7 Big Mistakes I see Small Businesses Make Everyday
I just spent the last 4 days meeting with 120 small business owners in Melbourne who are exploring ways to grow their business. I’ve done these sessions in the UK, Singapore, the USA and Mexico. There are seven big mistakes small businesses make that I see all the time…
1. Poor pitching skills
Pitching is possibly the most important skill every entrepreneur needs to posses. Unless you’re a software engineering genius that can write an algorithm that self-evidently changes the way humanity functions, you need to pitch your way to the top.
There’s a reason venture capitalists want you to pitch to them before they even look at your product. It’s because they know it doesn’t matter how good your product is if you can’t pitch it.
With this in mind, why on earth we aren’t teaching pitching skills in schools and universities is lost on me (especially in 99% of business degrees). Every entrepreneur must self-train in this discipline; it’s a skill like any other and it can be learned.
2. Not producing material for people to read.
In my opinion, it’s nearly impossible to sell a product or land a deal without providing supporting materials for people to read. If you want to sell your services you need a brochure. If you want distributors you need a document that sums up the benefits.
Every small business should have:
– case studies
and even a book that shares the core philosophy of the founders.
If you produce written materials, you can use them in print and online to scale your business.
3. Trying to make money from products that get “bought” rather than products that get “sold”.
There’s two types of products – those that get bought and those that need to be sold.
Bought products are typically low cost, low risk products that people already know they need. Customers either shop online for a cheap version or look for the most convenient supplier based on other criteria (normally location).
Sold products require a sales professional to talk to customers and make the link between a real problem the customer needs to solve and the product/service on offer. Despite the fact these products are highly valuable, they require customers to think through the solution and hence … They don’t sell themselves. They require sales activity – lead generation, relationship building and sales appointments.
In my experience, small businesses survive and thrive based on sales activity NOT based on inbound customers buying things of their own accord.
4. Offering only one product or service.
It strikes me that many self-employed people have replicated their previous job as their current business. They were once a graphic designer for an agency, now they offer graphic design services. They were once an interior designer for a firm, now they consult directly.
This can work for a little while; especially if you have an “anchor client” who covers your bills. Watch out though, if you lose your cash cow you need to start running a higher level business strategy.
Your bigger game will unfold when you have several products and services that are each chosen for very strategic reasons.
You will need some products that “get bought” and some that need to be sold.
5. Thinking the economy needs to pick up before they can grow.
Unless you’re running a bank, mining conglomerate or an airline you’re probably less effected by the economy than you think.
Realistically, a shift in economy probably requires you to shift the way you sell an market. You might need to rethink your messaging, you might need to prospect differently, you might need to offer slightly longer terms but it’s unlikely you need to “wait it out” or accept defeat.
Remember that some of the worlds most successful companies were started in recessions. Virgin, Dell, GE, Apple and HP were all started in recessions by people who might have gotten cushy jobs if the economy had of been better.
Get online and embrace new technology. The opportunities for small businesses to grow through tech-based solutions far outweighs the drawbacks of the sluggish economy.
6. Not having a supportive team.
You can’t show up to a basketball game with 1-2 people, there’s a minimum team size required to play. In my opinion, there’s a minimum requirement of “team” to be in business too.
Here’s my draft pick for who you must have on day one (part-time, full-time or contractor):
– a graphic designer.
– a personal assistant.
– a sales assistant.
– a book keeper.
– a mentor/ a small business group to bounce ideas off.
These people could be virtual staff based anywhere in the world, you might pay them per hour or per task but without them it’s hard to get your enterprise off the ground.
7. Unrealistic standards.
This can show up as either too low or too high.
Some small business owners show me their MS Word document that is supposed to get me interested in their business. I want to say “this isn’t a homework assignment, it’s a business!”.
They don’t want to spend money on graphic design or printing but they expect others to spend money with them. I’m not suggesting they need to spend thousands on this stuff but in the age of ODesk there’s really no excuse for circulating a document that looks cheap and nasty.
For $50 a designer can pretty it right up. I can’t understand how someone can have years of experience as an educated consumer and yet seem to be completely unaware of how they must look in the eyes of a customer.
On the flip side, I see some small businesses paralysed by perfectionism. They won’t go out and make sales because they’re waiting for the gold-plated-mega-embossed brochures to come back from the design agency they just spent $14k on.
Even when they get their printing back from the printer, a spelling error on page 13 is now the reason they can’t get face-to-face with a prospective client. I wonder if these high standards are just a way of avoiding the required sales and marketing activity that will truly determine the success or failure of the enterprise.
A small business has no excuses any more for looking small. By the same token, there’s no need for it to cost the earth or take more than a month to get an amazing result.