“If you can avoid just a few of the biggest, most crucial mistakes that I’ve made, then success is going to come much easier.”
In fact, because most other businesses are making at least some of these huge mistakes, if you can just avoid the worst of them, your business will be at a huge advantage.
Yes, experience helps in business. But my experience can help you, too! Why not learn from my mistakes instead of making the same ones yourself?
Understand that you’re going to make mistakes
If you can avoid just a few of the biggest, most crucial mistakes that I’ve made, then success is going to come a whole lot easier. In several different businesses, I completely torpedoed any chance of success by making direct frontal attacks at established businesses, competing for the same customers in the same way.
For example, I started a free newspaper offering general “Help Wanted” ads, competing more or less head-on with Boston’s flagship daily newspaper, The Boston Globe. Guess who won?
In MBA programs they call this “strategy,” but it’s just as easy to think of it as being “different.” Not just a little better, but really different. With my newspaper, I could have targeted a particular market segment, like technical help. Or perhaps I could have tried something really different, like running job fairs or collecting resumes of job candidates and selling access to them.
Never look at an expense in isolation
It’s so easy to make blunders handling money in a business. But my biggest mistakes come about when I don’t keep looking at the budget and the cash-flow projection.
Every day in business you are bombarded with what seems like great reasons to spend money on something you didn’t budget. You get ideas from ads about LegalZoom alternatives, salespeople, employees, and even your relatives! Taken in isolation, so many unplanned expenses seem like a great idea. Think how fast a new computer would be! Wouldn’t new desks look sharp!
But when I start to make even one or two exceptions a week to my budget, I soon find my budget and profit projection were just a fantasy.
Walk before you leap with marketing
I could talk about my marketing blunders forever, but the bottom line is clear: you never know what is going to work in marketing, so don’t be afraid of making lots of mistakes—as long as they are small ones.
- Never, ever, spend lots of money on any marketing program until you see that it is bringing in money.
- Never assume that someone else’s marketing program will work for you.
- Never assume that an ad agency or marketing expert can guarantee you results—no one can.
- Make small test promotions and put in that extra effort to carefully measure results.
- Ask every customer how he or she heard about your business, and track the response to every promotional effort.
There are some marketing avenues out there that will work for your business, but it could take you a long time to find the right mix of the right media, the right offer, the right ad copy, and the right ad design.
Spring for the coffee
Everyone makes some big blunders managing people, and I’ve made more than my share. A lot of business owners and newly minted managers tend to be too harsh and demanding—like me!
At one of my first ventures in college, a house painting business, even my employees would give me free people-management advice. I remember one of them saying, “Hey, Bob, how come you can’t act like a normal guy and spring for coffee and doughnuts now and then?” I grudgingly started taking five bucks out of my wallet and ten minutes out of each workday for the coffee break, but in higher productivity I probably made back the money many times over. More important, the employees kept coming back to work the next day!
Obviously, buying the coffee is only a starting place in treating people right. I’ve found that you can’t just drive people to work 100 percent flat out all day long and well into the night—well, at least not every day. So even if people are doing a reasonably good job, loosen up and show them how much you appreciate their work.
Nurture relationships with key customers
Dealing with customers is something I never seem to get right. Like so many businesses, I spend too much effort on making the sale and not enough on building the relationship. This would be fine if nothing changed or there were never any major problems, but there always are.
You are so much better off if you have developed a close relationship with key decision makers, and not just the buyers at businesses with which you are dealing. Sooner or later, I find that there will be some kind of problem—such as discounts, payment terms, faulty products, or whatever—and you’re going to end up dealing with the key decision makers for the first time under negative circumstances.
Even if you’re a relatively small vendor, you may be surprised how receptive executives of a large company you’re doing business with may be to meet with you, especially if they know you are not just meeting with them simply to get more orders, but to try to serve their needs better.
Takeaways you can use
- Avoid frontal attacks on established competitors.
- Keep your eye on your budget and cash flow.
- Marketing mistakes will happen—make sure they’re small ones.
- Spring for the coffee—treat your customers and employees right!
Author: Bob Adams is a Harvard MBA serial entrepreneur. He has started over a dozen businesses including one that he launched with $1500 and sold for $40 million. He has written 17 books and created 52 online courses for entrepreneurs. Bob also founded BusinessTown, the go-to learning platform for starting and running a business.