There’s just so many ways to destroy a young or small business and so many fewer tactical ways to grow and succeed. And while we like to concentrate on the things that will bring success to your business, there are some tried and true fails that can drive an owner to his or her knees.
I’d like to say that I personally have observed these mistakes caused by the misguided strategies of OTHER companies, but I have to say we’ve tried some of these ourselves and they were in a word; DISASTROUS. Fortunately we took some hits to the bow but never sank (sorry, I’m a Navy veteran and these things just launch out of me) and lived to do business another day. Some companies aren’t so fortunate. So, without further ado, five guaranteed ways to sink your small business.
1 – Pick Opulent and Ornate over Frugal
The last thing a small business needs is a big office and all the bells and whistles that go with it, which don’t remotely match your revenue. The old line, “build it and they will come,” should only be offered by people like Kevin Costner in an Iowa cornfield. I’ve seen too many companies spend their seed money, their business loans and their investor money on a building and all the accoutrements that accompany it. Fancy furniture, flat screen TVs, upgraded fixtures, new office equipment, artwork and signage can kill your business. If you’re a retail operation, focus only on how best to display your product. If you’re a B to B business, concentrate on functional. Chances are your clients aren’t going to visit that much anyway. If you’re like us – they want to see us in THEIR office, not the other way around.
Sometimes you don’t even need an office. A quiet, work efficient home office will do for most just fine and a UPS box can serve as your business address. It’s accessible 24/7 and you only need two keys. If you have clients that will let you work in their space (most like having you around) that’s also an option you should consider if the kids are home from school for the summer or you’re sick of the crawling wi-fi at Panera.
2 – Spend Too Much Money on a Website and Marketing Materials
Expensive websites should never be your first priority as a small business, unless you’re selling product online. There are some great inexpensive blog options at WordPress or Blogger to get you started. Once you’re up and running and the revenue is coming in – THAT is the time to get a real website that’s clean, functional and SEO savvy. I’ve seen too many companies drop 5-10,000 on a website before they even made their first sale or grabbed their first client. It’s a crazy way to get out of the gate.
There’s also a lot of other amazing ways to blow your budget, from advertising to direct mail pieces to Tchotchkes (golf balls, mugs, water bottles). Not that I’m calling anyone out, but I know one company that six years after ordering them, still has three dozen company logo mugs. Let me know if you want one.
3 – Take on Clients so you can Pay your Employees
A couple of years ago I was talking to the founder of a small tooling company and asked him how he was doing? His response? “We’re treading water.” Why? “Well, we’re getting beat up by the OEMs and I’m having to take on work that I know we won’t make any money on.” Why? “Because I don’t want to lay off employees.”
As gallant and caring as that sounds – taking on work to keep the lights on or prop up what is probably an inflated work force, spells doom for any company. It’s not your job to single handedly battle the local unemployment rate. When you are forced to bring on new break even clients just to keep them on, you’re putting the future of your entire company at risk and could jeopardize the careers of ALL of your employees, not just a few if you end up shutting your doors anyway. And taking on non-revenue generating work, in any environment, is just bad business.
4 – Engage in Co-Dependent Hiring
This one I’ll fess up to because I turned it into an art form and I want complete credit. I’ve had a lot of different types of jobs in my life, from the media, to corporate communications to in-house CMO. In that time I’ve met a lot of people I felt really didn’t get the credit they deserved. With that bit of revisionist history, I ended up hiring those types of people. You know the ones – the men and women who didn’t get a fair shake, the ones who should have been promoted and weren’t, the innately talented ones, who in spite of their brilliance have been out of work for two years, and my favorite – the one who sued her last employer because she was so obviously wronged. I’ve hired all those people and it was a DISASTER.
I knew my HR policies had his rock bottom when a business coach told me that I hired like I used to date. He was right. If you’re obviously not good at picking through the candidates or recruiting new people to your office, there are plenty of outsourced HR groups who can do the screening for you by vetting their background and giving them online personality tests. It works.
5 – Don’t Follow Industry Trends
Our own company was strictly a PR agency when we started seven years ago and we quickly figured out our clients wanted more. With the advent of SEO, Social Media and new marketing strategy, public relations for us became a piece of the toolkit rather than the main selling point of what we do.
Many companies have fallen asleep at the switch and have become irrelevant. Kodak seemed to be the last company on the planet that realized people weren’t using film anymore and got into a crowded printer market too late. Newspapers who have failed to give their readers what they want online are on life support. Avon got killed by similar companies like Amway which were much quicker to get into the international market and drive more traffic online. RIM couldn’t update their Blackberries in time to compete with Apple. You get the picture.
Small businesses are no different. Colors, textures, technology and buying habits change every year. If you make a product that is no longer in demand or has been replaced by something more valuable or user friendly – you’ve got to shift your strategy. If you provide a service that is declining in consumer need, it’s time to sell or shift. Keeping up with industry trends is not for the faint of heart, but something that should be a priority for your small business.