Tag Archives: negotiation

Trade secrets – selling at rock bottom prices can be good business

What they don’t tell you about starting a business…

As a rule of thumb for start-up businesses, they should compete on quality not price. A price war with bigger, more established competitors is rarely won. Discounting should only be used with great care and as part of a marketing strategy, not as an act of desperation.

That said, most high street supermarkets discount food products as they come close to their sell-by dates. For them this makes absolute business sense – it reduces food waste (a tick in the corporate social responsibility box) and it costs much less to sell the product at high discount than have the cost of disposing of it themselves. It also generates good word-of-mouth publicity in the locality, and the bargain-hunter may also buy full-priced products while bargain-hunting around the supermarket aisles

The general lesson for entrepreneurs is that, in negotiating terms with suppliers, you may be in a much stronger position than you think; a quoted first price is rarely fixed.

For other Trade Secrets in this series, go to https://enterpriseessentials.wordpress.com/category/trade-secrets

An A – Z of social entrepreneurship: L – O

L & M – Leadership and Management

Management is about now, leadership is about the future; one implements goals, the other sets them; one relies on control, the other inspires trust; one deals in rational processes, the other in emotional horizons.” Amin Rajan

Another useful distinction comes from Lord Bilimoria, founder of Cobra Beer, who suggests that “leaders make things possible, managers make things happen”.

Either way it’s good to try not to confuse the two – many do – and remember…. you don’t need to be a leader or a manager to use those skills (particularly if you have greater expertise in both areas than the leaders and managers do!)

 N – Negotiation

 Gone, I think, are the days when negotiation was all about playing hardball and ‘getting your own way’ whatever the cost. Most entrepreneurs are in it for the long haul and recognise that it’s more about trying to end up in a (jargon alert) win-win situation with the other party. Any parent knows this makes for more rewarding relationships!

But nor is negotiation about bending over backwards and underselling yourself. Traditionally the not-for-profit sector has said ‘give us half the money and we’ll work twice as hard’. Being business-like – increasingly important in these hard times – is about saying instead ‘give us half the money and we’ll do half the job’.

 O – Obstacles and opportunities

Two sales executives were sent to a tropical island to research the market for shoes. One e-mailed HQ to report “bad news, no one wears shoes.” The other reported “good news, no one wears shoes.” Which would be your e-mail?

There’s a lot of bullsh*t spouted about necessity being the mother of invention and simply working smarter to save money as an excuse for slashing expenditure. But I do think some organisations have suffered in the past from the relative ease of access to funds for good works. Developing flabby organisations can lead to flabby thinking, and I’d like to think that a bit of belt-tightening might stimulate creativity.

Enterprise essential – Learn about price, value and negotiation

Even in times of economic hardship we under-value the products and services we provide and pay too much for those we purchase. Price is only one of many factors that influence the purchasing decision. Learn to sell well in the open market and to win contracts. When buying, develop your negotiating skills with suppliers – a recession is a good time for bargains eg in stationery and printing.