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.

Recent blizzard conditions across most of the American midwest and east coast areas have shut down businesses, as well as government offices, for days on end. There has certainly been lost productivity, as well as damages caused by the storm. How does all this impact your small business?

The Toll of Severe Weather

Severe weather conditions can spell disaster for a small business that depends on the day-to-day routine of production and sales. Days without production causes inventory to deplete, go stale, or even become damaged or destroyed. Missed sales are another cause of economic loss when employees are not able to be at the business to take or fill orders.

And what if worse should happen? What if a storm causes physical damage to equipment, machinery, or your owned property where you do business? All these instances are being felt after the recent storms in February 2010 across America. The good news is that there is help available to small businesses who suffer from the effects of storm damage.

Help for Your Impacted Business

The Small Business Administration (SBA) has programs that provide disaster loans to small businesses with this type of damage. One category is Business Physical Disaster Loans, which are available to any size of business, including non-profit businesses, churches, and private universities. These loans can be used to repair property that was damaged from a disaster, including real estate, equipment and machinery, supplies, and inventory.

Another category of SBA disaster loans is the Economic Injury Disaster Loans. These loans were created to help small businesses through disaster recovery by providing working capital. Businesses that have lost cash flow due to lost sales and other disaster expenses can stay afloat with the help of this low-interest loan.

These loans are available in regions that have been declared disaster areas. Many times, a severe storm, such as the recent widespread winter snow storm, is cause for a disaster. If your business has suffered economic loss due to physical damage, or even lost sales and cash flow, you can seek help from these low-interest loans up to $2 million.

When was the last time you took a client out to lunch? Do you entertain weekly or rarely? You could be missing a valuable tax deduction if you don’t entertain, but you could also be attracting the eye of the IRS if you deduct the wrong expenses. That is why you should take special care about the amount and which receipts you use for your small business entertainment deduction.

Meals

The IRS allows meals to be expended if they serve a business purpose. For instance, if you take a client out to lunch and discuss points of a contract, the meal counts as an entertainment expense. But what if you and the client discussed the contract in your office then went out to lunch? That’s acceptable as well. You can still qualify the meal as an entertainment discussion since there was direct business occurring directly before or afterward.

Other Entertainment

Can you take a client out on the golf course? Of course. Although the cost of the greens fees is allowed as an entertainment expense, the full price of your country club dues is not. The same holds true with sporting events. Your season subscription is off limits, but you can take a client out to a game, as long as business is discussed during, before, or after the event.

How Much Can You Deduct?

Keep in mind that your entertainment expenses are only 50% deductible. For your $500 meal, only $250 will be eligible as a small business tax deduction, and the same goes with other entertainment receipts.

Many small business owners ask about including other staff employees, spouses, and even spouses of the client. Employees are absolutely eligible to be included with the entertainment deduction, as long as they are associated with the business at hand with the client. Your friends or spouses are not eligible to be included with the total receipts. Spouses of the client are treated the same.

But what if you sponsor a large banquet where you, your staff, staff spouses, and clients and their spouses engage in a big meal? This might be an acceptable situation, but you should always check with a tax professional for full rules on this type of situation.

Entertainment is expected in business transactions. Be sure you get the full tax deduction coming to you, but avoid the temptation to deduct more than you are eligible.