People frequently ask me for my No. 1 small-business tip, but who can say if they’ll be faced with the situations I’ve faced? The lesson that was the hardest for me to learn might be something other people never encounter. But since y’all want to know, I’m going to answer with a Pandora’s box of a post, except that I’m releasing a host of clichés and adages into the world instead of evils.
My first job after college was at Dow Jones News Service, a business-news wire service, where I was a copy editor. The experienced editors used to warn the new ones that, “If it sounds too good to be true, it is” and “There’s no such thing as a free lunch.” I’ve been thinking of those sayings — and a few of their equally hackneyed brethren — because it’s become clear to me that I have often acted as if it’s possible get something great for very little. Money for nothing and chicks for free, as Dire Straits sang.
If you have or wish to have a high-quality small business, it’s crucial to recognize that you need to invest as much as you can to get where you want to go. This knowledge has been so hard-won that I shouldn’t pass it along to you as bluntly and clearly as I’m going to. Why should I give away expertise that cost me an enormous amount of time, money, sweat and tears (no blood was involved, thankfully) to obtain? I’m a fucking saint, that’s why!
Conventional wisdom tells us that “You get what you pay for.” It’s easy to dismiss that as a lie after a few bad experiences where you pay a lot and wind up dissatisfied anyway. So a better way of looking at the concept is to recognize that you will NEVER get MORE than you pay for. If I were going to get a tattoo, that’s what I’d get. Maybe across my forehead, backwards, so I could read it in the mirror every damn morning. Here it is again, so you can tattoo it on your brain:
YOU WILL NEVER GET MORE THAN YOU PAY FOR.
I’m comparing apples to apples when I say that. The apples to oranges comparison is looking at the price of U.S. labor versus overseas labor. Yeah, the cost of manufacturing a single piece of jewelry in Asia is a tenth of the cost of manufacturing the same thing in the U.S. (The hidden cost of overseas production is the need to produce greater quantity in order to secure the discount). Similarly, you can find great computer programmers in India who will work for a tenth of the cost of U.S. programmers. But sticking to apples — which I don’t even like except for Granny Smiths, so this whole image is starting to annoy me — we must compare U.S. programmers to other U.S. programmers and Indian programmers to other Indian programmers. And in that scenario, I can assure you that the least expensive programmer in the U.S. isn’t going to be the best in the U.S. and the least expensive programmer in India isn’t going to be the best one in India.
I’ve tried to save money for my very small company by doing things myself, using volunteers, and hiring affordable people instead of great ones. All of the above should be emergency measures, not long-term strategies. I’ve made these mistakes with graphic design, computer programming, photography, public relations, sales, wax-model making, jewelry manufacturing, stone setting … and those are just the examples that immediately spring to mind. I’ve tried that thing where you hire someone less experienced for less money because that person will be “hungry” and work harder. Not! The hungriest people will get themselves an internship or an apprenticeship or an entry-level job at a quality organization, even in these hard times. And if they can’t manage that, they’ll be too smart to sell their services for nothing. They’re the ones who know that you don’t move up in the world by selling yourself short. I’ve thrown away years and thousands of dollars on all kinds of bad work that got me nowhere. When I’ve finally dug deeper to hire the best, I’ve realized exactly how much I wasted. Money that paid for a three-year-long effort might have only covered six months with a better vendor, but I would have done better in those six months than I did in those three years.
“Do it yourself” is the worst money-saving tip as your business grows. I’m not a professional programmer/photographer/publicist/goldsmith/stone setter, so why should I waste hours/weeks/months/years doing a subpar version of those jobs, when I could be doing the things that I’m best at? Sure, you have to do everything you can in the very beginning but at some point you need to scale up. A growing business should demand more people, not fewer. Before Bill Gates retired from Microsoft, my guess is that he wasn’t running around the company trying to do every job from the lowest to the highest. It’s also easy for DIY-ers to undervalue their own labor, as I’ve pointed out before. Check out this 2010 post on Bead Mavens for more on how you might be charging less than you’re worth (and thanks to Deanna for alerting me to that post).
What if you can’t afford good help? The question is, can you afford to NOT have it? I’ve debated that question since I launched my business. If I had a dime for every time I said, “I can’t afford to do XYZ, but I can’t afford NOT to do it,” I’d have a hell of a lot of dimes. I only paid attention to the first “can’t afford” for a long time. My policy was don’t spend the money and hope for the best. (Note: Hope was the one thing left in Pandora’s box.) But now it seems to me that’s the ultimate in “penny-wise, pound-foolish.” It’s like saying you can’t afford to go to the doctor even though you’re really sick, and, as a result, winding up hospitalized, permanently incapacitated or dead. Have you known people who have played that game with their health? I have, and I’ve thought, “How foolish.” The consequences for the penny-pinching were much more costly than that original appointment would have been. Same is true in business. I definitely rule out stealing, but if you need to beg or borrow to secure the funds to ensure a better result, start begging or borrowing sooner rather than later. Feel free to attribute your future success to this post — which is an exception to the rule that you’ll never get something for nothing.
So true, all of the above!
In advertising, we often see our jobs as the first cut of a struggling business but how far can you really get without an advertising or marketing plan? We (maybe not all agencies) will work with clients of any size. Heck I just had a client – a farmer with a CSA – come to us for a logo, business cards, sign and brocure. We’re getting payment in cash… and vegetables! But they got a damn fine logo and are already sold out for the year. Personally, I’d rather a client come to me with a budget and we find a way to maximize that. Even if you are great you need to let them know you are there.
Also, Granny Smiths are the ONLY apples I can stand. Maybe Honeycrips but that’s it!
Genius. And, moreover, I think this applies everywhere. Whatever you do – do it with the best material and technicians you can afford (or can’t as the case may be :-). If I’m redoing my bathroom – I only want the best contractor, even if my 7000 job turns into 17K – before we start, I mean, not half way through the project. And if I’m going to take up a new skill – I want to learn it thoroughly from good teachers, with good materials. The best things come out of confident commitment. It’s not money you can’t afford to do without – it’s faith and savvy.
Bookmarked for future reference, especially after my first $1 million.
You said that you focused on the first “can’t” for the longest time. What finally changed that to the point this post was written for us to learn from your ways?
I was thinking about where I am now and where I want to go. I realized nothing was going to change if I didn’t change my behavior. I decided I had to start making the scary investments that I’d been avoiding for years.
Better late than never, to add one more cliché to the post. Those scary investments will pay off for you. Can’t wait to see what happens.
Wow. It’s like you magically knew that I’m playing with the idea of starting a business of sorts in the near future. Thanks for the advice. It really puts things into perspective.
Wonderfully worded. Perfect advice. My only question goes something like this- you can do things right, the way you are suggesting you do them and sell quality items but it doesn’t mean people will want them. Of course it is your (our, my) job to make them want them but it is very much a throw away world. You might not have an audience for your items because people don’t care if they last so they aren’t going to pay the quality prices. I mean look at the businesses that operate this way, the throw-away way, they do seem to be doing well. And the numbers look a bit iffy with more expensive lines (I think?). The internet is sort of like a bubble gum machine to a lot of people (which I think is cool, I don’t dislike that at all though do like more quality situations too) and selling quality AND making a profit at it is a challenge. I like and do make quality items but definitely have a range of prices, smaller items are less expensive. I find it hard to talk about this because unless you see a company’s numbers you don’t really know what is going on, there is a lot of smoke and mirrors. I mean who exactly is making how much? I remember reading recently that McQueen was barely breaking even.
I keep my “help” tight because it is so easy to let quality wander away from you, and that will wreck you. It is definitely a challenge to expand when you are building from the ground up.
All concerns aside, thanks for the amazing post.
A small company with limited distribution is always better off differentiating itself from competitors with quality/customer service/design, because it’s not going to win a battle for the lowest price. Walmart, for instance, is a huge seller of fine jewelry. It can have 100,000 units of some items produced for its many stores. Walmart is always going to beat me on price as long as my capacity for “quantity” production is 100 units. If you’re not going to be the cheapest one out there, you better have something else to offer and you better be able to market it. I wrote about this in my post on quality, having been very struck by a story about Toys R Us. Toys R Us was nearly put out of business by Walmart…then it STOPPED trying to compete with Walmart on price: http://wendybrandes.com/blog/2010/01/get-smart-about-quality/
You are a saint 🙂 Thanks.
I believe the correct term is “fucking saint”!
Double reply… I do get a little frustrated, or more like woeful, when client’s don’t understand the work that goes into what I do. Most people have grown up with manufactured products and they really can’t see why something will cost more. I do try to show the work and explain what I do as I post online without taking all the uh “magic” out of it. I sell some unusual items so making comparisons sometimes doesn’t work but yes that makes sense re not competing by lowering prices.
Shocking!
Thank you for posting this, especially the link to the Bead Mavens post. Pricing is by far my biggest struggle in establishing my product and my customer. As a novice who started a tiny side business for creative outlet most of my earliest, and still best, customers are friends and family. Thoughts about pricing have often been weighed down by worry and guilt over charging the people I love “too much” and doubt and fear that I am not skilled or “good” enough to charge more although some pieces might take me hours to complete. As I’ve continued to slowly progress with my work from something that was more of a hobby to something I really love doing I’m realizing that by shutting myself down before anyone else can I am sabotaging my success. Yes, some people might stop buying my pieces if they cost 2x-3x more but there are others that will buy those pieces and really those are the people that are going to help me get to the next level. I really don’t want to be a one woman sweatshop.
When you’re trying to establish yourself, it’s very tempting to do too much for too little, just as a marketing ploy. But you can’t let your marketing put you out of business. It’s better to lose some customers and make more money in the end.
Thank you for this post! I feel this applies not just to business, but a lot of other things in life and these are definately lessons hard learnt. The sad thing is, even people who read your post might go and make all those mistakes – people seem to really learn so much better from their own screw ups! Not always easy to learn from others, but as for me, I sure do try, so again, thanks!
Worse than other people not learning from my experience is my not learning….I’ll smarten up in one area but then in another area I’ll try for that miracle once again. “Maybe this time, I’ll really get something for nothing!” Ridiculous!
this is such great advice. so many good points made here.
Such GREAT advice. I am good to remember it when I plan to start something! Needless to say I agree with you 100% … You get what you paid for (and sometimes not even that, unless you are ready to be hard core)
♡ from © tanvii.com
I totally agree, you’re actually losing money by trying to do things yourself – you’re losing your precious time, which is money. I made this mistake in my business too.
Great post. I have made a lot of these mistakes and I definitely know what you mean about paying less experienced people less because they will be hungry and work harder. The truly hungry get better situations.
Well said! And having worked for a large software company in the past which had a Bangalore office, I’ve seen firsthand some of the inter-cultural and communication obstacles that can crop up from hiring Indian programmers. Sure, it’s a cost-saving measure, but it ends up costing more in work hours and energy.
Hi there-well done indeed for divulging such quality and sound advice in this brilliant post, a real eye opener and a lot of food for thought, thanks so much xxx
Great post Wendy, I totally agree with what you said, “The hungriest people will get themselves an internship or …at a quality organization, even in these hard times.” I remember when I was interning in fashion, I was completely hungry, then when I started my own gig, I hired interns that wanted to be there instead of just to fulfill a credit course… They are out there!! Having a business is definitely full of life lessons… I also loved how you wrote this post! 🙂
these are good tips. it takes balls to have your own business. and a lot of folks learn a lot of things the hard way. you may have helped more than a few avoid some pitfalls with this post!
I regret reading portions of this post aloud to my husband. He is currently giving me little tidbits of business advice as I try to read blogs… I
Another truly wonderful and wise post! It’s making me re-evaluate how I spend my time and effort…
Let me just say lady..you ARE a saint..how sweet of you to offer this advice. It all makes so much sense too…..and you have learned from your own mistakes…rock on sister!
Your advice is awesome and your bluntness so refreshing. Great food for thought. Thanks!
I need to bookmark this post, Wendy. Perfect timing for me. You have pointed out some things- I never realized (that I need to beg borrow but not steal to finance my dream) and validated some opinions of my own (hire someone who does it better than you.) And when it comes time for me to thank all those who helped me reach my goals by giving me support, faith and good advice, I will be adding your name to the list. Thank you, St. Wendy.
the Citizen Rosebud
Great advice.
That is damn good–and admittedly, hard to swallow–advice. I’ve always suspected the “you get what you pay for” cliche was true, but we’ve become such a DIY culture what with teh internets and all…
These are great lessons. I’ve seen people I’ve worked for go the “cheap” or “moneysaving” route, only to regret it.
I’ve even done it myself, on little things, like socks and kitchen gadgets. It never pays to pay less.