I wanted to take a bit of time today to help break down some of the reality behind running a small business. This is what the grocery stores don’t want to tell you. We have gotten some push back lately on our pricing. People are wanting to compare us to what they can get at their grocery store and in one person’s words, “I just got a a brownie mix for .85 at aldi, $15 is highway robbery”.
Let me tell you what folks, if I could sell mixes for .85, I totally would. As a small business owner, we want our products to be available to as many people as possible. That’s just simply not possible, though. My ingredients cost more than .85 (because they are much better quality and don’t include any fillers), and that dosn’t include rent, or licensing fees, or packaging, or labor or any of my other costs.
Running a basic website that people can buy your product from can easily run at least $100 a month when you include everything involved. That’s $1200 a year just to have a web presence. At a certain size you start to scale and those numbers become a smaller percentage of your total needs. Many of the aspects of a website are static and don’t go up – such as plug ins to run a shopping cart or the domain name purchase.
Along those lines, large grocery stores will literally lose money on certain products that they consider loss leaders. They will use sales and discount products to draw people into the store. Frequently, they will either make zero money (above the actual cost of the product) or actually sell it for less than it costs. Small business simply don’t have this capability. Discounts can really be a challenge to do. If I discount something, then that money is not going to pay rent or our other daily family expenses.
We have been at this for a year now. We still don’t pay ourselves. That’s ok, and I expected that, as many beginning small business’ aren’t able to pay the owners for several years. That is part of the deal. While we absolutely do not want you to buy something you can’t afford, we do want people to understand that small business products are going to cost more and will need to be a priority in your budget if it’s something you want to include.
We do want you to understand as entrepreneurs that we are not simply rolling in money. It costs a lot of money to make the government happy and do what needs to be done to bring you a great product. We cannot compete with grocery stores, and that is what the grocery stores don’t want to tell you. Small businesses exist in a totally different space. We want you to love our products and to form a personal relationship with us. We want you to buy from us because you know our product and our story are both worth the investment. This is not just another .85 store brand brownie.
We will never be able to compete on price and don’t want to. Please don’t ask us to, because it just makes us sad. We need to be able to feed our families and we are far from that at this point. It’s long, hard, often times lonely work to run your own business. I’m not asking for sympathy, just realization that we are not the big grocery store chains. So next time you see an expensive product by a small business, please don’t complain that it’s more expensive than the grocery store. Just smile and make a choice about where you will choose to spend your money. If you can’t afford it, that’s totally fine, just say, “no thanks”, and move on.
Thanks for the rant,