Do you want to run a business and make some serious money? Well, if you don’t make these unforgivable mistakes it’s likely going to be very difficult for your business to take off. If this sounds like you, then it’s time for new management.
The article will feature 12 of the most common mistakes that are typically overlooked by new businesses. It will also include a market analysis of where you can find potential customers as well as what is currently trending in the industry right now.
A couple of years back, my consulting firm began working with a client who was interested in opening up an auto parts store. The company had been around for 4 years and it was profitable year after year. However, after it had grown to over $5 million in annual sales there were some serious issues that had to be addressed. The major problems were due to the improper hiring practices that had occurred within the company in the past 2 years.
The following are some of the most common mistakes you should avoid when you first open up your own business:
Mistakes #1-3: Poor Signage and Marketing Strategy
If you think about it, your signage is arguably one of your most important marketing tools. And if your business is in a niche market like our auto parts store, then you need to have a very good strategy when it comes to signage. Our business had no signage at all which meant that we didn’t have any direction for potential customers on where they needed to go.
Plus the high traffic areas of the store were fairly empty and the other areas of the store were nearly empty. We had around $10,000 worth of inventory sitting on the floor in front of the registers which cost us money every day it was there. The result of not having any signage was very poor customer feedback and low sales volumes. But the main cause of this problem was labeling issues.
If your business has $1,000 worth of inventory sitting on the floor in front of the registers then you have a labeling problem. This can happen when you are trying to reduce inventory levels or hold onto excess inventory because of an overstocked product. If you’re not sure how to fix this problem then I recommend putting more time into your marketing strategy so that it generates more sales.
Mistake #4: Not Having an Action Plan
It was interesting working with our client because they had done so well over the course of 4 years. However, it seemed as if the focus had changed from generating sales volume and profits to the customer relationships instead. In fact, one of their customers was the father of a longtime employee and the company recently lost $2 million on that single customer.
Yes, it was true that the loss was due to a serious health issue within the family but that’s no excuse for not having an action plan in place. My recommendation would be to have more than one sales person working at your business every day. This way if something happens to one of your employees then there is someone else who can jump in and take over for them.
Mistake #5: Not Having a Standard Policy System in Place For Employees
As you’ve read above, our client gave huge discounts to a few long-term customers which they weren’t supposed to be doing. They also never followed up with those customers to ask how they were doing and if everything was fine. This is a very common mistake when it comes to employee management and something that most people tend to overlook. But it’s very important in many industries because what we do as sales professionals directly impacts our customer relationships.
If we stop caring about our customers then why should our clients care about us? The best way for us to see this happen is when we don’t handle the customer service aspect of our business properly.
Mistake #6: Not Having a Cash Management System in Place For Employees
The first question we asked the president of this auto parts store was how much money was being made each month.
The president didn’t know because he was too busy looking at profit and loss statements. The problem was that he knew that overhead expenses were higher than normal and his net profit wasn’t where it should be. So, he was making less than half of what he had been in the past few years.
If you’re not making as much money as you should be then you need to take some time to look at how you are running your business and make sure everything is in proper order. Remember, every customer we have has a potential impact on our financial situation so ignorance can lead to a serious problem.