Showing posts with label Small Business. Show all posts
Showing posts with label Small Business. Show all posts
The Entrepreneurial Myth
Posted On Monday, December 7, 2009 at by Sun Jun
Last month, I visited Cebu city after more than a year and I was surprised to see that they have their own Fully Booked bookstore already! To celebrate my first visit there, I bought a copy of "The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It" by Michael Gerber.
Into the first chapters, I already got hooked as I learned about the technician, the manager, and the entrepreneur. Continue reading this article to know more about the Entrepreneur Myth.
Michael Gerber wrote that most small businesses aren't actually started by entrepreneurs. In fact, he wrote that most small business owners actually are technicians. He defined technicians as people capable of doing the technical work involved in the business. These are individuals who started working for somebody else until one day they decided to start their own business. According to Gerber, the problem with this setup is that these individuals tend to assume that if they understand the technical work of a business, they also understand a business that does that technical work. When in fact, the technical work of a business and a business that does that technical work are two totally different things.
I definitely agree. Knowing how to do something to start a business is totally different from running that business. The author then presented that there are actually three types of individuals involved in a business and that these personalities are present in each one of us. These are:
1. The Entrepreneur
2. The Manager
3. The Technician
An Entrepreneur is the visionary in us, the dreamer. He turns the most trivial condition into an exceptional opportunity. He lives in the future and constructs images of "what-if" and "if when." He pushes for change which the manager and the technicians might not necessarily agree with.
The manager is the one that plans and brings order and predictability in the organization. Where the Entrepreneur sees the opportunity in events, the Manager sees the problems. His main focus and drive is to bring order to the organization.
The Technician is the doer. He is happy as long as he is working. He is not so much interested in ideas as in learning "how to do it." Trying new things that probably doesn't need to be done at all can frustrate and annoy him.
Given the presence of these three conflicting personalities in us, it is therefore crucial for us to control each personality and attain balance so that our businesses can continue growing and be successful.
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Product Pricing Strategies for Small Businesses
Posted On Wednesday, May 6, 2009 at by Sun Jun
Are you a small business owner? Do you have problems with how to price your products? Here are a few pricing strategies that you can use to help your business.
Before we can go into discussing the different pricing strategies, we must now the cost associated with each product. The 2 key elements in determining your product cost are cost of goods and operating expense. The cost of goods includes all amount paid for the product including shipping and handling expenses. While operating expenses include all costs associated with operating a small business. This usually includes overhead expense, payroll, marketing expense and office supplies.
Regardless of what pricing strategy you use, the first and most important rule to remember in pricing your product is to set a price that exceeds your product cost. I know this is common sense but I'm putting it here for reference anyway. A small business owner simply cannot succeed in business if they continue to sell below product cost.
Pricing Strategies:
1. Mark Up Pricing
Mark Up pricing is setting a preset profit margin or percentage (usually the industry standard) to the cost of the merchandise. Like for example, if you want a 50% profit margin and your product cost is 50 bucks. You would set your product price at 75 (50 + 50*25%).
2. Vendor Pricing
Vendor pricing is using the Manufacturer's Suggested Retail Price (MSRP) as your product price. It is a common strategy used by small business owners to avoid price wars and still maintain a decent profit. However, by using the MSRP, you lose your advantage, in terms of product price, over the competition. You will have to think of something else to attract customers to buy your product.
3. Competitive Pricing
There are two ways for a business owner to engage in competitive pricing. The most common way is to price your product below that of the competition. Another way is to engage in Prestige pricing, or pricing your product above that of competition. Prestige pricing can be considered when your location, exclusivity, or unique customer service can justify the higher prices.
4. Psychological Pricing
Psychological pricing involves setting prices to a certain level that is perceived to be fair by the customer. The most common method is odd-pricing. In this strategy, business owners use prices that end in 5, 7, or 9. Studies have shown that customers tend to round down a price of 19.95 to 19 rather than 20.
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