[00:00:00] Fiona Johnston
We've made a lot of progress as a society in many of the areas that we needed to in the last few hundred years. But one thing that has not changed enough is money. If we want to be able to tip the scales towards the favor of marginalized people, we need to understand the secrets to making money in small business.
The more we talk about money and the secrets that usually stay at the golf club, the more likely we are to be able to make money. My mission is to get more money into the hands of good people, specifically good business people like you. This is Money Secrets, the place to learn about the money secrets of successful small business owners.
Because I believe small business can change the world. And in order to do that, we need to be making a lot of money. Let's go.
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This podcast episode was recorded on the lands of the Wurundjeri people of the Kulin nation. And I'd like to acknowledge them as the traditional owners and custodians of this land and water that I live. work and play on. I'd like to pay respects to Elders both past and present and note that sovereignty has never been ceded.
This always was and always will be Aboriginal and Torres Strait Islander land.
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Today I want to talk about a word that really gets under my skin and it is this word. Affordable. Now, are you a small business owner who is trying to be affordable? Let's stop right there. It is not your job to be affordable. Let's break that down. So, did you start your small business to be mediocre? Were you hoping to deliver a really low level of service to your clients because that's everything you've always dreamed about?
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Were you hoping to deliver a product or service that was low quality and high volume? No? Okay, me neither. I started my business because I wanted to deliver a really high quality level of advice and support for small business owners who are my favourite people. I wanted to deliver the kind of service and the kind of quality that changed people's lives and businesses.
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Now, you simply cannot do that whilst also trying to be affordable. And why not? Because the only way to be able to be affordable in the, you know, the sort of generally accepted use of that word is to have high volume and low quality. Now, what small business owner do you know who went into business hoping to do high volume and low quality?
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I really don't know many at all. And so in order to have an affordable product or service. You need to have the kind of economies of scale that an Amazon, a Kohl's, a Woolworths, a Cotton On, all of those businesses are delivering high volume, low quality, low margin, low cost products because that is the business model that they are in.
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They are using their size and their scale. In order to be able to deliver this really high volume, huge volumes for some of those businesses. And let's not talk about whether or not Coles and Woolworths actually are low price, because holy moly, the costs there have increased over the last few years, but you understand my point, which is that in order to be able to provide a product or service.
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At a low price, the only way to be able to do that is with the economies of scale that you get when you are a big business. And an economy of scale essentially means that your price to deliver something gets smaller the more of it you are doing. So for example, the big e commerce businesses will be paying roughly half or even less for Australia Post than a small maker.
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Right, they will be paying less for their ingredients or their materials or their products or their stock because they buy so much of it. Right, so as a small business owner or a small maker or a small service provider. You simply do not have the economy of scale to be able to deliver a product or a service at high volume.
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So if what I'm telling you is that it is not your job to be affordable, what the hell is your job? This is the bit that I love. As a small business owner, it is your job to be Valuable. Okay, this is one of my favorite words when talking to small business owners is this word valuable. It is not your job to be affordable.
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It is your job to be valuable. But what does that mean? Well, being valuable is quite different from being helpful. So let's start here. Being helpful is often what I see small business owners doing when they are starting out. They're being helpful, meaning that they are trying to throw themselves everywhere.
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They're trying to help people. They're offering to work for free. They're kind of volunteering on different committees. They're sort of being helpful to everybody. But that is not leading to clients. And it can be really upsetting and confusing to see yourself putting all of this energy out into the world.
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Whether that's volunteering, or working for free, or doing really discounted coaching, or selling your products at a special price to your friends and family. That is being really helpful, but it's not being valuable. So the difference between helpful and valuable is helpful is something that feels really good, but it's not something that you would want to pay for.
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Being valuable is where you are able to understand How can I improve the life or business of my client so much that they would love to give me money to do it? How can I improve their life or their business so much that the amount I am going to ask for them in monetary terms is less than the pain or the desire that they have for the solution to that problem?
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Or to that kind of improvement in their life that they're looking for. So when we focus on being valuable, now we are working like a successful business owner rather than a volunteer. Okay? And I say this knowing full well that I did this at the start of my business too. I volunteered with two organizations so many hours a week for about the first 18 months of my business, which is called Peach.
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And it nearly killed me. Not actually, but I worked so hard for these two not for profits. And it was at a time when I was trying to grow my business from scratch. And I can see in hindsight that I was being really helpful to those not for profits. And one of them I am very proud to have been involved in because they've gone on to do amazing things.
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The other charity that I worked with is also an amazing charity, but they have access to plenty of people at different stages of their lives that could have volunteered in the role that I was with much less sacrifice than it caused to my life at the time as somebody in my early thirties trying to start a business.
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I digress. I wanted to just share with you that I have done that myself and I am absolutely not judging you if that is a path that you have gone down with your business. But in order to think like a business owner rather than a volunteer, what we need to do is think about how can I be really valuable as a business owner?
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As a service provider, what are the ways that I can use my skills and my experience, my connections, my influence, my talent to improve somebody else's life or business? Do I actually understand what my ideal client is looking for? What are the problems that they have? What are the desires that they have for their life or business to be better?
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What are the sort of things that keep them up at night? And are these the sort of things that I can help them with? Are there particular ways that I could deliver my product or service that would actually make their life even better than if I did it a different way? And this is where the difference between having somebody on retainer as opposed to doing a VIP day Or being on a project basis can really help your client to decide, okay, which of those options actually suits me.
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If you are a product business, a maker, an e commerce business, or a manufacturer. You want to understand exactly the problems and desires that your ideal clients have and then you want to match your products to those desires and to those problems. So, for example, really getting into the mind of your customer.
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So, if your customer is somebody who has limited time because they are a parent of young children. You need to factor that into how you market to them. If they're somebody who is retired, that might mean that they have lots of time, and depending on, you know, what it is that you're selling, it might mean that they actually have a much bigger budget, or it might mean that they have a smaller budget.
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You might want to consider things like where does that person live? Where do they shop? What are the other products that they buy? What sort of information are they looking for from me as the creator of this product that's going to help them come to a decision quickly? So, when we really understand what are the desires of our ideal clients, what are the problems they have that we can help them solve?
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And those problems can be both emotional, physical, and monetary. They can be health problems. They don't necessarily just fall into, you know, business problems. So what are the problems they have that I can solve or what are the ways that I can meet the desires that they have for their life? If you think about an architect, for example, somebody who has been waiting their whole life to be able to work with an architect.
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The excitement of being able to work with an architect to build a new home or renovate the one that you are in, that is a really exciting life stage. And if you are an architect, you are going to be working really closely with that person for the next 3, months, depending on the project. So it's really important that you understand what's happening in that person's life and how you can make the delivery of your service or your product Fit really well in the way that they want to do things so that you can genuinely improve their lives.
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People will pay for convenience. They'll pay for speed. They will pay to not have to be as involved. Sometimes we think that people want to spend more time with us as service providers than they actually do. Some people will pay more for something that is deeply researched. Some people will pay more for something that is quick and dirty.
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You know, some people will pay more for something that is branded or customized and others prefer to buy something that is easy to access, right? Are you focusing on some of these key things like being able to be customized? How fast can you get it to me? How easy is it for me to become a customer with you?
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How many steps do I need to take between finding out about you and being able to purchase or invest in you? Right, so all of these things become part of that customer's decision as to whether they can actually see value. in the product or service that you are offering. So let's recap on this little episode.
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It is not your job as a small business owner to be affordable. You simply do not have the economies of scale that a big company has, which is what allows them to be in adverted commas affordable. It is your job as a business owner to be valuable. So understanding What your ideal client is looking for, how can you improve their life, how can you improve their business, how can you make their problems go away, or how can you meet the desires that they have, how can you be the, you know, the lighthouse in the sea of other providers?
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or the other e commerce businesses that are selling the same thing. How can you be the person that reaches out of the screen and says to your client, I get you, I understand what your life looks like and I want to be the thing that is convenient or easy or deep or researched or I want to give you exactly what it is that you want, and I'm going to provide that to you in the highest quality that I can, so that you are receiving the most value that you can from me.
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It is not your job to be affordable. It is your job. To be valuable. I hope you enjoyed the episode and I'll see you in the next one.
Thank you so much for listening right up to the end. I hope you enjoyed this episode of Money Secrets, where we talk about the money secrets of successful small business owners.
If you enjoyed the episode, I'd love it if. Subscribe to the podcast, but leave us a review or share this episode with one of your friends. I hope you learned something. I hope you got a new perspective and I really hope you enjoyed the listening experience.
