Selling on price alone will harm your start-up – what’s a small business to do?

Red Hot Sun
Red Hot Sun (Photo credit: Wikipedia)

A business adviser said the other day that with the rise of the mobile revolution, the size of your small business doesn’t matter nearly as much as how connected it is. The adviser encouraged start-ups and small businesses to learn how to manage a business on their phone or tablet and develop a social media or mobile marketing campaign to reach new customers.

With so many affordable tools available online to help promote small businesses it’s surprising that not more small businesses have a stronger online presence. In small retail businesses owners have relied so much on walk-in trade and their location that many have neglected to take their business online. Perhaps it’s because they may not know what to do and how online differs from selling in a retail store, for instance.

A young entrepreneur talked to me the other day about how he had built websites for small businesses but he ran into difficulty. His problem was that he was offering to get a small business up and running with a website at a very competitive cost but the small business owners were not prepared to provide content for their website.

The entrepreneur was paid 50% upfront. He set up the website and then asked the small business owner to provide the content. But that’s where things went awry. They expected that to be done for free and wouldn’t pay him the balance of the 50% owing to him.

The problem with this entrepreneur’s business model was that he could get business by offering the lowest price for website design but where was the value? The small business owners he attracted with the lowest price did not see value in putting up pages about their business and their offering. The entrepreneur should have been upfront with the small business owners: that they would either have to spend their time and resources in writing copy for their websites and creating images or photographs or paying someone to do it for them.

The other issue is that the entrepreneur because he said his price so low had to find a large volume of small businesses to achieve even a modest revenue. It’s one thing starting a sideline business as a hobby or to supplement your studies but quite another thing to turn it into a real business that makes profit. The entrepreneur could have offered a hosting fee or even a website service fee monthly which would have given him a source of recurring income.

It’s never too late. This business model developed by this young entrepreneur can be revived. A business model that provides better value for small businesses, gives them an attractive and constant presence online will give far superior value than just being the lowest cost provider.

Imagine being able to price your product or service so you turn up the temperature of your sales and still keep your customers red hot buyers. Use your prices to turn a freezing cold customer into a boiling hot one.

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