1. Choosing a bad business opportunity. The hardest lesson for eager
entrepreneurs to learn is that having a “great idea” for a business doesn’t
equate to a good business opportunity. Learning the distinction will greatly
improve your chances of success. Here’s how to recognize a good business
opportunity: 1) It satisfies existing customer needs and 2) Customers are
willing to pay for satisfying those needs. Too many businesses fail simply
because the entrepreneur doesn’t take the necessary steps to ensure he is
pursuing a good opportunity. Don’t get so attached to your business ideas that
you try to force a business to work. If you do, you’ll lose every time.
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2. Pursuing the wrong customers. All too often business owners try to sell
their products to people who don’t need them, resulting in wasted time and
money. To be successful you have to win the match game—you have to align the
right customers with the right products or services. And the key to finding your
customers is figuring out what need your product or service relieves. You’ll
need to do some research. Market surveys and focus groups are two great options.
Knowing which customer base you should target will help you save money in
marketing and advertising, provide more enhanced product or service design, and
increase sales.
3. Trying to sell the unsalable. Many entrepreneurs love their business idea
so much that they can’t fathom that others might not be as ecstatic about it as
they are. But of course, in the real world, customers will pay for only what
they need regardless of how cool or useful you think your product is. To make
sure there are enough customers who really need your product, take the following
steps:
- Determine your differentiator—that aspect of your product that makes it
better than the competition.
- Use that differentiator to market your product. Get it out there in front
of customers as soon as possible.
- Develop a prototype right away and use it to get customer feedback so that
you can work out any problems they have with your product.
- Remember, when it comes to your product, let constant improvement be your
goal.
4. Selling for the wrong price. Put the incorrect amount on the price tag for
your product and two things can happen—neither of which is good. Either no one
will buy your product because it is overpriced, or you’ll make sales but lose
money because your costs exceed the money you are bringing in. When determining
your price you should consider the following:
- How much will your product cost fully loaded? Remember: Price – Cost = Positive Cash Flow;
- How much do your competitors charge?; and
- What is your potential customer
willing to pay?
5. Overestimating the number of and the speed of customer purchases. Just as
entrepreneurs assume that everyone will love their product, they assume that
when that product goes up for sale, it will fly off the shelves. They don’t take
into account customer inertia, which is basically the reluctance of customers to
switch from a product they already use to a new, unfamiliar one.
Fortunately you can overcome this phenomenon. One way is by perfecting your
sales pitch. Create a pitch that solves customer needs and stresses the benefits
of your product. And when you are delivering your pitch, know when to shut up
and listen. (No one likes an overzealous salesperson.) You can also offer
incentives to first-time customers: free samples, product demonstrations, free
repairs/service for six months, and bonuses for customer referrals.
6. Mismanaging the business. Running a business is like baking a cake. You
need the right ingredients. You need to do the steps in the right order. You
have to use measured amounts—and you do it the same way every time. But also
like baking a cake, if you put in too much of one ingredient or misread the cook
time, one simple mistake can ruin everything.
Entrepreneurs should manage by objectives and exceptions. When you manage by
objectives, you create lists of “to-dos” that help you prioritize and focus your
time on the most critical tasks and keep you from becoming overwhelmed by
everyday minutiae. You should also learn the art of management by exception—or
knowing how to quickly and efficiently fix those things that go wrong on a given
day.
7. Failing to hire the right people. Running a business is all about people.
You do business with people (customers) and through people (employees). If you
start a business that will require you to hire employees, your success will
depend on how your employees treat customers and how well they do their jobs.
When hiring, your number one objective should be to select people with the right
attitude, a track record of success, and with high standards and integrity.
Don’t make skill level your number one focus. You can teach skills—you cannot
teach character and drive.
8. Losing good employees. Once you’ve hired great employees, you want to make
sure you keep them. Always treat your employees with respect, give them a sense
of doing something important and meaningful, praise them, teach them, and help
them accomplish their dreams while they help you accomplish yours. Ask your
employees monthly if they are happy. If they aren’t, find out why not. And make
positive changes based on their recommendations. When they see that their
opinions and concerns matter to you, they will want to work even harder for you,
and you can rest assured that happy employees will result in happy customers.
9. Being unable to accommodate growth. You’re probably thinking Too much
growth? I should be so lucky. The reality is that growth always looks good on
paper, but if you can’t properly manage your business’s growth, the whole
operation could implode. Big mistakes can happen when growth comes too quickly.
For example, poor-quality products are made, customer delivery times are missed,
and new employees are hired too quickly.
Keep two things on your mind when you are experiencing growth: quality and
employees. You must always maintain a high-quality product and be sure to
involve your employees as much as possible. You’ll be asking more and more of
them, so make sure they are involved in every step of the process. Keep them informed so they know they are growing with you and
involve them in finding and training new coworkers.
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For more information, please contact
Dottie DeHart,
DeHart & Company Public Relations, at (828) 325-4966 or DSDeHart@aol.com,
or visit www.edhltd.com and
www.ftpress.com .
