10 Mistakes That Reduce Profitability
by © Dr. Rachna D. Jain.
In my professional experience as a sales and marketing coach/consultant,
I've had the opportunity to work with a number of small business owners
on various issues related to sales and marketing. The owners who are struggling
to keep their businesses afloat tend to engage in some, or all, of the
following mistakes that reduce profitability.
Mistake #1: They fail to market or market inconsistently. Once you have
committed to owning and running a business you must be equally committed
to marketing and selling the products and services of that business. It
is difficult, if not impossible, to stay and remain profitable without
a commitment to ongoing concerted marketing.
Solution: Market all the time, every time.
Mistake #2: They hesitate to "ask for the sale". Rather than seeming
pushy or obnoxious they let profit-producing opportunities pass them by.
They worry more about what someone thinks of them than they do about bringing
more money into their business. If you find it difficult to "ask for the
sale", you can be sure that you're not bringing in as much money as you
could be.
Solution: Practice asking for the sale.
Mistake #3: They don't ask for help or assistance in the aspects of
the business where they most need it. Most business owners possess strengths
in a particular area but whether by necessity or ignorance they often end
up working in areas that aren't part of their strengths. When business
is not going as it should they delay or procrastinate in asking for help.
Each day that goes by with your business running at less than maximum efficiency
means dollars lost from your pocket.
Solution: Get expert advice from an attorney, accountant, or other service
professional before you really need it.
Mistake #4: They don't follow up with past customers. It is usually
much easier to reactivate a former customer than it is to attract a new
one. If you are not following up with past customers on a regular basis
you are reducing your profitability potential.
Solution: Develop and implement a regular method for customer follow
up.
Mistake #5: They don't take regular stock of their expenses. Savvy business
owners regularly appraise their business expenses and find ways to reduce
costs without sacrificing quality. If you haven't completed a cost analysis
lately, you might be paying more than you need to be, which will reduce
your profitability.
Solution: At least once per quarter review expenses and negotiate for
adjustments as appropriate.
Mistake #6: They spend large amounts on glossy, slick marketing materials
and expect business to pour in without any additional effort. Glossy brochures
and slick marketing materials are a nice addition to more active forms
of marketing such as meeting people, calling people and speaking to people.
Brochures and business cards, no matter how beautiful, do not replace direct
contact. If you are spending money on flashy marketing materials rather
than marketing directly you will be less profitable than you could be.
Solution: Take those glossy brochures and hand them out directly to
people at the next possible opportunity.
Mistake #7: They spend a significant amount of time in low-return activities
(as measured by dollars and personal satisfaction). If you are spending
the majority of your day completing tasks which are administrative in nature
and/or which can be easily completed by other people you are reducing your
profitability.
Solution: Track your time and figure out how much you're making per
hour. Hire an assistant if you are spending the bulk of your time in administrative
work.
Mistake #8: They charge less than they desire. This challenge seems
to arise especially for consultants, coaches and solo entrepreneurs who
sell services. It is often tempting to accept less money than you need
- so you get "some money" rather than "no money". After time, working for
too little can leave you exhausted and resentful and it takes a deep cut
out of your profitability.
Solution: Commit that, at the next opportunity, you will ask for full
fee. And then do it.
Mistake #9: They make infrequent or no use of technology which could
save them time and effort. As a business owner, you have a fixed amount
of time and energy within which you must maximize your profits. Technology
can help you do this in the form of autoresponders, voicemail, wireless
internet connections, speech recognition software and the like. All of
these tools are designed to save you time and effort. If you are not making
consistent use of technology in your business you are likely not as profitable
as you could be.
Solution: Look for ways that you can make your business processes more
efficient by using inexpensive technology.
Mistake #10: They adhere to outdated business models or plans. If you
do not stay up with the trends in your business you will notice a steady
decline in your profitability.
Solution: Attend meetings and conferences that will keep you on target
with your market. Implement new means of doing business and update your
business plan at least every couple of years.
If you are serious about improving your business' profitability, start
by implementing the suggested solutions to these ten common mistakes. Together,
these solutions will help you make more money and have more fun in your
business. Try them and see.
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