10 mistakes almost everyone makes when it comes to business … (Part II)

You can see part I – here.

Mistake #4 – You rely on that you are going to be the first

“Every business model that could be copied, will be copied”55987

You may rely on that you are going to be the first who came up with this idea. This might help you if you are Mark Zuckerberg, but if you are not I have to warn you. There are thousands of people out there with deep pockets, who are looking for the next Facebook. And if you create something, at least a bit successful, you will catch their attention. And they will be wanting either buying you or … …hiring other people to do the same thing, as you do. “It is not fair!” – You may say, but this is the way the world work and the competition is here to stay. Is something good for us all and you have to be smart to put yourself in a good comfortable and winning position.

If everything could be copied, then how should we protect our business?

If you are developing a new product, for example, you may want to do a patent of your technology, design or other possible parts from it.

It is a good idea also if you trademark your name or brand for a little amount of money (depending on where you live).

The above methods may work, but my personal favorite is having something that people can’t buy. It should be difficult to achieve. Few things are coming in this category:

a) Unique skills

This might be the unique skill set your crew has. If you have an excellent and healthy relationship with the manufacturer/supplier of your product.

b) Unique relationship

For example, your supplier/manufacturer could give you a 50% percentage off for your orders, whereas if someone “new” asks for the pricing of the same products, he might get only 10%.

c) Insider information

You can also have an insider information for certain market or needs, which could boost your score. This is mostly used for stock markets.

d) Have authority

 

This is the most time-consuming way. If you are now starting, having an authority won’t help you right away. You will need to establish yourself on the market as a knowledgeable, responsible and valuable company. The relationships that you create will give you credibility and bring you more customers. The goal here is getting so famous with your brand that everybody is asking for you and you are defining the standards. Examples for these are brands like Ferodo and Pampers.

 

Mistake #5 – Targeting everyone!

I’m often asking – who is your target? And getting the following answer:

“well, everyone can use this product/service”

Dart on Target and People
Dart on Target and People

I know it is hard to define who would be your perfect customer but is very important. Is it black, white, man, woman, kid? What language does he or she speak? Are they using slang? What are their habits? Where do they eat? What places do they go to? Do they like more bars on restaurants for example? What is their age? Are they young or just before their retirement?

How do you understand all of these? Get data! You need data. Once you have a landing page or other form of validation, track who is saying “yes”. You may have a hypothesis who your perfect customer is, but see if you are right.

As we were building www.mengear.bg with Kaloyan, we were sure, that we are targeting boys. Geeks, people who play video games and watch the latest TV series. We were expecting like 80% man and 20% women distribution. Well, this is not what our friend Google Analytics say:

MenGear

We were wrong. Most of our visitors are females. And I can tell you, that the higher percentage of our customers are also women. So thank you women! You are great!

 

Why is this important? It is because all of your texts, images, backgrounds, customer service and products should look appealing for your target group. So, no. You can’t target anyone. Even Coca-Cola are not doing this.

Mistake #6 –Scaling too early

Having sales already? Thinking of scaling up your business? Sounds great, but here is what you should look at. Don’t hire too early. You need to make sure that you are doing a significant amount of money. As a rule of thumb, I would say at least 2 times the salary of your first employee. And also, check if you can put some more time and effort from your side, before hiring. If you are still able to, then get back to work, pump up the revenue and see what happens. It is a common mistake that people are outsourcing their work, before even knowing best practices. How can you teach someone to do something, if you don’t know this yourself? In the most cases, you can’t. When your business grows up you can buy them courses, books or trainings. In the beginning you would need to know what the best processes are and what is taking vital time of your/your employees work, but not bringing any ROI (Return On Investment). Drop those tasks.

 

Mistake #7 – Selling the wrong thing.

You may have heard – I will buy me a car, a laptop, a new smartphone, a vacation ticket. And my previous not-so-well educated me often imagined that the people are really wanting to physically possess these things. Well, no. This is not the case. People want to buy freedom with the car, maybe also the feeling of acceleration, the adrenaline while hitting the corners with full gas, the respect of other people with the luxury car. Take the smartphone for example. People are buying the ability calling their friends and family, the ease of use accessing their favorite social network or their productivity apps. It is the same for everything we own.

 

Mistake #8 –  Not using the Lean Startup Canvas

Canvas

A great tool to have an overview of your business model is either the Lean Startup Canvas or the Business model canvas. Personally, I prefer the Lean canvas, as an activist of the Lean Startup movement. Whatever model you select, will help you having a one-page business plan, which is easy to use, understand and modify. Once you have all 9 boxes filled, you will be able to see what the riskiest part of your model is and tackle it directly. If you are failing, you can try different methods until it works, but if the riskiest vital part is not working, this would be a big red lamp on your dashboard. It is not a good idea starting with the easiest parts because if we fail on the hard parts, we already lost time on and usually people will lose even more time, trying to fix a born-dead idea.

To fill out everything I think that this might help you

 

 

Mistake #9 – Your co-cofounder is…

Often we make a business with friends and family members. Whereas this could be beneficial for both parties, there few steps that won’t break your relationships.

  1. Define responsibilities – “you are doing this, I’m doing that” type of document. Yes, DO-CU-MENT! Why? Because we need to know what our responsibilities are, not just “I think that I should do this”. You have to know what is yours and what is his/hers/theirs. Once you have this set up you can easily define if someone is meeting the expectations, doing his job, or not.
  2. Define who is going in or out and how – Accept that everything could happen. Life could be unpredictable. Don’t focus on the situations that may occur – death, serious injury, looking after someone. Focus on what would happen if a given person can’t work anymore in this business. For example – is he or she getting his share until the end of his life or just as long as he works for the business? Is he/she going to receive one-time payment? How is this going to work?

The same question comes in, if you need another co-founder. What would be his share and responsivities?

3. Share and equity – Last, but not least. Who is taking what. What is important here, is that everyone needs to know what his share is. You may all work equally, but someone could still be the “head” of the project and he may want to have a bigger piece of the cake. There is nothing wrong with that. The most important part here is that everyone feels satisfied with his portion. Your relationship as partners is more important than 10% more or less.

 

Mistake #10 – Trying to know everything

A common bottleneck in the already established businesses is that a particular person, most likely the CEO wants to know everything. Every little step, having thousands of meaningless reports,  knowing the exact number of clicks of every employee. This is an observed behavior of people who want to rule everything. What happens then is, a bottleneck. The business goes as good as the head who is taking all the small decisions. To avoid this situation let the employees what tactics are working best for them and your business grow. As long as the reports are showing progress, let them do their job.

 

Bonus Mistake #11 – working in your business

 

There is a difference when you are working in your business and on your business. If there is a task, that could be outsourced, you better give someone who loves the mechanical part of the work and thinks how to expand your business. A common misconception is “I can’t afford to hire people”. If you are making more than 400$ in profit you can always hire someone to do the small tasks for you. Especially if your customers are speaking English. There is a site called www.onlinejobs.ph, which for 50$ gives you one month access to people searching for a job in the Philippines where the average monthly salary is around 300$. If your customers are not speaking English, you can still have someone part time. Just make sure that you will set them a target, they should achieve. You need results in numbers, not time, right?

 

I hope you enjoyed these tips and common mistakes. If you like or hate some of them, please let me know in the comments bellow!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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