Wednesday September 10, 2008 10:10 pm
What decision had the biggest impact on the profitability of your business?
Continuing our series of posts on starting up a small business, the next order of business is profitability. Before we jump in, if you have missed any other posts from the series, check them out:
- Getting the confidence to start your own business
- Taking “bet the farm” risks in business
- What was the first defining moment of your business?
Now, back to the topic of profitability. I have to say that, if I could just pick one, then the one thing I did in business that had the biggest impact on profitability was recognizing what we were worth. In the beginning of our ad-supported online business, I was just happy with anything that any advertiser was willing to give us, and happily gave them ad real estate for bargain prices. It took me a little bit, but there was a day where the lightbulb went off, and everything clicked. I was way underselling our ad inventory, and pretty much, we were being taken advantage of.
I immediately started asking advertisers for what I thought we were worth, rather than being happy with what they were willing to pay. Once I did that, the number of advertisers we had diminished - but the goal wasn’t to have a bunch of advertisers. We wanted a few good advertisers that paid well. The good thing is that these advertisers still felt we were worth it to their advertising budgets, and they didn’t even question our rates. We moved our rates to be in line with other top Internet sites, because we felt that our content could match up. Luckily, advertisers agreed.
This is actually a good overall business tip - know what you are worth. Don’t undervalue yourself - and, please, don’t overvalue yourself either. Have a realistic mindset of where your business stands in your industry, and then make sure you are getting what you are worth.
- Related Tags:
- business, entrepreneurship, gear live, online business, profitability, sidefeatured, small business, starting an online business
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