Richard A. Lindsey, CPA

Lindsey & Waldo, LLC – Certified Public Accountants

  • Nov 10

    I know in polite company and business communications you’re not supposed to talk politics and religion, but I am SO tired of talking to business owners whose religion is…

    Price.

    At least that’s what some of you believe. Based on your actions – the only way you ever talk about your product or service is that you are the cheapest provider in the city/area/community/street/block — you believe you SHOULD BE and CAN BE the low price leader in your category. Don’t you know you are worshiping at the altar of shortsightedness?

    Yes, there is a place for the lowest cost provider, but that place is fraught with peril. The margins there are razor thin; you must be ever vigilant to honor the gods of cost cutting and pray that someone more committed (or with deeper pockets) than you doesn’t step into your marketplace and undercut your price by a penny.

    Remember a few years ago when Apple® released their newest (at the time) iPhones, the iPhone 6 and iPhone 6 Plus. To say there was a lot of hoopla would be an understatement, right? Apple® released the new and improved phones on Friday, September 19th and by Monday they had sold 10 million units, one million more than the first week of the 5s and 5c the year before.

    Despite the “bad” economy. Despite losing its visionary co-founder and CEO, Steve Jobs. Despite my belief that 10 million people can’t NEED a new Apple® phone. Despite that Apple® products are rarely, if ever, cheaper than the competition.

    Apple® has achieved what every business owner dreams of: the ability to charge premium prices and still attract business. Apple® has successfully refused to bow at the altar of low price—and your business can too. Here are four ways Apple® has accomplished this…

    Can you apply these principles to your business?

    1. POWERFUL BRANDING. Thanks to a well executed branding campaign, Apple® has built a brand that is trendy, cool, and technologically advanced. The iPhone, in particular, has become a status symbol for many.
    2. STRATEGIC MARKETING. Every time a new product is launched, customers line up for hours (if not days) outside Apple® retail locations. And every time, a product shortage prompts anxiety and even desperation from customers who were unable to get their hands on the product. The result is a palpable feeling of scarcity and value—customers feel privileged to fork over $200-300 for the latest model or closer to $650-750 if their plan isn’t eligible for an upgrade! While Apple® won’t admit that they intentionally create product shortages in order to create a buzz, it’s hard to imagine that they wouldn’t be able to meet everyone’s demand on day one if they wanted to.
    3. EXCELLENT CUSTOMER SERVICE. Apple Care, the company’s warranty and customer care program, provides a level of service that is unparalleled in the electronics industry. The peace of mind that comes from knowing that expert help is a phone call away is a big part of the value Apple® provides.
    4. THE PRODUCT THAT DOESN’T DISAPPOINT. Branding, marketing, and customer service don’t mean anything if the product is disappointing. Apple® doesn’t cut corners and doesn’t make promises that its products can’t keep—resulting in customers that are consistently thrilled with their purchase. At the end of the day, if a product can’t live up to the expectations set by its marketing; it won’t be successful in the long-term.

    Apple® doesn’t compete on price—and your business doesn’t have to, either. Apply these lessons… and you’ll find that you have the ability to charge premium prices and still win the business!

  • Oct 27

    Business people seem quite willing to throw lots of money at the newest, unproven tactic for acquiring new customers/clients/patients when they would be better off plugging the holes in their existing processes that are leaking profits…

    Often right into their competitors’ pockets.

    Here are a couple of areas where you could quickly seal the holes and perhaps, double your profits.

    Probably the biggest area of opportunity for most people is following up with non-buyers. Often there is none. No systematized, automated strategy to follow up with prospects to turn them into customers.

    Of course, you have to capture the prospect’s information first and that’s another possible leak. But, if you’ve done something to capture their name and address or email, then you have the ability to stay in touch and perhaps move them from simply interested to paying customer. The higher the cost of your product or service, the more important this is.

    Capturing prospect’s information is an absolute must! It can be done online or offline, in-person, or by phone. Even though it’s easier than ever, many make no attempt whatsoever and it’s costing them thousands and thousands of dollars.

    Most business owners, when asked where their best leads come from, invariably say it’s a referral from an existing or past customer/client/patient. Yet most stumble across these referrals by chance. Almost none have a systematic approach to generating a steady stream of referrals.

    What if you weekly, monthly, or even just quarterly provided your referral sources with the tools they needed to refer others to you, such as useful reports, newsletters, emails, and instructions on your ideal customer and how to introduce others to you. You could create an “unpaid sales army.” By the way, your best referral sources might not ever have been customers. There are others who might champion your product or service. It’s not about who you know, it’s about how well you know them. If you’re curious, look up BNI.com

    Plugging holes in your leaky profit bucket is often all you need to do to provide for all the growth you can handle. It just takes a commitment on your part.

  • Sep 1

    What is a champion? By definition, it’s someone who excels above all others. Generally, it refers to a world class athlete, but it could just as easily apply to a top businessperson. Nancy Holland Morgan, a two time Olympic skier, has identified seven traits that can help us understand how we too can get to the top of our game and become champions.

    You have to really like what you are doing. If you don’t have a love of the activity, an enthusiasm that turns into a burning, white-hot desire, then it may be time to sit down and reassess your life’s interest. Without it, you will not have the passion necessary to sustain the drive. Without passion, none of the other traits will even matter.

    Achieving success invariably means having to learn new techniques, master new skills, develop new strengths, or obtain new knowledge. But more often than not, as we learn new skills and techniques, we don’t get it right the first time. We have to practice. Repetition, practice, review, effort, feedback, all go into learning the fundamentals. Commitment to learning is an absolute necessity for improvement in any activity.

    Combine your desire with commitment to training, and you begin to formulate a thoughtful plan to improve your performance. But, all the desire and commitment in the world won’t do you any good unless you have a goal. Champions set goals based on their strengths and weaknesses. Their plans revolve around reaching new thresholds based on increasing their strengths and overcoming their weaknesses. Champions know that to compete seriously for their personal best, they must surrender themselves to the goal.

    The first three traits prepare us for the fourth: tenacity. Life is a series of tests; we have to pass each one to go on to the next. As we move higher up the mastery scale, we take the chance of falling harder and longer. The falls are always painful. But, we must learn to get up after each fall and continue onward.

    No one today makes it to the top alone. All champions surround themselves with a support team. The strength of others is crucial to achieving the goal of championship status. Your support team may be only your closest family members, it may be a friendship circle, or it may consist of a paid staff of advisors. Your team’s job is to keep you in the right attitude as you gain altitude.

    Do something every day that scares you just a little — not something life threatening, but something that causes you enough discomfort that you will become accustomed to pushing the envelope of your performance. Get to love your zone of discomfort. It means that we are in an awkward phase of learning a new skill or strategy to help us achieve a higher level of performance. Some people seem to move in and out of the discomfort zone more easily. This is generally either because they have more experience living in the zone of discomfort or they have learned to fake it better than others!

    People like to be around those who have an aura of self-confidence and positive self-esteem. Self-confidence means you believe in the potential of achieving your goals. High self-esteem means you are satisfied with your talents and are able to recognize and appreciate the talents of others. This is not about being arrogant, but rather a more humble expression that you are comfortable with yourself, your accomplishments, and your talents.

    Being a champion starts and ends from within. To achieve success, you must start with a strong desire and end with the courage to maintain positive self-esteem and confidence in your ability. But in between is where the real work takes place. Championship status takes every bit of inner strength and external leveraging you can muster. With hard work, the rewards will be those of a champion.

  • May 24

    They played baseball together for ten years, and it happened so often, Franklin P. Adams, a New York Evening Mail columnist, wrote an eight-line poem about it. Originally published under the title “That Double Play Again,” it is better known as “Baseball’s Sad Lexicon,” or simply as “Tinkers to Evers to Chance.”

    These are the saddest of all possible words:
    “Tinkers to Evers to Chance.”
    Trio of bear cubs, and fleeter than birds,
    Tinker and Evers and Chance.
    Ruthlessly picking our gonfalon bubble,
    Making a Giant hit into a double—
    Words that are heavy with nothing but trouble:
    “Tinkers to Evers to Chance.”

    A little background: Back when the Chicago Cubs were a dynasty they won the National League pennants in 1906, ’07, ’08, and ’10 and the World Series in 1907 and ’08. Anchoring their infield were shortstop Joe Tinker, second baseman Johnny Evers, and first baseman Frank Chance -the best
    double play combination of the day.

    Adams considered the poem a throwaway when he wrote it. He simply wanted to get out to the ballpark and watch the game. But those three may still be the best known Cubs of all time.

    But, it didn’t happen by chance. (Did you see what I did there?) It happened by teamwork. It happened because they practiced. It happened because Tinkers and Evers and Chance developed a special relationship with one another unlike most others. The same is true if you’re trying to grow your business by word-of-mouth. You can’t expect people to shout your praises and send you referrals just because you showed up at the ballpark. It takes a relationship to make it work. Referral relationships work just like other relationships work.

    Think about the relationships you have with your neighbors. How willing would they be to help you out if your car broke down? Depending on your relationship, they might each respond differently. One might outright refuse to help. Another might share the name of his favorite mechanic. Another might be willing to take you or pick you up at the garage. Still another might insist on fixing it for you at no cost. Each of your neighbors may display a different willingness to help. And naturally, your willingness to help them would probably differ as well. Even your requests for help would be dependent on your history with each of them.

    Great referrals don’t happen just because you ask. At some level of consciousness, people who are good salespeople know this. Yes, sometimes, just asking for referrals will work, but more often, asking someone with whom you haven’t yet developed a relationship, may sour them forever.

    Like a great double play combination, it may look easy, but it takes a lot of work behind the scenes to make it happen. Getting ideal referrals with strong introductions from influential people involves planning, preparation, and practice. It involves developing that special relationship.

  • Apr 27

    In business, doing what others don’t do can often give you an edge. It can position you head and shoulders above your competition. It helps you stand out in a positive way, and when you do, people are attracted to you and your business, and your success grows stronger, deeper, and more durable.

    Asking for feedback is a simple way to gather information for improving our businesses, but many of us never take the time to ask. We get so wrapped up in the day-to-day running of the business that we fail to pause and ask people, “How are we doing?” Others are simply intimidated by the process – and afraid of what they’ll hear.

    According to the book The 29% Solution by Ivan Misner and Michelle R. Donovan there are five main reasons why we don’t ask for feedback: (1) we’re afraid the response will be negative; (2) we don’t know who to ask; (3) we don’t know when to ask; (4) we don’t know how to ask; (5) we don’t want to take up other people’s time. With all these objections, the thought of asking for feedback can give us heartburn, but it’s worth the pain; the potential for growth can be tremendous.

    Whether positive or negative, feedback should be considered constructive, because it helps our business develop new products, improve existing services, and sometimes adopt a whole new approach.

    Fear of a negative response may be what keeps many of us from asking for feedback. Nobody is eager to be criticized. But, as difficult as it to receive, negative feedback is actually a gift. It’s a reality check; it reminds us that no matter how good we are, we can always improve. It’s also a reminder that we can never make everyone happy. If you’re willing to ask for feedback, you’re going to get some negative feedback along the way. It’s your attitude toward it that will turn that negative feedback into an opportunity. Don’t ask for feedback unless you’re ready to hear it – and respond to it constructively.

    Whom should you ask for feedback? One answer is everybody. Ask your coworkers, supervisors, subordinates, partners, customers.

    When is the best time to ask for feedback? That depends. A professional development trainer might ask for feedback several times. During a session, so it can be tailored, the end of a session, and three or four months afterwards. She’ll ask different questions at different times. Someone selling a product might need to give the customer time to use it, or might not. Someone selling professional services might want to ask shortly after the services have been delivered.

    What if you don’t know how to ask for feedback? The easiest, and most logical, way is make it part of your sales process. Many companies use a questionnaire; some hand it out upon completion of the assignment, some e-mail it afterward, and some mail it as a follow-up in a few weeks. How you choose to do it depends on your customer base.

    The last reservation that a lot of us have is that we are reluctant to take someone else’s time by asking for feedback. What a cop-out. Adults have the option of saying no. It’s our responsibility to ask. Increase the likelihood that you’ll get useful feedback by making the request simple and timely. If it’s too complicated, or if you set a hurry-up deadline, your requests may end up in the circular file. Make the deadline too far off, and people will set it aside and forget it.

    I dare you – do something few others do. Stand out from the crowd. Ask for feedback. And be ready to turn it into opportunities for your business.

  • Mar 3

    Current research suggests that we are bombarded with between 300 and 700 marketing messages per day. Current research also indicates that we take note of less than half of those messages, and far fewer make a strong enough impact to be recalled, make an impression, or make a sale.

    Here’s a tried and true strategy for connecting with your customers and prospects. Legendary copywriter, Robert Collier, pioneered and perfected an effective strategy he called “entering the conversation already occurring in the prospect’s mind.” Instead of going straight into your pitch marketing message and being ignored like everyone else, do something different. After all, if you do what everyone else does, shouldn’t you expect the same mediocre results?

    Instead of hitting your prospects over the head with your message, first capture your prospects attention by using something they are already thinking about as the hook. Then, make a smooth transition into the marketing message. This strategy has been proven to work over and over again. There are several ways to implement this strategy. One is by using holidays.

    Holidays are always on people’s minds. For instance, right now people are thinking about what they are going to do for the upcoming holidays. Where are we going for Christmas or Hanukkah? Where’s the New Year’s Eve party? Am I going to make (and keep) any New Year’s resolutions? Where should I take my sweetheart for Valentine’s Day? Where’s the best place to go for some corned beef and cabbage on St. Patrick’s Day?

    And on and on. Those are just the major holidays in the next four months. There’s a major holiday almost every month. There are also obscure holidays you probably never heard of nearly every day of the year. You did know that December 25th is also National Pumpkin Pie Day, didn’t you? So, why not make a connection with your prospect by “entering the conversation already occurring in the prospect’s mind” by relating your message to the approaching holiday?

    You have to make a reasonable connection between the holiday and your offer. Otherwise, the prospect will feel like you tried to trick them and that’s no way to get them to know, like, and trust you, let alone buy something from you. It’s really not that hard. You can probably come up with several ideas if you just sit down and think about it.

    New Year’s Day is easy. Think about tying your message to something new or to a New Year’s resolution. Health clubs and gyms do it every January. The air waves and ads talk about the most common New Year’s resolution around – losing weight. With the promise that this year — you can do it… you can have that new body, the new you — with our help.

    And, of course, you can have a “sweetheart” deal for Valentine’s Day.

    This is a powerful, tried and true marketing strategy. And the best part is… if it works this year, you can recycle it again next year!

  • Jan 20

    In the book Masters of Networking, Don Morgan asserts that there are three ways to increase the power of your network and improve its ability to help you achieve goals. Fortunately, he says, anyone can create this leverage by understanding three fundamental characteristics of human nature. However, he goes on, only those dedicated to becoming master networkers will commit to mastering the arts of friendship, generosity, and character. The person who creates this trilogy of leverage will be on the road to unlocking the full power of networks.

    Friends like to help friends. And at some point in your life, you’ve probably helped a good friend do something that you might not have enjoyed doing— painting a room, helping out with the move–just because he was your friend. You really couldn’t avoid it. If you make good friends of your networking associates, you gain the same kind of leverage.

    How do you turn networking associates into good friends? There’s nothing complicated or mysterious about it, Morgan says. Think back how you and your best friend became friends. You went places together, did things together, talked about things, and one day you realize that you have been best friends for some time without even realizing it.

    That’s what you do with your networking partners. Go places with them, do things with them, help them when they need help. Soon you’ll discover that associates have become good friends. Not all of them, of course, but the more effort you put into it, the more friends you’ll make. And the more powerful your network will be in helping you achieve goals.

    You’re at a party. You’re given several presents. You don’t have anything to give in return. How do you feel? A little less than wonderful, right? It’s human nature to want to give a gift in return.

    The same holds true in networking circles, when you give something to a networking associate- a business referral, emotional support- she’ll want to give you something in return. Perhaps you won’t get a return gift immediately. However, the more you give your networking partners, the more inclined they will be to reciprocate.

    A true gift is an unconditional gift; you give without expecting anything in return. However, usually you get something back anyway. First, you gain the satisfaction of helping a friend. Second, human nature dictates that you will get something in return. When you least expect it, you may receive a gift worth far more to you than the time and effort you expended.

    The most lasting impression others have of you is the first impression: the way you looked and behaved when they first met you. If that’s a bad impression, it may take a long time to overcome and others may be reluctant to get involved with you. A master networker understands this and puts a lot of effort into creating a good first impression by dressing and behaving appropriately at all times.

    However, your long-term image goes well beyond how you look at first glance. Equal in importance, according to Morgan, are three character attributes: responsibility, reliability, and readiness. The group needs some tasks done or problem handled, do you take responsibility? Can you be counted on to come through when the need arises? Are you quick to volunteer your services?

    Above and beyond the first visual impression you make, your responsibility for, reliability within, and readiness to participate in group activities become the most important aspects of your image in the long run. If the group sees you as an asset by virtue of your character, individuals in the group will trust you, rely on you, and enjoy associating with you. And they will feel more comfortable referring their friends and associates to you— and your business.

    In the end, this trilogy of networking leverage comes down to an old principle, known in some parts of the world as the “Golden Rule”. In BNI we just phrase it a little differently: “Givers Gain.”

    To find a BNI chapter near you, visit BNI.com.

  • Dec 9

    Shhhh! I have a secret for you. I’m going to share it with you today, but you have to promise to keep it under wraps.

    Applied to your business correctly, this one “secret” could transform your business. If you have the faith to apply this secret correctly, it could be worth millions. Your life could change from struggling to keep the wolves at bay to successful entrepreneur nearly overnight.

    Okay, here’s your tip of the day. Well, it’s not so much a tip of the day, as it is the tip of the week, or maybe the tip of the year…

    Change your prices. That’s all you have to do. I have seen more people make more money simply by raising their prices than any other advice I’ve given them.

    Nearly every business person grossly underestimates the elasticity of price, and neglects the fraction of their customers/clients/patients who will cheerfully buy a higher priced premium option of what they sell if only it were offered. They leave a lot of money on the table by not offering a leather bound version of the paper bound product; a red door to walk through in the back instead of the blue door in the front.

    Marketing guru Dan Kennedy talks of the time he lived in Phoenix. At the time, there was a very popular nightclub in Phoenix that had a big, long rope line in the front where you could buy a card for $500 a year that allowed you to stand in the rope line in the back. Well, you say, who’s gonna buy a card for that? A lot of people did, based on the length of the line in the back. In fact, some nights the rope line in the back was longer than the rope line in the front.

    Not everyone will, but there are plenty of customers who will select a premium option. Price is very elastic. Most business people don’t understand just how elastic price is because of the manner in which they set their prices. Here’s what most people do, and I’d be willing to bet you’ve done the same thing. They look around at what everybody else in their industry is charging and set their price right in the middle. They think they’re being “competitive.” If they’re really daring, they try to be a little higher than the average; or if they think they can buy volume, maybe they set it a little lower than average.

    Alas, there are also those poor souls who attempt to price themselves at the bottom of the heap in order to proclaim they have the lowest prices on the block, in their town, their region, or whatever. It is a dangerous strategy because, as I’ve warned you time and again, there is always someone willing to go out of business faster than you are.

    Here’s the power of transaction size. Granted, it’s a very simple example, but one you might ought to post on your wall where you can see it every day. How do you get to a million dollars in sales in your business? You can get there with one transaction, if you can sell someone something for a million bucks. If you’re going to sell something for $100 it’s going to take you 10,000 sales to make it. Making a million dollar sale is not 10,000 times harder than making a $100 sale. It just isn’t. Now, I’m not saying Starbucks could figure out how to make a million dollar sale, but they did figure out how to sell a cup of coffee for $8. They didn’t do that by getting a committee together in a conference room and saying, “Let’s see, Denny’s sells their coffee for $0.55 and Dunkin Donuts is $0.72, so, let’s be courageous and go for $0.99.” That’s NOT how they got there.

    You’re familiar with Omaha Steaks, right? They come in a Styrofoam ice chest delivered to your door. They have good steaks. But, you know they also have hamburgers. And they have hot dogs. All of them delivered right to your door. So, Omaha steaks are, let’s say, double or triple the price of the best beef being sold in the supermarket or butcher shop. Maybe they’re five times as much as Sam’s or Costco. Yes, they do deliver, but a steak is a steak is a steak. Right?

    Wrong! Now, there’s Allen Brothers. Ever try theirs? I hear they are wonderful. It’s twice the price of Omaha. These guys are in the same business, catalogue selling of steaks, hamburgers, hot dogs, and they have the gall to charge twice as much as Omaha! And people are switching like there’s no tomorrow.

    I recently read about a cosmetic surgeon, Doctor Fairfield, who lives in the Philadelphia area. He does seminars to bring in new patients. At the seminar he offers a $25,000 membership in the practice for the patient to have all the cosmetic procedures they want or need for three years. So you want to come have a Botox shot every day? You can; $25,000 membership fee up front. Five people in a room of 150 chose this option, and three of them had no prior relationship with him. They showed up based on a newspaper ad and plunked down $25,000. That’s price elasticity. It’s everywhere. I promise you, most people don’t understand it and most people underestimate it.

  • Aug 19

    Don’t you just love Congressional tricks?

    One of my personal “favorites” is when they cram a bunch of unrelated business into their bills.

    Which is just what happened about a year ago, and it could affect you…

    H.R. 3236, popularly known as “The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015” (yes, that’s how these things are named) brought some tax-law-related changes.

    Individual tax returns are still due on April 15th — and a six month extension period is still available. But …

    * Partnership tax returns are due March 15, NOT April 15 as in the past. If your partnership isn’t on a calendar year, the return is due on the 15th day of the third month following the close of your tax year.

    * C corporation tax returns are due April 15, NOT March 15. For non-calendar years, it is due on the 15th day of the fourth month following the close of the tax year.

    * S corporation tax returns remain unchanged–they are still due March 15, or the third month following the close of the taxable year.

    On TOP of that, another doozy: audits can get you for six years now, instead of three. Without going into all of the details, essentially if you withhold reporting of 25% or more of your income, the IRS has six years to figure it out. They’ve always had unlimited time for fraud or criminality … but there was some wiggle room for underreporting in the past. No longer.

    All this (and MORE!) in one measly highway bill.

    So, it pays even more to work with a pro, yes?

    These sort of issues are what we specialize in worrying all about — so you don’t have to. Because YOU have to keep your head in a bigger picture.

    Entrepreneurs know that hard work and a great idea don’t guarantee success. Fortunately, most of them also know that failure isn’t final — almost every successful business owner client of mine has crashed and burned at least once in his/her career.

    One of the best ways to pick yourself, or your business, back up off the ground is to take a fresh look at things that you “thought” were set in stone. Here are some strategies I compiled for you to possibly give your business a fresh lease on life, come fall, or into 2017…

    Re-target your market. In the heat of start-up passion, entrepreneurs frequently try to interest too broad a market: “Everyone will want to buy this!” The result: getting lost in the crowd. The more closely you define your market, the more success you will experience.

    Re-examine your price. Price is obviously supremely important. See how you can lower your overhead or cut production costs. Perhaps there’s a new way to package your products, so that your average transaction value can go up?

    Identify and push your best product. Focus on what works. If your hot product is coffee cups, look for ways to highlight and expand that niche instead of veering into new territory. How about different colors and holders for those cups?

    Make your marketing materials more memorable. Emphasize the benefits — SPECIFICALLY how features of your product or service will improve business or the quality of life for your customer. And scrutinize your advertising. Using big media is not always the answer, especially when you have narrowed your market. Don’t overlook narrowly-targeted marketing efforts or joint promotions.

    Keep promoting! Make sure your message sinks in. Find affordable ways to reach your target market, and use these avenues as often as you can. Try social advertising!

    These ideas are to get you started. There may be longer conversations to be had. If so, that’s what we’re here for.

  • Jul 8

    I recently read about a show on CNBC that was described as a cross between Shark Tank and Top Chef. (Seriously… Can’t you see that producer walking into a meeting with CNBC and pitching it exactly that way.) The show was called Restaurant Startup and I just had to check it out.

    The setup is that there are two teams of restaurant owners who approach the “sharks” with their concepts. In one episode there was a married couple who ran a Lebanese-themed deli in Oklahoma City that wanted to expand into a sit down restaurant, and the pair of good ol’ boys with a southern comfort food joint in Kingsport, Tennessee who wanted to open a second location in Knoxville. The sharks sample some dishes and quiz the competitors on their operations. They pick one and give them 36 hours and $7,500 to show off their food and their skills. After that “opening night,” they decide whether to invest their own money in the concept.

    Early in the show, the good ol’ boys serve the sharks some dishes prepared from the owner’s grandma’s recipe book. And the shrimp and grits did look mighty tasty. One shark asked the chef how much the owner currently charges for it in Kingsport, and learned it was $12. Then he asked how much the average check was, and learned it was just $13. “This is a $20 dish in Knoxville,” he said, pointing down at the grits. “You need a $35 average check to make it work there.”

    The chef did not want to hear that he had to raise prices, and much wailing and gnashing of teeth ensued. He objected that diners in his town wouldn’t pay that much for the food. His grandmother who came up with the recipe wouldn’t want him charging that much for the food. And he wanted everybody to be able to afford to eat at his restaurant and enjoy his grandmother’s great dishes.

    (Does any of this sound familiar? I can just hear some of you saying “my customers won’t pay any more!”)

    The sharks agreed that it would be a big jump to raise prices to those levels, but they insisted that the point of running a restaurant isn’t just to share grandma’s southern comfort. It is to make money—and making money, in this case, would require higher prices.

    The sharks chose the good ol’ boys for the test kitchen, and set them up with a local consultant to help walk them through the process. Once again, pricing came up. The owner said flat out “I don’t want to serve a $19 piece of fish.” The consultant explained the restaurant isn’t just serving a piece of fish, it’s serving an experience— then proceeded to show the owner how he could garnish and plate the fish to look like it’s worth the price he had to ask diners to pay.

    At that point you could almost see the light bulb go on over his head. He readily agreed to raise his prices, and the pop-up restaurant opened for business. Diners who filed in that night loved the food. Unfortunately for our good ol’ boys, service and management weren’t as good as they should have been and the sharks declined to fund the concept. It was a hard lesson for them to take home to Tennessee.

    And here’s our lesson for the day. If you’re like most small business owners I know, you at least profess to want to run your business to make money. You may think your customers won’t pay more— but you’re probably wrong. You may think that your mentor, or the person you bought your business from (who didn’t charge enough himself) would disapprove— but it’s your business, not theirs. And you may really want everyone in town to be able to enjoy your great product or service—but can you really make the kind of money you deserve if you price yourself into bankruptcy?