And welcome back. This is I think it’s the fourth of the series. We’re talking about how to increase profits and we now have begun to realize that profits is a result. And in fact, sales are a result. We discussed how expenses must be looked at for their quality. What impact did that have on your sales?
What impacted the Avenue business? We talked about how a piece of advice from someone can mean an awful lot to your business profitability, but it may have to pay for that. And so that quality of the expense maybe worthwhile because it’s an investment. It gives you a return on investments.
On the other hand, other expenses are just expenses, but may also impact on the quality of service you offer. We then talked about sales and we looked at the different elements. We broke sales out, we exploded in one of these diagrams. We exploded it out to look at the components of sales, and we began to delve deeper into that, and even those can be split into deepest segments.
In which we do in our program. However, today I want to talk about pricing as an element of increasing sales, increasing profits, because it is one of the things that’s often missed and it is one of the things that it’s probably the easiest thing to change, but it must be done with great care and great thought.
There are processes to follow and that is pricing. Now, often the instinct for most small businesses is, I’ll cut my price and I’ll get more business and on grow my business. Does that, does all of ring true for you? Have you heard that before? Have you heard that? Have you seen other businesses do it?
Have you seen other businesses trying to cut price to get to, to get more business? I’m sure you have right. And so my concern for you is that you don’t follow suit because it is probably the biggest lie. In business cause most people haven’t had a business course. Right. I wasn’t, you know, I’m a qualified accountant and part of my course did not include anything on running a business at all at all.
Right. I spent three years in intensive study while working from a favor of accountants and never, never was like taught how to run a business. In any of that, I had to then go look. I am super interested in how some businesses that are really successful in some businesses are struggling and some businesses fail.
And so I went out and I spent, you know, 30 and for 40 years, 40 years, and studying this stuff, and I’m still studying it. I haven’t stopped. I still spend over 25 30,000 pounds a year minimum on courses because I think keeping sharp is, is key to, well, I love it for a start, but I also use it in my business and I do use it in my customer and all my customers and clients’ businesses.
So absolutely important. But price is one of the things that can dramatically impact your business results, your business profits. Let’s look at discounting for argument’s sake, right? In most businesses, if you take a 10% cut and you cut your prices by 10% you sometimes have to increase the number of customers by 50% to keep your results the same.
Now you remember when we talked about expenses and we saw, you know, we’re building the layers, right? Uh, in the layer we talked about expenses, we talked about how complex expenses can be when you look at them and how you, how, what part they play in your business. Well, here again is when you look at the, the expenses of increasing your customer numbers.
Just say you were lucky enough. To increase your customer numbers by 50% what would happen to your staff requirements? What would happen to your time? Do you have the ability in your mind, in your time to do 50% more work? Most businesses owners I speak to are completely, fully, fully booked. They really busy and so they don’t have that time.
And so for you, you need to look at and look, you know, is cutting my price. Really a sensible strategy. And when you look at cutting price discounting, there’s a few people who’ve made a big thing out of it right there and quite successfully. If you look at. Little you look at all the, you used to be able to look at Asda, but that’s not, it’s failed with the advent of oldie middle because they can only be one lowest price competitor on the block, maybe two.
All the Elidel and the, you know, you very rarely find them side by side. Sometimes you do, but very rarely do you find them side by side. But they’ve taken on the previous low priced competitor, which was a Asda, and they’ve eaten their lunch. They’re in fact eating everyone’s lunch, because now that they’ve also demonstrated they’ve got reasonable quality, uh, and a reasonable product at a much lower price.
And so people are going, well, what value do I get from going to. Um, Tesco’s or Waitrose or Asda, I might as well go to old, the old little and, and so they begin to change their behavior. But you can begin to see if another price, low price competitor comes in. You might find the middle getting out of business.
Right. Because as the probably thought they were the low price people. I remember going on holiday and you’d get, you’d go walk along a market. I love visiting markets when I’m away on holiday. And uh, they would, there would be two people talking about as the price, as the price. They couldn’t speak much English, but they didn’t know that’s the price.
But [00:06:00] now they’re probably go all the price. I don’t know. But you know, that’s, that’s the sort of thing, you can only have one load price competitive in the market. Uh, you probably haven’t got deep enough pockets, pockets like all the little, and as the, to compete in this low price of, please don’t, you know, don’t go into that market.
You’re a small business. You go limited, uh, coined a general bank account. You don’t want to be wasting by trying to carve out a market share for being the low price competitor. And you know, one of the people who understand. Business lease. I can demonstrate this by my pricing analogy. Are accountants, right?
Let me, let me explain. accountants, if they understood business, if they understood the nature of giving good value, taking care, giving great customer care, and charging a reasonable price for the quality of the expertise they offer, they wouldn’t be discounting themselves [00:07:00] stupid. So you can get a set of accounts done for a quarter of what we charge.
You can do. I don’t, I don’t doubt that for one second. I could probably find a view in five seconds now, but the quality of the service, the quality of the results you get and the care and the knowledge of that person, how could they spend 35,000 pounds a year on training. If they’re challenging so little and just base basically making ends meet in the business to provide for their family.
They haven’t got the budget to keep up to date. And the number of clients I’ve picked up because I’ve demonstrated are up to date we are and our tax and our business thinking and our marketing thinking. Whereas their accountant is 10 years behind because they haven’t had the money, the resources, the time.
To develop, to improve their skills, to do, to deliver to clients. So please don’t, uh, be fooled into buying too [00:08:00] many low price products because that affects what you deliver. It affects your results, and please don’t discount yours. And the next video we’re going to be talking about the other side of pricing, which is.
Higher pricing, and that is a subject very close to my heart. I love that, and I love it when clients apply it because it means they will be more successful. They’ll be in business for years to come and will be a client for years to come. So pretty selfish. I’ve made, they got all the best. This is golden.
If you want a strategy session the way we look for 45 minutes, we’ll look at you and your business, then please book a free session. It’s 45 minutes. Uh, you’ve got to know me a little bit by now on this series. Or you’ll know whether the sort of thing I’m talking about is the sort of thing that could be useful to develop in your business.
And I’d love to be able to be part of your success story. This is Gordon wishing you well until we get a chance to speak in person, take a goodbye.
