Balance Income with Expenditures
5. Make room for a marketing budget
One of the biggest mistakes new business owners make is not including a marketing budget in their operating costs. In a nutshell, this is the money you invest every week or month to tell your community why they need your product or service and why your company is the one they should choose.
If you do not reach and retain customers, you won't be in business you'll be bankrupt. First, figure out what makes your business unique: what it offers, why people need your product or service, and why consumers should choose your company over any other. This is called your "unique selling proposition". Use all or part of it to create taglines, logos, marketing messages, etc. that will enable you to advertise through websites, social media, newspapers, fliers, etc. Then do a little research to estimate how much these types of advertising might cost so that you can budget for them.
6. Don't underprice yourself
When you're just starting out, you may be tempted to offer rock-bottom prices for your goods or services. After all, you don't want to alienate potential customers by charging too much ... and isn't underselling the competition a reliable strategy? Well, maybe but that's not the way to make a profit. Especially when you're just starting out, you can't be in the business of offering mega-discounts. If you recoup only enough money to pay labor and operating costs, you may be helping to feed your employee(s)' family, but not your own.
Underpricing is without a doubt the biggest mistake new business owners make. Often, the urge to undercut the competition is just too great, but doing so can quickly hurt your business. What you need to do first is figure out all your costs and what you want to make, and then use that information to determine the price. After determining what you need to charge to make what you set out to make, you may find the business you chose does not work. There are also many ways to add value to your services that will allow you to charge more if you have done your homework identifying what your competition fails to offer.