When it comes to friends, family, and honoring tradition, it’s pretty hard to resist offering a good deal. This might be good for the customer, but is it really good for your business?
Let’s examine haggling—a Bahraini tradition passed down from generation to generation. We have become so used to it that we’ve come to expect it to happen, no matter what the size of the business deal.
During your startup phase, you’ll probably have the tendency to give in to this by offering special discounts to family and friends, in addition to foregoing some of the rules you have set to keep your business running smoothly. It is very easy to be swayed by personal relationships, as they have been fostered over many years, and you actually need their business when you first start out.
However, in the long run, it doesn’t pay to offer these kinds of discounts—for many reasons.
“It is very easy to be swayed by personal relationships, as they have been fostered over many years, and you actually need their business when you first start out.
90% percent of the time, “loved ones” will abuse the relationship, and will not pay on time; or worse, not pay at all, as they expect a freebie. More often than not, part of them actually thinks they are benefitting you by helping you conduct business. The nerve of some people!
The best rule of thumb is to treat family and friends like any other paying customers. If you think about it, special treatment only implies that your “regular” treatment of customers is subpar.
Another trap that new entrepreneurs fall into is not following the policies and procedures of their own companies. When things go sour and there is no paperwork between the two parties, you will always get the short end of the stick—and no one is going to support you, because it was due to your own negligence. Even though you have only done this because of your deep relationship with the person(s), when worse comes to worst, you’ll be left hanging.
This is not just advice; it’s mandatory protocol for any successful business that seeks to protect its reputation. Making exceptions for clients is a big no-no, in most cases. The way I see it, this is only acceptable in your startup phase, when you are trying to get any kind of work, since you are new to the market. Businesspeople sometimes do work for close family or friends “off the books.”
“Making exceptions for clients is a big no-no, in most cases.
Let’s take another example. A family member approaches you to work on their project, and since you’re close, you have decided to give them a heavy discount. It affects you, but you forgo your profit margin because of your personal relationship. This person might then convey the wrong message about your company discount policy. The people he/she speaks with may then expect the same discount, which is something you might not be willing to do or able to afford on a regular basis.
To combat this, you’ll have to adjust your pricing to establish a buffer, allowing you to offer discounts—or not.
Another aspect of this phenomenon is the location of your business. If it is located in Bahrain or most places within the GCC, you can almost always expect people to haggle with you to land a better deal. In most cases, setting your price higher to allow room for haggling customers will be a good move.
In conclusion, whatever your stance on discounts, you’ll need to stick with it. Even though it may not be written in your “rulebook,” you will still have to stay true to your choice. Both you and your business will be judged on it.
