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8 mistakes in small business (Is that all?) | ||||
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We've got a lot of time for Rain Today, the US web-based magazine aimed at providing marketing advice to small firms. However, their recent article about the 8 mistakes all businesses need to avoid does provide some spectacular examples of management speak. The 8 mistakes according to Rain Today:
It's the same 8 things that were attacked early on by the most phenomenal growth companies including Google, eBay, Cisco and Dell. This is all very well, but what do they actually mean by some of these statements? 1. Managing for income not value creation Or worse still, managing for cash. Whilst “short-termism” is a stock market problem, insufficient capital is a big issue in the small business world. It takes huge amounts of discipline (and self-belief?) to keep doing the right things, creating value steadily, but without taking your reward. And, paying a big chunk to the taxman doesn’t help. Incidentally, “value” is what the customer feels. This is the key to business growth, rather than the arbitrary definition of quality that happens to exist in any given industry. As Andy Bounds puts it, what are customers left with after they’ve bought from you? 2. Failing to Create a Bedrock Market Position Maybe, failing to market. Sales and marketing are often seen as the same thing, but they aren't. I suggest that marketing is what you do to create future sales. So, where does advertising fit in? Advertising is generally a call to action - buy me now. [Read 33 rules of ruthless local advertising borrow David’s copy?] Marketing is all about building equity. At any point in time, most people don’t actually need your particular service. However, if you’ve built some marketing equity, they will think of you when they do need your service. 3. Not Expertly Designing a Pre-emptive Sales Strategy (Despite the split infinitive) we can't work out what this means. However, just having a sales strategy would be good. [The "pre-emptive" element seems superfluous.] For all the talk about USPs, the real question to ask is why a customer would buy from you rather than a competitor. If the answer that comes to you is something like "better quality at a lower price", then think harder. This is the best way to destroy value ever invented. What is the sales team actually going to do (and how often) to get the required sales? 4. Trying to Generate Leads and Not a Lead Management System Again, this is the difference between running a business and trying to do the business all by yourself. Generating leads (and then converting them to sales) is the lifeblood of any business. A customer won’t (can’t) buy if he doesn’t know you’re selling. In our experience, having a system to generate leads will transform a business. 5. Spending Your Marketing Budget On New Business - Not Your Clients If growth is a sign of business success, then attracting new customers is one way to be successful. But, remember that sales = no. of transactions x average value There are plenty of statistics to show that it is much easier (and cheaper) to sell more to people that already know you than it is to find new people to sell to. Marketing is about selling the right thing to the right customers at the right price (segmentation). I suggest that using the budget to get the right clients is the first step and the one that most often goes wrong. Any old client will not do. 6. Wasting Money Building an Online Presence This doesn't mean you shouldn't have a web-presence, it means you should think about what your existing and prospective customers are actually buying. For most small businesses, existing clients know what you do. They may want to use the web to speed up the ordering process, but they probably like you and want some human contact along the way. For new/prospective clients, the web gives you the opportunity to show that you know what you are talking about. You really want them to be sufficiently reassured to actually talk to you. Who knows what you could sell them if you could work out what they need to buy? 7. Hiring a Leadership Team and Staff Just Like You This is quite hard to avoid in practice. On the one hand you want diversity: on the other a unified culture. In our experience, in small business, people with a similar view of the world are far easier to handle. Or as the Boyscout says, "There's always room for one more sycophant." He'll go far. 8. Neglecting to Build Scalable Light-Touch Processes The difference between good and bad businesses in the same arena seems to be in attention to detail. Its all about the little things and the emotional side of buying. A (metaphorical) light touch is the natural result of thinking about a customer. When companies get too busy, this type of thing gets lost. So, setting up systems to remind customers how important they are works wonders. If there is a system, it's not a surprise when it happens. The accountant in us also suggests that running out of cash is a big mistake, but it’s not very sexy.
DUCKETT | 01432 370 572 | contact us
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