"Things are never as good, or as bad as they seem" - Tony Hsieh (CEO of Zappos)
I figured I would throw that quote out there for any small business owner, or potential small business owner that read the title of this post and panicked.
When you start a business it is inevitable that you will make some mistakes. No matter how much research and planning you do, it is unavoidable. Don't get me wrong, I am not advocating for winging it. It is crucial that you have a plan and do as much research as you have time for. While mistakes are going to happen, proper planning and research will head off quite a few of them.
While most of the mistakes a new business owner makes can be overcome with perseverance and the ability to learn from them, some are more crippling than others. Here are three avoidable mistakes that can be detrimental to your new business that I have made, or I have seen being made over and over again.
Not Knowing Who Your Ideal Customer Is
This can also be described as knowing what your target market is. Once your small business is established and you have a customer base or client list, this is much easier to not only determine (because you have found it), but to stick to. Look at the people that buy your product or pay you for your service already, and presto, there is the best indicator of your target market. However when you are just beginning, this is a much more detailed process. And while you should have a general idea of who will use your products or services, quite often with the right research you can be surprised!
Ultimately determining your target market is going to be one of the most important things you do. If for some reason you have an unlimited budget and don't care how much money or time you are wasting by marketing your product or service to everyone under the sun, you can probably stop reading here. Go ahead and look at the cool pictures, memes, and gifs in this post, and then pass this along to a fellow entrepreneur who isn't in such a position as yours.
I suppose since this is so important we better talk about some of the most cost effective ways to really nail down who your market is. Again, there are many ways to do this, but as you know I like to discuss strategies that have worked for me or that I have seen work with my own eyes. Additionally, strategies that won't break the bank by straining your budget. Here are just a few.
Research your competitors
This one doesn't require a lot of explanation, however can be extremely effective. Look at other businesses (small and large) that sell a similar product or service as you do and find out who is buying from them. Take a look at their reviews on Yelp, Facebook, Google, and anywhere else they have them available. This will not only give you an idea of who they are selling to, but how well (or poor) your competitors are doing things.
If it is not extremely expensive, or it within your budget, shop for their items or services. This way you get an up-close and personal view of their brand. It also gives you insight into their processes and they way they deliver on what they are selling. You can get a pretty good feel for this as well by interacting through their website.
In addition, it is a good idea to follow all of their social media platforms. It will allow you to see who exactly is liking and following them. This data is invaluable. It is not some percentage based estimate or analysis, it shows you the EXACT people! Remember one thing though, you are not doxxing them, and you sure as heck don't want to be stalking them. The information your looking for is easily found by simply following your competitor and checking out their profile occasionally. This strategy is free, and will answer all three important questions regarding your target market: Who, where, and how to find them!
Analyze the need/want for your product or service
Chuck Cohn is a contributor to Forbes.com and he writes about the value of data analysis and the ways to collect it. You can click here for the whole article, but there are a couple of cost effective ways that I really like, and have achieved terrific results with.
Create a survey with a large sample size. Geez Drew, that sounds easier said than done, right? While that is certainly true, there are ways to incorporate this with other marketing strategies you plan to use or are already using. I'll give you a real life example from one of my clients.
5280 Banh Mi & Grill is a very popular Vietnamese restaurant in South Aurora, CO. They also happen to have a killer pork green chili. As part of their marketing campaign to sell their green chili they send a representative to local farmers markets around the Metro Denver area to sample and sell the product. While doing this I created a simple survey form that the samplers fill out (keep this brief, no one wants to take a long time filling out paper work at an event like this) that not only gives feedback on the chili, but information about the person tasting it. You can easily do this electronically on a laptop or tablet as well, however it can be hard to get multiple peoples feedback at once if you only have one or two devices there. ******Disclaimer****** Always give an option for email address and phone number, even if they don't fill it out. Giving them the option to voluntarily be contacted is a must, and will serve you well in following email campaigns and such*****
Another way to access data and feedback is to look within your own network. By this I mean your family, friends, and their family and friends. Obviously you want as big of a sample size as possible, so if your network is fairly small this might not be the best option, but it will still give you important data and feedback.
Some people have told me "I can't ask my family about this, they will just tell me what I want to hear so they don't hurt my feelings. I don't know if they are being truthful about my product or service." This is a legitimate concern! One thing to remember though, you are not asking if you look fat in a dress, or if the chicken you cooked is overdone. Generally if it is about your small business and can help you succeed, they will be honest with you as a way to help.
To find and tap into your target market does more than just help you sell more products or services. It is one of the biggest money saving things you can achieve. I am sure you have heard of Return on Investment (ROI). If you are marketing to anyone and everyone that can be extremely expensive and your ROI will be lower than it needs to be. But if you are spending a great deal less money marketing, because it is targeted correctly at the right people, that ROI will increase dramatically.
Undervaluing Your Product or Service
The truth of the matter is that there are really very few circumstances where it is a good idea to undervalue what you do. I will get to two of them in just one minute. However right now in the United States consumer confidence is at an extremely high level. What that means for you is the phrase "you get what you pay for" means more than ever right now. If you are undervaluing what you do and what your work is worth, so will your customers. While you think you are offering a great deal for them, they are going to see an inferior product or service.
Erin Flynn writes in a post called "STOP UNDERVALUING YOUR WORK, YOUR INDUSTRY, AND YOURSELF", about this very topic. Click on the title to read the whole article, but in one section Erin explains very nicely why Cheaper isn't always better.
CHEAPER ISN’T ALWAYS BETTER
By presenting yourself with a really cheap product, many customers will skip over you because they know that they get what they pay for. You’re sending the message that you’re not really very good at what you do. And if a client does hire you and is pleased, you’ll become known as “that cheap designer” and have a hard time raising your prices (especially if this is currently a hobby and you’re hoping to go full-time). Even if you’re new and still learning, you should pay yourself at least minimum-wage (for ALL hours you work on a project, not just the design hours) and present yourself professionally (contracts, invoicing, and clear terms).
In addition, one of the worst byproducts of undervaluing is that it brings out is a lack of confidence. Not just in your business, but yourself. Trust me, when you are starting your own small business you have enough obstacles ahead of you for you to become one yourself. That fear of failure is already going to be there, you don't need to make it worse. Better yet, make it work for you instead. I'll be discussing how to make the "fear of failure" work for you more in an upcoming blog post.
So we have discussed a couple of examples of how you can undervalue what you do before you even talk to a potential customer or client. However there is a sure fire way to get yourself into financial jam while negotiating a price with them.
When you are just starting out in your new business adventure it will feel like the only thing that is happening is that money is going out too fast. Well, you're right, it is. I'm sorry I don't have any witty words of wisdom here to make you feel better, but it's the truth. This can lead to a sense of panic where you feel like you need to take on any project, or accept any offer thrown your way, just to get some money flowing in. Now don't get me wrong, you do need to act, and you do need to get some cash flowing in. However where the mistake comes in here is when you accept an offer that won't even cover the work that you will need to put in. Another way of putting this is "the work outlasts the money".
It's great that you got paid a little bit, but now you are stuck working on a project that didn't pay you enough to begin with, while losing out on potential projects that you could be making money on. You have to make sure that any jobs or deals that you accept won't end up costing you money, and equally as important, valuable time in the end.
I promised a couple of examples of when it can be okay to charge less than what a particular product or service is worth. However it is important to remember that you still need to value what you do correctly. In these cases you are lowing your price, but you still need to get the correct value in one way or another.
I'll give you another personal example of this from my business. At AES one of the services we provide is Logo Making. Anyone who knows about this particular market can tell you that you most definitely get what you pay for! There are huge brands that pay up to $10,000 or more for a professionally done logo. That is an extreme obviously, but a very well done logo from a reputable company can realistically get from $700 to $1,500. While AES has the same talented personnel and capabilities of the longer established logo makers, we had to build our portfolio, and more importantly our reputation. To do this we made sure to price out our logo projects much lower than the actual value. To make up for this, we were able to get excellent references and testimonials from reputable companies, and increase the demand for our services. Of course we had to put out a quality product in the logos, but that is a given in whatever industry you are in.
This tactic can work even more so in your favor if you have more than one product or service. Let's stick to the logo example for simplicity sake. At AES we offer a bunch of different services for small businesses. So while we already recouped the value originally lost in lowering the price, we can gain even more value finding other "areas of opportunity" for a client now that we have made them happy with their logo. They have a quality product to use on their website, social media, letter head, business cards, etc. Well who manages all of these things, and are there areas of improvement where we can offer our services? Do you see where I'm going with this? I bet you do. Long story short, now we have an opportunity to do more work for a business that is already a client, and already trusts and likes our work. I bet you can imagine this converts to dollars more often than a cold lead who knows nothing about you, especially when you are just starting out.
I hope using some personal examples has helped me explain this clearly. But in the end, if you are going to have the confidence to start your small business, there is no reason to let yourself undervalue what you do. Whether it's the fear of failure, or any other reason, if you are putting out a quality product or service, make sure you are paying yourself for the work that it takes to do so.
Overwhelming Yourself With Too Many Tasks
Let's not pretend that most days in the beginning of starting your small business that you aren't going to feel overwhelmed. It comes with the territory, and you will have plenty to do. Those of you that have started your businesses know exactly what I am talking about. However the quickest way to fall behind is not just having too many tasks on your plate, it is starting too many tasks without finishing any of them!
In a great post that contains even more critical mistakes to avoid, and how to avoid them when starting a small business, Silvia Pencak writes about the value of completing tasks and much more. You can click on her name to see the complete article, but here are a couple of things she touches on that are particularly relevant to our discussion.
If you are someone that creates to-do lists each day to make sure you stay on task, congratulations, you are fighting a winning battle. However you know that your day can turn sour really quickly if none of your tasks are getting checked off of that list. Generally this starts, and then snow balls in either direction, with the first one or two tasks on your list. Think back to the feeling when you get most or all of your tasks completed. It's quite nice and you know you have been productive. One thing Silvia talks about in her article is putting a quick and/or simple task at the top of the list. This way you start off your day completing something right of the bat! I know that sometimes you need to prioritize by level of importance, but if you can get something accomplished early on, that momentum will carry into the more important tasks as well. Soon you will find yourself being more productive all together.
Silvia also talks about trusting your gut. Don't let important decisions fester and hold up progress. Yes, you want to make the best, most informed decision possible, but be decisive. This will allow you to complete things quicker and get more done. She reminds us that 80% of something is better than 99% of NOTHING. It makes a lot of sense when you put it that way. Also remember while trusting your gut that it is important to learn from your mistakes. When making quicker, decisive decisions it might mean you make a wrong decision, another mistake. However this will still save you time as you can fix it and move on more quickly than if you let the original issue linger for weeks while trying to be perfect.
So you know you are going to be overwhelmed when you start your small business. But while that is inevitable, you are armed with a few strategies to make sure you still win. There are so many things that are going to happen that you cannot control that it is important that you make sure to get your arms around the things that you can! When you start completing tasks, it becomes contagious for you and for your employees. Pretty soon it is habit, and your small business will be more productive than ever before.
The Run Down
The launch of your new small business in not going to go off without a hitch. You will have to put in the work to find your target market. You will have to overcome any doubts, fear of failure, and/or lack of confidence to make sure you don't undervalue yourself or your business. And you will have to force yourself to form good habits to make sure you don't overwhelm yourself to the point of no return. However remember the quote from the beginning of this article, "things are never as good, or as bad as they seem."
As always, thank you for taking the time to read this. While I certainly hope you find it useful, it is humbling to know others have valued the work you have put in enough to read it. Please remember to like, comment, and share this post so others can benefit as well!