Implications of recent Bank of England statement

[gesso]

I decided to get a small loan from the bank and follow in my fathers footsteps and start 'The Frame Shed'. Some would say madness in this economic climate but I decided to look at the downturn in a positive way

This is an excellent time to start. If your overheads are low then you can offer a framing service that will under cut your competitors but on the flip side they will have established a customer base which you have yet to poach \ achieve, like having kids (so I'm told) There's never a wrong or a right time to start. You adapt your plans and go for it ....err your not in Norwich are you?

[kev@frames]

Basing your busines plan on undercutting your competitors is a sure fire way of either going down the pan PDQ, specially as most people have very little understanding of their "competitors" business, overheads, or often even what their competitors unique selling point is - and at best could see you working for peanuts and establishing yourself as "the cheap bloke".
Too many people start businesses, see what someone else is doing (or what they think they are doing) and copy them (or think they are copying them) without even knowing how much money their "competitors" are making, or if they are making a living at all, let alone knowing the slightest thing about their competitors actual business, other than peering through their shop windows or trawling their websites for prices.

Aim higher. If you undercut someone, de-facto you will probably make less profit per transaction than they will, and you will not poach as many customers as you think you will from the opposition. They have probably realised that there is a price-band of customers that they dont need or want, and you are welcome to them in that case. .... and anyway you will be working harder for the same money - but why?
You, your family, and whoever else depends on your business for a living wont ever look on your under-cutting idea as your finest hour, or any particular stroke of genius.

Customers move from business to business naturally. Your opposition's customers will come to you in due course, as yours will go to themm. Its human nature.

Other than that yes it is a great time to start. Interest rates are low, premises are cheap, staff think twice before packing in a job, VAT is down to 15% while your till prices are the same, competitors will be going out of business or having difficulties, suppliers are looking for new outlets, nd a new shop on the high street is welcomed with open arms these days by shoppers, chambers of commerce and other shops on the street with open arms.
There are going to be job creation programmes, subsidised cheap staff, "back to work" schemes etc. Its a good time to be an employer at the moment.

[gesso]

With the utmost respect kev

Basing your busines plan on undercutting your competitors is a sure fire way of either going down the pan PDQ, specially as most people have very little understanding of their "competitors" business, overheads, or often even what their competitors unique selling point is - and at best could see you working for peanuts and establishing yourself as "the cheap bloke".

The last 50 / 60 years have seen trade worldwide do exactly this. Where have you been?

If you have the oppotunity to start up a business with little to no overheads then your on your way

know the market you want to sell to
know your limitations you only get one chance to make a first impression.
study your fellow framers products whether on here or at their premises or on the net,
that includes framer half way round the world
treat your customers like they are all the only one you have.

[kev@frames]

If you have the opportunity to start a business with little or no overheads, then everyone else has that opportunity.

So what you say applies if someone wants a framing business based on being the cheapest in town.

You undercut, then the next one starts up and undercuts you, and you are all scratching around at the bottom of the barrel making nothing waiting for the next impecunious know it all king of the framing business to pop up on a shoestring and undercut everyone. Thats what they do down here. We see three four five or half a dozen new "framers" spring up every year, and few of them are around two or three years later.

There are a huge number of people who start up in framing who even get as far as opening a shop without any business plan, or proper costings. Any rep will confirm that, in fact I think Keith Hewitt recently agreed with a similar comment and he goes all over the world for Colourmount.

Its ridiculous enough all ready with 75% of "framers" charging hobbyist prices, even some who have retail premises, without encouraging people to undercut their "competitors".

Thats the trouble with this business, its cheap to get into Hobbyists end up proclaiming themselves as your "competition" and if you are not careful you end up competing with people in garden sheds, who re not your competitors at all, although they like to think they are.

Do you think on any other pofessional forum - eg dentists or gas fitters, or plumbers, or builders... that they are advocating new starters to go out and under-cut established businesses?

If you had a new start in town who based his business model on undercutting an established thriving business, the established business will usually wipe the floor with them. They have more to lose, thats why, and they've been there, seen it done it and got the T shirt, they'll have better trade contacts, certainly better prices, probably staff who have no intention of losing their jobs, a customer base, and will probably also be able to do most jobs in a quarter of the time and better than a new starter, even if he's done a whole three day course instead of two. Remember when you take on an established business you are taking on experienced management, experienced staff, and someone who has probably faced "competition" all along. Plus they have been where you are, they are in your head, you are not in theirs even if you think you are.

I'd advocate new starts to find their own unique selling points right away, concentrate on their own business, not what they think everyone else is doing, build their own loyal customer base, charge the maximum their customers will reasonably pay for a good job.

Undercutting makes you look desperate for work. What sort of customers does that get into your books? The sort that your "competitors" can do without probably.

The best favour someone can do themselves when they start in this business is set out making good pay for a good job from day one. Then you dont need to look with envy at other peples businesses or try to lure their (obviously disloyal) customers with offers of cheap framing. If customers will come to you just because you are cheap, they'll leave you and go to the cheaper one in the food chain behind you at the drop of a hat.

There are customers who choose and stay with their framers for many reasons: cheapness being low down on their list for many - It certainly comes very low on the list for our customers, and we are not cheap.

Here are some things which any framer should be able to offerinstead of being the cheapest. Indeed this is what any new start should be aiming at, to get ahead of the competition that dont/cant offer;
reliability
good workmanship
good advice
customer service
helpfulness
convenient location
a good choice
quick turnaround
friendly informed staff
convenient opening hours
being treated as a valued customer
a good shopping experience

A lot of the above simply outweigh price for thge sort of customer you want through your doors. Because those things are priceless, and they take working at. A lot more work than simply imitating your competitors designs/products and taking two pounds off the price.

Plus- if you are new in business, you ought to think twice before "taking on" an established business. They have a lot more to lose than you have, and things might get dirty. Seen it happen, it isn't pretty, and there are rarely any winners, certainly not the new guy on a shoestring.

[Roboframer]

Kev - you missed out the last line m8

"In other words.........." ???

(Loving this)

[prospero]

A little pearl of wisdom that I read in a framing book years ago....

"If you halve your prices and double your trade, you are working twice as hard for the same money"

Seems obvious when you think about it, but some folks don't.

[John]

The last 50 / 60 years have seen trade worldwide do exactly this. Where have you been?

I'm sorry, but if that is what they have seen, I must call into question the observational skills of the last 50/60 years.
Did the last 50/60 years see Microsoft, IBM, Apple, etc., achieve worldwide success by undercutting their rivals?

And also, has the last 50/60 years seen any banks, oil companies, telecoms companies, supermarkets, power companies, etc. undercut their rivals in any real sense?

[Dermot]

In the last 50/60 years quite a lot of the perceived price cutting was due to products been delivered to the market place in a more efficient manner hence leading to lower prices…and the myth that selling cheaper than your competitor will lead to success……….efficiency drove the pricing structures over the last 50/60 years not a business model based on been cheap.

Better transport
Better production methods
Better materials
Better volumes ( sixty years ago the population of the world was about 2 billion or less it is now 6 billion plus)
Better distribution
Better sales models
Better financial (despite the current situation) for the usages of money

And the list could go on……of the things that are done better nowadays that can lead to successful business models.

If you are thinking of the “cheap” (BTW nothing wrong with cheap or less expensive) approach to business make sure your business plan can stand up to the need of that model…………Ryanair is an example of how this can be done……..low prices, volume and minimal customer service…………….Ryanair delivered “better” opportunities for people to get from A to B……..by having the capacity to deliver more seats to put bums on and they drove the market by delivering the seats cheaper than their competitors,…….there are two distinct elements in the Ryanair model “volume” and “price”

However as many companies around the world are learning the Ryanair type business model is a very difficult one to maintain and it’s possible the most difficult business model to succeed with………..that said it can work if you have the business acumen and financial resources to drive this sort of business model.

I doubt very much if picture framing can provide the volume to make the Ryanair type business model work, in fact I would say defiantly it hasn’t.

It was pointed out to me recently that the old approach to business of picking two the three “price”, “quality” and “service” has existed because it has never been really challenged, but think of it like this it’s a three legged stool if you pick only two the stool will tip over, you need to deal with all three elements to get the balance right…..

[gesso]

I never mentioned the word cheap I said undercut. If you cant stand healthy competition !!!!

There was a post on here not long ago that touched on price fixing football shirt framing. surely we are better business men and women than that?

[Dermot]

I was referring to "cheap" as the business model not to what you said...

I think this is an excellent business discussion and I was just trying to give my view on it, the more views we have whether I agree with them or not the better,

BTW when I was framing back about 10 years ago or less I tried the route of undercutting the other framers in the area, the only customers I got were under feeders……

I was more focused on what others were doing than what I should have being doing for my own business……….this is one of the issues that confronts a business when you start down the route of using the cheap business model….

That said you should have some idea of what your competitors are doing……a little “shopping” now and then can be very revealing………….in other words NEVER believe what a customer say they are getting some thing for………..I found that out the hard way…

Set your pricing on your own business model and there is little chance you will go wrong, set your pricing on your competitors business model could mean your are heading down a very rocky road….

[prospero]

It is quite difficult to compare prices between different businesses. You could take an indentical print to two different framers and the frames may look the same superficially. One may cost £40, but inside it might be a right old lash-up. Another might cost £80, but be done with proper techniques and superior materials where it counts. Your average customer would not notice much difference. This pretty much applies to any business.

Remember that episode of 'Fawlty Towers?"

"What did you use for a lintel? RSJ?"

"No, a piece of 4x2".

[gesso]

I'm sorry, but if that is what they have seen, I must call into question the observational skills of the last 50/60 years.
Did the last 50/60 years see Microsoft, IBM, Apple, etc., achieve worldwide success by undercutting their rivals?

And also, has the last 50/60 years seen any banks, oil companies, telecoms companies, supermarkets, power companies, etc. undercut their rivals in any real sense?

This is what has happened in manufacturing since the late 60's
British textile,cars,bikes,ship building,mining,farming,white goods,call centres, do I need to go on?
Doesnt matter what forces were behind it they made them cheaper therefor undercutting the manufacturing base of this country. but you cant compare these with ms ibm & apple! As for Oil, a commodity that has been controlled for years by its producers and the US this would need an entirely new thread to give it justice. Now all we hear about from the rest of your examples are how they are cheaper than their competitors. I fail to see how you can give these examples with a straight (type) face

Plus- if you are new in business, you ought to think twice before "taking on" an established business. They have a lot more to lose than you have, and things might get dirty. Seen it happen, it isn't pretty, and there are rarely any winners, certainly not the new guy on a shoestring.

What has this got to do with anything?
Surely this is Healthy competition?
I don't believe anyone on here could describe themselves as cheap. The most expensive frame my business ever made was £10k for a head of state via Aspreys.
I am not advocating cheap framing at all, never made a cheap frame never will. in fact when people phone up to get a quote the first thing i say is' what do you want the cheapest or the best'? I leave it up to them, that's the market force at work.
16 years agoI chose to base 95% of my production on hand finished work, that means I don't do many public liability certificates in black cushion mouldings but I understand that the big framing company down the road caters to a market that wants cheep work either because of budget or they are not that interested in framing quality.

Set your pricing on your own business model and there is little chance you will go wrong, set your pricing on your competitors business model could mean your are heading down a very rocky road….

Or if your overheads are lower than theirs are then your quids in quids. Baring in mind that the next time the customer come back with more work and soon word gets round and before long you've got soo much work that you need extra staff and larger premises which lead to higher overheads etc....

No I agree you do need to know your market and your business model / limitations
(Sorry I seam to be repeating myself)!
If this fails then at least you know the model's wrong....However I cant say I havn't deliberately undercut a competitor as with many things there are factors that don't conform to a model or there is scope for the model to be morphed
I ve learnt like most who have been in this business (22 years)(16th years self employed) you never say never
If I think its worth undercutting on a job, then even if I make less of a profit therefor not conforming to my business model, I will for a foot in the door it is tricky but its a business.

[gesso]

It is quite difficult to compare prices between different businesses. You could take an indentical print to two different framers and the frames may look the same superficially. One may cost £40, but inside it might be a right old lash-up. Another might cost £80, but be done with proper techniques and superior materials where it counts. Your average customer would not notice much difference. This pretty much applies to any business.

Remember that episode of 'Fawlty Towers?"

"What did you use for a lintel? RSJ?"

"No, a piece of 4x2".

Ahhh Grasshopper!

"Naturally the framers see this business from their own perspective but they will never
grasp the nature of the business if they fail to see it through the eyes of their customers".

[Not your average framer]

I believe that the smart business model for many of us, is to price as many better quality jobs as we can towards the top end of what our local market will stand.

Lower end jobs should be priced reasonably, but not cheaply as you have gain a worthwhile return for your time and materials. Charge an appropiate price and do a good quality job that looks like you care.

Seeking to cash-in on the bottom end of the market by being cheapest, will not help you get the right reputation to get the higher value work. When times get tough the bottom end dries up and businesses known for supplying the bottom end of the market have got no where to go. It's a mug's game!

[kev@frames]

yeah it has got liveley, if a bit off the OP.

At the bottom end (cheapest price) end of the market, in a lot of businesses, there is a different mentality. You can end up all genteel and thinking you are playing marquis of queensbury rules, then its gloves off, and then a bottle fight breaks out, if you want to go for that sort of market you need to be prepared to fight dirty, and capable of it.

The other thing that springs to mind is that in framing 95% of the people you are "taking on" are individuals rather than companies. And individuals take things personally.

If, for example, someone (another individual) sprung up over the road from me, copied my business then undercut me, im pretty sure I'd wipe the floor with them on prices anyway, and enjoy it, the sooner they were off the scene the better. If someone is such an unimaginitive parasite that they cant develop their own business ideas, maybe they ought to take on a macdonalds franchise or something where they have to actually stick their hand in their pocket and pay for the priviledge of being handed a business on a plate.
This town has a lot of unique and interesting businesses and shops. We all sort of rub along pretty well together, even us framers who do our own thing and leave each other alone.

I have not got the faintest idea what other framers in town charge, but we all seem pretty busy. I dont expect any of them care what I do either, we all have our own types of customers who come to us for reasons other than a cheap deal.

What I can say is that over the years new framers have sprung up and vanished pretty quickly. The ones who are still here are the ones who dont try to undercut their collegues.

I dont know how many framers there are in this area, I guess shaun might pop up in a minute with another knob joke and tell us if my estimate of more than forty withing a five mile radius (penzance/st ives) is anywhere near the mark, based on his van drops. Now a number of framers on your doorstep that size that is competition. And no, we are not at all afraid of healthy competition. It keeps us fresh.

[Not your average framer]

I would reckon that you have to do a lot more frames per week to make a living, if you are aiming at the bottom of the market. Too stressful for me, as a heart patient I'm a bit slow these days. Slow but steady wins the race!

I'm currently doing a hand-finished stacked moulding job for £425. So do I care, if someone else can do the bottom of the market stuff cheaper than me? Good luck to them, if they can make a worthwhile living like that.

It seems to me that we keep coming back to this subject and in all likelyhood the only framers who will succeed by aiming at the bottom of the market will need a large enough local population who want plenty of regular framing. For those of us who ain't got that - IT WON'T WORK BECAUSE YOU WON'T MAKE A DECENT LIVING!

[DEEPJOY]

What an exhausting but passionate debate.
There are no rights and no wrongs to this thread as you all have your own game plan, a plan which on occasions needs tweaking to keep you where you have been and where you are today. The many contributers to this thread all seem successful and long standing business operations, all with tales to tell and experiences share.
My belief is, that this industry is a highly customised and individualistic and therefore does not lend itself to offer an easy product or piece comparison between outlets. Everyone will have different overheads. whether they are 'Fred in his shed' or like Kev Frames have a beautiful shop frontage. What one framer would recommend as the best moulding for the job, another would choose an alternative of higher or lower cost.
The competition is only someone else doing a similar, BUT NOT THE SAME JOB as you! The competition is only a diluting factor to the available numbers of potential customers within any given area. JUST CAST YOUR NET FURTHER. It's not about price with this industry, it's about the customers perception and their buying experience.
I am new to the game and yes some of you may see me as another irritation or even competition. I will only ever be competition to any of you guys if you FAIL to give attention, professionalism, creative focus to round off and satisfy your customers buying experience. I currently have a well paid career, to which I am totally brassed off with and that is why I want to get involved in something more fulfilling. It is easy for me to do the maths and realise just how many frames I have to make per week to try and get close to what I earn. As a result, I am not looking at being cheap or to discount, I am looking to give the very best levels of service and quality of product at the highest price I can possible charge. I have no intention of being a busy fool. I need fewer higher priced frames rather than loads of low cost jobs.
I am convinced our customers do not want shit on their walls, so why should they put it there? Lower priced and inferrer product will be shit and we as framers should take a stand and help to guide these people to make the right decisions. The product has a snob value and the customers needs to be educated into this fact, as result, they will be delighted with choice of knowledgeable framer and the price he or she is charging them.
I have so far, not been put off by anything I have read in this forum. Far from it, you all exude masses of enthusiasm and encouragement for new starters.

[gesso]

I have so far, not been put off by anything I have read in this forum. Far from it, you all exude masses of enthusiasm and encouragement for new starters.

Just like to wish you luck with your business. A despite the way this thread seams to have focused on some of the negative elements of the business I'm sure everyone on here would help you in anyway they can.
If there are any questions you need to ask about hand finishing I will be happy to give you some pointers.

[DEEPJOY]

Thank you Gesso

I will surely need all the help I can get.

[Dermot]

I would also like to wish you all the best….

If I can do anything please let me know……

That said my past record in framing really leaves me with one principle thing to bring to the table, that is “how not to do it”…….my past attempt at framing left a lot to be desired……….

Hopefully this time around I will be more successful….

Once again all the best going forward….