What Franchise’s resident business agony aunt Angie Coates, founder and CEO of Monkey Music, answers your business and entrepreneurial conundrums
My prices are being undercut by a local competitor. How should I respond?
With so many businesses under pressure due to the pandemic, this is a common problem at the moment, but don’t panic.
The temptation, even in the good times, may be to price match, but in my experience this normally leads to unhappiness and a loss of identity. There is also nothing to stop your competitor from dropping their price further, leading to a price war that ends up devaluing your brand. It’s generally far better to stick to your guns and use the competition as motivation to further improve your product and communication.
While the competitor may want to put the spotlight on price, you should focus customers’ attention on the strongest aspect of your product.
Trying to communicate too many of your product’s strengths will likely befuddle customers and devalue the thing you are best at. Instead, talk loudly and repeatedly about your unique selling point. At Monkey Music, we’re currently shouting about the fact 98 per cent of customers would recommend Monkey Music to a friend.
At the same time, make the price difference less clear cut. Be creative about the special offers and one-off opportunities you use to draw your audience in and don’t be afraid to experiment, as different promotions will appeal to different customers.
If possible, give something extra to your customers only you can provide. At Monkey Music, not only do we have a structured curriculum that uses our extensive library of proprietary songs, but we also have Monkey & Mo, characters who create a strong link between the live classes and the Monkey Club zone on our website - where we provide lots of extra content - that’s hard for competitors to emulate.
So long as customers understand the extra value you offer, you should be able to retain your price point.
I’m going into business with a partner. Do you have any tips?
Going into business with a partner can be an incredible experience, but it can also go badly wrong. The way you set the relationship up will often play a significant role in shaping which way it goes.
From the outset, be honest with yourselves and one another about what you’re both good at. Then discuss your visions for the business - do you both have the same ideas around the company’s values, core focus, any exit point/strategy, etc?
Next, formalise everything: write proper job descriptions, sign contracts, agree legalities around share options, etc.
With the vision and structure in place, you’re ready to agree your game plan. Again, document it. Create a three-five-year plan with targets for revenue, gross profit and number of employees and franchisees you’re wanting to achieve at the end of each year. Break the targets for year one down into quarters and then months, with clear accountability for each action and deadlines for delivery.
With the business underway, meet regularly to ensure you both stay on the same path - if not, act quickly to make new plans. Always make meeting notes and record not only targets, but who agreed to deliver which actions by what date. Make sure you both have a copy shortly after the meeting to minimise the potential for future misunderstandings.
If you get all the above in place and work as hard as one another, you’ll be well on the way to being able to enjoy the opportunity of doing business together and forging a bond that’s hard to match.
You might also be interested in
- Brexit property investment myths BUSTED!
- Leading trade body offers careers advice you can count on
- Multi-unit franchise ownership: what are the benefits?
- Franchising: The key to unlocking the perfect work-life balance
- “I share the stories of women who refuse to allow society to force them into a box”