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Business Lesson Number One

Last year was the first full year of operation for the little software development company my partner and I started.  We’re nowhere close to retiring just yet.  We started our company with a tried and true process for the development of database software for small to mid size entrepreneurial operations.  But neither one of us were experienced in business to business marketing.  In fact, we didn’t have any experience in any form of marketing.  We thought that if we built a better mousetrap the world would beat a path to our door.  Unfortunately that’s a myth.  We learned that after building a better mousetrap, we needed a better way of letting the world know that a better mousetrap was available.

We started our business using the service of a website that promised us access to customers looking for software development.  We competed with developers all over the world and we quickly learned that we couldn’t compete solely on hourly rate.  So we developed a campaign that allowed us to stress the added value of our service that went far beyond hourly price.  For example, while somebody else might promise to deliver a project in a week, we could deliver the software in three days.  We put samples of our projects online so potential clients could see the quality of our work.  And one thing we strived for was total customer satisfaction.  We took the lessons we learned competing for business on that website and have branched out on our own to find our customers directly.

Putting together our more direct business to business marketing strategy took, and is taking, a lot of research.  Simply finding new customers is our biggest challenge.  Developing the software they might require is the simple part.  We don’t yet have the resources to hire a professional marketing firm.  We don’t even have the resources to hire an amateur firm.  But what we do have is a strong desire to succeed and a product and service that is superior to our competition.  We have built the better mousetrap.  We are just rather limited on how we can tell the world how to find us.  The internet is great, but if people don’t know who you are finding you on the web isn’t all that simple.  However, we’ve put together a profile of the type of business person who might be in the market for some custom software development.  We have developed a strategy for finding and contacting people who might want our services.  We are getting a lot of good feedback based on this new in-house developed marketing strategy.  We know for a fact that this year will be even better than last.  And we will do this despite all the crushing regulations and the overwhelming tax structure that some people believe keeps businesses like this from succeeding.

In all of our business research, one thing we’ve learned is that we shouldn’t let our price be the primary factor in our business offerings.  We charge an hourly rate that is about middle of the pack when compared to our competition and allows us to do well enough to see a really bright financial future for ourselves.  Like I said before, we believe that the value we give our customers, the years of development experience and exposure to a variety of business environments, allows us to charge a premium over people who might be cheaper.  Hourly price is a red herring.  We never claim to be the cheapest because our emphasis is at being the best.  And when a customer indicates that price is the bottom line, we thank them for their time and leave our business card because it’s only a matter of time before they learn that when it comes to business services, cheap rates are rarely the best values.  This is one of the first lessons of business we learned in our little software shop.  It is an often repeated theme that many seasoned people in competitive business environments preach to business neophytes.

Having learned the lesson that price should not be the primary factor for a business trying to make a name for itself it’s pretty interesting to see people who claim to have been seasoned business professionals talk about nothing but reducing the cost on businesses as the sole reason for developing jobs in America.  We have to deregulate so that businesses can lower their cost.  We have to lower taxes so businesses can lower their cost.  We have to implement tort reform so that it’s harder for the courts to be used to penalize businesses whenever they might cause damage to us or to our environment because that will lower their cost.  We have to shut down government agencies and social programs designed to protect people and the things that we value so that we can do our best to give companies the absolute cheapest operating environment known to man.

The problem with this strategy is that no matter how cheaply we can put together a business environment, somebody is going to come along who’s a little more desperate and is willing to cut even more to offer a company an even cheaper environment.  And that’s the idea environment for those businesses that want to do nothing more than offer the cheapest products and services.  But some businesses understand that cheaper isn’t always better.  All too often the cheaper products and services available can often mean worthless.

When I hear a politician with a business record tell me that we can improve the economy and create jobs for everyone by giving up a lot of the things that added value to our lives, I really have to take such promises with a grain of salt.  That’s not what the business school of hard knocks says is key to making a business marketing strategy.  No matter how cheaply we sell ourselves, somebody else out there is going to be cheaper.  If anything we should be emphasizing the value we add to the other factors that make for a more complete business environment.

People trying to compete for a business looking to relocate used to stress the value of our educational systems and our healthcare systems.  These people used to talk about the additional benefits of working in clean environments and having a first class transportation and logistics network.  A lot of factors used to go into consideration when a business is looking for a home or a place to relocate.  If the only concern a business might have is how cheap an environment they can get to maximize their profits, chances are we should let that business look elsewhere.  We shouldn’t be competing for business at the expense of just about everything else we might hold dear.  It would be nice if some of the politicians with a history of business remember the value that comes from that one important lesson.

Tuesday, January 10, 2012 - Posted by | Life, Thoughts

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