Opinion: Competitors' 'naked' pricing opens door for competition

Dear Ellen: I crunched the numbers. I came up with a selling price that is three times the going rate in Springfield. My competitors have been in business for a hundred years and they seem to be doing OK. What am I doing wrong? –High-priced Guy

Dear Guy: Remember the story of “The Emperor’s New Clothes”?

The punch line is that everyone knew the emperor was naked, but they all thought the other guys were “smart” enough to see his clothes. Once the brave young lad in the crowd shouted out, “Hey, the ol’ geezer’s naked!” then the crowd was free to say, “Well, he is!”

Don’t assume that the competition, the other guy, knows what he is doing in his business. Don’t copy his selling prices, because I bet his prices have no basis in reality. He made them up. He figured the other guy knew what he was doing and copied his pricing.

No wonder so many businesses sink.

The emperor is naked, my friend. Your competitor may have no idea what he is doing.

You can make money. You crunched the numbers. You now have something to aim for – your financial goals. Good for you. Now keep score, and run your balance sheet and income statement every week. Compare actual numbers to your budgeted goals. If you are reaching your goals, terrific. If not, raising your prices is an option.

Dear Ellen: I work with my father. How do I get him to get with the times? I want to move this business forward, and he is stuck in the past. –“Rocky Rollin” in Republic

Dear Rocky: The person in the top box on your organization chart is responsible for setting the course of the company. If that’s you, it’s time to lead.

Share your vision for the company in a compelling way. Be sure to let people know how they benefit by helping achieve that vision.

Arrange for a nonfamily member to deliver your message, someone you both know and respect. That might work. Probably won’t.

Hold your team members accountable for playing their parts in your game plan. Reward those who meet and exceed objective expectations. Deliver appropriate consequences to those who don’t – regardless of bloodline.

If you are not in the top box, perhaps you should start a business of your own. Life is too short to wade in the Rocky River of Resentment.

Dear Ellen: I want to grow my business but I am overwhelmed. What’s the best thing to do first, if you don’t know what to do first? –“Buried” in Buffalo

Dear Buried: My vote: Clean.

Borrowing from author Don Aslett in “Everything I Needed to Know About Business I Learned in the Barnyard”:

“‘Clean’ is the No. 1 success word of any business, starting with the place and grounds and extending to the ethics of the operation. When something is clean, it looks and feels good – it’s bright and beautiful and functional. But when you let things pile up, they immediately begin to foul things up and slow things down. Soon you are forced to go around, over, and under it all, and the mess, not your goal, becomes your mentor.

“Note how almost all of the barnyards and businesses that fail are heaped with junk, litter and clutter, unkempt and unclean.”

Enough said.

Ellen Rohr is an author and business consultant who offers systems for getting focused and organized, making money and having fun in business. Her latest book is “The Bare Bones Biz Plan,” and she offers Podcasts on her site, www.barebonesbiz.com. She can be reached at ellen@barebonesbiz.com.