Q. I am a sole trader, running a garden nursery and maintenance business. I sometimes reduce the prices of my plants and advertise the discount to attract buyers. I am becoming increasingly reliant on my maintenance works but have quiet periods, especially in the winter. Would it be sensible to offer a winter discount to try and attract more customers?
A. Discounting or reducing prices on stock that will otherwise require time and energy to keep in good, saleable order - or outgrow their pots - is a very different proposition to discounting your labour rates. Think of your plant sales as being an incentive to spend money. Offering something for less than the normal price may attract people to come and buy more product but not necessarily spend any more money.
You profit by getting rid of any stock that would otherwise deteriorate, both in quality and profit margin terms, and the customer gains by getting more for the same money. You could think of that as a win-win situation.
I could enter the realms of finance, showing the effects of price reductions at different percentage rates and the impact on your overall annual profits, against the extra time that you have to spend working to maintain your required income levels, but these would prove ponderous and would take up several pages of mathematical equations. Your problem is trying to find a method of attracting either more customers to fill in blank diary dates or to increase your margins to compensate for the shortfall in your normal working pattern.
While I appreciate that you are a sole trader, you still have to operate under the same formula as a larger firm. Consider a company owner with 20 productive workers, each earning a clear profit of £10 per day. This would give the owner a profit income of £200 per day. If that same owner only had one worker, in order to maintain his income that person would have to earn £200 per day clear profit.
An obvious statement, perhaps, but as a sole trader you must maintain your profits even though you are experiencing gaps in your programme. You should either increase your charges to existing customers, find new clients to fill the empty days at your current rates or find new ways to fill your working time. What you must not do is reduce your rates, otherwise you will exacerbate the situation.
All you have to sell is your time and experience. You are not selling baked beans or greenhouses, or any product that demands an attention-seeking headline in magazines and newspapers to achieve sales targets. You cannot offer loss leaders to gain footfall and introduce new lines, or get rid of old stock, in the same way as a producer or manufacturer who must continually strive to keep in the public eye.
I know of some gardening firms that offer discounts for reasons I find quite strange. Ten percent discounts for OAPs, winter discounts for snow clearing (presumably even bigger discounts in the summer) or half-price Thursdays in an attempt to try and attract customers. I live in Sussex, where there are a considerable number of OAPs, most of them fairly wealthy and in no need of any discounts.
Reducing rates for a particular day may work as an incentive, but it could potentially result in fewer customers through the rest of the week and is therefore quite useless as a sales gimmick.
I suggest that you examine each and every one of your existing clients and produce a chart showing marks out of ten for a number of different categories. In the same way as you should be operating your business using your unique selling points, so will your customers have certain qualities that may be easily identified.
For instance, client A pays pounds x per hour/day, higher/lower than average = x points. They also pay late/on time, by cheque (five days to clear) or BACS = x points.
They are well connected, and seem to have a lot of wealthy friends and relatives. They have a large garden, with plenty of scope for extra works (should you find a way to broach the subject) = x points - until you come to a conclusion and a final total mark.
Try to be subjective and mark purely in business terms. The most pleasant and friendly of customers are not necessarily of the greatest benefit to your profits.
You will probably find that by using the same criterion for each client you will identify your ideal customer. One who pays the proper rate, on time, and fits your chosen best customer profile. Try to analyse those attributes and start the process of duplicating your ideal.
Always remember that as a sole trader, with only your skills to sell, and not a manufacturer reliant on quantity sales to maintain market share, you should avoid striving to gain additional income by reducing your rates and perceived value by offering discounts.
Perceived value is paramount in the gardening world. Understand the nature of your ideal clients and why you consider them as such (and, incidentally, when you carry out this exercise you may understand why they value you so highly).
By moving away from some of your lower marked customers and concentrating solely on your top ten, you will find that you become more attractive to new and affluent clients - something that you will never achieve by offering discounts or special offers of either your time or your talent.
Alan Sargent is an independent gardens consultant at the School of Garden Management.
- See www.tsogm.org
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