It’s tough enough to compete out there, but sometimes, it’s not the competition that gets us. No, we are often our own worst enemies. Here are five ways that you may be damaging your own business.
Not Feeding the Bird-In-The-Hand: I’m sure you have heard the old adage that a bird in the hand is worth two in the bush. Well, many entrepreneurs ignore this. They spend so much time trying to find new customers that they forget about the birds in hand- their existing customers. If you have customers that already love you, nurture those relationships to get more business from them (and have them refer their contacts as well). I see businesses that offer discounts for new customers only. How do you think that makes your loyal customers feel? I’m not saying to forgo new customer efforts, but make sure that you take fantastic care of those already supporting you.
Financial Statement Ignorance: One of the top areas of neglect for entrepreneurs is in financial statements. Many small business owners don’t pay attention to financial statements or worse yet, don’t even do them on a regular basis. In fact, a lot of business owners think credit card and checking account statements qualify as financial statements. Being lazy in this area can spell ruin for business owners. Financial statements can show you what is working and what isn’t, where expenses are running amok and even cash flow issues. If you don’t understand the financial statements, hire someone else to do them and to teach you what to look for. Ignoring your financial statements can put your business in serious jeopardy.
Systems? What Systems?: Business that have consistency are more efficient and effective. Yet, small businesses sometimes run their operations in an ad hoc way. Whether you go old school with employee checklists or use technology for automation, every function in your business should be systematized. This will prevent you from constantly recreating the wheel (especially in times of employee turnover) and provide more consistency in your products and services. How do you answer the phone? How do you proceed through a project? What’s your follow-up procedure? This should all be documented with an easy to follow system. Systems like these will allow you to put more of your (and possibly your staff’s) focus on revenue-generating activities in the business.
The Social Media Rabbit Hole: With social media being touted as a “must” in your customer engagement strategy, not having discipline and goals for your social media can be a dangerous time waster. With the number of different venues, the constant flow of content and 24 hour access, social media can go from effective to a time sink in a heartbeat. Make sure to be clear on both your strategy and tactics. Know who you are trying to engage, how you plan to do it, which venues will be most effective and how much time you are going to spend each day or week. Resist the urge to try out every new tool or to get sucked into content-palooza or you may find the opportunity cost of social media very big!
Underpricing: The temptation in a tough economy is to cut prices. But competing on price instead of value is a recipe for business failure. Cutting prices can attract fickle and non-loyal customers, which doesn’t make for a strong and sustainable business model. In fact, many business owners don’t have a high enough profit margin for the type of business they are in. Make sure that your pricing allows for a high enough gross profit to cover your overhead. Instead of cutting prices when times get tough, switch your focus to providing extra value and care to your customers. That will pay off exponentially in the long-run.