4 Tips To Absorb Losses Like An Entrepreneur

When doing business there are chances to face losses, particularly when just launched or introducing new products.

Today I will share tips on absorbing losses like an entrepreneur.

1. Offer obsolete products as freebies

Despite precautions, you will still experience some failures. For example, you might have ended up ordering a batch of items that did not get sold. So what do you do? You can use these unsold merchandise to fuel your promotional activities. Why not offer those unsold items for free? Customers love freebies and they dig it. You can also offer unsold items as a Buy 1 Take 1 item for some of your products (ex. You are a seller of cameras. However, there is batch of tripods you ordered that is not selling. Therefore, you decided to offer the tripods as a Buy 1 Take 1 item for your cameras).

2. Offer obsolete products at a discount

Another way to dispose obsolete products and products that do not sell is to offer them at a discount. If a product is really terrible, you can sell it at a big discount (50% off or 70% off). It does not matter if you will no longer be able to profit from those items. What is important at this point is to get back a portion if not all of the investment you made on those failed products. When you see shops offering big discounts up to 80% off, it is likely because they are trying to dispose obsolete merchandise. This is a method that has been in use by businesses for a long time already.

3. Include obsolete products in ‘package deals’

Let us take again the example of the camera and the memory cards that won’t get sold. One solution is to offer the two products in bundle. So to say, you are including a memory card in the package of the camera. Of course, you would have to add up the price (ex. Camera price is $100 and the memory card is 20% so the price of the bundle is $120). This way, customers that want to buy your camera will have no choice but to also pay for the memory card. But this is a risky take. You have to make sure that your customers want the main product badly enough so as to be willing to pay for the bundled secondary item as well. However, good entrepreneurs can make the bundle less noticeable.

4. Include contingency for losses when pricing items

An entrepreneur always assumes that a portion of his/her products will not get sold due to a number of factors (ex. Factory defect, damage from nature, unseasonal item, etc.). So when pricing your item, you should include a contingency for losses. So if you originally planned to sell your product at $120 for example, maybe you should sell it at $121 or $122 dollars instead. The additional $1 or $2 dollars is for the possible losses. Of course, this step is not necessary to products that proved to be a ‘sold out’ all the time. Applying this concept is especially useful when introducing a new product. This is because you still cannot say for sure if the new product will sell or not.

Stay tuned for the next tips!