Ethics 101 Maybe

[shrmndlit]

Would you, if you could, put all of the other sign business in your area out of business?

Hi all. As most of you know I am an aspiring sign maker that has not yet started my business. I live in a small town, NE that already has a sign shop that has grown fairly well in the last 5 years, Ill refer to them as SIGNS. NE is about 15 miles away from the much larger town, which has about 5-8 sign shops.

So with that back ground here is my question. I am in the position to buy a three shop strip store, in fact this is the one SIGNS started in and is directly across from their current location. I am also in a position to operate a sign shop at a loss of about $20,000, tax breaks for other income, for five years before it would become a problem. (I pray that a signage and screen print shop would be slightly more profitable that that ha ha). Anyway I don’t know this guys exact situation but I know he has had a lot of growth in the past few years and recently noticed he can now do digital printing and wraps.

As a business man I see a great opportunity to jump now that this person has likely made a large investment in equipment and undercut whatever he can do. Let me say, again, I do not know this individuals exact situation he could have a legion of repeat customers that would never abandon him or be a millionaire doing this for the hell of it and I could never threaten his business if I gave the stuff away. However knowing what I do about business I believe it would be no problem to sell at cost or even below that for a few years and put him out of business or at least force them to move. I don’t know the owners nor have I ever done any business with them, just looking at this from a business aspect.

I am from small town America and believe in the Mom and Pop stores of yeastier year. I have always looked down on big business coming in to small towns and wiping out the little guy, which I am in no way big business. I feel like it would be a little unethical to put or even try to put a person like this out of business. However if I was just starting out and had just enough money to get a shop open it would be every man for himself and that would not be a problem as far as ethics are concerned. The fact is the conditions are right in this little town for me to make a great investment. Again this is more about the question than the situation. I’m not trying to be a ass, thinking I can shut people down at my whim. I would just like some comments on the ethics of it not if it is possible for me to do or not. Before someone suggests it, the big town we live close to is an option just not as good of one, shop, taxes, and I can do everything from this small town because most of the people in the big town have to go through NE to get to work every day.

Sorry for such a long post thank you for taking the time to read and reply.

 

[Fred Weiss]

No offense intended but I cannot read your post as written and, as a result, am unable to respond. It would be very helpful to have it broken into more manageable paragraphs.

 

[ChristianSlager]

Wow,
I'm not sure how you did it, but in one post, you made me think you were a sleezeball. Nice.

 

[Gino]

This has got to be a joke. :ROFLMAO:

You say you’re a businessman, but you’re talking about selling at cost or below to put someone else out of business. What on earth does his business have to do with your pricing, methods, customers or setting up business across the street no less ??

Instead of worrying about harming him or putting him out of business…. worry about yourself and how you’re going to stay in business.

Ethics has nothing to do with your question, but stupidity does.

Sorry if that sounds harsh, but it’s not NEAR as harsh as hearing you say you’ll sell under cost for a year or two to make him move away or go out of business.

Remember…. you’re casting the first stone and it’s more like a boulder that will fall on your own head first.

 

[ChristianSlager]

and what i want to know is... after he is gone, how will you explain to your clients why your prices are now quadruple what they were?

 

[TheSnowman]

Come on fred, it's just a long text message! I'm not sure what to think in this situation. There's gonna be all different answers across the entire board. I probably wouldn't do it, because I don't have the balls to do that to someone else in town, as far as moving in directly across the street and undercutting them on purpose. When I started, I purchased a family business that had already been in business 25 years (which I realize probably normally isn't an option for most). We have about 5 other shops in town, but I really only consider one of them competition. I have no idea what his prices are, and he has no idea what mine are. We bid jobs for people, and sometimes he gets them, and sometimes I do...if I do undercut him, it's not on purpose, I don't think I'd do that even if I could. If we all would charge what it's really WORTH we wouldn't have all the tire kickers comin' in wanting lower prices and haggling.

 

[Jillbeans]

If this is an example of your work:
http://signs101.com/forums/showthread.php?threadid=34542
You will long be out of business no matter how cheap you undercut the other guy.
I know people will go for a better perceived bargain but the taste of bad work will linger in their mouths long after the "good deal" you gave them.

Signs are indeed a business that ANYONE can buy into.
You don't even need know how to spell, if you can crank out the vynull you too can be a sign maker.

As a 23 year veteran of the trade, and someone who actually has art talent, who went to art school, and can still make a decent-looking sign totally without the aid of a computer, I find your propsal to be quite offensive. If you think I am going to come onto this forum and give you free design advice so you can take the food from another sign man's table, you are barking up the wrong tree.

As for undercutting another shop, yes, it is unethical. It hurts everyone's business in the long run. It brings all our prices down in a market where the costs of all our supplies are increasing. It also lowers the value of a sign in the eyes of our clients. It makes our work something that can be sold to the lowest bidder rather than something we as craftsmen can be proud of.

Do yourself a favor and buy a burger franchise.

 

[shrmndlit]

Sorry about that hope this is a bit better.

 

[TheSnowman]

I just looked at that last post too, then came back here to make sure it was the same poster. I'm not genius at design either, but when I need something created that I can't do, I get a graphic designer. If you are working alone, putting out stuff like that, spending that amount of time, and lowballing everyone else, your just askin' for it.

 

[mystysue]

Why do you want to put a person out of business you dont even know.. this has to be one of the worse thoughts ive ever heard..
You say.. you dont know the guy but will put a shop right across the street.. sell at or below cost.. for 5 years.. to drive him out.. .. WHY??????

shakes heads.. Ok.. I have a shop that is 17-18 years old.. be have owned it 2 years..
we dont sell as cheap as alot of the other sign shops in the area.. .. but we are the busiest according to our suppliers.. and umm ditto what Jilly said.

So there goes your theory

 

[Sparky]

What about buying and building up the existing business? If they are doing good and the only guy in tow, bring in some better/bigger equipment, turn out higher quality product and while you may still lose some cash as you expect, you are a partner in something that is a success and the existing owners are happy, and not out of business.

My guess is that you need a business class to learn how to capitalize on existing markets, and grow them from there as opposed to putting a successful ma and pop out of business and hope that their customers become yours out of need rather than what you can truly do.

 

[Techman]

Any one who talks about putting another out of business has no business being around.. Period. Setting a very low benchmark price,, and that is what you are doing is noting but whoring.

Undercutting or any other tactic to put another out of business is just plain stupid. A real business person would open and do his best for his own operation and ignore anything the other guy is doing. Undercutting or price cutting is nothing but ego driven false economy. You open, do a great job,, sell a great product, make as much profit as you can and out market the other guy.

I am also in a position to operate a sign shop at a loss of about $20,000, tax breaks for other income, for five years before it would become a problem.

This is pure bullscat.. Anyone with any knowledge of running a business knows this is pure unadulterated stupidity. You are not a huge conglomerate. You are trying to be a business person. Your duty is to make a profit.

I myself heard this of others trying to put me out of business. How stupid to make such an arrogant statement. I was still around long after they lost everything themselves. It's pure fact that an established business can outperform a new opening anytime. All this attitude does is motivate the other guy into doing his work even better.

This is just another post buy just another tourist cowan eavesdropper.

 

[SignTech]

Would you, if you could, put all of the other sign business in your area out of business?

Hi all. As most of you know I am an aspiring sign maker that has not yet started my business. I live in a small town, NE that already has a sign shop that has grown fairly well in the last 5 years, Ill refer to them as SIGNS. NE is about 15 miles away from the much larger town, which has about 5-8 sign shops.

So with that back ground here is my question. I am in the position to buy a three shop strip store, in fact this is the one SIGNS started in and is directly across from their current location. I am also in a position to operate a sign shop at a loss of about $20,000, tax breaks for other income, for five years before it would become a problem. (I pray that a signage and screen print shop would be slightly more profitable that that ha ha). Anyway I don’t know this guys exact situation but I know he has had a lot of growth in the past few years and recently noticed he can now do digital printing and wraps.

As a business man I see a great opportunity to jump now that this person has likely made a large investment in equipment and undercut whatever he can do. Let me say, again, I do not know this individuals exact situation he could have a legion of repeat customers that would never abandon him or be a millionaire doing this for the hell of it and I could never threaten his business if I gave the stuff away. However knowing what I do about business I believe it would be no problem to sell at cost or even below that for a few years and put him out of business or at least force them to move. I don’t know the owners nor have I ever done any business with them, just looking at this from a business aspect.

I am from small town America and believe in the Mom and Pop stores of yeastier year. I have always looked down on big business coming in to small towns and wiping out the little guy, which I am in no way big business. I feel like it would be a little unethical to put or even try to put a person like this out of business. However if I was just starting out and had just enough money to get a shop open it would be every man for himself and that would not be a problem as far as ethics are concerned. The fact is the conditions are right in this little town for me to make a great investment. Again this is more about the question than the situation. I’m not trying to be a ass, thinking I can shut people down at my whim. I would just like some comments on the ethics of it not if it is possible for me to do or not. Before someone suggests it, the big town we live close to is an option just not as good of one, shop, taxes, and I can do everything from this small town because most of the people in the big town have to go through NE to get to work every day.

Sorry for such a long post thank you for taking the time to read and reply.

LOL .................

 

[Bigdawg]

 

[shrmndlit]

Wow you guys are great I never anticipated such a quick though predicted response. Ok I’m not going to defend myself as far as signs go because the question was about ethics not my ability tee to spell or make signs. Don’t hate me, not trying to hurt anyone’s feelings, I just like playing devil’s advocate.

Gino, not sure if I see your point. Is it bad to want and be the only supplier for an area? For any product? I don’t understand how as a business owner you’re not concerned about competition. Pricing has a lot to do with how much you sell and make. Sell low make many sales, sell high make less sales; both can achieve the same goals just in different ways.

Christian, very good point. This is something that would require very careful attention especially to long term repeat customers. Price increases are something no one likes but everyone expects. I’m sure no one who bought a 4x4 vinyl sign 10 years or even 5 years ago would expect to pay the same amount today. However if it is planned and implemented over time most customers will gladly follow. Customer relations to a good point has allot, not everything, to do with customers and how much they will pay.

Kraig, guess I should have mentioned how small this town is. I would not be moving across the street because I wanted to; I would because it is the main street in town and if I bought a store front in the town it would have to be on the same side or right across from him. It is interesting to me that you don’t have a general idea of the other person’s prices. Although I’m sure you have a set pricing plan his business must do something to make you feel that he is your only competitor. Or are you talking in relation to location? Thanks for your comment.

Jill, Wow, really seem to have struck a chord with you. I in no way meant to offend you. I’m sure you do wonderful work to be in business 23 years. Even if I do not but the shop in the small town, I cannot say the advice I get here will not be used to do great business and inadvertently harm another sign maker. Your 100% correct I have no artistic ability and my spelling sucks thank god for Word. I do question the fact that you say undercutting another sign shop is unethical I mean as I have read the posts on this site I can’t count the times I have seen people refer to links below to people selling at the "best price". So you didn’t like my feeble attempt at a logo (HE HE.) I only wish I had your ability to complete an art degree and truly create from within, to produce what others may marvel at. No, god’s gift to me was a mathematical mind that was made to crunch and forecast numbers.

 

[jiarby]

The goal of owning a business is to make money. Period.

There is little reason to work for 5 years to lose money...especially on the presumption that your competition will shrivel up and dies under the barrage of your undercutting.

If you have been around this board much you may already realize that some here can charge $200+ for a set of mags, and others can't get $50. Retail sales is a VALUE proposition. You manufacture something, and the customer decides if it is worth the asking price. Many of us sell much more than substrates as commodities as you intend to do. We build value into the product that makes it worth more than the sum of it's parts.

Your "competition" may be tickled pink that you are opening up. Now he can dump his lowballing customers on you, you lose money, and he can cherry pick the profitable ones. He can more easily demonstrate the value of his products by comparing them to your shoddy work.

Obviously YOUR goal for running a business is to make money just like mine.... but you think that the only way you can do it is to exist in an environment without competition (maybe because of an inferiority complex?).

You should try to change your outlook and win the market share by selling a better product, or by doing superior marketing, or finding a better location. The WORST way to make money is to have a business plan that says "LOSE MONEY" in it.

What if he DOESN'T go out of business?? What if he does but 2 OTHER sign guys move in. What if everyone goes under but you and you can bellow out your evil scientist laugh and drastically raise pricing to try and exploit your temporary sign monopoly.... but your customers all walk because they all have been buying lowball signs from you for years.

At the end of 5 years you will have nothing but debts and no savings and selling whored out 5yo equipment for 5¢ on the dollar.

I can shut people down at my whim

You can't put ME out of business. You have no talent, You have no skill, and you have no idea about running a profitable busineses in a competitive environment. This is not a monopoly game. Business is Business. If you want to be in it you have understand that youwill ALWAYS have competition. You have to build a business plan that will make you a profit even though you are across the street from another business.

If the only way you can compete is on price alone than you will die an agonizing slow bankruptcy. If your competition makes a better sign than you then they will always find customers.

 

[Rick]

I think you would get more out of this business if you have fun doing it and you get some satisfaction at doing good work.

 

[hammered]

Ok after reading most of what is written, bad idea at your place in the business world. But, its a common practice among those much larger a few decades back. FORD vs Chevy vs Dodge. Bud vs Coors. Its and old story. And unless you have an assload of cash, your the one who will suffer the most loss. Selling at your area's cost of living plus or minus your needs to pay bills, eat, cover employee salaries, rent on a space to undercut from, materials, equipment costs, insurance, money to impress your other half. Oh and advertising to draw in new customers once word of mouth has sunk you with the customers you may have put looking for a sign company after this tanking of the other company.

Now if youre looking to make as much money as possible, which is the main goal to any business person looking to survive asspukes with similar ideas as the one you presented, find a niche' and work the hell out of it. Be the best at some respectable end of this business and then look to your short comings and start adding some strength there.

What youre gonna find is, you will put so much effort into tanking your competition, you wont have any time to be in business.

 

[shrmndlit]

FYI. I have three people that are leaving a shop in Georgia due to a military move. These people currently run a complete sign and screen shop. In fact the owner of the shop they are at now has allowed me to observe and kind of show me the ins and outs of his shop. I have known these people for over 10 years and they will be here for at least 4 years if not 6, plenty of time to get my ducks in a row. Now that I have completely wondered away from the question and answered some of the how let’s move on

Kraig, Believe me I in no way intend to design anything. Not my cup of tea. I am a full believer of outsourcing.

Spark, Congratulations on your success. I’m sure it took a lot of hard work to get there. Thanks for your post, good idea on purchasing the existing store. I did not even consider this as he is doing very well. However I am going to make it a point to stop in next week and inquire about purchasing his store. Can’t believe I didn’t think of that. That what good about sharing thoughts and ideas on such a forum as this. Thanks again.

Tech, again did not intend to offend. That’s great that you were able to beat the people trying to put you out of business. You are correct in your assertion that I am not a conglomerate in fact I consider myself to be a very small business owner. It seems you have a successful business and I congratulate you on that. However, I don’t believe you completely understand how one business you own can really help another’s. Operating at a 20000 loss every year for the first three on paper and two more in actuality is not as hard endeavor as you think. I’m not gonna say you’re stupid or anything as simple as that but to say that not paying attention to competitors is not the best business practice. There is a whole lot more to a successful business than hard work, although it does help. Also in your reply you state exactly what my main concern is "Your duty is to make a profit". Would you not have a much higher profit margin if you were the only shop in town?

Thank you all for your responses.

Christian I thought it was gonna sound like that. I hate that to because I am not.

 

[shrmndlit]

So what I’m basically getting is that most here would not shut down other business in your area selling the same product. That is so strange to me, countless times you have said the idea is to make money but on the same side you want competition. This is a wonderful site and thank you all for your help.