Keeping it in the Family or How to Lose Business and Influence No One!

Understanding the Real Cost of Business Services

 ‘Unfair competition’


I was discussing a business opportunity involving the introduction of companies to Cloud based enterprise software with a friend and fellow business consultant recently.  Whilst considering how it might benefit our consultancy services he made the observation that  “businesses prefer buying things to services”. This got me thinking about how businesses make purchasing decisions, in particular decisions services such as web design and copywriting, and even closer to my heart, relating to the buying in of business advice and business support services. It has always surprised me that these seem to be made on a completely mistaken view of the real cost of the service to the business.

 Words no web developer, copywriter or business consultant wants to hear


I have a lot of empathy for web design companies and copywriters because of the ‘unfair’ competition they face. I don’t mean competition from other web designers and copywriters, but rather from the sons, nephews and second cousins half removed of business owners. These relatives have usually ‘done a course at college’ and claim to be able to design commercial websites or write marketing copy at a fraction of the cost. I have written dozens of marketing plans over the past twelve or so years and for many clients the plan will include the need for a new website or improvements to an existing one. Nothing fills me with more despair than when during my follow up conversation with my client I hear those fateful words: “I needed to save money so I wrote the copy and my nephew is doing the design for me”.


I ‘ve got a cousin who can do that!


I have a client who owns a hi tech business producing highly specialised equipment for the medical instruments industry. They are probably the best at what they do in the UK and yet they have no website and this is seriously hindering their growth, not to mention damaging their credibility. They should have a website as I developed a marketing plan for them nearly three years ago and it included a detailed brief for a website. I also recommended three highly competent web design companies and two copywriters*, all based in Brighton. Then came the intervention of the dreaded relative, this time a long lost half cousin several times removed who my client met by chance at a family wedding. She worked in the marketing department of some company not exactly well known for its exciting marketing campaigns. She advised them to go with a company who had mailed them with a cheap offer, one with a portfolio of websites so devoid of imagination and with copy so clunky that I begged my client not to use them. But blood is thicker than water as the saying goes, the half cousin won, and after eighteen months of grief and hassle my client still has no website.


*For a heartfelt Blog on the subject of undervaluing copywriting services see Helen Keevy’s excellent piece on her Blog.


Cost is a relative term


The root of the problem seems to lie in how businesses evaluate cost, seeing it as an absolute rather than a relative term in the context of their business. To calculate the actual cost to the business of a website you need to take into account the return on investment and value added to the business by the website. A website designed by a relative or friend of the family that costs £1,000 and which brings in no additional customers and hence no additional revenues has cost the business £1,000. In fact if the site is really poor it can actually cost the business even more as it can be detrimental to the business’s overall brand. Not only is there no return on investment there is also a negative impact on the value of the brand.


On the other hand a well designed website with good copy which costs £5,000 but which brings in additional revenues of £20,000 and enhances the business’s brand, far from costing the business £5,000 has provided a sizeable return on investment and added value to the company overall.


In fact the cost to my client of trying to save money on his website is even higher, because the web design company has wasted hours of his time over the past eighteen months and there is also the opportunity cost of his company having no website for that period and the lost sales and lost credibility that has entailed. Taking the advice of the long lost second cousin has been a disaster*.


*This is slightly off message but for a hilarious video on the subject of clients undervaluing the services of designers check out Graphic Designer vs Client on YouTube.


And even closer to home


Similar decisions based on an erroneous approach to business costs lead many business owners to eschew the services of business advisors or consultants on the basis that they are too expensive. They are seen as an absolute cost, rather than a resource, which will provide a return on investment. Those same owners will then quite happily pay thousands of pounds for an advert in their industry journal or local paper, without any strategic reason for doing so and consider it money well spent even when it (inevitably) leads to zero additional sales. Or they will put their life savings into a new venture without any market research or clear business strategy and struggle for years blaming everyone and everything for failure but their own lack of forward business planning. Oh well at least they saved the cost of bringing in a business consultant.


Of course quite the opposite is true. A good business Adviser will add value by filling in gaps in expertise, experience and knowledge and providing an objective overview and perspective to the challenges and opportunities faced by the company. In fact I would go so far as to say that a good business adviser should not take on a client for whom they could not add value. Enlisting the help of a consultant to help with developing a marketing strategy in scenario one above, or a business plan in scenario two would not have cost money in any absolute sense, but rather have helped them to use the funds available in a strategic way, minimise the risk of failure and ensure a return on investment for the business. In so doing the business consultant would also have ensured that there was a return on investment over and above their cost also.


It’s not all Relative


‘Keeping it in the family syndrome’ can also be the curse of the business adviser as a colleague and I found recently after providing two hours of our time free to a prospective business. They too discovered a long lost relative who runs a business and promised to provide them with free advice, hence “saving the expense of engaging a business consultant”.  It would be interesting to know how many of these ‘kissing cousins’ style relationships end in tears as Uncle George or Cousin Annie realise they are too busy running their own business to help their relative or that their experience managing a pick ‘n mix franchise has little in common with growing a manufacturing business or design studio. Upholding family values is one thing, but that doesn’t mean you necessarily get added value from family.


Cost may be a relative term for a business buying in services, but that doesn’t mean you should bring in your relatives to provide them. As the old saying goes: ‘you can choose your friends but not your relatives’. My advice is to also choose your web designers, copywriters and business consultants!


Coming Soon:

First we take Manhattan: my business journey from a Brighton bedroom start-up to international business with offices in Brighton, New York and San Francisco.