...Number 3 May Really Surprise You...
These mistakes apply to Start Ups and even those companies who have made it past the critical Two and Five Year point...
As a Business Coach, I get contacted by all sorts of people in business, and if I had to boil them down the most common mistakes that they make to just Seven, these would definitely make it onto the list...
1. Lack of Cash #1 - starting a business without enough cash to support the investment that is required to hit break even, and begin to achieve positive cash flow...
This usually comes from over ambitious assumptions being made with regard to the time required to get clients, coupled with an under estimate of the cash required to cover the costs.
To most Start Ups; assume it will take twice as long as you anticipate, and cost twice what you had budgeted - if you can cover that you will may be OK...
2. Lack of Cash #2 - once a business has got established, and overcome the initial cash challenges, it will usually hit another one in order to maintain growth.
As sales activity increases and new clients are attracted- especially in the B2B sectors - cash will be drained from the business quicker than margin can be made; major culprits include;
Discounting to win larger contracts - stop doing this...
Fixed costs increasing in steps - Gross margin may be OK but your Net sucks...
Debtor Days increase while Creditor Days decrease - avoid this too...
Increased stock, WIP, Finished goods and SDNI hold up cash...
Remember, fast growth is that quickest way to kill a business - no business goes bust for lack of Sales, it is usually lack of Cash that does the trick...
3. Excess Cash - sounds ridiculous but...
In the USA I was approached at an event by someone who had just decided to start his own consultancy business. He told me that he had $75,000 in savings and wanted to know what I thought he should do to get started quickly...
I asked him what his monthly fixed costs were, including marketing and overheads; they were around $10,000 per month...
So I said that in my opinion, he should put $20,000 into the business, and the other $55,000 into a secure account that he could not easily access; this would focus him on getting the business moving quickly rather than living on his savings.
If he had to get clients before the money ran out, then he would; needs must.
He could do this after $20,000 or $75,000 - the choice was his.
He didn't like this advice, and it was around 8 months later I had a call from him. He explained that he lived off his $75,000 and when it was gone he signed his first client; and that if he had tucked the $55,000 away, he would have signed clients earlier and kept the money too - and expensive lesson in how too much cash can slow people down...
4. Hope as a Strategy - the misguided hope that because a product or service is good; it will attract clients to buy.
Having a passion for the product or service is not enough; you will have to be a Sales and Marketing expert too, or at least find someone who can do this for you.
Customers don't buy what you sell; they buy the consequences of what you sell when they are derived as benefits to them. No one wants to hire an Accountant, Lawyer or Business Coach; they want the results or outcomes that can be derived as a consequence.
If your marketing says WHAT you do and ignores the BENEFITS that can be expected, there is a huge opportunity being missed..
5. Vision & Purpose - going into business with the sole purpose of making money will fail.
I see lots of people who start, or invest in a business with the sole purpose of getting rich; and whilst of course we are in business to make money, it should not be the only focus.
Clarity of Vision, Mission and Purpose are critical - what difference do you want to make in the world, how much value can you deliver to people...?
If you provide a product or service with passion and add value in excess of the price ticket, you will make money; but money should not be the primary focus...
Imagine, a prospect asks you why you are in business and you say..
"to get rich, buy a Ferrari and retire..."
not as attractive as..
"we are in the business of delivering happiness..." c/o Zappos, Las Vegas.
I know which company I am more attracted to - Zappos went from start up to being sold for $1.2 Billion in 5 years with this simple mantra...
6. Bad Recruiting - your team can be your biggest asset or your biggest liability, it is up to you which they become..
The number of small companies who hire people without knowing what they are doing astounds me. whilst you may hire people on their skills and experience, you will fire 95% of them on their attitude - so check the attitude first...
Hire people who buy in to your Vision, Mission and Purpose; hire people with positive attitude over qualifications. Hire people you would be prepared to socialise with; if you wouldn't then neither will you team and clients..
7. Burnout - attempting to do everything themselves and assuming that they actually know enough to make the business a success; it's exhausting...
Quitting is the biggest destroyer of most businesses; the owners either literally or metaphorically give up and stop fighting to achieve their dream - it simply gets too hard.
The way round this is to do two things;
Keep Learning - read books, watch videos, go to seminars and events. "Worker harder on yourself than you do on your business.." - Jim Rohn
Get Help - look for the experts to give you advice and guidance. Reaching out is not a sign of weakness, it is a sign of pragmatism and lack of ego which will serve you well.
8. Enough is Enough - it is not good enough any more to simply keep your promises; you have to achieve more with less...
Assuming that what worked last week will work this week, or that "satisfied" customers are the objective simply won't cut it in today's market place.
Building a client base of raving fans is the best way to sustain your business on the basis of your reputation; always be innovating and looking for ways to over deliver.
We are in the Social Media age, having positive stories out there based upon what you and your team did that was "amazing" will do more for your bottom line than any advert ever can..
Special Offer...
Book a 57 minute Telephone Consultation with me to discuss your business challenges and opportunities - it may be the best call you ever make...
And - it's FREE of both Cost and any Obligation to buy anything from us ever...
Drop me a note to davidholland@resultsrulesok.com and I will make the arrangements..
OR...
Come along to our next UK event...
Business Growth Workshop...
Learn how to build Sales, Profits and Cash in your Business by using these simple Techniques and Strategies...
- The TWO things you MUST do when Marketing a Service...
- The SIX Keys to Persuasion that ALL Entrepreneurs should know...
- How to never have to CLOSE a deal and get them to BUY every time...
- The THREE tactics you HAVE to use to keep Clients for life...
- Why PLANNING is almost USELESS In achieving your Success...
AND - we will be having some fun in the process; if everyone is good, I may even show a couple of Video's too...
Birmingham - Friday 25th April 2014
Places are offered to our Clients first, so there will only be a few places available - so make sure you book immediately; that means now, not tomorrow or next week or come back when you have had the chance to think about it, but RIGHT NOW..
Click - HERE
great work!
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