Are You Giving Your Business Away?

I love getting a little extra. The extra shot of espresso or added whipped cream to my coffee drink, the discount for being a frequent customer, and even receiving some free expert advice – it adds up over time when I am considering how to patronize the businesses in my area. As business owners, when do you provide value (for free), and when do you ask for a commitment (by way of a financial payment)?

Being in commercial real estate, having additional experts on speed dial is a great added benefit to my clients (who are business owners) and for my own business.. A few areas of expertise that I value in my business is that of an attorney and a CPA. Reviewing complex real estate contracts, to evaluating how a business is established (or dissolved) and the profitability model are some of the areas I like to lean on my expert friends for. Over the years, I have had these experts provide a quick insight or perspective to my clients, as well as develop long standing and profitable (for both sides) relationships. When I followed up recently with one of these friends, I asked him how he determined how much advice to provide up front without the expectation of a fee?

That can be a tricky question for a lot of us. If you are in real estate, like me, your paycheck doesn’t come until the business is fully complete (and sometimes not at all if a deal falls through). For others, a payment structure is established at the beginning and an invoice is provided for payment for the time it took to complete the job – whether the outcome was good or bad. If your business sells a product, then the exchange of payment for the product usually happens at the same time (unless the product needs to be ordered, then payment is usually placed up front and the delivery of the item comes later).

As business owners, we need to carefully consider how much up front value is comfortable for each of us. Here are some things to evaluate about your business:

  1. Will up front value increase the propensity for a sale?
  2. Will up front value create a higher sale?
  3. Will up front value set you apart from your competition?
  4. Is there a cost to providing up front value?

I am asking you to think about value in a little different terms. For many years, the term “value added” was the norm. I think it was a very popular fast food restaurant to coined the phrase “do you want fries with that?” The value add proposition was born. In this day and age, value can be tangible, but value can also be perception. The expectation of value needs to be established at the start, so the buying decision can then commence.

The beauty of our businesses is that we can determine what value we can and want to provide. What you may become surprised with is what your customers actually are willing to pay for. Those “value add” offers could work in your favor if structured and marketed the right way.