Bad business advice

http://blog.vincentlaforet.com/2013/08/01/how-to-succeed-as-a-creative-long-term-know-your-c-o-d-b/

The above link to the article about knowing your cost of doing business is informative in that it outlines exactly what any business person should NOT do. 

Good in theory but misleading in reality. The purpose of business is to serve others by supplying a need and to create abundance by sharing profit.

 

Yes, price determined by cost should be used as a platform to create profit margins. But price is based on what the market will pay, which is dependent upon good salesmanship and perceived need, not expenses.

 

You will never grow a business if you have fixed rates based on your personal bubble of needs. You need to be able to negotiate rates and find cheaper ways of doing the same job. Plus, the best business is one that leverages its resources.

 

When you have 5 guys working for you (whether employees or producers or agents), your cost of doing business changes as conpared with doing it all on your own. Maybe you pay a referral rate by giving them a discount for hiring you. So you now spend 20% of your original day rate on sales, but it cost you 0 working days and none of that cost is up front.

 

You may get less than your original rate because of negotiation, but you have more work, which leads to even more job opportunities with less lead development time.

 

It is better to have a smaller piece of a bigger pie when that pie represents a chart of profit share percentage. More sales means less impact on your business per sale. It means more security/accuracy in long-term planning and trend assessment.  It means you will have a greater sense of the market and what rates should be.

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