Why Small Businesses Fail Reason #5 - Undercutting Prices
In the video above, Dr. Paul Borosky, MBA, explains why underpricing products or services without an exit strategy is one of the top reasons small businesses fail. He warns against “giving away the farm” to gain market share, noting that while it may work short-term, it leads to burnout and long-term financial failure.
Transcript: Why Small Businesses Fail Reason #5 – Underpricing Products and Services
Introduction
Hey all, Dr. Paul here. So, why are so many small business owners failing? Here is reason number five — underpricing products and services.
The Problem – Giving Away the Farm
Now, one of the most popular startup strategies out there is to give away the farm just so you can go ahead and gain market share. I mean, small business owners when they start up, they love to undercut the competition to gain market share.
And granted, it is definitely a tried and true method. It works. You are definitely going to get market share without a doubt.
The Consequence – Burnout and Undervaluation
But it's also a yellow brick road to burnout. You're going to be working and you're not going to be getting paid for what you're worth.
And then finally, keep in mind there's a reason why this strategy is on my top 10 list of business failures. Yeah, it does work for a short period of time, but it's definitely not a long-term successful strategy.
The Moral – Choose Profit Over Market Share
So, the moral of the story here is gaining market share is good, but long-term profits are definitely better.
Closing Message
Hey all, Dr. Paul here, business consultant and creator of the Organize-Plan-Grow™ Strategy. If y’all are interested in more reasons small businesses fail, check out my short fable-based book. It's called Top 10 Reasons Small Businesses Fail: A Real-World Business Survival Guide. It's located on Amazon, both in Kindle as well as in paperback.
And then, as always — go out, make a little bit of money, and don't forget to share your thoughts, like, and subscribe. Thanks.
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About Dr. Paul Borosky, MBA, DBA.
Hey all, Dr. Paul Borosky, MBA and DBA here. I am the founder of Quality Business Plan, creator of Dr. Paul's Organize-Plan-Grow Strategy, author of numerous published books on Amazon, such as Why Small Businesses Fail, and publisher of over 1,000 business focused videos on YouTube. For over 14 years, I have helped entrepreneurs and small business owners turn business concepts and dreams into tangible businesses through my business plan writing services, in-person and virtual business consulting, as well as with my financial models.
