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Research Triangle Business Advisors

January 2014 Newsletter

 

Of course every business owner has a different environment, culture, clients, and therefore their own unique issues to deal with. And, it’s been said that you can’t learn how to find business success without making your own mistakes. But, that does not mean you have to make all the mistakes – you can learn from the mistakes of others. A survey of business owners resulted in the following list of top 20 things they learned the hard way.

 

 

Bob De Contreras

919-280-1307

Bob@rt-ba.com

www.rt-ba.com


20 Business Lessons You Don't Want To Learn The Hard Way

  1. You can’t do everything on your own. Building a team is essential because there are only so many hours one person can devote to a business. Exactly when you reach that limit depends on how much you work in your business (as opposed to on your business). If you’re a young single person, you might be able to do everything for a year or two. But if you have a family, your dedication will eventually hurt those relationships. Build a team that can carry on when you’re not available.

  2. You may think your product is perfect, but your clients may not. Listen to user feedback: Your opinion may not be the best one. The key takeaway here is release your product or service early and often. You won’t know if you have a great product or service until your customers use and stress it. It’s like some of the contestants on American Idol. They think they’re talented, their friends and family think so, but when they get on a bigger stage, their short comings become obvious.

  3. Do one thing really well. Entrepreneurs often try to be everything to everyone, but it’s hard to be successful in a store that sells stationary, baby toys and vintage wine. Specialize, and you can profit from what you do provide. That said, if there is a skill or service that would make your core product or service better, provide it.

  4. Get paid before you hand over a completed project to a client. This is especially important if you provide a service. Once you turn over those findings, website or design project, you won’t have much bargaining power.

  5. Undercharging is not sustainable. You may think, “I don’t need to charge $200 an hour, I can charge $100 and make way more than I was making as an employee!” But you might find out a short time later that your “great” rate is unsustainable. By the time you pay taxes, employees, rework costs, business licenses, insurance, etc., that $200/hour is looking more realistic. Compete on quality, expertise and your niche focus (see #3) instead of price.

  6. Patience and flexibility help you survive the lean times. Balance accepting customer needs/requests with sticking to your strengths. However, when it makes good business sense to add to your product line or services offerings go slow. Be patient, scale slowly — partly out of necessity — and build your company without debt.

  7. Build for your actual market. Only build your product or service portfolio based on an answer to market demand. Because, if you simply think “Wow, maybe xx industry could use yy prodct,” you might be disappointed at the results. Put another way: You would never start a restaurant without having worked in one…and built a strong experience base, so you could lead the growth of that business.

  8. Never enter a partnership without a buy/sell agreement. No matter how well you think you know someone, you just don’t know when he or she will want to retire or do something else. Even if it’s on amicable terms, know how you can get rid of one another when it’s time for one of you to move on.

  9. Be grateful. Appreciate loyal customers who show you there is a demand for what you do. There is no dollar amount you can put on the value of brand advocates. Good will translates into more loyal customers.

  10. Look after those who look after you. You want people to recommend your product or service because they like it. But, it does not hurt to say thank you when they do by sending them a small token of your thanks.  Some companies send a company shirt, others offer a “night-on-the-town” (paid expenses for night out with the significant other). Other companies offer free services as the thank you.

  11. It’s not a sale until it’s paid for. This sounds obvious, but I’ve known small business owners who get very excited about orders and/or meetings with prospective clients. But until the money for those products or services is in the bank, it doesn’t count.

  12. You’ll make more money being “wrong” than proving you are right. Rather than fight with an unhappy customer and say, “You’re using our product incorrectly,” or “You don’t know enough to use our product,” just refund their money. In the long run, these people consume so much of the support team’s time and energy that it’s more cost effective this way. They’re not your ideal client, and that’s OK – it’s best to just walk away.

  13. People don’t leave companies — they leave management. This lesson goes for both employees and customers. A manager will lose staff if the employees think they’re not being listened to or valued. Customers will stop using your products or services if they are dissatisfied with them. The quality and reliability of your products and services is a reflection of management.

  14. The way you present your business should be a reflection of your audience. If you have serious clients, be serious. If you have young, fun-loving clients, have a sense of humor. You have to find your niche and build your content to suit them. For example, Constant Contact and MailChimp do essentially the same thing, but their marketing content reflects very different client bases.

  15. Agree on service project scope in advance. Have a clear contract before work begins. Once a project goes beyond the documented plan, charge for it. If you agreed to translate 10 pages, but get 20 pages, the client should pay you for them. If your contract makes that clear at the outset, it is easier to control scope creep.

  16. If your company sells a variety of products, make sure your sales team is selling every single one of them. This might sound like a tall order — depending on how many products your company sells — but your sales team will only spend time selling the easy to sell items, unless you measure them on selling them all.

  17. When you think you’ve tested your product enough, test it some more. Never release a product until it has been tested, tested again and tested by people who don’t work for you.

  18. Understand how social media networks work. When Twitter was first available for businesses, people used it like an ad in a newspaper. If you go on a channel and use it the wrong way, it could do more harm than good.

  19. Save up. You can operate at a loss for a number of years but you can only run out of cash once. Have a rainy day fund that has at least two or three months’ operating expense in it. And have a line of credit available, even if you don’t plan to use it. Having a CPA look at your books once a quarter is also a good idea.

  20. Hire good people. Hire good people, get out of their way, and trust them to do a good job. (See #1)

 


Cary | Raleigh | Research Triangle Park | Greensboro | North Carolina
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