Pricing Your Items

Pricing Your Items

For an entrepreneur one of the toughest jobs may be pricing goods and services.  If one were to investigate the different pricing strategies, you will find a multitude of options.  According to Inc. Magazine, one of the primary considerations to investigate is your potential customer. In this step, it will be important to conduct a market research analysis of some type.  Market analysis can be formal or informal.  Information can be obtained through surveys, cold calls, and/or emails.  While emails and even direct mail may prove to be the most convenient approach, it typically yields only a 3-5 percent return rate.  An alternative to email and direct mail may be to conduct focus groups and individual surveys with individuals who may be potential customers.

After getting to know your customers and how much they would be willing to pay for goods and services, the next step is to determine just how much it cost you to deliver the goods or services.  Above this, you also want to calculate a profit margin and understand how many you need to sell to turn a profit. When considering cost, don’t forget to include overhead factors such as utilities, and rental space. Consider this approach offered by the National Small Business Association.

Step 1:  Determine X.  X is the cost of raw materials, labor, rent, and everything it took to make the product.  In this step, after analysis, you should be able to answer the following question, “What is your break-even mark for this particular product?”

 Step 2:  Determine Y: Y is what you want to make on the goods or service. This number is usually expressed in percentages. 

As you continue to consider pricing, you may also want to set an annual revenue target.  This amount would be your goal for the year.  If you have a service or one type of product it will be easier to set this target.  If you have more than one item or multiple services, the process will be a bit more involved. 

Consider this example:

New Business XYZ has one primary item (item A) in year one.

They have set a revenue target of $10,000 for their first year.

The costs for producing, marketing, and selling item A = $22.50

New Business XYZ estimates that they will sell 5 items per month. 5 items per month, over the period of 12 months = 60 units.

In order to determine a price per product that you want to charge, divide your revenue target by the number of units you expect to sell

$10,000/60 = $166.66

In this example, New Business XYZ will need to sell Item A for at least $166.66.

This is just an example.  If a business has more than one product or line of service, the steps above would need to be repeated for each item or service.

While there are many other considerations to think about when addressing pricing, the last factor I would like to discuss is knowing your competition.  Your potential customers will often shop around before settling with a particular business or company.  You should do the same thing when setting your prices.  See what others are pricing for services or products similar to yours.  Use this knowledge to help determine a price that is competitive while at the same time allows you to make a profit. 

ENT-640 Harvest

Harvest

Harvesting is the end result of why we as entrepreneurs do what we do. The reality is the beginning starts with the planting of that seed, in that business and watching it grow as we nurture it, love it, go through challenging times with it all to see the business stand strong and operate at a high level. So, to see the harvest come is sometimes a difficult pill to swallow, however you must have a plan of action to ease the pain and to move on to something more challenging.

I would like to leave build each business I began to one of my children so that they can carry on the legacy of what E.D. Poyner has started, so through the hard work of my wife and I, there is a plan to do so. I know we have other ways that we can harvest our business to benefit our children like the strategic sale, where a competitor buys the business and maybe even a partial sale where a single investor’s share of ownership is sold.  I know that I want to leave out on top therefore I don’t want to have to file for any of the Bankruptcy’s Chapter 11 or Chapter 7.

In conclusion, it is important to have an exit strategy in any business plan so that you know your option. My plan just so happens to be to retire and pass it to the next generation, and hope that it carries to the next and so forth.

David Amis-Howard Stevenson (2001). Winning angels: the seven fundamentals of early-stage investing. Pearson Education

 

ENT-640 Supporting

Supporting

At some point in my police career I had to figure out what my role was as a public servant in a department. In our jobs, we all have a supporting role to help make that organization run like a fine-tuned vehicle. Its only when those individuals that step outside of their roles when the organization hits rough patches and to some point the organization is puttering along slowing on a few pistons. This is good in any organization whether if it is a police department or a fortune 550 company.

In business, we have people who have specialties or roles, according to Stevenson (2001), Roles can evolve and change and more involvement is required to by an investor. Some time that investor must protect his or her assets, they have a right to do so.  Interesting enough on a daily, to have an investor constantly in the way, I a problem. You, as an investor trusted me enough and believed in the partnership, trust me enough to know that I will not dismantle my own business. The reality I would embrace the “Coaching “method where the investor and the entrepreneur meets and the investor provides support and advice. This concept is a healthy interaction. I would never want to be in the situation that I had a Controlling Investor, you will be in a situation that came become toxic.

In conclusion when you are seeking investors just don’t settle for the one that is so hungry, and he or she doesn’t understand who you are as an entrepreneur. You as an entrepreneur has be able to push through tireless days and nights trying to build a dream that can build wealth, so don’t settle.

 

 

 

David Amis-Howard Stevenson (2001). Winning angels: the seven fundamentals of early-stage investing. Pearson Education

ENT-640 Negotiating

Negotiating

Negotiating what you feel is the best deal can sometimes ruin the long-term progress of your organization. I would say with hesitation to always know your ends and outs of your business so that you cannot be taken advantage of. I am still a firm believer that everyone that is involved with negotiating a big deal will never get all of what they want, so therefore why go through the process of damaging relationships if the deal does not go through.

According to Stevenson (2001), Winners don’t negotiate “they know that the process can create problems they leave those challenges to attorneys and other representatives. Stevenson also stated that there is a need to cut out the “greedy” entrepreneur in the evaluation stage, Stevenson (2001), also stated that greed is the biggest challenge in the negotiating process.”

Again, I am a firm believer that everyone can be satisfied if they take the emotion and the greed out of the process. If more business men and women believed that all had the rights to a preferred instead of a commoner we would be in a better place. However, if you do have to negotiate focus on the objectives of the deal The Price, the money they invest, What role will everyone play.

In conclusion if you can walk to the negotiating table with the mindset, that we can compromise for the good of both entities, you would realize both parties will prosper. Both will be a winner at the end of the deal. His is just food for thought.

 

 

 

David Amis-Howard Stevenson (2001). Winning angels: the seven fundamentals of early-stage investing. Pearson Education

ENT-640 Structuring

Structuring

Structuring, can sometimes be a headache however I look at as if I am building a business I would want the best individuals involved with the process. Sometimes, you have to structure your business and have the mindset that everyone is going to eat and we all are going to eat well. No, one person is greater than the business and we all have a part in the growth of this business from the top to the bottom to the bottom to the top. Everyone must feel a since of ownership of the business.

When it comes to the distribution of the stocks, it is my belief that you take care of your family first. Now, I probably scared you a little and you thought I instantly became selfish and dishonest. What I mean by that statement is you take care of those people that have worked hard for the organization. You set up certain stock options for those people that have vested their time, and money into the organization, in a since they are family, they may not be related to you, but you have been involved in their lives. Common stock is according The Business Dictionary, a type of security that serves as an evidence of proportionate ownership, imparts voting right, however if the business suffers a loss and must be liquidated, you are last to receive any money. Now the preferred convertible stockholders are a little different they are ahead of the common stock holders in the event the company must be liquidated. So, the preferred stock holders will receive their share from what is left from liquidation and to some extent they have more protection when it comes to their holdings.

It would be nice to have a scale that was presented for both the common and preferred shareholders that could potentially change the way we look at societies class, I am a firm believer that everyone that wanted to share in the wealth can if a restructuring was done, to include those that wanted the opportunity to be preferred than to be common. Just listen to the word, “Common”.

 

Retrieved from the Internet June, 27, 2017:http://www.businessdictionary.com/definition/common-stock.html

David Amis-Howard Stevenson (2001). Winning angels: the seven fundamentals of early-stage investing. Pearson Education

ENT-640 Valuing

Valuing

As I reviewed the assigned reading for valuing, I just so happened to watch an episode of “Shark Tank” and the Sharks were going back and forth with the young entrepreneur about why should they take the chance to invest. The Entrepreneur actually had a great product, and there definitely could be some upside to the business. The biggest challenge to the Shark was did they have enough time to nurture the relationship and grow the business, due to their hectic scheduling. Yes, the shark had a multitude of money, but did not have a multitude of time, and as we say time is money.

According to Stevenson (2001), “The amount of equity is really insignificant compared to the value that can be generated by a serious advisor.”  I find this statement to be true as an entrepreneur I very have enough time to take vacations to re-energize, so I can imagine being a “Shark “trying to take on the responsibility of nurturing a relationship with a new entrepreneur that has great upside when it comes to business but what about your personal life and personal relationships? Sometimes money isn’t everything and we must learn that as business men and women.

Now if we do have the time to be engaging with being that start-up advisor it can have a great return to “our pockets”. According to Stevenson (2001), the pros are the relationship with the entrepreneur and his or her business gives us the opportunity to look over the entire concept so that we can give a better insures that the business will succeed.

In conclusion, we all must make decisions based on what we have on our plate at that time. We must not become so overwhelmed that we don’t make good judgement calls. So, take your time in the decisions you make in you deals, you may have to say no and come back when you have time.

 

 

David Amis-Howard Stevenson (2001). Winning angels: the seven fundamentals of early-stage investing. Pearson Education

Self-Care for the Entrepreneur

Self-Care for the Entrepreneur

When I think about my life as a child, I think about how children often answer someone when asked, “Want do you want to be when you grow up?”  I think about all the usual answers children say such as a doctor, a teacher or even a police officer.  I too probably answered with a more than typical response when questioned as a child about what I wanted to be when I grew up.  Now as an adult who has spent over 20 years in law enforcement as a police officer, I fully recognize that I have never given up my strong desire to be an entrepreneur. As an entrepreneur with a vision of starting a not-for-profit organization, my creative energies and thoughtful ideas can turn into a thriving business that helps build the lives of individuals and communities. This strong desire to lead and make a positive impact does not, however, come without great risk and reward.

The rewards of being an entrepreneur are great.  According to Cardon (2015), rewards of being an entrepreneur include control and flexibility.  As your own “boss” you can set your work schedule.  This can be great as you work to create a home and life work balance.  And because you are in control as an entrepreneur, you also get to develop your very own job description.  You also experience a feeling of freedom when you are an entrepreneur.  In many cases, entrepreneurs are doing what they love, setting their schedules and using their strengths to advance the company’s bottom line.  This creates an environment where the entrepreneur is free to be their very best.

Ross (2016) proposed that there are some risks to being your boss.  A few examples of risk include long hours and feelings of isolation or loneliness.  As an entrepreneur, the job must get done, and the entrepreneur is usually the person responsible.  This can bring about long days, hours and even weeks as the entrepreneur works toward meeting goals and deadlines.  Because the entrepreneur usually does not have a team to delegate tasks to, he or she can also begin to feel alone and isolated.  Then there is the financial burden. Being an entrepreneur often means giving up the security of a regular paycheck. This risk can present many additional personal and professional challenges for a person responsible for leading their own business.

When we examine both the risks and rewards of being an entrepreneur, it may not come as a surprise that all too often entrepreneurs can begin to experience feelings of stress and burnout.  When this happens, not only can the business suffer, the physical and emotional well-being of the entrepreneur is threatened. As a result, it is important to not only practice skills that advance his or her business but to also create habits that contribute to their physical, emotional and spiritual well-being.

Here are three tips I have gathered from articles written by Ross (2016) and Cardon and Patel (2015):

Make time for Rest.  A good night’s sleep is important for all of us.  However, as an entrepreneur who often is responsible for tasks handled by teams in larger organizations, it is important that you have the energy that good rest can offer.  Don’t allow this to be neglected.  Make time for the rest you need.  If not, you and your body will “feel the pain.”

Don’t Go It Alone.  Sure, you are an entrepreneur, but that does not mean you don’t need a network.  Meeting others in and out of your business can provide you with opportunities to network, learn new ideas and market your business.  As a bonus, the experience can give you more energy – energy needed to run an effective business.

Eric D. Poyner is the CEO and Co-founder of a small non-profit that deals with the service professionals social and emotional health. Eric has been a police officer for 19-years and is also currently enrolled in the Masters of Entrepreneurship Program at Western Carolina University. Webmasters and other article publishers are hereby granted article reproduction permission as long as this article in its entirety, author’s information, and any links remain intact. Copyright 2016 by Eric Detron Poyner.

Take a Hike or at Least a Walk.  It is so easy to get stuck at your desk, on your computer or the phone.  Give your body and mind a rest by taking the time to get up and get out.  If only for a few minutes.  The air, sunshine (yes even when it’s raining, the sun is out) and change of environment can help make your day better.

Your business needs you.  Put yourself on the top of the to-do-list and make your well-being a priority.

References

Cardon, M. S., & Patel, P. C. (2015). Is Stress Worth it? Stress‐Related Health and Wealth Trade‐Offs for    Entrepreneurs. Applied Psychology64(2), 379-420.

Ross, J. (2016). Don’t stop believin’: The journey to entrepreneurial burnout and back again. In Academy of Management Proceedings (Vol. 2016, No. 1, p. 17507).