Saying no, pricing and deliveries: Business rules that turned upside down in 2022

Game-changer. Now there’s a term that gets over-used by everyone with a press release about their metaverse, shampoo, toaster or whatever.

But this year, when you’re deep in the business trenches, the game really has changed.

Rules that have operated forever have been turned upside down, at least for a while.

It feels … weird.

Power balances have shifted.

Buyers are no longer gods that must be appeased at all costs. Suppliers are over-run by demand and can’t get enough product to handle all the work. Nobody has enough staff.

This shift will test who is good at business.

You know who won’t do well in the next few years? Traditional tight-arse operators who pay their staff bottom dollar and believe they should be grateful for a job. Who open every supplier conversation with “you’d better sharpen up your pencil”. Then pay them 120 days from the final date of the month they got the invoice.

When you’re used to ordering people around, having to persuade them will be too much of a jolt for some.

For us it’s nice to be back in business again after our trip to shutdown hell and back. We’re grateful that fate has swung the pendulum back our way for now. We’re seeing activity like we’ve never seen before.

I can’t speak for every sector, but I chat with friends in lots of different industries. Almost all tell tales of freakish stuff, unlike anything they’ve experienced before.

Strong demand. Having to knock back sales enquiries. Supply chain nightmares. No sign of any improvement on the staff shortage situation. Coders. Cooks. Carers. Whatever you want, join the queue.

The nightmare of saying no to work

Having to say no to work kills us. It goes against every fibre of our entrepreneurial instincts, after decades of never saying no.

Until now, we’ve always hunted around and found a way through insane peak periods with freelance labour.

Now lots of freelancers have left our industry after the shutdown years. The ones who remain are scarce, and choosier about what shifts they work.

So we’re saying no to significant work and exciting new customers every month. It’s an uncomfortable conversation with clients we love dearly. And being held accountable to market forces is essential for your business. With mad demand comes the strong risk of being spoilt and that’s a trap.

We’re freaking out about telling people they have to book earlier if they want us to do it. Our industry has always saved the day at the last minute for clients. Now we’re scared that when demand tapers off, they’ll carry some kind of resentment that we couldn’t help.

If you’re in this position, you have to face the reality that saying yes when you’re beyond capacity will deliver a broken experience. And you’ll burn that client. Because, in their minds, they’re your only client that day.

You have to be honest and tell them that you can’t honestly deliver what they’d expect. Long-term, they’ll respect you for it.

The new pricing rules

I wrote back in March that it’s time to put your prices up a bit. That hasn’t changed: if you want to be able to afford decent staff — or any staff, really — you need to charge properly.

It’s a balance. Most businesses would do great if they charged their normal rates. Rather than dropping them every time a client asks.

Now is a really good time to say no to the deals. Everyone understands you’re facing higher costs.

There are many people who still expect a fat discount off your regular rates, purely because that’s what they’d like. Their budget problems are not your problems, and at last, they must go to the back of the queue.

Back of the queue for you, little man.

If you’re tempted to charge extortionate fees because demand is on fire, don’t (hello, airlines).

And the worst use of the hot deal award goes to the  six-hour SYD-ADL trip. It was economy too.

Profiteering will come back to bite you on the bum in years to come.

I have heard of companies coming back to clients with demands for 50% more money for something quoted two months ago. Not OK. People remember standover tactics forever.

The battle to find suppliers who can deliver

2022 is a battle to find suppliers who can deliver. Rather than tell you they can, then pull out at the last minute “because staff shortages”.

Anyone who needs to use tradies at the moment knows that the job isn’t to find the cheapest quote, it’s hoping you can find someone to do the work within twelve months. You want windows with that? Welcome to a project timeline you’d normally expect for a cross-city tunnel.

Running this tradie shot because it is still entertainment gold.

We’re trying to buy a new truck. Delivery date is mid-2024. Do you think we’ll be getting a discount on that truck?

In most areas of business, purchase cost is not the real cost.

Not getting the 5% discount we might have got in 2019 is loose change, compared to the costs of not having assets working for us in the year or two we have to wait.

Yet some buyers still bring the let’s wait for a discount mentality, and it’s hurting their bottom line.

At the moment our purchasing criteria are:

1. Can we get it and when?
2. After-sales service and backup, because lots of suppliers have let that slip in the last two years. It’s a Code Red downtime risk that could cost us a lot.
3. (distant third) Price.

It’ll change long-term, but this situation ain’t going away any time soon.

You’re in business, you’re (hopefully) paid to adapt to change. Rather than complain that things were better in the old days when staff and suppliers knew their place.

How can you be seen as a good client, so that good suppliers will give you priority in the peak demand times?

I wrote some thoughts on that but it started turning into a book, so we’ll come back to that in a couple of weeks. Stay tuned.

This article was first published on the Undisruptable website. Ian Whitworth’s book Undisruptable: Timeless Business Truths for Thriving in a World of Non-Stop Change is out now from Penguin Random House.