We learned that working for yourself
was a great way to improve one’s lifestyle.
No surprise then that we now own a few
businesses of our own. But we made lots of mistakes getting started, mistakes we
could’ve avoided if we had known a few things.
Here are seventeen mistakes that you
should avoid:
Sell Something Legal
Selling something legal may sound
obvious to anyone in business, but the truth is, when it comes to wanting to
make money you will likely consider a lot of ideas… some legal, some illegal and
some in between.
You don’t want to make a lot of money
and then lose it all because you are on the wrong side of the law.
You Must Market Your Product to
Succeed
If people don’t know about your great
product, then they can’t buy your great product. It’s that simple.
Marketing Keys to Succeed in Any
Business
There are three things you need to be
successful in marketing any business, whether online or off. Do you have the
ingredients you need to succeed? The key ingredients are:
- A Good Product
- A Marketing Mentality
- Money for Advertising.
A Good Product:
You can't succeed without a good
product. If you are in business, you want to provide your customers with a
quality product or service. If you have a good product, there are four ways to
position your business for success:
* Have a Niche Product:
create something that nobody else has or provide a service that no one else is
providing. If people need the product and your business is one of the few in the
country that provides it, you can almost be guaranteed a national market for
your goods or services. (Then the Web is the natural place to promote your
company.)
* Have the Best Product in
Your Industry: some people will always be willing to pay a premium price for the
best product. That is why some people buy a Mercedes rather than a Chevy. If you
have the best product or highest quality service, you can charge more, but your
market is usually smaller and your clientele more select. If you have the best,
don't compete on price - compete on quality and perceived value.
* Have a Good Value: if you
don't have a niche product or the best product in the industry, you can still
build up a large market for your company by providing a good value for your
customers.
MacDonald's doesn't make the best hamburger in the world, but it does
make a good hamburger at a low price, and the company is almost in every
industrialized country in the world.
* Give a Value Added Service:
a VAR is a corollary of the last two. If you have a service you give to your
clients that helps them build a better business, the clients will be willing to
pay more for your product because of the relationship you build with them over
time.
For example, if you sell diagnostic equipment to a car dealership but you
also offer training on the new equipment to the dealer's employees, the dealer
will be willing to pay you a bit more for your product and will choose you as a
supplier over someone who just sells the product and gives no service.
Your
training clinics are a valuable service that the dealer cannot get from another
supplier. You may actually save them money, because it would cost the dealer
more to send the employees out of state to get the training.
A Marketing Mentality
Be warned! A good product is not
enough! Good companies with good products fail every day. One of the most common
reasons businesses fail is a lack of advertising. If no one knows about your
product, nobody will buy it. It's as simple as that.
Most marketing gurus will
tell you that your advertising budget should be between 15% and 20% of your
total budget. That percentage may be greater if you are just starting a new
company or introducing a major new product.
Many small business owners are
afraid to spend money on advertising; hoping word of mouth will make their
business succeed. Such thinking is a fatal mistake for many
businesses.
* If you are afraid to spend
money on advertising, you don't have what it takes to succeed in business.
Period. The web will not help you. Fear is ruling your future and you don't have
the confidence to take the necessary risks to succeed.
All businesses ventures
require risk and a certain amount of faith: faith in your product, faith in your
ability, faith in the future, perhaps even faith in the fairness of the
marketplace. Without that faith and a willingness to take a risk for the sake
of future profits, you lack an essential ingredient to make it in
business.
* You need to see advertising as
an investment not as a cost. When looking at your potential returns and future
sales, you must see advertising as a way of increasing your product sales. If a
billboard advertising campaign will cost you $10,000 this year and you can only
see how much money you will be spending, you don't have a marketing mentality. A
true businessperson looks at the potential return on his or her investment in
advertising.
For example, if your average product sale to the customer is
$10,000 and the product costs you $5,000, you need only 2 sales from your
billboard campaign to break even on your advertising expenses. Just 3 sales
means you've made more money than you've spent. If an average billboard
campaign will bring you 10 sales, why are you looking at the $10,000 it will
cost you instead of the $40,000 you will earn? Perhaps you should be spending
$100,000 on your billboard campaign. Again, if you don't see advertising as a
means of generating revenues, then you lack what you need to succeed in
business.
* You need to have a long-term
vision for advertising. You need to understand how advertising works. It takes
21 impressions on radio, television, and combined media to cause your business,
product, name and contact information to be remembered by the consumer.
If you
spend $1000 on 15 prime radio spots, don't expect any sales. If you do get some,
you're unusual. Most likely, the customer won't even remember your business name
by next week. Repetition is the key to learning and remembering. Repetition is
the key to advertising. Many business owners are disappointed when they don't
see an immediate increase in business with an advertising campaign. They expect
the phone calls to start pouring in. Such expectations are unrealistic. What
actually happens is this: the more frequently the consumer hears your name, the
more familiar you become and the more comfortable they become with you.
If, for
example, you sell tires, the consumer may not need tires the week they hear the
ad. But after hearing your name regularly for a month or two, when it comes time
to buy new tires, your name is going to pop into their head, and then they will
give you a call. That is an example of how advertising really works. So you can
see that if you don't have a long-term vision, you lack what you need to succeed
in business.
Money for Advertising
I'm sorry to say it, but even if you
have a good product, and you have a marketing mentality, but you lack sufficient
capital to promote your business, you lack an essential ingredient for business
success. Many businesses fail because they are undercapitalized.
They start out
with a good business idea, but they lack the money to make it work. They spend
all their resources on plant, rent, equipment and raw materials, but they have
no budget for advertising, and so they have no way of letting the public know
about their product.
Such businesses usually fail within three years, or they
crawl along just barely making ends meet, if they survive at all. You can
succeed if you only have the first two ingredients, but having money for
advertising sure makes everything a lot easier. So, the question I have for you
is this: "Have you budgeted your business for success?"
Why the Web?
A web presence should be one of the
essential items in your overall business plan for advertising and for sales.
Just as you need a sales force, regional advertising in radio, television, and
print media, the Web should be one more avenue for advertising and generating
business.
It is part of your strategy and part of your plan. In fact, studies
show that the Internet address is replacing the phone book as the place that
young adults turn to for business and consumer information. If you aren't on the
Web, it's like not being in the phone book. If you aren't there, people can't
find you. Internet commerce and web procurement are the wave of the business
future. You need to make plans for this future, or you will be left
behind.
The marketing mix is made up of the
following elements, often referred to as “the four Ps”:
- Product
(or service)
- Place
(location and distribution)
- Price
- Promotion
For a business to succeed, you need
to:
- get all of the elements right
- strike a balance between the
elements
Differentiation of your business from
your competitors can be achieved through adjusting the elements to make your
product/business more attractive. For example, if you wanted to market a high
profile brand, you would focus on promotion rather than price.
Promotion
Promotion is about effectively
communicating with your customers so that they are encouraged to buy from you.
You need to promote to both existing customers and prospective ones, which may
involve promoting to each in different ways.
To promote successfully, you need to
take the following into account:
- You need to know as much as possible
about your customers and their buying habits.
- You need to identify which are the
important questions customers could have about your product/service, eg is this
a reliable product? Your promotional activities should answer these questions.
- You need to identify your unique
selling point (USP) and communicate it effectively to your customers.
- You need to identify the style of your
promotional activities
- You need to decide when you are going
to promote.
When you have answers to the above, you
are in a stronger position to decide what to say, how to say it, when to say it,
and which promotional method(s) to use.
Promotions mix
The ‘promotions mix’ is the combination
of promotional elements you use to promote your product/service.
The various elements which can make up
the promotions mix include:
- Personal Selling
- Sales Promotion
- Public Relations
- Direct Mail
- Trade Fairs and Exhibitions
- Advertising
- Sponsorship
You would choose the appropriate
elements for your product/service and integrate them to form a promotional
campaign.
Make Payments Easy
The lesson I learned from Advice Monkey
was that if you wanted to make money you needed to make it simple for people to
pay you.
Of course you have to provide a
valuable product, something people want or need, but if you don’t make it easy
for them to pay you, you’re business will suffer and eventually fail.
I’ve learned that whether you are
providing a service like consulting or a product like software, you should
provide the simplest, most common and fastest way for people to pay.
If you make it hard then you are simply
giving people an excuse to delay paying you or even giving them an excuse to go
to your competitor who does make it easy. Don’t do that because it could be a
million dollar mistake.
Focus
One of the reasons Steve Jobs and Apple
were so successful was they focused. They didn’t have a bunch of products, even
though you might think they did. They had only a handful.
That allowed them to do several things
very well:
• They could listen closely to what
their customers were saying.
• They could create the products to
meet the needs and desires of those customers.
• They could make those products the
best in their category.
If you are not focused you will not be
able to do a good job on your business. Find the things in your business that
make you the most money and focus on them. Eliminate everything else!
