Flaws to watch out for when starting a new business
When planning to start a new venture, it is very common for first timers to miss a few details. But some details are pretty critical to the success of any business and spell certain doom to any who ignore them. There are a few issues that I have seen over and over again and I would like to take a moment to address some of them here.
1. Word of mouth is NOT a marketing strategy
This should be emphasized and pounded into the head of anyone thinking about starting something on their own. But I think I actually need to take it a little farther here. Word of mouth is not even a COMPONENT of a good marketing strategy. Nope….still not strong enough. Word of mouth is not a part of ANY marketing strategy. Clear enough yet? This is a critical point.
Why does word of mouth advertising have no part in a marketing strategy? Great question. I’m glad you asked. Word of mouth has absolutely no part in any strategy because it cannot be controlled. It is totally out of your hands. There is nothing you can do to make non-employees spread the word about your new company. Nothing. The sad truth is (here it comes): they won’t. Customers won’t talk about you. They will buy your products and services and then forget you exist.
There is no way around this. You can offer the most life-changing products and unparalleled services and no will say a peep. They will not be racing home to call everyone in their address book and urge them to get down to your store front. Forget about it. You don’t get free walking billboards just because you are good to your customers.
I know this sounds a little extreme. It is…..but only a little. For the most part this is the truth. Or at least, this is the mind set we need to internalize. We can never count on word of mouth and whenever I hear someone mentioning that as a part of their plan, I sigh. So get it through your heads. The only things that deserve to be in your marketing strategy are legitimate, controlled marketing techniques like radio ads, online advertising, E-mail campaigns, fliers, etc.
2. Quality and cost are inversely related
I have had a pretty large number of entrepreneur minded individuals explain their ideas to me and attempt to convince me that their plans were success bound because they were simply going to offer high quality for low prices.This is so very basic that I repeatedly feel surprised at having to explain it. Business is built on rules. Rules that can be bent, sure, but not broken.
I think this is a very simple concept but too often when I explain it I get blank, confused stares in return. Someone may even challenge me on this and assert that simply pricing things cheaply will result in such incredible sales volume that the business will be an incredible success. They will often imply that existing competitors price their products with no thought in their minds besides maximizing profits at the expense of poor consumers.
Silliness aside, this really is a rule to memorize. If you intend on offering a high quality product you must price your product high. If you intend to offer low prices, you must sacrifice some quality. This is a rule you can bend, but only a little. The bending of this rule generally speaking means one thing to me: minimal profits.
3. Good isn’t good enough. You need PROFITS!
A great idea is one thing. A profitable idea is something else entirely. Too many miss this point. You may have yourself an amazing plan for a business that will help others and benefit your community and employ people and revolutionize the world. But all of that stuff doesn’t matter AT ALL if the plan is not profitable.
This doesn’t always go over well when I explain this to people. People often tend to wince at the word profit as though it were a filthy obscenity. It seems at times as though people think a successful business must earn money only by accident. This is bologna. No one invests in a business or loans money to a business because the entrepreneur has some philanthropic vision. The only business that succeeds is the business that makes MONEY. Again, seems so simple but it is critical. If this is something you don’t feel extremely comfortable with or you are firm in your belief that your good intentions will result in droves of customers and your lack of selfish ambition will cause Jesus to send angels from Heaven with holy checkbooks to pay your bills with then I think you should forget about self-employment.
Best wishes to all you entrepreneurs out there who understand that to be successful you MUST promote it yourself, you CAN’T sacrifice your profit margins to be competitive and you HAVE to be profitable.