Got business problems or challenges at work? With his Two Cents page, Loaay Ahmed shares his expertise in strategic management consulting to help managers, employees and entrepreneurs thrive.
Q: It’s been more than six years since we increased our prices. We want to go higher but we’re worried about our customers rejecting the new rates. How can we go about it?
Many landlords increase the rent after an agreed period is over. Courier and airline companies increase rates when oil prices go above a certain level. Production companies charge more for their tickets depending on the leading star of any given play. It happens everyday and we, the consumers, adapt if the rationale is believable and reasonable. Alternatively, we decline and leave the business if we don’t find the higher rates justifiable. If your only reason is that you want to make more money, then think again, because that might aggravate your customers and push them away if they can’t see the value for money. How do you feel as a customer when the same hotel that you stayed in a few months ago is now charging more for the same room and without any improvement in the service or experience?
So how do you go about it? Think objectively about the reasons why moving your rates up is a must. Is it inflation, gas prices, recent employees salary increases or a combination of all that? Did you invest in a new technology or system that will enhance the customers experience one way or another? Once you pinpoint your reason(s) communicate with your customers using honesty and creativity in your approach to share why the increase is fair. A different approach is to show how you still deliver great value for money with the new rates. So remember: prices are worth increasing when you have a good reason. Otherwise, customers might feel used, taken advantage of or even that you’re twisting their arms. Then it’s a matter of time before your competitors send you ‘Thank You’ notes…and that’s just my two cents.
Q: We’re a small company with less than 40 employees. I can’t afford to spend money on everyone for training. Is it wrong if I attend training workshops alone and then train them on what I’ve learned?
Companies often set a budget for training, but they shouldn’t. Training workshops are only one way of learning. People learn in different ways. What companies need to do is to set a budget for employees’ development rather than training. When you think in development terms, you start to explore other ways for your employees to learn. Some people learn from reading. You could find out what publications are important to your employees who prefer a magazine or a book to attending a seminar and start your own business library. Many books and magazines are now available as a digital version so you can save the environment and shipping cost. Other people demand more visual material like videos. The Internet is filled with How-To material and interviews that are worth watching.
If you know what areas each employee needs to develop – and you should – invest some of your time building a digital library on YouTube by creating your own favorite lists. Employees can go to your channel and browse the selected material by topic. And if training workshops is the preferred method for you and other employees, consider rotating. If your budget allows for four workshops, attend one or two and send other employees. Make it a policy for the attendee to share the knowledge with other interested staff members within a week. This approach has three benefits: when you teach others the information sticks more in your head; other employees get to learn new content; and you show other employees that you’re serious about investing in them, not just yourself…and that’s just my two cents.
Q: Both retail branches we have are unprofitable and we’re running short on cash reserves. There’s a good opportunity to sell one branch. Should we use the money from selling one branch to fund running the other or should we sell both branches and close down?
Often, we see a high turnover in local retail shops or even in International brand names brought to the market through agreements. When you sit with as many entrepreneurs as I have, you see a pattern in most but not all of them. The immediate reasons usually given about why the business is not doing well are, “The market is bad and the employees are not qualified.” As true as it may be, I don’t see it that way. If it’s the market, then do your homework and study the market and the potential profit and risk before starting the business. If it’s the employees, you’re the one who hired them. If you don’t know how to choose the right ones, seek assistance, but don’t throw money down the drain that way.
Yes, in some cases, all you need is time to make it in retail so it’s fine to sell one branch to support the other. This, however, is conditional to seeing your figures on a continual rise even if you’re still not breaking even at the moment. If the figures are not showing any indication of steady growth and you’re not going to do something different operationally and/or marketing wise to change the current status, then most likely you’re just delaying the inevitable by using the extra cash to keep the doors open for a few more months before finding yourself where you are today, again. Anybody can open a shop. But it takes money, time, creativity, planning, effort, persistence, and patience to keep it successfully open…and that’s just my two cents.
For Loaay Ahmed’s advice on business or work matters, send a short email to [email protected] . Regrettably, only the questions chosen for publishing will be answered.
Loaay Ahmed is a management adviser and strategic expert. To learn more about Loaay and his consulting service, strategic business therapy, visit www.knightscapital.com