Home » Business & Finance » Small Business » Value Added

Value Added

© Bert Markgraf

If you're wondering whether your small business is going to make it, to survive and prosper, one of the key measures is whether your operation adds value for your customers. If what you do adds a lot of value to what they buy, your chances are good; if not, why would they continue to buy from you?

It used to be that you could buy wholesale and sell retail without adding a lot of value. While there are still markets which are trying to maintain this kind of structure, they are disappearing fast as companies that used to be wholesalers sell direct and whole retail sales systems go out of business. If, as a consumer, you have access to wholesale pricing, why would you continue to buy retail unless there were other factors. It is up to small businesses which are active in such markets to provide the reasons.

Reasons for a consumer to pay more and buy from your small business instead of the wholesale chain can include:

1. Service
Wholesale chains are notorious for lack of customer service, especially after sales service. Staff are generally not knowledgeable about their products and warranties are farmed out. Addressing these issues in a convincing way constitutes good added value.

2. Presentation
Keeping products stacked twenty feet high in the original packaging is inexpensive but not attractive. You're not interested in the customer who will visit five chain stores to save $1.50 anyway. You're interested in the customer who will spend a bit more to shop in an attractive setting. For them, good presentation is good added value.

3. Knowledge of the local market
I couldn't find a particular item at one of the big hardware chains recently but our local hardware had three different sizes. Catering to the particular needs of your community and target markets results in added value for these groups.

4. Convenience
Convenience means good location, good parking, well organized operation and fast service. You're trying to get the customer who doesn't want to drive for half an hour, walk two hundred yards across a parking lot, walk up and down long aisles and stand in long line-ups. Avoiding this is good value for your target customers.

5. Accessibility
A large, wholesale-type operation expects you to know what you need and they're not geared to take phone calls or visits to discuss your problem. If your small business can do this, that's added value.

The best added value for a small business is value which doesn't cost the business very much but is greatly valued by its customers. I would even go so far as to say small businesses should go out of their way to find customers who value what they can provide at low cost. Don't forget, you're small and so you don't need a 60% market share - you can choose the customers which fit best.