Know your value as a small business - Then charge for it

As a business owner, it’s important to strive for financial security.

01 Nov 2015 | Best in small business | Share:
1 Nov
Know your value as a small business - Then charge for it

Across the country, small businesses are underselling themselves. Despite being prepared to work long hours and invest blood, sweat and tears every day, small business owners often make the mistake of undercutting competitors just to get a foot in the door with large, previously untouchable clients. The hope – and there is a lot of hope involved – is that over time they grow the size of the account organically, so the sacrifice made in the first year or two is compensated by the business growing in the following years.

Unfortunately, this scenario is easier said than done, and for many small business owners, it can create a profit squeeze and more challenging issues when it comes to applying for a loan.

Cash flow still is – and always will be – one of the biggest pain points that businesses face. And traditionally, when it comes to applying for a loan to help solve cash flow, most lenders will shut the door immediately.

For most lenders, approving a business loan in this situation is very black and white. They assess the business on a certain criteria and then move the application forward based entirely on that check list. They only look at things like income and assets, no outside factors, and especially not organic growth or the potential of the business. This means a business that boasts big name clients may not look as appealing on paper.

SMEs can obviously get smart when they’re looking for a lender to help with their business growth because there are mainstream lenders that work hard to provide customised finance solutions where others can’t. Liberty’s Business Boost product is a great example of this kind of unique offering, allowing small business owners with a strong equity position in their property portfolio, the ability to attain short-term funding to alleviate immediate cash flow problems for their business. Similarly, Liberty’s business loans give flexibility to businesses that are looking to expand, invest and purchase commercial property.

But, small business owners need to understand that underselling yourself to bring in new business may seem like the right thing to do, and that the short term risk will be rewarded with long term gain, but there are other challenges that arise from running a business in this way.

Small businesses are invaluable to the clients they serve, so why shouldn’t they be charging full price?