New Entrepreneurs - A Common Notion Needs to be Challenged

I've noticed a common notion among aspiring entrepreneurs and even existing business owners. This includes students in the classes of my Successful Entrepreneur program at Independence Community College and businesses up and down Main Street. The notion inhibits successful profits (i.e. what many small business owners use to make their living) and sometimes causes businesses to die after suffocating under the weight of their overhead.

For aspiring entrepreneurs, we need to begin challenging this notion early. I'll demonstrate the notion here by paraphrasing what I hear from my students quite regularly.

"I want to offer my customers more value; bigger, better, faster.....whatever my customers they want that's not being provided by my competitors. "I want to meet or beat my competitors' prices."

If you're an aspiring entrepreneur or existing business owner and your strategy is offer more value while at the same time meeting or beating your competitors' prices, I'd like to present some ideas here, in the form of a challenge, for you to think about.

The first part of your strategy is great. All businesses should always be looking for ways to offer more value. Adding more value--benefits not available from competitors--is the key to attracting customers to you. Its the key to attracting customers from outside your normal trade area. If you are truly successful at adding a value that customers want, they will pay more. If product/service offering is truly perceived as a greater value than available from your competitors, customers will pay more.

Most of the time, creating this greater value for your customers will increase your costs of doing business. When businesses spend the extra time and money creating greater value for their customers while using a pricing strategy to "meet or beat the competitors' prices" they put themselves into a time/cost squeeze that is difficult or impossible to sustain.

If you put the extra money and effort into creating a greater value for your customers and price yourself too cheaply, you could go out of business (from losing money) or end up working long hours making less money than if you worked in a minimum wage job.

The key to small businesses surviving and thriving in the future is not to offer low prices, but to use innovation to create a greater benefits (not available from competitors) for which customers are willing to pay more.