There are several lessons that business owners throughout history have already learned for you.
Why would anyone readily agree to learn these lessons the hard way?
1. Niche Selection: Pick One You Actually Understand
Like Tony Robbins has famously said many times “find something that gets you outta bed early and keeps you up late at night.”
That’s the first step. You also need to have intimate knowledge of your chosen niche industry – the products that sell, positives and negatives that will affect a successful operation, and most important: the types of customers you’ll be serving.
Even venture capitalists who make a dozen deals a week still make sure they know the industry they’re investing in, or have a trustworthy expert at their side advising them on the nuances of the business. You’ll quickly get run over in one form or another if you rush in with your credit cards and checkbook a-blazing without a clue what you’re doing.
2. Partnerships: Get Everything in Writing
Everything’s “honky dory” when you and your new business partner decide to endeavor into the world of entrepreneurship together. Then a year or two goes by – maybe times get tough, they die, or just simply decide they’ve had enough of the business and want to move on. About this time you realize that you entered into this business together on a good faith type of arrangement and suddenly your partner or there family wants to sell the company out from under you.
You want to keep running it and make it into the multi-million dollar corporation you know it can be, but the lack of buy/sell contract means you may very well lose the company you fought so hard to build. Make sure you have a cross-purchase or redemption agreement – in place and on paper, along with any other stipulations your lawyer or business manager suggests.
Learn more here: http://www.forbes.com/in-business-get-a-buy-sell-agreement/
3. Customer Loyalty: Reward Your Return Customers Often
Sending a simple thank you email or 10% off coupon via letter mail is a great way to offer a simple reward to the people who grace you with their continued business. Offer “zero-tax” sales where you cover the sales tax for a weekend or week, or after a pre-determined milestone such as their fifth or tenth purchase from your company.
You won’t find that every single customer appreciates this gesture, but you’re offering loyalty rewards to the people who do. Some will see such a practise as a gimmick to get their money; the rest will see it as good will and help you expand your brand indefinitely.
4. Customer Service: Stop Arguing. To the Customer, You’ll Never Be Right Unless You Admit to Being Wrong
Just like you’ll attract more bees with honey than you will with vinegar; you’ll also make a lot more customers happy and loyal simply by apologizing than you will arguing, finger-pointing or making excuses. This wastes resources and can quickly kill both yours and your staff’s pleasant disposition.
This is an oft-neglected practise in modern customer service. One that will quickly distance you from your ideal customer pool.
Saving a few buck today might make you thousands down the road; depending on the industry you operate in. Remember that you always have the choice to “fire” them down the road when the cost of doing business becomes greater than the profit potential they can offer.
5. Ideal vs. Non-Ideal Customers: Know Who They Are!
Some customers will just show up and buy what you’re selling without ever giving you an ounce of aggravation. Others may pose some problems now and again – complaining, asking for freebies/discounts/revisions – but still pay well and contribute plenty of profits and referrals to your bottom line.
Then there will be those who, despite giving them every conceivable chance to gain your loyalty toward them – continue to take up more time and resources then they’re worth. They’re the black cloud that hovers over your business when they call, email, or step through the front door.
Know when it’s time to fire these customers – not just for profit’s stake, but also to protect you and your employees from high blood pressure!
6. Undercharging vs. Overcharging: Understand the Right & Wrong Time
When you’re starting out, it might be wise to keep your rates “slightly” lower than your competitors, to attract your first customers and establish a reputation. This is of course, unless you have a reputation in your chosen industry and customers are ready and waiting, with checkbook in hand to buy what you’re selling.
Otherwise, you need to understand the cumulative costs of running the business: employees, taxes, licenses, supplies, transportation, manufacturing, marketing, mistakes, and so on.
Charging half what your competitor does will drive away the customers who appreciate the quality aspect you offer, while you desperately cling to the “cheapos” who’ll defect the minute you up your rates ever so slightly. Either way, you’re stuck holding the bag if you go bankrupt!
7. Financial Disasters: Make Sure Your “Rainy Day Fund” is Always Topped Up
Lahle Wolf recommends having a plan to escape personal financial ruin before you even start your new business. Register the business as a separate entity and don’t be too quick to find ways to use your profits early on. Quarterly taxes, business license fees, payroll and income taxes often creep up on you fast, and can destroy the business if you get behind on just one of them – one time! (more)
8. Employee Retention: It’s Management’s Responsibility, Not the Employee’s
There are so many more lessons I could share in this post, but I’ll leave you with one of the most misunderstood; especially in the world of small and medium-sized businesses. Some employees move on because their spouse has a better job in another county, state, or country and it’s the smart decision to make. A few others don’t want a long-term career in your industry, or you simply cannot pay them what they want currently.
However, if you find you have a consistently high turnover rate: don’t be the silly goose who “deludedly” believes you have bad luck finding good employees. Chances are almost assuredly that it’s yours or your other management staff’s fault. Commit to the realization that it’s your responsibility to keep them around. It’s rare to get two rotten eggs in the same carton, right?
Photo credit: Torbakhopper