Why People Love to Owe You (and how you can fix that)Posted in CategoryGeneral
BBunmi Mercy 1 week ago
I have seen many small businesses complain about running into debts/losses because people (read: friends & family) always ask/expect discounts or buy on credit.
Here's a thread for small businesses.
Let's talk about this:
1. Perception: How people view you or your small business can determine how easily they are able to demand an unreasonable discount or buy on credit. They might feel like your business is not "business" enough. Or like they are doing you a favour by buying from you.
Most times, you are responsible for however they view you. Many business owners use messaging that signal or sound like they are dependent on people buying from them to survive. When people feel like they are doing you a favour by buying from you, they will disrespect you.
If you talk about your business as some random thing you are doing to make ends meet, you expose yourself to people like this. If you promote or advertise your products with messaging that speak vulnerability (e.g., buy so I can feed tonight), you're doing yourself harm.
Your business is not a random hustle you are doing just because you can. It is something that provides value to people. And for the value you give, you get money in return. Let your copies, adverts and promotions always reflect the value you're bringing to the table.
2. Your lack of structure Almost all the time, small businesses are quick to give unreasonable discounts or on credit because they lack structure. You must have a structure that addresses discounts or credit. You can't just be giving everyone who comes to ask you.
For instance: What guidelines must be in place before you give someone a discount or credit? You can draft out something like this: a. Discounts: Buyer must be a third-time (or more buyer). Or buyer must have bought products worth so-and-so amount before qualifying.
This way, you're not throwing money into the bin, but more importantly, you're rewarding someone who is a regular buyer. Discounts should never be because you pity a buyer, but because they can bring in higher profit NOT at the expense of your bottom line.
You can also have a scheduled period where you give discounts in a year. When people ask you for a discount, assure them that you have a massive discount sale in plan for your customers in December or during Valentine's.
Another way to handle discounts is to tie it to more business sales. If a person tells you they want a discount, smile and tell them that they can get a percentage discount if they bring in two or three of their friends. Don't do this if your business cannot afford to.
For people buying on credit: See items you give on credit as a loan. If you sell a product for 15k and someone is asking you to lend them 15k, would you lend them? If yes, why? If no, why? Would you give someone money just because they said they would give you by month-end?
You want to find out: - Why do they want this product on credit? - What do they do? - Have they bought from you before? - Can they afford to actually pay back? - Do you have a mutual party? - What impact could this have on your business if they decide not to pay or they die? When are they promising to pay back?
- Do they want to pay back in full or in instalments? If in batches, how many?
You can implement what I call a credit contract. Have them sign a document? You can visit @legalboxng if you do not use contracts yet.
Many business owners give on credit because they feel helpless or desperate. They do not want the customer to go somewhere else. But the truth is these same customers can go to someone else they do not know, buy at a more expensive price and pay immediately. Leave them.
3. You're the primary point of contact. When people see that you're the alpha and omega of your business, they will keep feeling like they can reach you anyhow. One way to deal with this is to either hire someone else to handle your sales processes OR if you cannot afford to –
Create a system that communicates that you are not the only one in charge.
1. Create an official email address.
2. Create official pages Whenever people reach you asking for that 100% discount, politely tell them your sales manager will handle it and point them to the email.
Tell them your sales manager handles things that because you like to have a clean record at the end of the month/year. Tell them FIRS abi any other body can arrest you if you don't have your numbers in place Rolling on the floor laughing
When they send an email or DM, it moves from personal to official.
Pay attention: You remember you cannot afford a sales person, bah? So, you're basically your own sales person. When they reach your business via email or DM, they're talking to you (without knowing). Here, you can actually say no to discounts or credit with your chest.
You will need to learn proper business communication to let this fly. You cannot be chatting or replying emails as if you are the Funke they know. You have to move from the "I" mode to the "We" mode. People are more likely to respect business accounts than personal accounts.
Instead of: - I'm sorry I can't give you the product on credit right now Say: - None of our products are currently available on credit. When they are, we will surely reach out to you and let you know. We apologise for any inconveniences Which of these do you think works better?
4. No constant policy communication Constantly let people know your business policy on massive discounts and credits. For example, we organize courses at @OLAcademia and I always say that we do not have scholarships unless someone is sponsoring them.
And I actually mean it. I say no to discounts unless I am the one funding it myself. When I give on credit (which I RARELY do), it is because I know that it will not tell negatively on the bottom line. When people know where you stand, they are likelier to respect it more.