Part 2 -The 10 Biggest Business Blunders (and How You Can Avoid Them) More business blunders in this excerpt from the new book by David Finkel and Diane Kennedy. Learn about the 10 biggest blunders businesses make and get tips for avoiding them.
The 10 Biggest Business Blunders (and How You Can Avoid Them)
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Blunder #6: Giving Your Expertise Away in a Way that Has No Perceived Value
This is a challenge for many professionals. Prospects call and want to meet with you for a free consultation. You want to dazzle them and give them tons of good information in the free consultation. Yet this one-on-one time is the most costly time you have, because you’ve got no leverage on it and you haven’t been paid for it. Plus, you have no guarantee that you’ll even get a client out of the deal!
Strategy: You’ve spent a career lifetime learning the skills to ask the right questions and look at your client’s situation and challenges in a systematic way. Charge for this expertise and structure that you bring to the table. Not only will it make you more money because it will be an additional revenue stream, but it will also dramatically increase your closing ratio in converting prospects into paying clients. Best of all your new clients will benefit from the extra value they’ll receive now that you help them understand and appreciate the tangible value your expertise delivers to them.
Blunder #7: Requiring Payment Before You Give any Value
Okay, this might sound like a contradiction to Blunder #6, but it’s not. Be willing to give value first to start the relationship, but do it in a virtual way that minimizes any one-on-one time of your own. Giving value is often a great way to invest in a new business relationship that can pay great dividends. Just do it consciously and not out of habit or fear of asking for payment.
Strategy: Give prospective clients some huge benefit that has just a one-time cost and requires no ongoing time of yours. For example, we’ve created the “Millionaire Fast-Track Program,” a $2,150 free bonus for people who register their copy of The Maui Millionaires for Business. While it costs us over $100,000 to create and maintain this valuable bonus, we know that over time it will generate millions of dollars of value for our business. How? Because it is a simple and easy way for readers to start doing business with us after getting an incredible free gift that shows them the quality of the information we offer. We used this with our last book, The Maui Millionaires, as well, and thousands of our readers let us know their appreciation for the book bonus we used in that case by choosing to enter into a long-term, mutually profitable relationship with us and our companies.
One hint: Your free content needs to have real value. It shouldn’t be just a sales pitch. Instead, gracefully and tastefully offer your products or services in your free content in a way that makes the experience a positive and valuable one for your new clients.
Blunder #8: Ignoring Window Shoppers in Favor of Customers
A lot more people will visit your brick-and-mortar shop or your virtual business than will ever become customers. Don’t make the mistake of concentrating on the customers only and ignoring the visitors. Your visitors are people who contact your company through an inbound phone call, in-store visit, or someone who buys your book, or visits your web site. Far too many businesses ignore these unrecorded guests even though your business may be spending hundreds of thousands or millions of dollars in marketing costs just to get them to come by. You must find automatic, systematized ways to get your visitors to tell you who they are.
Strategy: Offer your visitors such great value (for free) that they choose to enter into a relationship with you in a way that lets you know who they are. The special book bonus you get with this book is a powerful example of this. Each of these offers requires our guest to let us know who they are in order to receive this free information. We each get something of value in the exchange. This same strategy can be used in a retail store (e.g. offer them a free gift certificate), in a service-based business (e.g. script out how your phone team will offer your callers a free e-book, gift, or upgraded service), or in any other business. All it takes is a little imagination.
Blunder #9: Hiring “Warm Bodies”
When the rush of new business happens, it’s really tempting to hire any and everyone. The problem with doing warm body hiring is twofold. First, you may or may not be getting quality employees. And second, you could very well experience a sales slump and be stuck with a big payroll.
Strategy: Use outsourcing to fulfill staffing needs rather than hiring employees. When you do hire employees, always make sure you do background checks, verify references, and get signed non-disclosure and non-compete agreements.
Blunder # 10: Failure to Fulfill Sales Promises
In Blunder #4 we talked about the danger of spending all of your time and effort in building the infrastructure and systems and ignoring the sales component. That’s a complete non-starter for a successful business. Without sales and cash flow coming in you have no business.
But the extreme opposite is a problem as well. In this case, you make lots of sales, but don’t have a good operations system to fulfill the product or services. In the short run, you’re fine because you have cash. But, in the long run, you don’t have a business that is sustainable because the only referrals you are getting are tepid at best and negative at worst. And, taken to the extreme, you might even have a lawsuit if you fail to fulfill or make a mistake because your internal documentation is out of order.
Copyright © 2008 David Finkel and Diane Kennedy. All rights reserved.
David Finkel is one of the nation’s most respected wealth masters. A former Olympic-level athlete, he is a business and real estate multimillionaire and the co-creator of Maui Mastermind, the world’s most exclusive wealth retreat™. He is also the bestselling coauthor of The Maui Millionaires (with Diane Kennedy) and The Real Estate Fast Track, both from Wiley. His how-to financial articles have appeared in over 4,000 periodicals across the United States.
Diane Kennedy, CPA, is a top real estate author and investing expert. She is the founder and owner of DKA, a leading tax strategy and accounting firm. A past recipient of the prestigious Blue Chip Enterprise Award, she is also the author of Loopholes of the Rich and The Insider’s Guide to Real Estate Investing Loopholes, both from Wiley.