Business Information for Entrepreneurs by an Entrepreneur

When you are trying to buy something and want to get a better price, you can use a tactic known as a “krunch”.  A krunch is your response to the initial price you were quoted and is designed to put pressure on the other party to go lower.

One of the main things to consider is your attitude when going into the dialog.  Do not feel that the price they quoted you is final.  How you respond, including your body language, tone of voice, and words will be different based on your goal and the situation.  Here are some extremely effective one line phrases that you can use to negotiate a better price.

Soft krunches: you are close, you just want them to reduce their price a little bit

• Hmm, can you work with me on this?
• What kind of flexibility do you have here?
• I’m not getting a warm feeling about the cost.
• I need you to come down on the price.
• What’s your friends and family rate?
• Hmm. (Then, just pause till they say something no matter how long the wait. Then, do it again.)

Moderate krunches: you need them to go a good bit lower

• That’s not going to work.
• Way too expensive.
• Well, this isn’t really an attractive price for me.
• You’re not quite in the ballpark. (Variation: remove “quite” if you need them to go even lower.)
• I can’t bring that price back to [my boss] [my wife/husband].
• If you can get down to [$abc], I can sell it at [my office] [home].   (Note that this phrase accentuates the positive instead of the negative phrase which would be “If you can’t get down to $abc, I can’t sell it…).

Aggressive krunches: you really need to hammer the price down a lot

• What?!?  (Use this immediately upon hearing their price. Then, either pause and wait for a response or use a follow up one-liner below.)
• You’re not even close.
• Whoa, you want my first born with that?
• I think you misplaced the decimal point in your quote.
• That’s just not going to happen.
• You’re joking, right?
• Hey, I’m not a bank.

I am putting together a quick YouTube video to show the non-verbals associated with these responses. That will help you get a clear understanding of how these negotiation tips feel when you will use them. I will post that video later this month.

Practice before you engage in the negotiation and you stand an excellent chance of getting their price down.

What are your customers saying about your business? Thanks to the customer-friendly website, Yelp.com, customers can say just about anything about almost any business. Reviews may be positive or negative; Yelp posts them all.

However, for a fee, Yelp can help your business improve its image on their website. But the method and process of Yelp’s “advertising” has raised a lot of questions about whether it is geared to legitimately help businesses, or whether it is ethical or even illegal.

Advertising Opportunities

Yelp has admitted that they use posted reviews as potential sales leads. Yelp salespeople will look for negative reviews and spend their time cold-calling those businesses with an advertising proposal.

Advertising subscriptions for a Yelp page range from $299 to $499 a month, and by purchasing Yelp advertising, the salespeople promise to improve a business’ image on their website. In fact, the company even allows the advertiser to pick a favorite review to be seen at the top of their Yelp page. Advertising on Yelp also gives the advertiser the option to have ads show up on local searches or even on competitors’ Yelp pages.

The Potential Scandal

But what if you choose not to advertise with Yelp? By declining the sales pitch, a business could face even more negative response on Yelp. Businesses have reported that after declining a Yelp advertising offer, they witnessed their Yelp ratings fall.

An article published in the East Bay Express out of Oakland, CA reported that at least six business owners received a barrage of phone calls from Yelp salespeople, even after declining to advertise.

The business owners said that Yelp salespeople promised they would remove negative reviews if they advertised, but after declining the Yelp offer, the owners saw even more negative comments. That raises the questions about whether real people are writing real reviews on Yelp, or whether Yelp employees ‘anonymously’ post additional reviews to punish a business for not advertising with them.

Is Yelp engaged in scandalous behavior? The company denies “extortion” tactics used by their salespeople. The fact that Yelp posts consumer comments can be a big help to small local businesses looking for testimonials. However, many businesses are treading carefully when it comes to (not) advertising on Yelp.

Do you think your small business could turn into a Fortune 500 corporation? Just because your business is currently local doesn’t mean you can’t think globally and expand your business horizons. A good example is a success story about Fairytale Brownies, which was started in 1992.

Fairytale Brownies was formed by long-time schoolmates, David Kravetz and Eileen Spitalny in 1992. They began baking his mother’s 50-year old brownie recipes using the back of a friend’s catering kitchen. Their brownies were a hit with the local community, and they decided to make it a full-time venture and gave up lucrative jobs in the corporate world at Proctor & Gamble and television.

Creative Promotion

Fairytale Brownies found a 1,000 square foot facility in Scottsdale, Arizona, where they could make their delicious delicacies, and they soon had to double their space a year later due to their popularity.

To help get the word out about their product, they gave samples and sold their products at street fairs and farmer’s markets. Still, they continue to promote Fairytale Brownies by partnering with local and national non-profits, such as the national playground developer, KaBOOM.

Strategic (And Lucky) Domain

David and Eileen had the vision in the early 1990s to notice that the internet was becoming a great place to promote a business given the growing numbers of internet users. They bought the domain, brownies.com, and have not looked back since. Now about half of their business sales are via their internet site, and 35% of all revenue comes from internet sales.

Expansion

Fairytale Brownies sales volume steadily expanded year after year, finally reaching $1 million in sales in 1997. David and Eileen have used three separate small business loans backed by the SBA, culminating in the development of their 26,000 square foot baking facility in 2006, which now serves as both their main production facility and corporate headquarters. They employ about 30 regular year-round employees and an additional 50 during the busy holiday season. Each employee is empowered to make decisions that will help keep customers happy.

By 2007, Fairytale Brownies reached $10 million in gross sales.

Take an example from David and Eileen – they took a delicious family recipe and created a bonanza of a brownie empire with strategic promotions, partnerships, and marketing. Will your little venture be the next $10 million small business company?