April 26, 2016The 12 Biggest Small Business Mistakes
By Cliff Ennico
"Cliff, we love your column. You give lots of good advice but you dole it out piecemeal, week by week.
Every once in a while, can you pull together some of your pearls of wisdom and summarize them in a single column? It would be nice to have a handy 'checklist' of things to do or avoid when we need them."
In the next few weeks, I plan to do exactly that.
As my readers know, I've been working with small businesses (both successful and unsuccessful) for well onto 35 years now, and I've learned a ton in that time. Many of these lessons - based on actual experience, not theory -- contradict what you read in most small business "how to" books.
Here are the 12 biggest mistakes most small businesses make.
- Not knowing the customer and market trends. Without customers, a business isn't a business. It's a hobby.. It is essential - essential - to understand your customers and what actually motivates them as real people living in the real world. Too many business owners adopt the "if I build it, they will come" model for their businesses without knowing exactly why that will happen. What emotional and psychological "triggers" will their products and services generate that will drive people to their door or website?>Too many business owners assume that their customers will always "do the right thing" as long as they are given a chance to do so. While we would all like to live in a world where everybody acted in a selfless, perfectly moral way, that is not the world we live in. If we lived in such a world:
*People would be delighted to pay a premium price for superior service.
*People wouldn't "showroom" retail outlets to learn more about a product only to buy the item online later for a discount (plus free shipping).
*People would always buy organic food even though it's twice as expensive as the pesticide-infused GMO stuff.
*"Big box" retailers selling highly discounted merchandise wouldn't be able to compete with family-owned local small businesses. It's also important to understand market trends, and keep abreast of them. Customers are constantly changing, and it's easy to be left behind. If your website is not mobile-friendly, you are not reaching the Millennial generation who live on their smartphones. Period.
- Underestimating the competition. Every business has competition. Sometimes they don't make themselves obvious, but they exist. Sometimes they are not a "who" but a "what" - new technology that makes your business model obsolete.
Dismissing an upstart competitor can be a huge mistake. Not doing everything you can legally to crush that competitor before it grows is an even bigger one.
- Not standing out in the marketplace. "Me too" businesses seldom succeed unless they have another competitive advantage, such as a better location, home delivery, fluency in Spanish, or lower prices.
In these days of declining attention spans, it is more important than ever for your business to stand out from the crowd. In the words of P.T. Barnum, "there is no such thing as bad publicity."
- "Paralysis by Analysis". This is an especially hard challenge for people who come to the entrepreneurial life after a stint in big-corporation America.
In large companies, people are under pressure to get everything right, down to the very last detail, before taking action on anything. They have meeting after meeting with their teams trying to build "consensus" and consider problems from every conceivable angle before making a recommendation to the boss.
Running your own business like that will get you clobbered.
By the time you have studied and analyzed the pros and cons of taking a new course of action, the opportunity has probably passed you by. Being "first to market" is often the key to successful brand recognition, and "(s)he who hesitates is lost". Acting on imperfect information is what entrepreneurs do, for better or worse. This is what "taking risks" is all about, and one of the many reasons Nature gave us liquor.
- Poor or unrealistic financial planning (anticipating cash flows). Big companies are all about earnings and profits. Small businesses are all about cash flow. Underestimating the amount of cash you will need to put into a business before it "breaks even" and becomes profitable is a fatal mistake. It's even worse if you borrowed money on your personal assets and then realize you're going to fall short.
More next week . . .
- Weak, unfocused or indecisive leadership. While you don't have to be a bullying, chest-thumping Alpha Male (or Female) to run a business, you can't be everyone's "best buddy" either. One of the biggest stumbling blocks to success in any field is the desire to be loved. When you know something needs to be done, you have to get it done, whatever that takes. Being overly gentle won't get you there.
Cliff Ennico (email@example.com) is a syndicated columnist, author and host of the PBS television series 'Money Hunt'. This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state. To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com. COPYRIGHT 2015 CLIFFORD R. ENNICO. DISTRIBUTED BY CREATORS SYNDICATE, INC. Permission granted for use on DrLaura.com.
Posted by Staff at 11:29 AM