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How to stop mates rates from killing your business
Running a small business in any trade industry can be hard and competitive, your clientele usually begins with friends & family and word of mouth. The difficulty is determining how to draw the line with ‘mates rates’ between ensuring you’re not underselling yourself and wanting to help out your friends. Most of your friends and family will offer to pay the full rate because they want to support you and understand that we all need income to survive but tradies are likely to discount or do a job for free because they want to help their mates when they need it and would prefer not to have the awkward money conversation.
So how do you keep getting the referrals, make a steady income and keep all of your friends and family happy? Continue reading to find out how to stop mate’s rates from killing your business.
Draw the Line
If a friend asks you to help with a small job that you can do in less than 30 minutes and offers a 6 pack of beer in return, you may be more than willing to give him a hand. Whereas, if a friend asks you to do a big job such as a bathroom renovation, be upfront and let them know that it is a big & time-consuming job and you will have to schedule it in.
Give them the full quote and if you are willing to drop a small amount off the price, cross out the full price, re-calculate it and write underneath the small discounted price. Remember, do small discounts for bigger jobs, don’t mark off 50% where you will be lucky to even cover the materials.
Your friend will know you are still giving them a good deal and will be thankful. This will also stop them from passing on any of your prices. If you don’t make them aware that you are giving them a special deal, they may recommend you to someone else and mention what they paid then you are stuck under quoting for all your referred business. If they are aware you did them a good deal, they are more likely to pass on your number for a quote and not give an estimation.
Change the Situation
If you have employees, you have the option of sending someone else to the jobs that are for a friend-of-a-friend or a neighbour etc. By booking in the job during work hours and sending an employee you are creating a more professional relationship where they are more likely to pay the standard fee and avoid the discount question as it becomes more apparent to them that employees need to be paid from these jobs and will likely look at your business as more of a profession than just a tradie mate.
Exchange Professional Skills and Services
Your mates may have their own special set of skills that could come in handy for you. This is a great opportunity for you to work out an agreement that is mutually beneficial. You could work on an hourly based system or a one-for-one system. Just be careful not to do 10 hours of work and only received 1 hour of work back. Make the agreement work for both parties.
Your bottom line is important
Owning your own business doesn’t mean you have to give discounts to everyone you know. It is great to help your close friends and families. Give good deals to those who are bringing you more business but remember to look out for yourself and ensure you and your business can survive and continue to grow.
Check out another recent blog in this category.
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