Five Business Mistakes and How to Avoid Them

In this article we will address the following five mistakes:

  1. Not having a plan
  2. Insufficient start-up capital
  3. Not identifying your market
  4. Not knowing the competition
  5. No support system

 

We will also provide some ideas that will help you avoid these common missteps.

Not having a plan – many businesses start from a dream that is just an idea in the entrepreneurs mind that eventually becomes a start-up business. Many other businesses are born when someone who is working for someone else realizes that it is his expertise that is the most valuable asset to his employer. Then he realizes how much the business owner makes from his efforts and decides to cut out the middle-man (his employer) and go out on his own. Generally businesses that start this way do so with no formal plan. The newly independent business owner may bring some of his former employers clients/customers with him as a jump start to his business or he may go out and generate his own new clients. Either way this business owner is intimately familiar with the operational aspects of the business (e.g. a heating and cooling technician knows very well how to fix a heater and cooling system), but many times he knows little or nothing about the other aspects of the business (e.g. how to find and capture new clients, how to manage cash flow, maintaining the accounting records, etc.)

Insufficient start-up capital – this is by far the most common reason that new businesses fail. Entrepreneurs as a group are typically more optimistic and willing to take chances than their counterparts who work for others. This can lead them to jump in to a new venture assuming the best case scenario. When these entrepreneurs encounter a slow period in generating revenue they can get in to deep trouble if they don’t have adequate cash reserves to pay the bills and ride out a lull.

Not defining your market – Whether starting a new concept or breaking off from a former employer to do the same type of business on their own, many business owners fail to properly define their market. The HVAC repair technician may know very well how to repair an HVAC system, but he may have no idea who the best prospects are for his services. Not knowing their market these new business operators may waste valuable time and money going after the wrong market. Couple this with insufficient start-up capital and a small amount of time spent chasing the wrong prospects can lead to disaster.

Not knowing the competition – By knowing who the players are in your industry you can help define your target market based on your own strengths and weaknesses compared to the competition. Many entrepreneurs never identify or articulate effectively their unique selling
proposition (USP). In other words, why should someone hire them instead of their competition. If they don’t know their competition how can they hope to effectively communicate why they are a better choice?

No support system – A support system could consist of a formal board of directors or it could be a loosely affiliated group of people who can act as advisors to the entrepreneur. There are many categories of expertise that advisors could come from, but each business owner’s strengths and weaknesses should guide their choice of advisors. If you’re background is operations and you know nothing about accounting and finance then having a good accountant and banker on your team would make sense. Someone who was an accountant in their previous profession might best be served by having people with operational or marketing expertise on their advisory team. Whoever you decide to have on your team they should compliment your strengths. You aren’t looking for yes men when it comes to assembling your team.

With these common mistakes in mind a new business owner can avoid being a statistic by focusing on their goals, developing a plan that outlines in detail how they will achieve their goals and by establishing a support system of people with strengths in their own area of weakness. Taking these few, simple steps won’t ensure success, but it can position you better to deal with whatever challenges that come your way.

A Salute to a Great Poem-Freedom is Not Free

I am the son of a 30 year Army veteran who served in World War II and the Korean and Vietnam Wars. In high school I was in Junior ROTC and many of my former classmates went on to serve our country, many of them for 20 years, some for more. Some of them attended military colleges like the Air Force Academy. Among my classmates are some of the finest men and women who served our country proudly and I have tremendous respect for them.

I recently found out that one of my high school classmates wrote a great poem that was an ode to his father, who was a Vietnam Veteran who served his country proudly in the Marine Corp. His name is Kelly Strong and after high school he went on to the U.S. Coast Guard Academy and went on to become a Coast Guard pilot. So, without further ado, let me introduce you to……Freedom Is Not Free, by Kelly Strong. Click here to read it on Facebook.

 

For Those Who Believe Everything on Facebook

I see so many Facebook posts that people seem to believe are absolutely true or real. I am no expert on what is fact or fiction in every case, that is for sure. But, this post gives you a good example of just why you need to be at least a little skeptical when you see something that looks hard to believe.

Why You Need a Content Planning Calendar

It’s important to have an editorial calendar to keep your content consistent and relevant to your business goals. Most businesses put at least some time into planning other areas of their business, like an annual budget. However, most don’t plan their content, which should be the cornerstone of your online, on-site marketing. In fact, great content is at the core of all organic search engine optimization (SEO). Without it, your SEO guru may be able to get your pages listed high in search results, but without great content that won’t keep them coming back.

Proper Planning Creates Efficiency

Without a well thought out content calendar, your content may or may not support your business goals and you could potentially waste resources, creating content that lacks value. Conversely, when you plan your content in advance, it creates tremendous efficiencies and ensures your content stays on target and gets results.

Repurposing

One of the ways planning creates efficiency is by facilitating content repurposing. Many businesses only think about creating content for their blog. This is a great starting point, but when you plan properly, you can use the research and outline from a blog article to create many other content pieces with very little additional work. Here are just a few ways you can repurpose a single blog article’s content:

  1. Youtube video
  2. Slideshare presentation
  3. Tweet
  4. Facebook post
  5. Linkedin group post
  6. White paper
  7. eBook
  8. Other

The possibilities are limited only by your imagination.

Identify Areas That Need More Attention

Planning your content will help you identify areas you want to address by seeing it all in one place. For example, you may want to have different content pieces aimed at your prospective clients during various stages in the sales funnel/buying process. The tone and calls to action will be different for each stage and by seeing this in a big picture summary, such as your content calendar, you will be able to identify where you need to focus additional content.

Spot Opportunities for Larger, Higher Value Content

If you have concepts or processes that you want to explain to your audience, which cannot be handled in a single article, your planning calendar will help keep you focused and on track. It will also help you structure your articles to craft a story rather than having articles around the same subject that don’t flow together. This will make it easier to turn an article series into a white paper, eBook or PowerPoint slide presentation with minimal additional resources.

Keep it Simple

When people hear “planning” they sometimes tune out because they envision a time consuming process that adds little value. In many businesses, planning is something that is forced upon you from people higher up in the organization. A content calendar can be as simple as a calendar with content topics dropped into the week you want to publish the content. It’s useful to track a few other things to increase the value and efficiency of your content marketing, like calls to action, keywords, etc.

Just Do It

The most important thing is to get started. You can always add to, or modify, your plans. On the other hand, if you have no plan, you are shooting from the hip. In an increasingly competitive world, more and more businesses are looking for every possible edge to help them stand out from the competition. Planning could be an edge that helps set you apart and moves your business to the next level.

Deutsche Telekom CEO in Transition

Germany’s biggest phone company, Deutsche Telekom, just announced its CEO is stepping down to pursue ‘entrepreneurial opportunities’. Current CEO, Rene Obermann will remain with the company until the end of next year to oversee the transition to its new CEO, Timotheus Hoettges. Hoettges is the company’s current CFO and has been with Deutsche Telekom since 2000. While there is speculation about the real reason for Obermann’s departure, what is clear is the company’s stock has lost 36% of its value since Obermann took the CEO job in 2006.

[Click here to read more.]

Optimism on the Rise as Housing Index Hits 6 Year High

The builder sentiment index rose two points to 47 this month, inching closer to the 50 point level that most experts view as signs of growth. While the index is still below the level most economists would categorize as a growing market, the trend has been upward and it has been consistent, causing many to lean towards a much more optimistic outlook for U.S. housing.

 

[Click here to read more.]

Morgan Stanley Fined $5 Million for Facebook IPO Improprieties

Morgan Stanley was fined $5 million for unlawfully coaching Facebook’s treasurer to improperly provide information to its analysts just prior to Facebook’s IPO. William Galvin, the Secretary of the Commonwealth of Massachusetts, hit Morgan Stanley with the penalty for what he called, “…a clear violation of the global research analyst settlement that Morgan Stanley signed with Massachusetts in 2003.” Morgan Stanley’s Mary Claire Delaney said the  firm is glad “to have put this matter behind us.”

[Click here to read more.]

Apple’s Stock Punished on Announcement of iPhone 5 Sales in China

Apple’s stock dropped on news that its debut of the iPhone 5 in China did not live up to analysts expectations. The company sold 2 million units over the weekend, almost matching their unit sales volume for the entire third quarter of this year, yet the company’s stock was down .

China is now the biggest market in the world for smartphones, but the country’s complicated distribution system has caused Apple problems in in the past.

[Click here to read more.]

The 80/20 Rule-Pareto’s Principle

Many people have heard of the 80/20 rule. It is known by a handful of other names including the law of the vital few and the Pareto Principle. Simply put, the 80/20 principle says that roughly 80% of results come from 20% of causes.

Why Should I Care?

What does this mean to you? If you understand how to apply the 80/20 rule you can do more with less. Who doesn’t want to do more with less? I sure would like to do more with less whenever possible. I’m not lazy (well, not all the time), I just like being efficient. By the way, when you’re efficient you have more time to be more effective too. So, anyone who was about to argue that effectiveness is more important than efficiency, put that in your smoke and pipe it.

Real World Example

Some simple real life examples make it clear how it works.

  • Business – 80% of profits come from 20% of customers.
  • Technology – Microsoft has found that 20% of the bugs in their software cause 80% of errors and crashes.
  • Safety – 20% of safety hazards cause 80% of injuries and accidents.
  • Wealth – 20% of the richest people control 80% of the wealth.
  • Health – 20% of patients in the United States use 80% of healthcare resources.
  • Crime – 80% of crimes are committed by 20% of criminals.

 

Even among the world’s top ten richest people, three (Carlos Slim Helú, Warren Buffett, and Bill Gates) are as rich as the other seven combined.

It’s Not Just a Good Idea

There are a few things about the rule that are important to understand. First, the numbers 80 and 20 are not fixed numbers that are always the same. They are a rule of thumb. Sometimes the ratio will be a little different, but the concept is that a minority of causes account for the majority of effects.

The second important thing to grasp about the 80/20 rule is that it is a naturally occurring phenomenon, and scientists consider it a law. Yes, it’s not just a good idea, it’s a law. This is a very important aspect of this rule because what it implies is that, whether we like it or not, it works; just like gravity. You can choose to not believe gravity is a law, but if you step off a cliff you won’t float because you don’t believe in it. You’ll drop like a rock. It’s the law. Scientists have even observed that brush fires seem to occur in a pattern that is consistent with the 80/20 rule, so it has been observed to happen in nature, not just in man-made situations.

You Can Use It to Your Advantage

One of the great things about the 80/20 rule is that if you understand and apply it, you can get more things done, more efficiently than if you don’t use the rule. Tim Ferris wrote a book called The 4-Hour Workweek that talked extensively about using the 80/20 rule to work less and get more done. Ferris famously incorporated the Pareto Principle into his life to help him accomplish some pretty amazing things all before he turned 30, including:

  • First American in history to hold a Guinness World Record in tango
  • Speaks 5 languages
  • National Chinese kickboxing champion

 

In my consulting work, the biggest application of the Pareto Principle I’ve seen has been in the area of working with budgets and financial results for businesses. And yes, the rule applies there just like everywhere else. As it turns out 20% of the items in a business’s budget account for 80% of the sales, profits and/or problems. In short, just like everywhere else, focusing on the 20% will take less time and get more results than just going down a list. The funny thing is, I’ve spoken at national conferences where I was asked to deliver a presentation to an audience of conference attendees comprised of Chief Financial Officers, Controllers, Treasurers and the like. All of these people are very senior finance professionals and many of them routinely express that, although they are familiar with the 80/20 rule, they don’t use it as much as they could or should.

What You Can Do About It

Sometimes the most important step in making change and/or progress is awareness. Most people have heard of the 80/20 rule, but few actually use it effectively. If all this article did is to get you to think about how you can use the rule to improve something, great. If all it did was entertain you, that’s cool too, but hopefully you’ll do what Tom Hopkins refers to as GOYA. Get off your assets. You thought I was going to say something else just then didn’t you. Shame on you. Now GOYA and start using the 80/20 rule to your advantage.