Business Information for Entrepreneurs by an Entrepreneur

Increasing Your Customer Base

Previously, we talked about ways to increase your revenue. There were basically only two ways; you could raise the prices on the goods or services you offered, or you could increase your customer base.

Experience has probably shown you that raising prices is a much easier way to increase revenues than increasing the customer base.

Often, a larger customer base will mean additional expenses for your business. You may find that you need more materials or employees once you increase your customer base, and you will certainly find yourself a lot busier than you were in the past.

However, it goes without saying that if you do want your business to grow, then sooner or later you will want to expand your customer base.

The key to gaining more customers will be marketing; let's take a look at the most reliable forms of marketing you have at your disposal.

Word of Mouth

Without a doubt, new customers referred to you by a previous customer are the best ways to increase your customer base.

Referrals mean that you are doing a good enough job for people to recommend you to others they know, and that means new clients are predisposed to being loyal to your business.

Self promotion

A lot of people struggle with the idea of self promotion, but it's the next best thing to word of mouth when it comes to marketing.

Seize any opportunity to get the word out to friends and acquaintances about what you do and how you do it; you never know who will be interested in using your services.

Internet Marketing

Operating a business web page is another tried and true way to increase the number of customers you have, but it is quite involved in terms of both time and money.

You have to know exactly what you are doing, and the best ways to promote your site are through the above two methods!

Marketing through media has always been a controversial issue as the results can never be fully measured.

At worst, though, media marketing will mean that word about your small business is out there, and people may contact you if they come across the business name.

How to Raise Prices and Keep Your Clients

Whether you run a small business that sells products or services, there will come a time when you consider raising your prices.

Aside from increasing your customer base, it is the best way to increase the profits coming in.

Raising prices, though, is a risky step for any small business. Customers and clients are more sensitive than ever about products and services that they pay for, and you may have to prepare for a bit of a backlash in terms of support.

Just how big that backlash is will be determined by the preparation you put in before raising prices.

Let's take a look at a couple ways you can make this step as painless as possible.

Conduct Tests

Before you raise your prices, you may want to test the new prices out before you hit the market with them.

One good way to do this is to put higher prices on products you put out for new customers or clients. If you run a service based business, for example, you might want to raise your quotes when potential clients ask what you charge.

If acceptance seems to be easy, then the new prices are probably quite reasonable.

Explain the Changes

If you do find that the price testing goes smoothly, you will probably want to raise them across the board.

If you do, remember to explain to existing clients and customers why you did so. Odds are that if you are still attracting new business with higher prices, your services or products are worth it.

The key to raising prices is making the changes slowly and in an informed manner.

No one likes to see the cost of goods and services go up, but you can minimize the backlash (or at least be prepared for it) with a bit of preparation.

Price Considerations for Your Small Business

One of the trickiest parts of operating a small business is figuring out just how much to charge for your service or product.

You probably know that base factor is what is going to make or break you as far as your business goes, but what should you charge?

Let's take a look at some important consideration when it comes to setting your prices.

Initial Cost

Obviously, the last thing you want to do is lose money.

Whereas service based businesses come down to what the job is worth, selling products make pricing a bit more complicated.

You want to cover the costs of original materials, shipping, and so on, plus make a certain amount of money per sale on top. Don't forget to take taxes into account!

Competition

The main factor when it comes to the pricing of goods or services will be what customers are willing to pay, and that is often determined by how much your competition is charging.

If you offer a service or product that is more expensive than a similar business charges, you have to have a good reason why.

Moreover, you need to be sure your customers understand the reasoning as well (the best way to do this is offer hints but let them come to their own conclusions).

Customers

Finally, consider what your target market will be willing to pay for your products or services. In the case of services, you may be lucky enough to have some flexibility.

Many times service based businesses are the first to suffer during recessions, as people begin to take on a whole new "do-it-yourself" attitude. If you can lower prices to fit customer's needs without breaking your business, consider doing so until things pick up again.

Pricing will be an important determinant when it comes to who uses your small business. If you bill right, the customers will come.