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Vision or Lie?

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Written by Karen D. Swim

Ron entered the building right on time for his appointment with Neal. The office was modern with a coolly detached vibe. After giving his name to the receptionist, he was directed down a long hallway to a spacious hallway with a large oak desk. After exchanging pleasantries, Neal and Ron got down to business.

Neal, told Ron that their company had moved to the state and would be renovating 60 homes per month. Ron liked Neal and the process he laid out. An hour later, Ron walked out with the specs on the first job, which he would start in two days. The economy had been challenging and Ron was afraid he would have to lay off a few of his guys. This contract could not have come at a better time.

Over the next few weeks the jobs came in starts and stops, not the steady flow of work Neal promised. Ron could not keep his crew on hold for days at a time so he opted to take other jobs. He went in to pick up his check for the last job with every intention to speak to Neal. He ran into the Project Manager, Andy in the parking lot. Andy shared that he was leaving the company and opened up to Ron about the promises that were never kept. It was then that Ron learned that Neal had presented a vision of where he wanted to the company to go and not the reality of where the company was today.

Like many business writers, I am often invited to take on jobs for companies promising lots of steady work. Inevitably, the company wants to leverage that promise for a lower rate. 

“Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.” – Jack Welch

There is a great deal of focus these days on having a big vision. We are told to put our faith in action by changing our mindset and language. I completely agree that we must fix our minds on what we want and rid ourselves of self-limiting beliefs BUT we must be careful when we recruit others to our vision.

When hiring employees or contractors, it is important to present the reality and allow each person to make their own choice. To present the vision without the reality is a lie. Contractors plan their accounts receivable based on billable hours, just as employees plan their budgets based on income. It is unfair to ask someone to set aside billable time when you cannot deliver on your promise. 

“I think there is something, more important than believing: Action! The world is full of dreamers, there aren’t enough who will move ahead and begin to take concrete steps to actualize their vision.”– W. Clement Stone

Many will believe in your vision and will be willing to take the risk with you. However, do not be offended by those who are unwilling to take the risk. Respect the right of everyone to make his or her own choice.  

Have you ever unintentionally misrepresented your business? Were there repercussions? Have you ever signed on for a vision that did not match reality? How did it make you feel?

Is Your Business on Welfare?

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Recently a writing colleague posted an article on the Elance water cooler. The article written by Ron Lindeboom, highlighted the three different buyer types. The article is several years old, but the principles still hold true.

Lindeboom discusses the three marketing types and groups them into top tier, middle market and low end. The top tier clients representing about 15% of your client base are those that value quality and relationship. The middle tier represents about 70% of the market and they want good but fair pricing. The low end wants high end service for cut rate prices. Lindeboom calls the low end segment “Grinders.”

As a business owner, why would you ever want Grinders? Yet, far too many businesses, particularly small businesses fight for this client type. Understanding the psychology of the client segments is important but it’s equally important to understand what type of business you are.

Many small business owners are standing in the welfare line and not sure how they got there. They work hard. In fact they may be working longer hours than CEOs of Fortune 500 companies. They deliver high quality work. Yet, they are barely making ends meet. These businesses are well intentioned but are not appropriately targeting their market or pricing their services.

Other small businesses are locked into a mentality that says they can only compete on price. To win against the “more established,” or “the “larger competitors” they have to compete on price. Does this sound like you?

Still others believe that volume makes up for low pricing. These business owners proclaim “yes our pricing is low but our volume supports it.” These same business owners would like to convince you to work at a fraction of your normal fees because they’re going to give you a large amount of work.

Although I’m humiliated to admit it for a long time I too had a business that was on welfare. My company was turning out high quality work and a sucker for every sob story that justified someone negotiating our rates lower. We wanted to help and by golly help we did to the detriment of our own profit margin. In fact our margins were negative!

I’m here to tell you “Don’t try this at home! You’ll go broke!” I am a big believer in volunteering, giving back and charitable giving. However, when running a business you must realize you exist to make a profit. You can set a fixed amount of time aside to donate business services (and I advocate doing so) but your day to day operations should be generating income.

Let’s look at this from another angle. In corporate America, did your employer negotiate your salary daily? When you showed up for work, did HR say, “Gee you know right now our budget is stretched, so can you work 3 extra hours for half your salary?” Of course not! Yes, companies get into budget trouble and they often solve it by doing lay-offs or salary freezes but no company negotiates your pay (or value) on a daily basis. So why are you doing this in your own business?

Negotiation is a natural part of doing business. Negotiation however is an exchange and not the seller simply giving everything away. It is an exchange to work toward a mutual win where the critical needs of BOTH parties are satisfied. Great negotiations end with all parties feeling like a winner and it sets the stage for a good long term relationship.

However, you are not obligated to negotiate price with every potential client. When you walk into the grocery store to buy a gallon of milk, there is a price you will be required to pay. Do you get to the register and ask to pay a different price? Do you ask them to give you more milk for the same price?

Yes, I realize milk is a commodity and service businesses operate a little differently, but do you negotiate price with your doctor, dentist or hair dresser at every visit? We ask for lower pricing when we beleive the price does not reflect the value but more often than not we simply pay what is asked or we don’t buy.

So, how do you begin turning things around? The first step is to examine what you have to offer. What does it cost you to provide the service? What is the value of that service to your ideal client (ideal being key here as you are not targeting grinders)? Set a fair price and stick to it. Your ideal client will pay you for the value. Grinders will not buy from you.

You may end up with fewer clients, but that’s a great thing. You want fewer clients that pay you what you’re worth. Unless of course you really do want to spend your time killing yourself for the pennies that grinders are willing to pay.

I’ve learned the hard way that clients will only value what I have to offer if I first realize that value myself. This means getting off welfare and saying No to the people who really can’t afford my services. Am I missing out on a large segment of the market? Yes, I am but it’s a segment that does not represent my ideal client anyway.