January 31, 2013
Common business mistakes
Bad business mistakes happen to good people, according to author and entrepreneur, Mathew Dickerson. Here, Mathew explains to Business View where some businesses stumble and reveals his list of common mistakes to avoid in business.
Bad business mistakes happen to good people. Author and entrepreneur, Mathew Dickerson explains where some businesses stumble.
Mistake 1: not delivering consistent customer service
Many businesses get so caught up in managing the bottom line that they neglect customer service and this can eat away at brand integrity, and affect profits.
“If you say, ‘I’m going to deliver something to you or get back to you by this time’, do it,” says Dickerson. “And if you don’t do what you say you’re going to do, be able to say, ‘Sorry, I made a mistake’ and then fix it.” That’s critical to reversing the negative customer experience.
Meet your online customer service promises, too. If, for example, you state on your website that your business will respond to customer enquiries that come through to Facebook within 24 hours, do it. “Don’t say, ‘My wife was sick and I had to collect the kids from school, so I didn’t get back to that person in a day’,” says Dickerson. The reason you provide for not delivering is irrelevant – the issue is that the customer’s expectations weren’t met.
Mistake 2: attending irrelevant events
Think twice before attending networking events if the audience isn’t a good fit for your business. And in terms of value, approach networking in the same way as you’d approach any spend on advertising.
“It’s critical in the networking process to deliver value for your business and to make sure you’re networking with the right audience,” says Dickerson. “Put a value on your time.”
Mistake 3: poor task prioritisation
Business owners need to get good at saying ‘no’. They’re too nice, according to Dickerson.
“Smaller businesses, in general, will say ‘yes’ to everyone and they’ll try to be incredibly helpful to everyone,” he says. “Yet what they have to do is prioritise things that are urgent and important.
“If it’s not urgent and not important, don’t do it. Apply the Stephen Covey matrix. Don’t stop your charity or community work, but if you want to do things that improve your business, make sure what you do is giving a return.”
Mistake 4: cash-only business
Dickerson is a firm believer in all businesses providing credit and EFTPOS facilities, as the amount a business pays a bank to process EFTPOS is cheaper than the cost of handling, counting and banking cash. In the cashless society that we live in today, clients will often turn away from a business that doesn’t make it convenient to deal with them.
Mistake 5: not being hungry for profit
Only the top 10 percent of entrepreneurs earn more money than an employee in an equivalent role and the average small business owner works 20 percent longer hours than the average employee, says Dickerson. That means you need to aggressively approach business as a profit-making venture, rather than as a venture in which the prime focus is to indulge your passion.
If you want to transform a hobby into a business, be clear about how you’ll make money and chase the business model that delivers the best profit. For instance, you may get a greater return on investment by hiring someone else to do your job or by outsourcing part of your work.
Mistake 6: always cutting expenses to achieve profits
Cutting expenses may not automatically increase profitability. Dickerson opts for another approach: “I’ve always been a fan of increasing income to become profitable, rather than cutting expenses, unless you have a fixed income.”
Mistake 7: being afraid to raise prices
This is a fear many businesses have, notes Dickerson. “They think, ‘if I put my prices up, people won’t buy, won’t think I’m any good anymore, won’t like me’. But when they finally take the plunge to put their prices up, more often than not they find that no one really notices – especially if it’s only a CPI price increase, only up by a couple of percent. Make sure your prices are keeping track at least with inflation.”
Mistake 8: not stress testing the business idea
Ensure your business idea passes what Dickerson calls “the common sense test”. That is: does it have a sizeable potential customer base that the product or service will appeal to? And does it have strong potential for repeat business?
As a case in point, Dickerson shares an example of one idea that wasn’t going to fly – a rural massage business for pregnant women. “Sounds good initially, but how many people are pregnant at any one time, and then how many of those would be interested in your services in your area? That’s a very small audience.”
Mistake 9: Ignoring customer feedback
Not enough small businesses willingly take on customers’ comments, according to Dickerson.
“Rather than trying to defend yourself, rather than being thin-skinned, embrace feedback – especially negative feedback – and ask yourself, ‘what can we do better to keep improving?'”
Read more business insights by Mathew Dickerson
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