Shot of a young businessman experiencing stress during late night at work
Businesses of all sizes, small, medium, and large, need to improve operations. You can implement five low-hanging fruit opportunities in your business to ensure you have a successful year in business every year.
Preserving capital and maintaining sanity while operating your business are imperatives. Here are five familiar small business mistakes owners make that are resource drains.
Mistake One: Ignoring Customers
When small business owners start a business, they often have a business plan, but a customer service plan is frequently not included in that plan. The customer service plan is a roadmap to how you will interact with customers, how to resolve the most common issues customers face when they arise, and how to communicate managing customer service roles with employees.
There are compelling reasons to focus on developing a customer service plan. Chief among the myriad reasons is that it is more inexpensive to service existing customers than to acquire a new customer to replace a customer. Research from Bain & Company shows that increasing customer retention by 5% can increase profits between 25% to 95%.
Mistake Two: Poor Marketing Strategy
Marketing guru Seth Godin once said, "The cost of being wrong is less than the cost of doing nothing." Many small business owners treat marketing like a tertiary obligation instead of a primary feature of their customer acquisition strategy. Marketing is the battle of perception in your prospect's mind. However, you need a marketing strategy to be in the conversation to provide your product or service. Here are three parts of a marketing strategy your plan must have:
1) Budget: how much will you spend on deploying this marketing plan, and what are the expected returns based on historical data
2) Brand Message: Who are you, what do you offer, and what do customers hire your firm to provide for them
3) Multiple Avenues of Attack: You should have at least five marketing poles in the water. Always rely on more than one way to gain more customers.
This plan should be compiled by the last week of November each year and fine-tuned in December each year so that it is ready to launch by January 1st of the new year.
Mistake Three: Chasing Your Competition
Every business in the marketplace has its unique strengths and weaknesses. Even when you are in the same industry as another business, there are aspects of your customer delivery process, proprietary manufacturing process, or unique SOPs that make your business special. When you create offers, pricing structures, and marketing programs similar to your competitors, you've just created a carbon copy of their business. There are five reasons you may want to rethink this strategy.
1) Your competitor can be worse at marketing than you
2) Their target market could be different from yours
3) You need to establish your voice in the marketplace
4) Copying your competitor arrest your creativity
5) The goal in developing a unique business is to avoid marketplace confusion and potential trademark/copyright issues
Although copying your competitors can be a recipe for disaster, that doesn't mean you can't aim to learn from them. Create a goal to learn from them and execute a marketing plan uniquely so people search for what you offer.
Mistake Four: Lack of Business Systems
Operating a business without SOPs and automation in this modern age is equivalent to not using motor oil when you drive a car with a combustible engine. It will run for a while and appear normal, but just when you think you are good, it breaks down.
If you are a new entrepreneur, you should be systems and processes-minded; however, at the beginning, you will need time to understand which areas of your business require specific systems. After all, there is a lot to learn and implement. However, as the business scales, without elite business systems, it could crush under its success.
Here are three business systems that your small business should have at a foundational level:
1) Marketing/sales system: process for generating, nurturing, closing, and onboarding prospects
2) Operating system: process for communicating, collecting money, scheduling, assessing, and following up with customers
3) Employee systems: process for recruiting, onboarding, developing, engaging, and communicating with employees
Mistake Five: No Exit Plan
Few opportunities exist where you can create and shape the life you want, but owning a business offers such a rich opportunity. Before you start your business, you should think about what you want your life to be like so you can create and structure your business around that life.
This requires you to think outside the box and include how you would like to exit your business. There is a prevailing narrative that the endgame for operating a business is selling it, but the reality is that very few companies will sell, and even fewer will sell for the amount the owner thinks they should. Only 30% to 40% of businesses listed for sale sell.
If you are looking to sell your business, all hope is preserved. There are other options. You can have a plan to generate enough cash to fund the kind of retirement you want while you're operating your business. You can turn your business into a lifestyle business and reduce the amount you work while maintaining a leisurely life and enjoying your favorite activities.
By avoiding the five mistakes in this article, you stand a greater chance to run an elite business that gives you back time, makes money, and keeps you sane.
