now you’ve got that figure in your head, it’s time to think about the strategy you need to implement today, to maximise the value and the saleability of your company in 3 or 5 years’ time. So what does a saleable company look like? Here’s a few thoughts:
A saleable company has shown steady, year on year growth for at least three years and the prospects for the future look good
A saleable company is making good profits for the owner(s)
A saleable company does not rely on the owner working within the business for it to function or make a profit. The owner oversees the operation but is not hands on.
A saleable company has valuable assets. That could be a nice website, a strong, recognisable brand, a good reputation, a large database of clients and prospects, strong strategic partnerships, patents or recognisable trademarks or a host of othering things.
A saleable company has plenty of untapped opportunities
Just to expand a little bit more on point 3 above – a company where the owner is actively working inside the company and is integral to its success might sell for approximately 2-3 times annual turnover. Whereas a company whose owner is not integral to the business can sell for 7-8 times annual turnover.
Now that you know those five points, you can start to build a three or five-year plan around them. The first action point though is that if you want to maximise the sale value of your small business in 3 to 5 years’ time, you need to make plans now to remove yourself from the business, put a manager in your place and still make the business profitable. It’s food for thought at least. Following on from that, you’ll need to focus more than ever on doing whatever it takes to achieve favourable profit and turnover figures. We’re going to expand on this topic in future posts and we’ll be covering each one of the 5 points referenced about in detail in individual future blogs.
Has this post struck a chord with you? Would you like to learn more about planning your business exit? Why not book a 40 minute Skype session with the small business coach to discuss your options in more detail? Visit our support packages page for more info and to book.
Business negotiation – What to do when someone asks for a discount
You’re right on the cusp of getting a new client on board. Looks like it could be a pretty profitable one too. All that hard work across the different parts of the sales funnel are finally paying off. They found you because of your Google Ads, you’ve had a phone call, maybe even done a presentation or a demo and then you’ve provided them with a proposal. That was a couple of days ago so now you’re going to phone them back and close the deal… or at least, that’s what you think you’re going to do…
The closing call goes well at first. You answer all of the outstanding questions, and they’re happy to go ahead on one condition… you lower the price. They want a discount and that’s going to cut your profit margin by at least half, maybe more. But you really want to close this deal so what are you going to do? Here’s a few options for you to think about, some of which require additional planning beforehand, but that additional work will be worth it if you want to negotiate a better business deal.
Give them the discount. After all, you want their custom and this gets you off to a great start. The benefits are that it removes the barrier to sale and instantly closes the deal. The bad news however, is that your profit margin has now taken a hit and you’ve set a precedent for future transactions.
Tell them you don’t offer discounts and that the price you offer is already as low as you can afford it to be. The benefits are that you’ll get a decent profit on your sale, that’s if the sale goes ahead. There’s every chance that your prospect is “working” a number of potential suppliers so this strategy could end your chance of a sale altogether.
If they do mention that a firm elsewhere has offered them the same product or service for less, suggest that they provide you with a copy of the competitors quote and you’ll match (or beat) the price. Bear in mind though, that in doing so, you’ll have given them a discount and got the relationship off to a bad start by refusing them a discount in the first place.
Do some prep beforehand and ask yourself, if the customer wants a discount – what can you give them instead that they would find value in? Adding more product or service for free is better for your bottom line than discounting an existing deal. Let’s look at a couple of examples to understand why.
Now let’s do a second example where instead of providing a discount, we provide the customer with free goods to the value of £200 instead of a £200 discount.
Of course, as all of your products and services already have a mark-up, a £200 freebie to your customer doesn’t cost your business £200, it just costs whatever you paid for it from your suppliers – in this case just £75. The net result is that you have just netted a bigger sale at greater profit than in the first example and most importantly, your customer still feels he or she has got a good deal. It’s a big win-win.
This option also requires you to do a bit of prep beforehand. But this time, instead of thinking about the extras you can give your customer for free to try and maintain the sales value, you need to accept that you’re going to give your customer the discount, but consider what you would like in return for doing so. How could your business benefit from giving a customer a discount? Typical exchanges in return for giving your customer a discount are:
Stating a minimum sales value – if you can increase your order to “xyz” I can give you a 10% discount
Stating a minimum contract term – if you sign up for “xx” months instead of running month to month, I can give you a 10% discount
Getting them to agree to (i) give you a recommendation (ii) be part of a case study in return for the discount or (iii) provide a glowing reference on request. This is a perfect way for you to accrue some “happy customer quotes” whilst giving the customer what they want. It doesn’t cost them anything in return except for a little bit of their time
So there you go, four ways you can choose to play the discount card and proof that a discount can be an opportunity rather than a hit to your bottom line. If you’ve enjoyed this piece, why not spread the word and share it with your contacts.
3 ways to make that financial step from “one-man band” to being a genuine small business owner
Hands up if you want to grow your small business, but try as you might you just can’t figure out how to do it. It’s a frustrating scenario isn’t it? You need more money coming in to be able to employ someone, but you’re at full stretch yourself so you’ve no way of getting more business through the door. Don’t worry, you’re not alone. It’s a problem that most small business owners face and here’s a few thoughts on how to overcome this common problem.
Put your prices up
Yes, that sounds odd but if you have plenty of clients coming to your “door” and simply don’t have time to serve them all, it’s time to put your prices up. You’d be amazed how much of a difference even a small price rise can make
And even if you don’t have customers clambering through your (virtual) shop windows to buy your products or services – a price rise is more than likely, something you could still put in place. Now, you’re probably reading this bit thinking “I couldn’t possibly do that” and you’re one of many small businesses that would think the same. But are you really charging market rates or are you letting your small business inferiority complex damage your bottom line? Your products and services are just as valuable as those offered by bigger business and you should charge appropriately. If you’re still not sure, do some market research. Phone up your competitors (or get a friend to do it) and get some quotes and you’ll see more often than not, that your prices are well below where they could be.
Bring your costs down
Sounds obvious, but it’s not just about getting the best price for raw materials to make your products. Think about electricity, heating, water, business rates and rent. Do you really need a large, posh office in a top postcode if you don’t entertain clients at your premises? Are you heating rooms in your building unnecessarily or leaving the heating on overnight when you’re not even there? What about your energy suppliers… are you sure you’re getting the best deal?
Then there’s the subscriptions for software that you don’t use. That unnecessarily high mobile phone tariff and the monthly direct debits going out for memberships to a club or group you no longer attend, or that delivers no value to your business.
One of the best ways to bring your costs down is to go through the business bank statement on a monthly basis and question every item on the list. Ask yourself; Why is it on there? Does it need to be? Does it add value to the business? Can it be done better or cheaper elsewhere? Once you reduce your costs, you’ll have more money in the bank to consider bringing someone else on board and begin to expand.
A useful tip is to have a secondary “savings” account for your business. This helps you to save for your tax bill at year end, but can also be used to “skim” money from your main account so you can save up to employ someone in the future.
Get a loan to fund your first employee’s salary
This might seem like the simplest approach but it’s also the highest risk. If it’s not planned correctly, your small business could end up further from your goal than when you started off. If you are going to consider using a loan to fund your first employee’s salary, here’s a few things to think about first:
Exactly what are they going to do? Write a detailed profile of their role and responsibilities.
How will their role enable the business to make more money? Will they be selling (in a small business, everyone should be responsible for selling)? If they’re not selling, are they taken work of you so that you can sell?
Following on from this, exactly what will your role be, once you employ this new person? You can’t afford to sit back and relax – you have a loan to pay off and an employee’s salary to pay every month. Make sure you have a defined plan in place for yourself, when your new employee comes on board.
How much money will you need to borrow? This can be calculated by producing a business plan showing how your business will change and earn money once the new person comes on board. By making a plan including financial projections, you can understand how many months you will be reliant on the loan paying your new employee’s salary before your small business finances improve sufficiently to take over the responsibility.
Has this post struck a chord? Would you like to talk to us about how to grow your business? The small business coach offers a range of business support packages to help businesses like yours. Take action today and let’s get your business on the path to growth.
How to turn your invoice into a sales tool
As a small business owner, I’m always looking for more ways to sell more of my services. A good way I’ve found of doing this, is to document the end to end customer journey and then take each stage and explore whether there’s an untapped opportunity to sell. A classic example is at the invoicing stage. By this point your customer has already purchased from you and has probably already utilised your product or services, but that doesn’t mean the customer journey is finished. On the contrary, this is potentially the start of a new, bigger sales cycle. You just need to think of your invoice as more than a piece of paper telling your customer how much they owe. Here’s some ideas to help you grab your next sale.
Showcase other products
One of the simplest ways to add value is by showcasing other products you offer that you believe the customer might find useful. Let’s say you’re an accountancy practice, why not bring to your client’s attention that you offer a business review, a business planning service or maybe even a part-time CFO function. Web design agencies who also offer marketing services may choose to bring these to their client’s attention. What about an MOT centre? Maybe you also offer oil changes or new tyres. This strategy really can work for any business.
The bottom line is, this customer has already purchased from you and so they’ve already passed through the “trust barrier”. You now need to educate them on how else you can add value to their lives so they become long term customers.
Special offers or bundles
Showcasing your products allows you to educate your customers about what you offer. Providing a time-limited special offer however, brings a level of urgency to the purchase. Make sure the customer knows that the special offer is only open to much-valued existing customers and won’t be available next time around.
Top Tip: Instead of offering a discount, why not offer something extra for free. That way the average “basket value” of your customers will be higher. It works in much the same way as the “happy meal” does for McDonalds. If you are dead set on offering a discount, offer it on multiple purchases or long-term contracts only. For example, if your customer normally signs up for a month of services, offer them a 20% discount for signing up (and paying for) 3 months up front.
Advertise a referral scheme
The best sales people in the world are your existing customers so encourage them to talk about your business by starting and promoting a referral scheme. The scheme doesn’t have to pay out money. Instead it can be used to offer your existing customers a discount on their future invoices. This is particularly powerful if you have customers who are on a retainer or recurring contract. Make sure your referral T&C’s state that the referral discount is only activated once the person that’s been referred pays their first invoice. That way you won’t lose out if the referral gets cold feet.
Offer a discount or freebie in return for a case study or review
How many of you read case studies or product / company reviews before making a purchase? Quite a lot I’m guessing. Reviews and case studies are really powerful tools when it comes to selling so the more you have, the better. A great way of encouraging your existing customers to get involved, particularly if they are short on time, is to appeal to their pocket. Offer a freebie or a discount in return for their time and effort in writing a review or being involved in a case study.
So there’s four simple ways you can turn your invoice into a sales tool. If you’ve found this article useful, please share it with your connections.
5 ways restaurants can increase their turnover and their profits
With over 140,000 restaurants here in the UK, the restaurant industry is becoming more competitive than ever. The good news is however, as a population, we’re eating out more than ever and happy to spend more to do so. The big question is then, how does your restaurant get a bigger slice of the action?
Here’s five things you could put in place today to make sure it does…
Put a loyalty system in place. We see this regularly in cafes and coffee shops, but there’s no reason why a loyalty system can’t transfer to restaurants too. Unlike coffee shops who typically offer free coffee after a set number of purchase, restaurants don’t have to offer a free meal. A free starter, desert or simply a discount on the total bill is effective enough.
Put a killer promotion in place on your quietest day of the week. And when I say killer, I really mean it. This needs to be something which people simply can’t refuse, offered at marginally over cost price. Let’s say a Pie and a Pint for £7 for example. If they’re wowed by your food and your service, they’ll start coming in at other points in the week and that’s where you’ll make your money back.
Upselling and meal combos. Fast food restaurants are the master of this tactic. They’ve got the meal deal and are famous for asking “if you want to go large”. You don’t have to be as crude as the fast food sector, but you can always upsell from a small to a large coffee, or from two glasses of wine to a bottle, or from a main meal to a 2-course special deal.
Build a customer database and speak to them regularly. Ask your customers for their email address when they pay the bill, or ask them to put a business card in a pot to win a free meal at the end of the month. In doing this, you can begin to send out offer emails to your growing customer database on a weekly basis. This enables you to remind your customers of your killer promotion. You can also announce or focus in on key dishes to wet people’s appetites. What about providing people with a discount code which will only be valid for reservations that week. Email marketing is a hugely powerful tool to maintain and grow your customer base.
Flyers. We’ve all seen this on an episode of the apprentice I’m sure, but flyers really work. Even in rural locations. There’s two things you need to think about if you’re going to go down this route (i) what do you want to achieve from it and (ii) where are you going to hand them out.
Let’s take point one first – of course the aim is to get more bums on seats, but when? A generic flyer saying “look at us, we’re great” is unlikely to be as effective as one that says “tickle your Tuesday taste buds with 25% off today”. If you don’t put a time limit promotion in place, you give neither a reason or a sense of urgency as to why someone should visit.
Secondly – think about the location. Going down the local high street is the obvious choice, but what about visiting the local train station during the morning commute? How about putting flyers on car windows down at your local multi story or down at your local B&Q? It all helps.
If your restaurant is in a town or city, why not go round the local businesses and offer a unique discount code for their employees. It will grow brand awareness and encourage more footfall.
Has this post struck a chord? Would you like to talk to us about how to grow your business? The small business coach offers a range of business support packages to help businesses like yours. Take action today and let’s get your business on the path to growth.
3 things to consider when choosing a business name
So you’ve got a great business idea, you’ve validated it and you’ve done at least the basics of a business plan so you know how you’re going to make money. Next stop is to give your business a name, but before you do – here’s some things you’ll need to think about…
Is there another company out there with the same name?
Sounds obvious but when you’re carried away in the moment, it’s easy to forget. The quickest way to find out if a company with the same name already exists is to type it into Google and see what pops up. If there’s a company trading in another country with a similar name and you only want to trade here in the UK, that shouldn’t be too much of a problem, but if you do want to trade internationally, you might want to have a rethink.
Google isn’t the only source you’ll need to check before choosing your name. You’ll also need to go to the companies house website and check there too. Providing there’s no one else listed, you’re almost good to go, but before you go ahead and register your company – make sure you at least follow the next point below first.
Check a website domain is available that you can use
OK – so you’ve decided to call your company Fred Bloggs Limited. You did the checks above and it all came back ok so you went ahead and registered the name at Companies House. Now you’re going to go and buy your domain so you can set up a website, but oh-no – Fredblogs.com is not available. Even though there was no listing for fredblogs.com on Google, someone has gone ahead and bought it so that you can’t have it. What are you going to do? WHAT ARE YOU GOING TO DO?!?
Don’t worry, there’s no need to panic. Nowadays .com websites are rarely available, unless you’re using a completely made up word, so you’ll probably have to look at .co.uk or .net or one of the other, less well known extensions.
But before you do, you might want to try this “hack” when it comes to getting yourself a .com domain name. Instead of fredblogs.com, why not try fred-blogs.com, thefredblogs.com, fredblogslimited.com, fredblogsuk.com or even FBUK.com. How about adding the trade after the company name, for example fredblogsrestaurant.com or fredblogsclothing.com. If you really want that .com name, there’s always a way. Just don’t let it get too complicated. Fredblogs.co.uk for example, is a lot better than fred-blogs-clothing-uk.com.
Will it be prone to being mistyped?
Ironically it’s just taken me about 2 minutes to figure out how to spell “mistyped” but that aside, we have lots of words in the English language that are commonly misspelt. The oxford dictionary website provides a useful list right here. Of course, if people are commonly misspelling your website, you’re going to get a whole lot less visitors and that means you’re going to have to work twice as hard (and spend twice as much) to market it. It also means you risk people ending up on a different website. Perhaps a competitor who has bought the misspelt domain name to redirect traffic to their own site.
And it’s not just singular words that could be misspelt, it’s misspelt phrases too. For example, let’s say you have a company called Simpsons Suits. That sounds simple enough – but when you type in www.simpsonssuits.com – I wonder how many people would miss out the double ‘s’ in the middle which comes from the last letter of ‘Simpsons’ and the first letter of ‘Suits’. It’s small details like this, that if picked up at the beginning, could significantly improve your chances of having a successful business.
Ok, that’s all for this article. If you’ve enjoyed it, please share it and if you would like help with your start-up or small business, head to our support packages page and let’s get your business moving forward.