A business partner of mine was recently meeting with the owners of some small businesses here in town to tell them about a new advertising campaign that we’re working on. He told them that it was effective, would reach thousands of people in their demographic and, best of all, was affordable for all businesses.
While some of the business owners jumped at the chance, he ran into a couple who told him “I don’t need to advertise because I have all the business I can handle.”
Really? You have so much business that you can’t possibly take on another client?
When people tell me that, I look out to see their Porsche sitting out in front of their office, wonder where they are going to be taking their private jet and wish I could live in their mansion. Well, okay, so not quite, but if someone has so much business that they can’t possibly take another client, shouldn’t that show that they are successful? But often times it doesn’t. I know plenty of business owners who are swamped with work but are only barely getting by.
Why would that happen?
Let’s assume for the moment that the business is sound. Some businesses are going to fail no matter what you do – they just don’t make good business sense. But if the business is solid, then what can make a business owner struggle while being swamped with work.
It’s all based off of one of the most important rule of economics: Supply and Demand.
Sometimes supply is quite simply time. Calendars are only so large and you can only fit so many clients in any given week. Time, as a supply, is extremely limited. So what happens when we have a high demand for something that is in short supply? Ask all the people that have sold Wii game systems on Ebay for a huge markup during the Christmas rush.
Short supply + high demand = increase in price.
Now don’t go all out and chase off all your customers with a 200% price increase, because then you’d have the opposite problem (low demand + High supply = your toast). If you raised prices five or ten percent, would you lose business? How about creating a new product that has a higher cost, but a higher value for your clients?
Some people don’t want to raise prices, so instead they should increase supply. Hire part time help or, if it’s because your location just isn’t big enough, move to a larger store.
These are just suggestions. Maybe none of these would work for you, but why would you continue to do business where you don’t get ahead? Growth should always be a part of your long term plan.
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