Let me start out by once again reminding you that we are nearing year-end (as if you really needed my reminder).
And Chicago business owners are extremely well-positioned to make a dent through proper tax planning more than any other population.
We’re right here, should the impulse strike you: (773) 995-2990
On the personal side, you should consider these basic year-end moves:
1) Double-check your withholding (assuming you are taking a W-2 payment from your business).
2) Evaluate your charitable giving and look for smart ways to make an impact on your own taxes, as well as your gift recipients.
3) Make sure you understand mortgage deduction rules for YOUR mortgage because there are new limitations this year on how large of a mortgage you can use to write off debt payments.
4) Catch up on retirement contributions.
5) Give tax-free gifts ($15K and under to family and friends — like your friendly accountant, for one), as well as ensuring you use any FSA funds set aside through your business.
But there is one year-end move that I believe you should strongly consider.
Here’s what I mean.
Raise Prices For Your Chicago Business
“You are a product of your environment. So choose the environment that will best develop you toward your objective. Analyze your life in terms of its environment. Are the things around you helping you toward success – or are they holding you back?” – W. Clement Stone
I take a look around the small business world sometimes, and I get a little sad.
Because it’s heartbreaking to watch so many small businesses go out of business or not bring home enough bacon simply because they get trapped into thinking about their pricing in the wrong way.
When you differentiate yourself based on price, you simply cannot provide value. You end up competing on the wrong playing field.
Sure — while price competitors have been in operation since the beginning of time, it’s important to understand that if YOU want to build a sustainable, scalable and one day SALE-able business, a core foundational piece of that puzzle is that you must be charging enough for your services.
You see, most business people under-price their products and services. And it’s my experience that price either isn’t or doesn’t have to be a very important factor in a consumer’s decision or the success of a business.
We should all seek to be positioned at the higher end of a price scale and have our competitors focused on selling from the perspective of being “cheaper” instead of being better.
I know of a chiropractor that is surrounded in his area by other doctors who charge $35 to $55 less per typical treatment. Yet his practice is bigger and more successful than three of his close competitors added together.
In my experience that’s not an exception — that’s a rule of business. Almost every time I’m asked by a client or friend to look at a business with an eye to help, one of the very first things I encourage is to raise prices or fees. Sometimes the adjustment is pretty dramatic.
Price is the laziest and riskiest advantage to market with. Buying business with lower prices is relatively easy … but keeping business obtained purely because of price becomes much more difficult. So, one way that you can immediately increase profits in 2020 is by increasing your prices.
You might say, “Okay, Ayton, just how do I go about doing that?”
Well, the first (and easiest) answer is to simply do it. If you have a good relationship with your customers or clients, I guarantee you’ll be happily surprised by what happens. It won’t be the disaster you feared it would be.
Another smart strategy is to re-package what you currently provide, into “bundles” or packages, and watch your average transaction value during 2020 soar.
Lastly, much of this comes down to how you position your business. Are you drawing “price shoppers” with your marketing? Or, do you emphasize relationship and value — which are *not* tied to price? When you put structures into place that ensure a strong, personal connection to you or your staff, you will find that your customer list can weather an increase.
The beginning of a new year — yea, a new DECADE — might just be the perfect time to do this. Try it out, and let me know what happens.
I’m grateful for our chance to serve you and your Chicago business — and we are dedicated to its success, in every measure.
Feel free to forward this article to a business associate or client you know who could benefit from our assistance. While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for families and business owners.
A.L. Taylor and Associates, PC