Everyone who has done it, knows that success lies at the end of a series of business lessons and learnings; some easy some hard. If one were to analyse these lessons, you would likely find that most business owners will have made many of the same mistakes. Most could have had a much easier time had they instead, sought to learn from the mistakes of others first.
Every business owner will experience their own trials and tribulations. Here are some of the most common:
- Learn how to delegate effectively early on. As a business develops and progresses, the owner has to keep moving his or her focus and activities up the food-chain of importance and presumably difficulty. One cannot do this effectively unless you are able to get rid of the lower order tasks, to free up your time and head-space. Remember that “success in business is a team sport” and delegation is at the heart of a good team effort.
- Focus. There is always a strong temptation to get involved in other things that you believe will make you more money. It’s very hard to be good at selling antique furniture and at the same time do justice to your social media software product. If you keep focussed you will become known as a specialist that people will value. You will be able to charge more. That said, if there is a service or add-on that will make your core product better, provide it.
- Get your business model right early. Running your own business is hard work no matter what it is. So make sure that you optimise your business model, otherwise you will be pouring a lot of effort into something that at best may only be mediocre.
- Beware of Discounting. In certain situations, discounting is an appropriate mechanism. But unless you fully understand the financial implications, avoid it like the plague. The common notion that one will make up for the lower price by increased volume is true; it’s just how much volume you need that will catch you out. Do the math. You will quickly concur that discounting will seriously affect your businesses profitability.
- Your product is probably not as good as you think it is. At the end of the day, it is only your customer’s opinion of your product that really counts. In-house use and testing will never be as tough as having indifferent customers using it in the field and beating it up. So seek customer feedback and act on it. There is nothing worse than product-complaint-deafness. Don’t be like the contestant on Australia’s Got Talent who’s family and friends think is great, but on a real stage, has obvious shortcomings.
- Keep a tight reign on receivables. This is especially important if you provide a service, you don’t have much bargaining power when you are only selling time. But it’s key for all businesses. Have a clear and enforceable credit policy that you stick to relentlessly. If you let things slide, not only will your business be cash-starved, but you will end up having to pay more to collect old receivables which will reduce your profits.
- Develop products against specific demand. If you think “Wow, I think xx industry could use XX” you could be very disappointed. Once you factor in development, marketing and distribution costs for commercialisation, you could be up for a big investement. On the other hand, if a customer comes to you with a specific request; you build a product for them and then discover that there are many more customers for that product you will be in the pound seats.
- Never enter into a partnership without a buy/sell agreement. Irrespective of how well you think you know someone, you just don’t know what is going to happen in their lives. Having such an agreement worked out before problems arise, makes for a clean (and inexpensive) separation when the time comes.
- It’s much more expensive to prove you are right than admitting you are wrong. When you have an unhappy customer, apologising, refunding them and moving on is much better than trying to prove you’re right and save the sale. They will burn too much of your time and badmouth you. They are not your ideal client; put them in the D for “Dead” category and move on.
- Thoroughly understand leverage. To grow and prosper means to be leveraged. Make sure that every aspect of your business is set up to get the biggest outcome for the least effort, over and over and over again.
- Get really good at hiring. All too often employees are hired too readily and without sufficient rigour. Chances are your candidates are better at handling interviews than you are. Before you start recruiting, develop a thorough process that will unequivocally eliminate under performers, and an equally thorough process for monitoring their progress through their probation.
- Leave your ego at the door. Neither your customers nor your team members will pander to your ego until you are a big player in the market. As a general rule, being humble and generous trumps egotistical and mean, convincingly. If this applies to you, learn how to manage yourself.
- Poor managers make poor employees. Don’t expect employees to do a good job all by themselves. A few will, most won’t. A good manager can make all the difference; turning mediocre employees into good ones. A good manager will have outstanding communication skills and be very clear about building a productive work environment that addresses the businesses vision and customer promise.
- Document, document, document. Most of a business’s success will be attributable to the knowledge of its people. When people inevitably leave, they take their knowledge with them, even though it belongs to the business. So make sure that everything you learn and develop in your business is properly documented for the use of those that follow; otherwise you will continually be paying to re-invent the wheel.
- People leave because of people, not companies. People’s actions are largely based on how they feel. Everyone, staff and customers alike, like to feel valued. Customers will stop using your product if they are dissatisfied or feel you don’t care; staff will leave. All this, a reflection of management’s understanding of Emotional Intelligence.
- Make customer acquisition and retention you key focus. You can have the greatest products, the best customer service, the most efficient operations. Without the requisite number of customers required to make your revenue targets, all of that serves very little purpose. When you have a sufficiency of customers, most other business challenges can be dealt-with with comparative ease. If your top-line is a continual struggle, no matter how good everything else is, your business will struggle and eventually succumb.
- Understand how to make the Internet really work for you. We live in a world where customers do their homework before they show up to buy. Your business needs to be part of that story. There are many options and opportunities online that you should be abreast of. Make it your business to understand them in relation to your business.
- Cash is more valuable than profits. You can run your business at a loss for a while, even a couple of years, but if you run out of cash it’s all over. Have a safety fund with two to three months operating costs in it, and for safety sake, a line of credit even if you don’t think you need it.
- There is no shame in getting help and advice. Many entrepreneurs are out to prove themselves and feel awkward asking for help. In business the stakes can be high, so better to be proved right with help and advice, than wrong without. And even if you are confident you don’t need help, it’s astonishing how much value an emotionally detached outsider can bring – which is why big companies have external directors. You will be amazed at how many of the world’s top business people stay at the top of their game by using coaches and mentors.
- Don’t overdo things. Always have the CFO pay for drinks.
Your business lessons are inevitable. You have to learn them to ultimately succeed. It’s just up to how you choose to learn them. Either through your own mistakes, or by studying the mistakes of others.