No surprise then that we now own a few businesses of our own. But we made lots of mistakes getting started, mistakes we could’ve avoided if we had known a few things.
Here are seventeen mistakes that you should avoid:
Sell Something Legal
Selling something legal may sound obvious to anyone in business, but the truth is, when it comes to wanting to make money you will likely consider a lot of ideas… some legal, some illegal and some in between.
You don’t want to make a lot of money and then lose it all because you are on the wrong side of the law.
You Must Market Your Product to Succeed
If people don’t know about your great product, then they can’t buy your great product. It’s that simple.
Marketing Keys to Succeed in Any Business
There are three things you need to be successful in marketing any business, whether online or off. Do you have the ingredients you need to succeed? The key ingredients are:
- A Good Product
- A Marketing Mentality
- Money for Advertising.
A Good Product
You can't succeed without a good product. If you are in business, you want to provide your customers with a quality product or service. If you have a good product, there are four ways to position your business for success:
* Have a Niche Product: create something that nobody else has or provide a service that no one else is providing. If people need the product and your business is one of the few in the country that provides it, you can almost be guaranteed a national market for your goods or services. (Then the Web is the natural place to promote your company.)
* Have the Best Product in Your Industry: some people will always be willing to pay a premium price for the best product. That is why some people buy a Mercedes rather than a Chevy. If you have the best product or highest quality service, you can charge more, but your market is usually smaller and your clientele more select. If you have the best, don't compete on price - compete on quality and perceived value.
* Have a Good Value: if you don't have a niche product or the best product in the industry, you can still build up a large market for your company by providing a good value for your customers. MacDonald's doesn't make the best hamburger in the world, but it does make a good hamburger at a low price, and the company is almost in every industrialized country in the world.
* Give a Value Added Service: a VAR is a corollary of the last two. If you have a service you give to your clients that helps them build a better business, the clients will be willing to pay more for your product because of the relationship you build with them over time. For example, if you sell diagnostic equipment to a car dealership but you also offer training on the new equipment to the dealer's employees, the dealer will be willing to pay you a bit more for your product and will choose you as a supplier over someone who just sells the product and gives no service. Your training clinics are a valuable service that the dealer cannot get from another supplier. You may actually save them money, because it would cost the dealer more to send the employees out of state to get the training.
A Marketing Mentality
Be warned! A good product is not enough! Good companies with good products fail every day. One of the most common reasons businesses fail is a lack of advertising. If no one knows about your product, nobody will buy it. It's as simple as that. Most marketing gurus will tell you that your advertising budget should be between 15% and 20% of your total budget. That percentage may be greater if you are just starting a new company or introducing a major new product. Many small business owners are afraid to spend money on advertising; hoping word of mouth will make their business succeed. Such thinking is a fatal mistake for many businesses.
* If you are afraid to spend money on advertising, you don't have what it takes to succeed in business. Period. The web will not help you. Fear is ruling your future and you don't have the confidence to take the necessary risks to succeed. All businesses ventures require risk and a certain amount of faith: faith in your product, faith in your ability, faith in the future, perhaps even faith in the fairness of the marketplace. Without that faith and a willingness to take a risk for the sake of future profits, you lack an essential ingredient to make it in business.
* You need to see advertising as an investment not as a cost. When looking at your potential returns and future sales, you must see advertising as a way of increasing your product sales. If a billboard advertising campaign will cost you $10,000 this year and you can only see how much money you will be spending, you don't have a marketing mentality. A true businessperson looks at the potential return on his or her investment in advertising. For example, if your average product sale to the customer is $10,000 and the product costs you $5,000, you need only 2 sales from your billboard campaign to break even on your advertising expenses. Just 3 sales means you've made more money than you've spent. If an average billboard campaign will bring you 10 sales, why are you looking at the $10,000 it will cost you instead of the $40,000 you will earn?
Perhaps you should be spending $100,000 on your billboard campaign. Again, if you don't see advertising as a means of generating revenues, then you lack what you need to succeed in business.
* You need to have a long-term vision for advertising. You need to understand how advertising works. It takes 21 impressions on radio, television, and combined media to cause your business, product, name and contact information to be remembered by the consumer. If you spend $1000 on 15 prime radio spots, don't expect any sales. If you do get some, you're unusual. Most likely, the customer won't even remember your business name by next week. Repetition is the key to learning and remembering. Repetition is the key to advertising. Many business owners are disappointed when they don't see an immediate increase in business with an advertising campaign. They expect the phone calls to start pouring in. Such expectations are unrealistic. What actually happens is this: the more frequently the consumer hears your name, the more familiar you become and the more comfortable they become with you. If, for example, you sell tires, the consumer may not need tires the week they hear the ad. But after hearing your name regularly for a month or two, when it comes time to buy new tires, your name is going to pop into their head, and then they will give you a call. That is an example of how advertising really works. So you can see that if you don't have a long-term vision, you lack what you need to succeed in business.
Money for Advertising
I'm sorry to say it, but even if you have a good product, and you have a marketing mentality, but you lack sufficient capital to promote your business, you lack an essential ingredient for business success.
Many businesses fail because they are undercapitalized. They start out with a good business idea, but they lack the money to make it work. They spend all their resources on plant, rent, equipment and raw materials, but they have no budget for advertising, and so they have no way of letting the public know about their product. Such businesses usually fail within three years, or they crawl along just barely making ends meet, if they survive at all. You can succeed if you only have the first two ingredients, but having money for advertising sure makes everything a lot easier. So, the question I have for you is this: "Have you budgeted your business for success?"
Why the Web?
A web presence should be one of the essential items in your overall business plan for advertising and for sales. Just as you need a sales force, regional advertising in radio, television, and print media, the Web should be one more avenue for advertising and generating business. It is part of your strategy and part of your plan. In fact, studies show that the Internet address is replacing the phone book as the place that young adults turn to for business and consumer information. If you aren't on the Web, it's like not being in the phone book. If you aren't there, people can't find you. Internet commerce and web procurement are the wave of the business future. You need to make plans for this future, or you will be left behind.
The marketing mix is made up of the following elements, often referred to as “the four Ps”:
- Product (or service)
- Place (location and distribution)
- Price
- Promotion
- get all of the elements right
- strike a balance between the elements
Promotion
Promotion is about effectively communicating with your customers so that they are encouraged to buy from you. You need to promote to both existing customers and prospective ones, which may involve promoting to each in different ways.
To promote successfully, you need to take the following into account:
- You need to know as much as possible about your customers and their buying habits.
- You need to identify which are the important questions customers could have about your product/service, eg is this a reliable product? Your promotional
activities should answer these questions. - You need to identify your unique selling point (USP) and communicate it effectively to your customers.
- You need to identify the style of your promotional activities
- You need to decide when you are going to promote.
Promotions Mix
The ‘promotions mix’ is the combination of promotional elements you use to promote your
product/service.
The various elements which can make up the promotions mix include:
- Personal Selling
- Sales Promotion
- Public Relations
- Direct Mail
- Trade Fairs and Exhibitions
- Advertising
- Sponsorship
Make Payments Easy
The lesson I learned from Advice Monkey was that if you wanted to make money you needed to make it simple for people to pay you. Of course you have to provide a valuable product, something people want or need, but if you don’t make it easy for them to pay you, you’re business will suffer and eventually fail. I’ve learned that whether you are providing a service like consulting or a product like software, you should provide the simplest, most common and fastest way for people to pay.
If you make it hard then you are simply giving people an excuse to delay paying you or even giving them an excuse to go to your competitor who does make it easy. Don’t do that because it could be a million dollar mistake.
Focus
One of the reasons Steve Jobs and Apple were so successful was they focused. They didn’t have a bunch of products, even though you might think they did. They had only a handful.
That allowed them to do several things very well:
- They could listen closely to what their customers were saying.
- They could create the products to meet the needs and desires of those customers.
- They could make those products the best in their category.
If you are not focused you will not be able to do a good job on your business. Find the things in your business that make you the most money and focus on them. Eliminate everything else!
Other Keys to Succeed In Any Business
- Solve Problems Customers Are Facing
- Do It in a Simple Way
- Be Patient
- Charge More
- Conserve Cash
- Never Stop Closing
- Always Find Your Passion
- Learn, Learn and Learn Some More
- Good Help Costs Money
- Emotions Rule
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