Marketing, Management and Margins for More Business Stability

To run a successful business is not as easy as most newcomers might think but it can be very lucrative and even fun if you can find the right recipe or blueprint.

In 1993 my wife and I found ourselves in a predicament with four little children and no income after we lost our farm due to a severe three-year drought. Fortunately, we could sell our farm and pay off all our debt and still had R50,000 left. ($14,285 at the then exchange rate of $1=R3.50)

Since I had the skill to write programs for computers, I created some programs for managing the farm and to keep the books. It was the time when GST or general sales tax was just introduced in South Africa.

My neighbour, Philip Erasmus from Charlton Somerset East, saw me using these programs and asked if he could get a copy because he would like to use it in his stud breeding business as well.

He sold stud Bonsmara bulls and Dohne Merino rams to his fellow farmers.

Every time he had a client, he would show them these programs on his computer and soon we received requests from all over for my management programs.

Most farmers did not even have computers at that time and wanted a full system with computer, printer, power backup, lightning protector, modem and all my software pre-installed.

We prayed for rain during the drought, but it started raining computers instead.

Without really knowing it, we started to surf a big wave by starting our Computer Business. First it was Computers, then came Windows and later the Internet.

These are the seven main lessons that we learned in the University of Hard Knocks over the past thirty years:

Lesson One – Invest in Your Customers

Lesson Two – Importance of Lifetime Value

Lesson Three – Premiums and Incentives

Lesson Four – The Four Ms

Lesson Five – The Right Clients

Lesson Six – Good Products and Services

Lesson Seven – Muscle Marketing

The First Lessons We Learned – To Invest in Your Customers

In the past thirty years I have learned quite a few lessons the hard way – it cost me quite a bit of money in losses.

My first mistake was to start at too low a price. Once you name a price, it is very difficult to raise your price but if you start too high, you can always offer a discount if you experience resistance.

One often tends to underestimate the value of something that you built yourself because it is so easy for you. Other people might view it in a completely different way because they might not be able to do it themselves.

For instance, I sold my software for only R250 ($71,43) initially. In those days we did not even have access to Windows and all my programs were still running on DOS.

[At University I learned to program the Main Frame IBM computer with Fortran. The whole program was still typed out on punch cards.

I developed most of my later programs in DBase III Plus and compiled them with Clipper.

I also used FrameWork 3 to develop menus for my customers to easily access their programs. Framework also gave them access to a word processor and a spreadsheet system.

Later I used FoxPro to translate my programs to run in Microsoft Windows.]

One day a lady phoned me from Cradock, a neighbouring town, and asked if I could deliver a computer system for them on the farm on the next Wednesday.

At that time, we were still farming, and I could only do such deliveries over the weekend.

To put her off, I told her that the price of my software was now R980. ($280)

This was nearly a four-fold increase but the next morning she phoned me back and asked if I could bring six systems!

She had phoned her neighbours and asked if they would also like to buy computers. They were planning a farmer’s meeting for the next Wednesday. It would suit them well if I could show all of them how my system works and give them training as a study group.

This is how our Computer Business was born in March 1993.

By investing more and more in your customers by treating them like royalty and only giving them top-notch service, we were able to grow the business.

Give then not only what they want, but also what they need so that they can make progress and see results quickly.

Zig Ziglar said that if you can give enough people what they want, you’ll never have to ‘work’ another day in your life.

Today all our children are part of the business. Paul, our eldest son is leading the pack since 2004. He is a System Analyst and handles all the network requests for our local Businesses, Banks and even the Police.

[Unfortunately, we lost Wilmien, our eldest daughter, at 20 years old in 2003 as a pedestrian in a hit-and-run accident when she was studying in Johannesburg. A young man of 19 jumped a red light while having a street race under the influence of alcohol.]

Stefan, our youngest, is doing the books and handling all the orders and appointments. His nickname is Banka because he handles all the money matters of the business.

Their sister Sorita is a Graphic Designer and handles all the design work and special printing jobs like 3D printing, Lazer printing on wood and other materials as well as banners, posters, and weddings.

M&M Computers CC does nearly all the printing in town now.

With the latest technology equipment, they can do quality work quickly.

Our daughter’s husband Rihan, who is a technician, handles all the repairs and maintenance of equipment like notebooks, printers, inverters and even smartphones.

[They have six-year-old twin daughters and Ouma, my wife Martha, provides Day-care for them. It is a delight to see your grandchildren grow up.]

After Covid the business really took off and they even had to employ two more ladies, Anusha and Yolandi, to help with the customer service and reception.

Second Lesson – Lifetime Value

It will often happen that you spend money trying to get more new customers and then your profit is less than what you hoped for. This is actually not a bad thing though.

The money should not be in your first sale to a customer, but it is your opportunity to show them the value in what you have to offer. First show them that you care for what they want and that you are even prepared to help them the best you can and not just to make money from them.

A satisfied customer will always come back and do more business with you. The money is in these backend sales.

I had a customer from Elliot that is quite a way from our little town who asked me if I could deliver a system to him on their farm. My travelling cost would be way more than my profit that I would make on the deal.

I did the delivery and today I have a dear friend and I am very glad that I did it.

This customer became a life-long loyal client that bought more than twelve computer systems from me.

He would upgrade his own computer every three to four years and every time one of his children would go to College or University, he would order a Notebook Computer for them.

Just a few weeks ago one of his sons bought his third computer from my eldest son who is now managing our business.

Many of our first customers are now grandparents also and will buy Tablets for their grandchildren’s birthdays or at Christmas.

Invest in a new customer and you might just have a friend and client for life.

The lifetime value is what you should aim for and not just a single sale. Today it can even be better to offer your services for a small monthly subscription that will bring even more stability to your business.

Everything is moving in the direction of Printing as a Service, Computers as a Service and soon we will have Cars as a Service with the Autonomous EVs.

How can you do the same with your Business?

Third Lesson – Premiums and Incentives

It is your duty as a business owner to give to your customers not only what they want but also what they need.

They might not always know the difference but you, with your experience, also know what they need, and it is not always the biggest and the fanciest equipment that make the product work for the customer.

Let us take computers again as an example:

Especially on farms with long powerlines, lightning can play a big role in the lifespan of electronic equipment.

We are very fortunate that we had a telephone worker that came upon this great idea to develop an electric plug that prevents lightning damage to fax machines, computers, printers, TVs, and modems or wi-fi hubs today.

Our trip switches are just too slow to prevent lightning damage and it can even protect your fridge and freezer.

When I would assemble a computer system for my customer, I would always ask them if I can add a UPS so that they would not lose all their data with a power failure.

It is something that they need but would never even think about it. They would often come back and thank me for adding it after they had a power failure.

Another thing that I would always do when I deliver and install the system for my customers is to give them something extra that they would not expect.

When I connect their system to the power, I would always first plug in the lightning arrester extend-a-plug that will protect their fax machine, computer, modem, and TV.

They would ask me why I do it and I would answer that I have seen too many people unnecessarily losing their electronic equipment and that it is my gift to them for buying from me.

An unexpected little gift can turn a sceptic customer into a loyal client.

When I would install a printer, I would always take an extra ream of paper to test the printer after I have set it up and then leave the paper for them as a gift.

Small little things like this can make a huge difference for your business.

Lesson Four – The Four Ms

This is again something that I had to learn the hard way.

Recently it was put in a most elegant way by Joe Polish, a world-renowned marketer who started as a penniless carpet cleaner.

“In Business you need four things: Marketing, Management, Margins, and the right Membership Model.”

First M: Without a good marketing strategy for your business, you cannot hope to make a success.

Without knowing it at the time, I had no clue about marketing when I started my business. I thought that by placing a small advert in the local paper was marketing and left it at that.

Fortunately for us we were on top of the new electronic era and most people were actively looking for somebody to help them to computerise their business and my very first client was the owner of the local newspaper.

After helping him to do his page layout on the computer and to eliminate Letraset ting for him, I was his hero and he advertised me for free all over the area.

Second M: Without firm management of your business, you will fail.

Here again we were very lucky in that my wife found a former insurance manager of a national bank to replace her in the business. She wanted to give more attention to our young children in Primary school.

I was so busy installing systems for my doctor, lawyer, farmer, business owner customers, that I neglected my management role at the business.

Janet Goosen was a bright young lady that kept a firm check on our books, inventory, and accounts.

She would phone late payers to hear if there were any problems. She did it in such a nice way that we received prompt payment from our clients.

She even picked up that I have bought ten items but that there were only five invoiced and only one left in stock. I forgot to tell her that I installed the rest at a new customer. It happened more than once.

She kept our business away from the debt collectors with excellent management! Thank you, Janet, you were worth much more than what we could ever pay you.

Third M: Without good margins you cannot hope to succeed.

If the products that you sell have low margins, then you must find other ways to increase the perceived value of your offer so that you can make a good profit.

Without a profit your business cannot grow and without growth you will lose in the end.

A wise old farmer once told me the rule of three:

Take your cost of farming and multiply it with three.

Take one third to buy seed and fertilizer.

One third you spend on labour.

The last third is your profit if there is anything left at all.

Always remember that next year will be a better harvest!

Jokes aside – you must have a profit to survive and there are many ways in which you can achieve it.

The first way that I found was to bundle things that fit well together. For instance, you can add ink for a printer as well as a box of paper and then sell it as a premium offer.

The bundle is perceived to have a higher value than the parts put together, because of the convenience.

You can even offer to supply your customer on a continuous basis with consumables. Not only will it be convenient for your customer not having to worry about replenishing it.

You will also have more stability for your business in that you will have a reliable monthly income.

What about starting a loyalty program for your best clients where you supply them in such a way and then add a little surprise gift to it to make it worth their while.

That brings us to the last M.

Fourth M: By creating a membership for your business you can add another dimension to it and differentiate your business from the competition.

There are four types of membership models that you can consider.

First Model: A product membership model is where you supply your members with a new delivery each week, each month, each quarter, or each year.

Second Model: A service-based membership can be where you render a service to your customers on a regular basis. This is something that works well for a car wash business or even for hairdressers and beauticians.

Soon you might even be able to offer a robotic massage service to your customers.

Third Model: The third model is becoming very popular lately and is called a knowledge-based membership. This works especially well where your customers are struggling with an ongoing problem like overweight or trying to learn a new skill like painting, playing the piano or guitar, or having to home-school their children.

Fourth Model: The last model is all about establishing a community of like-minded people. This can be something where you invite your fellow business owners to be part of a mastermind group or membership.

Here you can discuss your daily problems, how to cope with higher inflation, load shedding or marketing.

If you are not the expert, then you can invite other experts that can answer the group’s questions.

Lesson Five – The Right Clients

Have you ever felt like some of your customers put a drain on your patience or energy?

In most cases your best customers make out only 20% of your customer base but brings in 80% of your revenue.

Maybe it is time that you place most of your focus on serving those elite group of your customers better. Try to find out what makes them better customers and what caused them to become repeat buyers.

Then concentrate on doing it for all your customers.

It might even be necessary that you get rid of your worst customers in a kind way by referring them to people that might be able to serve them better.

It will allow you to spend more time with the clients that can benefit more and appreciate what you are doing for them.

Lesson Six – Good Products and Services

Always ensure that you only sell products that you can be proud of. Never compromise with inferior products just because it is cheaper or easier to obtain.

If you are not willing to offer it to your mother, then it is just not good enough.

Your name and your reputation are not worth losing just to make a few pennies more. Always work on your offers and try to improve the quality and durability because then you can be certain that people will respect you for your integrity.

They will be willing to pay a premium for your services because they know that you will just deliver the best there is.

Once you have found a winning combination of products and services that you can be proud of, it is time for the last lesson.

Lesson Seven – Muscle Marketing

When you have found a strategy that converts well in your business, it is time to crank up your marketing.

The first step should always be to ask your current happy clients to tell their friends about you.

Most people are afraid to do it because they think that the customer will think that they are not able to get new customer themselves.

This is far from the truth because most people love to tell their friends about a good book or a good restaurant. They might just not think about doing the same for your business. Gently remind them that you would appreciate their help in spreading the word.

This will give them the opportunity to give something back to you for the good service they receive from you as well as all the surprise gifts they received from you over the years.

They will actually enjoy doing something for you in return.

There are many other ways to market better without it having to cost you an arm and a leg.

When Joe Polish was a young carpet cleaner, he got the advice to create a consumer guide for his customers.

It explained to them all the pitfalls of using cheap detergents or all the other ways they should be aware of how unscrupulous carpet cleaners can do them in.

What the questions are that they should ask their carpet cleaner before letting them into their house and what most mistakes most homeowners make when choosing a carpet cleaner.

There was no mention of his business, just a telephone number where they could get more information.

To produce these guides just cost him a few pennies.

Soon he was the go-to guy in town and even his competition came to him for advice. His clients gave these guides to their neighbours and told them about the super service they received from Joe.

Won’t you investigate how you can employ the same strategy for your business?

If you need any help with your business marketing, then feel free to click the link below. I am certain that I may be of some help to you if it is only to share a few more marketing ideas with you.

We can do a free business audit for you so that we can decide together how I can be of assistance to you.

We also create websites for small business owners and can help you to create and print consumer guides for your customers.

M&M Marketing – Where you get decent service at the lowest possible price.

By admin

I am a retired engineer with my own online business where I help small business owners to create an online business. I create websites, membership sites and affiliate programs for my customers.

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