Siphiwe Online
Posted on 09/04/2017 by S'phiwe on Business

What are the key reasons for rejections of black people’s business proposals?

Whenever someone is on the market for some service or product, they get multiple proposals but eventually select one. Can we talk about those black businesses who didn’t win YOUR bid? Why did they fail? I’ll start, in random order.
  • PRICING: I recently had to say no to a black business whose price was (justifiably) more than double the average charged by the rest of the competitors who were gunning for the same job spec. Ironically, they happened to be the ones I found the most likeable. When I say their price was justifiable, I mean their reasons made sense – they weren’t trying to rip me off – they were just trying to cover their costs. Pricing alone is a huge subject but a key takeaway for me right now is: don’t try to cover your costs out of a handful of customers. Many business models require volumes in order to break even. Do your homework to find out what your average competitor charges, charge within that ball park, give kick-ass customer experience and market your business as aggressively as your budget allows; this will get you the volumes that will have you not only competitively break even but turn a good profit and provide sustainable jobs. This is how to sustainably keep the money within any community.
  • ARTICULATION: Right from “hello” the business referred to above knew that I was already paying about 17% of what they were going to charge but went ahead with the conversation, holding back their opinion. Unfortunately for them, their private opinion leaked not only through body language but during the initial inbox chat. By the time we met, I could tell that they basically think I’m lying or trying to negotiate them down to some sort of middle ground. I wasn’t. That compromised their credibility (which is my next point.) It amounted to cognitive dissonance – that awkward vibe you get when you or someone you’re talking to is maintaining contradictory beliefs/opinions and it filters through in their attitude/behaviour. Essentially, I knew they (1) were lying and (2) thought I couldn’t tell. I already felt like I was being taken for a ride. I agonised about whether to even bother talking to them any further but I decided to give them the benefit of the doubt and upon meeting, body language confirmed by hunch.
  • CREDIBILITY: By the time I came across the said business, I already had suspicions that the current service provider is basically under-charging, which explains their unsatisfactory service. This suspicion stemmed from the fact that I’d already received at least ten proposals and the cheapest quote was exactly double what I’m currently paying. For this reason, I had room for what the bidder must have thought was the big reveal, which was the idea that I wasn’t going to get what I was looking for at the price I was communicating. Their cognitive dissonance told me they’re probably thinking what I’m thinking but aren’t being sincere about it. I actually think it stemmed from trying to protect me from what they believed (which I suspected) was the truth but from where I stood, they were not being truthful. Granted, I understand. I must confess that this actually feels like they thought I was somewhat retarded and they didn’t know how to break it to me so they were taking the easy way out, which is to try their luck and hope to get away with a lucrative deal.
  • FEAR OF MONEY: The rest of the black businesses were just uncomfortable with the subject of what they were going to charge. They left it right to the end of the conversation and I chose to think of that delay as them needing to gather information about the job before they determine the price but I can tell you with certainty: everything we discussed after I issued them with the initial job spec was included in the initial job spec. They were simply afraid to say what they charge for such a spec and it can only be because they don’t have confidence in their pricing model and they wanted to appeal to black-on-black compassion or something else such as the grace of God. Hayi kabi.
  • CONFIDENCE: They know they can’t compete on price and are not sure if they can compete on any other terms and it makes them feel the jitters.

What does this tell us? Black people generally don’t know what their services/products are worth and they hope to arrive at the right price by chance.

What’s the solution?

  • Invest time in establishing your industry’s going rates. Call/email your top competitors and pretend to be a potential customer and push the conversation right up to the point of negotiating for a bargain to make sure what their final price is and then “regrettably” reject the deal. Yes, it costs lots of energy and you didn’t hear this from me.
  • Invest time in locating your best competitor’s suppliers. Make no mistake: your competitors won’t volunteer this information and if you ask them you’re only going to raise flags and they’ll do all that’s in their power to block you. You can only get this through their disgruntled employees, industry colleagues, Google, etc.
  • Calculate your costs. This is the gist of a business plan: projections. The purpose of this is to answer the basic question of how you’re going to be left with money after paying taxes, your employees, suppliers, etc. This is also the section in your business plan that potential investors are most interested in because it answers their key question which is how THEY are going to be left with money after paying whatever it is they have to pay in order to become shareholders in your business.
  • Provide kick-ass customer experience. Make people vouch for you when you’re not listening. It’s much easier to keep a client than to recruit a new one. Keep promises, own up to mistakes (people know that life happens and they trust those who own up and fix errors promptly). Be nice/likeable – nobody wants to do business with jerks unless they’re the cheapest and most reliable.
  • Lastly, trust your ability to deliver good work. DO NOT fake it till you make it. Don’t ACT confident. This screws things up. After participating in a few business negotiations, you eventually figure out that (1) most talented people suck at selling themselves/showing off what they do well, (2) most people who suck at something tend to over-compensate in what they say. When I say trust your ability to deliver good work, I mean be the former, not the latter: be sure that what you’re trying to sell is darn good and it’s priced well; then communicate that to your (potential) customers CONSISTENTLY.

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