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Want that first customer? Do research, don't undercharge

Many small business owners are so anxious to get their first clients that they'll underprice products or services and end up in unprofitable and unpleasant relationships.


By JOYCE M. ROSENBERG, Associated Press

NEW YORK — Many small business owners are so anxious to get their first customers or clients that they'll underprice their products or services, and end up in relationships that are not only unprofitable but also unpleasant. Owners can also find themselves doing work they don't want to do.

Some advice for new owners on how to avoid the misery of bad clients:

— Underpricing yourself can create an abusive relationship. When V. Michael Santoro and his business partner started their digital marketing firm, they first provided their services to other businesses in exchange for testimonials that would attract other clients. "What we discovered is many were just taking advantage of us. Many were chronic complainers who were always trying to get more services for no money," says Santoro, co-founder of Vaetas, based in Tampa Bay, Florida.

— Owners who are too eager to get new clients can make bad choices. Donny Minchillo, co-owner of website developer Pineapple Development, says it's important for a client to be a good fit for his business, in much the same way that his company needs to be a good fit for a client. "Setting proper expectations and being transparent from the start has helped us continually bring on clients that are better matches for us as time has gone on," says Minchillo, whose company is based in St. Petersburg, Florida. But he and his wife and business partner Jackie have made mistakes. "We have taken on at least eight of what I could consider to be 'bad' clients for us," Minchillo says.

— Don't be afraid to say no. "It's important to know your boundaries, and to be firm with your limits, or the client will walk all over you and you will end up in situations you don't want to be in," says Rachel Reisner, owner of Cats and Hamsters, a pet sitting service in Montreal. Reisner has found that some clients expect to pay very little because some pet sitters, including students, are working to pick up some extra cash rather than running a company, as she is. "Clients who give me a hard time about my prices, and often ask for discounts are not my ideal client," she says.

— Do market research to find out who your customers are — and go after them, says Laura Willett, a business consultant and lecturer at Bentley University in Waltham, Massachusetts. Don't underprice, and don't sign deals out of anxiety. "What you're communicating is, my product isn't worth as much as everyone else's," Willett says. "Your desperation is going to be communicated to your client."

— Owners who are anxious or not sure how to find the clients they need should seek some advice, Willett says. She recommends Small Business Development Centers sponsored by the Small Business Administration. They can be found at www.sba.gov/sbdc . Willett also suggests contacting SCORE, which links owners with veteran business people who give free counseling. They can be found at www.score.org .

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Finance Magazine: Want that first customer? Do research, don't undercharge
Want that first customer? Do research, don't undercharge
Many small business owners are so anxious to get their first clients that they'll underprice products or services and end up in unprofitable and unpleasant relationships.
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