Common Business Mistakes

Four Common Business Mistakes

As a consultant, I get to see the inner workings of business after business, which allows me to observe problems that repeat themselves time and again.  Interestingly, prospective clients ask us, “What experience do you have in my industry?” believing that industry-specific knowledge is the most important factor in creating a successful strategy. My general observation over hundreds of clients is that IT IS THE ROLE a business plays WITHIN its industry that seems to determine what problems it will have, not the industry itself. Here’s what I mean:

1. Distribution Businesses: These businesses have it tough, often getting price-squeezed by their clients, and mistreated by their supplying manufacturers. The secret to success of a distribution business seems to be not to become over-dependent one line, and to add value by providing services that relate to the product lines sold, like maintenance, or consulting. Then they can easily establish credibility for the lines they do sell by charging for expertise, and providing excellent marketing. Amazon has mastered this business model by offering millions of products, and over-the-top service with immediate delivery.

2. Service Businesses: These businesses, especially smaller ones, generally don’t charge enough. Most charge hourly rates, and get stuck in the rut of not ever having enough cash left over to grow. Most would do well to create packages of their services and offer flat or project rates to accomplish the tasks they are hired for. What’s more, if they base their fees on the value the service brings to the client, they can get paid far better for the work they provide than if they stay in their hourly pricing model. Edward Jones and Mr. Rooter do great jobs of avoiding the hourly in favour of service bundles.

3. Manufacturers: Manufacturing or Construction businesses are willing to spend heaps on equipment or property upgrades, but typically do not leave enough budget for their marketing. They seem to think “if we build it, they will come.” Many manufacturers I’ve dealt with have built a marketing plan with good intentions, only to set it aside so they can buy another piece of equipment. In the end, if you don’t have a branded product, you have a yard sale. You won’t see Apple products in a yard sale, right? Think about how hard this company works at their marketing.

4. Retail and Hospitality Businesses: Retailers are either very loud or very quiet when it comes to marketing, but most think too much about the products and pricing (especially discounting for temporary sales), and too little about the service and expertise they offer…or a unifying angle to make them stand out. But when retailers take the time to know their customers personally, this guides them toward the right products, and provide expertise, price be comes far less an issue. Ever notice just how hard Fairmont Hotels works to keep their guest happy?

So there you have it: If you’d been in my shoes as a market research and business strategy consultant over the past few years, that’s a taste of what you’d have observed. I’m sure that regardless of the business you operate, you’ll find a grain of truth in what I’ve learned…and maybe take a little tip to get you going in the right direction. If you’d like to chat, go ahead and book a free consultation.