10 Myths in running a successful business
As we near the end of the calendar year of one of the most difficult commercial environments we have known, perhaps you are thinking about making new-year resolutions relating to how to run your business.
To help we have listed below ten business practices that could hold back the potential in the next twelve months, if you do not eradicate them as quickly as possible.
10 Myths in running a successful business
Myth #1: Setting up a formal business plan is a waste of time
Entrepreneurs are decisive people and know what it is they want to achieve. So for many, they cannot understand why they need to put in place a business plan. What they underestimate is the need for everyone else to know what is in their mind and how they are expected to contribute to the success of the organisation. This often becomes an issue once the business has reached a level of maturity where it is no longer possible to oversee every single aspect.
Think of the issue in this light. You have arrived in a city for the first time to visit one of your offices. You get in a taxi to take you there. The only way you are going to achieve your objective is to tell the driver the address. Also, if you need to get there quickly it would be helpful to let the driver use his skill to plan the quickest route.
As a first step test your employees’ views on what you want to achieve and see how closely it matches your vision. You might be surprised!
Myth #2: If I do not make the decision something always goes wrong
Delegation is a much feared tool by business entrepreneurs but whether you like it or not your employees are the ones who deliver the product or service to your customer. If you want to have a consistent and sustainable level of performance then the only way to achieve that is by effectively providing clear and quantifiable targets for each task undertaken and then set up processes to allow those tasks to be completed as efficiently as possible.
As a first step find out how many initiatives are not progressing because they are waiting on a decision from someone else. I think you might be surprised at the number of times that person was not aware that a decision was required or it was believed that it had already been made.
Myth #3: I need to offer our services or products to everyone
Businesses believe that by making themselves attractive to everyone they have the best chance to succeed. Why would that not be true?
Many small businesses offer a product or service that benefits from an expertise or level of service but the person buying it wants to buy it from someone who not only is an expert but also understands what they need.
It is very difficult to be all things to all men so a comment on a website such as “we offer a full range of services for both large and small companies” may in fact put off everyone.
Why? Think about it.
The buyer from the large company looks at you and thinks that you are probably not sophisticated enough to look after their needs so looks for a recognised brand. The smaller business is put off because they think you will be too sophisticated and therefore too expensive.
As a first step think about what your ideal customer would be and what it is they need from you. Then look at your marketing material and see whether that is obvious to someone who does not know your business.
Myth #4: The only thing I am interested in is getting new customers
The challenge to find new customers is a continuing battle but so often businesses spend a huge amount of time and effort to attract a new customer only to let them slip through their fingers to do business with another competitor.
Did you know that it is statistically at least 8 times easier to sell to an existing customer than it is to sell to a new one?
As a first step, consider understanding the lifetime value of a customer. You can calculate this by multiplying the average amount a customer spends with you by the number of times in a year they use your services or buy your products multiplied by the average number of years they remain a customer plus the number of referrals they give you.
By knowing the value of your customers you can determine how much you should be spending to keep them!
Myth #5: Corporate governance is only for large companies
There are very few SME owners of businesses with sales that have reached £1 million that implement systems – strong written policies and procedures in their businesses.
However think about this – if you can leave your business for a period of six weeks without hurting its performance then you have created a valuable business. If not, you have given yourself a job like everyone else because there is no value in that business other than you!
As a first step put yourself in a position of thinking what would happen if you needed to sell your business now. What would a person offer you and does it represent what you think the business is worth? Almost certainly not – and if you don’t believe us then take a look at Dragons Den on TV to see investor reactions to valuations.
To create a business with true value you will need to have set up policies, processes and procedures that drive growth and are not there for show!
Myth #6: Marketing is simply an expense that needs to be controlled
If I said to you that for every £1,000 I spend I will be able to give you £2,000, would you not be pleased? What would you then say if I said unfortunately the maximum amount I am going to spend is £5,000? Would you not question whether there was a way to increase that amount?
Many small businesses do not test and measure their marketing spend so they do not know how it effective it is. So get into a frame of mind that looks at marketing as a profit centre rather than an expense. There are numerous tools and techniques that can be used to achieve this objective so don’t be put off.
As a first step look at a recent marketing campaign and see if you can identify the additional sales it created. If you cannot, ask yourself why you could not and whether there were other ways of carrying out that campaign in a way that would have produced measurable results?
Myth #7: Measuring the number of visits to our website is an indicator of success
The use of the internet and social media is the new great friend of the smaller business but so many businesses simply put their details on to the internet and are then pleased to report that 50,000 people visited their site last year.
But how many of these became a customer and how long were they actually on your site?
The internet is both the friend and enemy of small businesses. It can help you potentially to make contact with lots of customers but equally you can be lost in all the noise that makes up the internet world.
Think of it like this. You get home and want something to eat. You are too tired to cook so you decide on a takeaway and do a search on the internet. You are only interested in finding those businesses that can meet your requirements. The business owner now has about 3 seconds to get your attention before you move onto other options.
Now think of your own business and as a first step, look at your on-line activities and ask a potential customer what they think it is saying and whether it would convince them to buy from you?
Myth #8: Once the business opens customers/clients will come
So many businesses seem to approach the communication with customers on the basis that the customer will go to them once they know what they do. This is particularly true of professional services companies.
However the real reason customers buy from you is that it will benefit them by making their life easier, cheaper or perhaps more fun. Businesses often just explain the features of their product or service but do not then go on to explain why that should matter to their customer.
As an example; a car has a three litre engine. So what? The answer may be that it provides a smoother ride or a faster acceleration than its competitors. If those attributes’ matter to a customer they are more likely to buy from you.
As a first step look at your product or service and list three features it has. Then, opposite each feature write down one reason why that benefits the customer. Do you explain those benefits in your communication and if not why not?
Myth #9: Delaying payments preserves cash flows
Non-payment is a common problem for small businesses. But if you do not pay your suppliers how do you expect them to support your business.
Often the delivery of your product or service is dependent on others delivering raw materials to you. Treat them as you expect your customers to treat you and think about creating longer term relationships.
By taking this seemingly radical step you may find that you can negotiate better terms than your current short term approach can achieve.
Myth #10: I do not have the time to think about what to do next
This is one of the most common problems that face business owners. But if you do not make the time are you not in danger of overseeing the gradual decline of your business as other new competitors erode your market share? You will not be able to achieve the full potential of your business without help.
So as a first step take a deep breath and stand back and look at what is truly going on and recognise where you perhaps would benefit from help. Where that expertise is available within your business use it. Where it is not, think about taking on additional resources either temporarily or permanent. This is an investment in your future.
If you have plans to grow your business and would like support and guidance to achieve the true potential, please send us an email or give us a call on 020 7965 7216.