Business Education

When Should Your Business Start Charging for a Free Service or Product?

There comes a time when a business must start to charge customers for something it’s provided for free in the past. As consumers, we are all familiar with this phenomenon. Perhaps a local restaurant favorite, that previously furnished patrons with bread-sticks or chips, free of charge. Then, suddenly on one particular visit, that item was no longer provided for free.

Why Businesses Start Charging for a Previously Free Product or Service

Of course, there are a myriad of reasons for a business to transition from offering something at no cost to charging its customers for it. It could be due to a variety of situations, such as a lack in supply, an overall change in industry practices, perhaps a transition from one owner to another, or a simple revenue loss calculation.

One of the secrets to business success is pricing your products properly. Price your products correctly and that can enhance how much you sell, creating the foundation for a business that will prosper. Get your pricing strategy wrong and you may create problems that your business may never be able to overcome. —Inc.com

Whatever the underlying reason for the change, it is usually out of necessity, rather than just a capricious decision on the part of the business. Perhaps your company is experiencing this and you’re wondering if it is feasible to charge for something you have previously provided at no cost to your customers. It’s a tough decision because you’re obviously worried that it might hurt your business, either in the short- or long-term.

How to Know When it’s Time to Begin Charging for a Service or Product Previously Provided at No Charge

Of course, there’s always a risk entailed in going from no cost to charging for something, be it a service or a product. So, let’s take a look at a few reasons when it is appropriate to start charging for a service or product you previously offered at no cost:

There’s a change in your cost. Let’s begin with one of the most obvious signs, a change in your expenses. You might have experienced an increase in how you acquire a product or need to keep up with the industry and start charging for a particular service you offered for free prior.
Other businesses already charged for the same thing. Here’s another fairly straightforward reason — companies in your line of business already charge for that certain product or service. Perhaps you did not in the past because it was a way to drive business. But now that you’re established, it’s time for customers to pay for it.
The industry itself is changing. Sometimes, market forces simply dictate a change in the way some companies do business. This might be one of those circumstances, when others in the same industry are starting to charge for something that they previously provided for free.
It’s simply time to make the transition. There are times when it’s necessary to take a loss-leader and transform it over to a revenue generator. It isn’t really all that uncommon for businesses to take a small loss on a product or service for some length of time, only to begin to monetize it at some point.

What other advice would you give about transitioning from taking a product or service from no cost to charging? Please share your thoughts and experiences by commenting!

Interested in learning more about business? Then just visit Waters Business Consulting Group.

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Employees are Quitting Instead of Returning to Work and That’s a Good Thing — Here’s Why

July 9, 2021 No Comments

Leading news organizations continue to report a substantial number of employees are quitting their jobs rather than returning to work. The headlines are stark and alarming. They are also good news. Yes, it’s actually not cause for alarm. Instead, it’s a blessing in disguise, a silver lining to a cloud. Read on to learn why. Quitters Never Win? It’s a cliche, “Winners never quit and quitters never win.” But, we all know there are certainly exceptions. Put another way, sometimes quitting is the right choice, the best option, for an employee. Moving on and into something new can prove extraordinarily fortunate and fulfilling. However, it can also reveal qualities that aren’t net positives for businesses. After spending more than a year at home, some don’t want to go back to commuting, preferring the flexibility of remote work at least a few days a week. Others are simply burned out from logging long hours while also balancing child care and remote school, sometimes all at once. And nearly all employees are ready to see what else is out there. —CNBC Practically anyone who chooses to walk away and be part of what’s currently referred to as the “Great Resignation” is doing so for almost entirely personal reasons. And, that could very well point to a deficiency not previously exposed to co-workers, administrators, and owners. This of course being, unwanted characteristics, such as laziness, lack of passion or even interest, and just showing up for a paycheck. All of those are things a business can really do without. 3 Top Employee Qualities On the other side of the equation is the qualities that are the most beneficial to businesses. Companies should always look beyond resumes and take full advantage of the interview process (perhaps even going so far as to an informal interview over lunch or dinner). Here are some of the top qualities good employees naturally exhibit: Strong work ethic. Someone with a strong work ethic will obviously be productive. But also, concerned about the quality of work he or she is producing. But, be careful not to mistake a workaholic or the extreme statistics of the Japanese “karoshi,” people who literally die as a result of overworking. Strong work ethic isn’t the same and will offer a much more well-adjusted person to your team. Enthusiasm for the job. An enthusiastic individual is quite fortunately fairly easy to spot and even more thankfully, easy to distinguish from a phony or fake. (Phonies and fakes often exhibit many telltale signs they are just not genuine.) These people usually speak with zeal and great pleasure about their work. What’s more, will also talk about their work in a very focused yet informal and understandable manner. Team cooperation and collaboration. Place this quality in the “obvious” column, but one that’s definitely worth including. A person who is a true team player tends to be an individual who loves to listen to the input and perspective of others. Also, someone who can follow instructions without a bad or negative attitude, but can just as easily step into a leadership role, yet relinquish control for the good of the company. What other suggestions do you have? Please take a brief moment to share your thoughts and experiences so others can benefit from your unique perspective! You might just help out someone in a profound way. Interested in learning more about business? Then just visit Waters Business Consulting Group.

What to Do When Your PPP Money Runs Out

May 7, 2020 No Comments

What do businesses do when their PPP or Payroll Protection Program funds run out? While small companies can apply and receive relief, that money is only finite. It will go just so far before it’s gone. And, once it’s gone, it’s gone for good. Even organizations with business interruption insurance benefits have limited resources. Eventually, the cash will run out. So, what do small businesses do then? PPP Loan Forgiveness Only Solves One Problem It’s important to remember that PPP loan forgiveness — while most certainly helpful — merely solves one problem. Meaning, there are still other debts and obligations to pay and to meet. That alone reveals the fact there’s a lot more to doing business than just compensating employees. Vendors, contractors, and others also need to be paid. The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. —U.S. Small Business Administration This gets to the heart of the larger issue — the inescapable reality of the business world. Put another way, if someone paid off one of your personal debts and you had five, six, or ten more, while that’s a blessing and it’s appreciated, it does not get you totally out of debt. Businesses don’t operate that way because there’s always additional obligations. What to Do When Your PPP Money Runs Out Since businesses stay in a cycle of dynamics, with revolving credit and monthly bills, and they apply and receive PPP money, what can they do once those funds are gone? Here are a few suggestions that might prove helpful to your business: Offer invoice financing. Instead of requesting (or demanding) the entire invoice amount to be paid, give them the option to finance their outstanding balances. You can charge a small fee and/or interest rate — so long that it’s legal and ethical. Ask suppliers for extensions. For businesses that owe other businesses money, it’s worth a shot to ask for some more time or at least try to establish payment arrangements. This will help to take off a little pressure and to free up some cash. Review personnel staffing choices. Most businesses already have or will soon, be forced into this scenario — assessing which team members aren’t essential. It’s a tough spot but because employees most always represent the largest expense, this can’t be ignored. Consider liquidation or selling equipment. Another thing you can do is to sell off non-essential equipment, if available. Or, liquidate some inventory or materials. These are all difficult decisions but they could mean the difference between staying in business and going out of business permanently. Offer new services that are in demand now. Look at what services are in demand now that may be in line with your service offerings or a close extension thereof to provide immediate cash flow. Quickly shift to provide those services by promoting them to your current customer base and use social media to get the word out. Several industries and businesses have done this in recent weeks. What other suggestions do you have? Please share your thoughts and experiences by commenting! Interested in learning more about business? Then just visit Waters Business Consulting Group.

Help! My Business Partner doesn’t Help Run Our Business!

May 6, 2021 No Comments

It’s said that the only ship that won’t sail is a partnership. Outside law and medical practices, few partnerships thrive, let alone survive. There’s a slew of reasons partnerships don’t work out. But, most entrepreneurs go into them because they’re optimists by nature. After all, it’s easy to imagine a worthwhile scenario, particularly when it’s someone who is trusted. However, many of these ventures fail and when it starts to go bad, it’s time to take action. The Most Common Challenges Partnerships Face The most common problems partnerships face are incompatibility, money issues, distrust, and then there’s a list of life events. These include death, drug abuse, disability, divorce, and other personal experiences. If that’s not enough, there’s always a divide between visions — one person wants to take the joint venture one way and the other, in another direction. In an ideal business partnership, everyone contributes their time and labor toward making the company a success. When a partner isn’t pulling her weight, it’s essential to address the problem before resentments develop and the business suffers. In many cases, simply having a frank discussion can resolve your issues. —Houston Chronicle Small Business What’s more, egos can also become a huge problem — especially when one person is the single source of inspiration. Or, disagreements about staff, expansion, and just about everything related to the operation and future of the business. How to Deal with a Lazy Business Partner Fortunately, there are ways to deal with a partner who becomes a bit lazy. If he or she is slacking off or just not producing whatsoever, there’s most definitely an underlying reason. Depending on the circumstances, you can try one or more of the following to deal with a lazy business partner: Have an honest discussion. Like it or not, you’re going to have to confront him or her, but not necessarily in a confrontational manner. Don’t go into the talk with a bad attitude, or even one of superiority. Any hint of a negative vibe will only serve to turn them off and not cooperate. Talk about your visions for the company and all the good things that will come out of working together. Then, listen carefully to what he or she has to say. Offer some temporary help. It could very well be that he or she is just going through some personal difficulties. Or, feeling a bit helpless and hopeless amidst the economic disruption. These are very common feelings and the good news is that they will usually pass. Offer him or her a little extra help and support, but put a time limit on it. Provide a little flexibility. If it is just a temporary situation and he or she will bounce back quickly, don’t let him or her get overwhelmed too soon. Instead, provide them a little bit of flexibility and that can really work wonders. Consider a total buyout. Obviously, not all circumstances will warrant staying in business together, there are most definitely situations that simply won’t work out, no matter how much effort you put in. So, explore your options to sever the business relationship, and a possible buyout scenario. What other suggestions do you have for dealing with a lazy business partner? Please take a few moments to share your thoughts and experiences so someone else can benefit from your perspective! Interested in learning more about business? Then just visit Waters Business Consulting Group.