Discounts are Never Worth the Trouble

Dicsount

 

My pal Donna posted this and when I saw it, I just knew I had to write about this in my Lessons Blog here for you.

This has actually been quite the hardest lesson for me to learn. I want to be NICE, I want to HELP so I try to “do someone a favor” and discount the item I am selling or making for them. The problem with this, I have noticed something….

It bites me in the ass!

The most recent experience is an item I was making for someone who gave me a possible contact to another connection. I thought how nice that was and she said to me it was a joint gift and so I thought, “Hey why don’t I give her a discount for giving me that connection”

Funny thing is, the connection never bought anything. IT did not end up a sale. It did not end up with another referral that ended up with a sale. So why the hell did I give HER a discount. Maybe that sounds harsh, but the reality is that I marked MY item down for NO REASON whatsoever. I did so “Out of the niceness and kindness of my heart”

I wish I hadn’t.

It never fails to me that the people I try to give a discount to or help out, end up being the worst pain in the asses to me.

A $100 item I discounted for this person at $60 has already cost me. I even sent a sketch beforehand to approve (which I do for all my clients) and she did not understand I found out, though she approved it, but now of course doesn’t like it and wants to change it. So now I need to reinvent the item. Which is now costing me more money than the agreed price.

The other problem I run into with discounts is the argument I get afterwords. It’s like they forget I am trying to help them out. I could not believe someone I THOUGHT (being the key word here) was a friend decided to argue with me when I reduced the price of the item for her. She said “Well, if you can discount it that much why don’t you just sell it for that much in the first place?” 

First I was stunned that she did not see the niceness of my soul. Then I wanted to go smack myself like I had a V8.I thought” I too have thought this about things on sale”

When I tried to explain I was doing her a favor she battled with me. Then asked for MORE off the price!! I said no, she didn’t end up buying and I put the price BACK to where it was and left it there. After much argument on this issue and others we sadly ended up not being friends. True colors seems to show when money is involved.

The other thing we do is give a discount after they even AGREED to pay that price! WHY?!?!?!? Stop selling yourself short!!

The thing I do too often is toss in a fascinator. I need to stop doing that. If they didn’t ask for one, stop throwing away $10. If I added that up I gave over $2,000 away in fascinators last year alone! Money out the door.

Then I saw this post and nearly fell over again. Hell to the yes…..

Discount Self Love

 

Do not lower your OWN self value by lowering your price tag. Too many times as Work at Homers, Entrepreneurs, Self Made Business guys and gals we , without realizing it sometimes even, are lowering our own value by lowering our price tags. OR sadly, not even charging the right amount in the first place.

  • Charge the value of the fabric or item itself
  • Add any elements or extras you did
  • Remember to input the TIME it took you to make…THIS  IS YOUR VALUE
  • Now charge that cost and LEAVE IT THERE
  • STOP DISCOUNTING. STOP LOWERING YOUR VALUE
  • VALUE YOURSELF MORE

Why is our time any less important? It is not and we need to stop forgetting this and start adding our value in.

“But if I did that the price would be too high and I can’t sell the item for that cost!!”

Then, you are trying to reach the wrong market for that item (try other areas, groups, venues, etc), or you might need to learn to do it different or  faster (Take lessons on Craftsy, or You Tube, or local school or college) , or change what item you are making (stop trying to sell shirts no one is buying and make a different type of shirt or start making skirts, or make them with your own fabric that YOU create, or whatever, just Be Different).

If you don’t want to change, then you need to stick to your guns.

YOU ARE WORTH IT!!

“So, that means I should NEVER discount anything?”

No that is not what I am saying.

Just like clothes in your closet if you still have that item over a year, you need to get rid of it.

  • Donating it to a worthy cause, get a receipt for the value of the item, and take it off on your taxes the following year. (I do this a lot and it has worked well for me)
  • Or, that could mean having a flash sale and lowering all the prices for those items online or at a vendor show. (Also once a year, I do this and sometimes I make more money this way.)
  • Offer a cash discount only at shows. It makes it easier than having to figure up taxes. If they pay with cash, there is not interest charged on my square and I don’t have to pay the tax.

Can I gift items?

Sure. Gift away. But realize those gifts may not come with the response you desire. Those people you gift are NOT obligated nor SHOULD feel obligated to reciprocate.You can ask if they will, but gift with the intent of a gift. Not an expectation.

What about Bartering?

I love to barter. However, have a bartering agreement. I send items to models all the time. But the model knows they are to take pictures with those items and send the pics to me. The item they are gifted in a bartering agreement is payment for the pictures. Be clear. Write it out. Have it signed. Or don’t send it. Sadly, you will learn a few lessons there the hard way as I did. Some people want free shit. Some are willing to help you out by helping them. Make sure people have YOUR best interest at heart as well as their own. Then when you find THOSE people…HANG ON TIGHT. They are GEMS! GEMS I TELL YOU!

Bottom line————–>>> Value You. When you value YOU, you will stop the discounts.

Until Next time

Xoxo Trisha Trixie

Bootstrapping

I never knew until recently what that word meant. I did not realize it applied to how I run my business. Most people know Bootstrapping to be

By the sweat of my brow” or “By the seat of my pants” type of financially funding for their business.

I was at a network luncheon and overheard the term and when explained I realized, oh, that’s me, that’s what I do. OR at least what I have tried to do. Even that I feel at times is failing. Now don’t get me wrong, there is nothing wrong with failing. IT helps you see what not to do, it helps you see things in true colors and also helps you learn how to manage things and what works and doesn’t for you financially and profitably.

Here are a few places I found some information on “Bootstrapping”

Bootstrapping, getting a lot done on very little cash

http://www.entrepreneur.com/encyclopedia/bootstrapping

“It’s never easy, and it’s not always glamorous, but bootstrapping will force you to become a better, stronger entrepreneur with a more vibrant business. “

http://www.forbes.com/sites/theyec/2013/02/06/8-ways-bootstrapping-makes-you-a-better-entrepreneur/

Entrepreneurs who bootstrap have a major advantage: They can operate in relative secrecy for a period of time, staying off the radar as they fund their own operations. And that can make all the difference in maneuvering around competitors and building a great product

For most start-ups, bootstrapping is an essential first stage because it:

  • Demonstrates the entrepreneur’s commitment and determination.
  • Keeps the company focused.
  • Allows the business concept to mature more into a product or service.
  • Gives the concept a chance to be vetted by the market.
  • Allows some milestones to be achieved.

Relatively early in the process, before you get deeply in debt, decide how far you want to go on personal financial risk (such as by depleting your savings, selling off your stock portfolio, liquidating your 401(k), taking equity out of your home, running up your credit cards, or pledging personal guarantees). This will help you know when to move beyond bootstrapping to finance the business.

Primary sources of the cash necessary for bootstrapping are from the start-up entrepreneur. These include:

  • Cash from savings.
  • Borrowing against assets, such as your home.
  • The careful use of selected credit cards.
  • Keeping your day job, while starting the business in off-hours.
  • Living off your spouse’s wages while starting the company.
  • Doing consulting work to provide start-up cash for the business and for living expenses.
  • Rushing an early product to market to provide for early revenues and earnings.
  • Running extremely frugal operations, allowing the company to grow on internally generated cash earned on the sales of products.

These are some tactics to stretch your bootstrapped cash runway:

  • Lease or borrow the equipment you need to acquire new, such as computers.
  • Buy fixed assets such as furniture used or from “fire sales.”
  • Go as long as humanly possible without paying yourself.
  • Compensate advisers and consultants with equity, good will, and in-kind services. Salaries end up being the largest part of expenses and once you start paying, you can’t cut them off. You will also end up paying FICA and other related expenses which drive up actual cash expenses significantly.
  • Call in past favors and rely on personal relationships to get things done for free.
  • Use lawyers and accountants to help you with judgment issues, not basic education issues. Negotiate the delay of payments for services until the company is funded. Use public sources to learn the basic parameters before starting the fee clock.
  • Be frugal everywhere-drive instead of flying, choose cheap hotels, and use your personal computer and printer.
  • Find out the real, unmet need versus shotgun marketing to drum up unqualified sales leads. Spend money on marketing only if you must.
  • Post job openings and see who applies. Many will be unemployed people that will work for deferred compensation or equity with the hope of someday getting cash payment.
  • Network everywhere to leverage connections and personal introductions by others.
  • Get to know the people from whom you hope to get money before you desperately need it.
  • Keep records of all out-of-pocket expenses. Once you raise money, you may be able to reimburse yourself first before taking a salary to lessen tax issues.

Continue bootstrapping as long as possible, but know when it’s time to seek investors. Postponing fund-raising to the extreme can cripple the company, especially when the window of opportunity is short (as is often the case in technology start-up companies). Potential investors will recognize and value your bootstrapping resourcefulness in starting your company.

http://www.entrepreneurship.org/resource-center/bootstrapping.aspx

Cohesive to this term is “entrepreneurship”

the process of identifying and starting a new business venture, sourcing and organizing the required resources, while taking both the risks and rewards associated with the venture.”

I have been an entrepreneur for a few businesses now. I would have to say the fashion business I am in for the past year and a half has been the most rewarding as well a the most challenging and daunting.

My definition…

Entrepreneurship=Bravery to try it all out in the first place, Courage to try new things, Determination to keep going when those things fail (and they will), Drive to succeed- no matter what, preparation to change that definition of success, the willingness to fail, the strength to get back up again, the thick skin to be tough what other say against your business AND you, gratitude for every aspect of what it takes to run a business, late nights, early mornings, and most of all the passion to smile through it all because it means something to you.

Until next time,

Xoxo Trisha Trixie