Fear. It’s crippling. It can make you think you’re about to be eaten alive when no such threat is real. I’ve found facing my own fears means taking a hard look at the chain of events that leads me to feel it.
First, there is a trigger subject, word or event. Maybe you previously feared something but never looked at the cause so now you see that as truth. Instead of experiencing it as a feeling, you experience it as fear.
Which leads to the “what if?” fears.
And then you do something stupid like worry or, in your business, discount.
That fear is often what leads to articles like last week’s Wall Street Journal, Small Retailers Feel Pinch of Big Discounts.
In it, one retailer is quoted that they, “will provide 20 percent to 50 percent discounts through December. Many of our clients live in Manhattan and if I don't do something to entice the customers, they… will get a better deal in the city.”
There’s a reason Groupon and all the online coupon companies are thriving right now: because of fear someone else is taking your customer.
Another business owner profiled in the article was referred on their website as, “The Rolls-Royce of puzzles.“ The owner said he, “managed to eke out a small profit last year despite [offering] a 15 percent discount. He believes he could have been in the black this year had he raised or just held steady on his prices. ‘But in the last two years, it was so frightening that I didn't dare raise them.’”
Are you frightened about your competitors? Is that why you’ve discounted your services or wares?
When you go down the discount path you are discounting your own value.
When I used to work for a regional chain, we had a manager who discounted. Her store had the highest volume in the chain by a long shot. While it was common knowledge she was discounting, the owners didn’t make her stop.
When I challenged one of the owner’s double standards because they didn’t allow any other store managers to discount, the reply to me was, “Bob, high volume hides a wealth of sins.” They went bankrupt.
Millions of dollars in sales means nothing when there is no profit.
Any student of Accounting 101 can tell you that the profit earned by the average business is only one to three cents on the dollar. This fact flies in the face of the common perception that small business owners are raking in the dough.
Doubt me? Ask your employees how much they think you put in your pocket out of every $1 you take in. Their answers will give you a clue as to how they look at discounting your prices.
Small business owners haven’t just experienced declining profits and closed stores (although those are clearly dire outcomes). Many have even lost their homes as a result.
Based on comments I’ve read in recent news stories, it appears that business owners that are unable to make a profit have taken on other jobs to support their business. Many offer discounts to lure customers which cripples their profitability.
The endless promotion of low-price and discounting that has eroded the businessman’s reason to invest in America must be reversed.
It hurts when you don’t take a salary from your business. That means you have all of the problems, but none of the financial rewards. It’s akin to always having the baby in dirty diapers instead of seeing your child going off to college.
The goal of your business is to be profitable.
That’s why today I want you to examine the triggers like the phone not ringing, a stack of payables for more than you have in your bank account, or not enough people coming in the door -- anything you may be feeling that have encouraged you to take less than you should.
Not making enough money? Look in the mirror and see your own part in not being profitable.
I had one audience member say she could only mark items up 30 percent for them to move. That’s a charity not a business.
Another turned to Twitter to offer discounts when there were too many bills to pay. Capitalism rewards thriving businesses with profits as a measure of value in excess of costs. And closes the rest.
That’s why today I want you to examine the triggers you may be feeling that have encouraged you to take less than you should.
Those triggers are real but discounting is not the answer. Look at what you need to fix in your business and fix it.
Continue to take less through endless promotions and discounts in a misguided belief you’ll get it back “in the future” is insanity.
Stop the discounting and couponing. Manage the fear.
Bob Phibbs is the Retail Doctor® and author of The Retail Doctor’s Guide to Growing Your Business (Wiley.) Phibbs has helped hundreds of businesses in every major industry, including hospitality, manufacturing, service, restaurant and retail. Follow him on Twitter @theRetailDoctor