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7 key mistakes business owners commonly make - part 3
Why is it that as business owners we seem to seek out the path of most resistance when it comes to building a successful business?
Do you wish it was a lot easier to gets the results you want?
Are you making the mistakes that most business owners make, and making it hard for yourself to get the rewards and the lifestyle that inspired you to start your business in the first place?
This free report explains the seven most common, and most damaging mistakes that business owners consistently make when building their business.Plus, it tells you what you should be doing instead, with some questions and actions to get you moving towards more profitable business results.
Parts 1 and 2 of this report were published in previous months, and you can still read them just by registering your details and downloading the FREE reports right now.
And here's part 3:
Mistake number 3
Not Developing Your Biggest Business Asset
The number one asset in your business is the value and strength of your customer base.You must love them, nurture them and encourage them to keep spending money with you. Yet so many businesses only ever get in touch with their customer base when they have something they want to market and sell to them.Then when they have bought, communication stops altogether.
Your business needs fuel to get started and keep going, and that fuel is your customer base. The best business in the world, with the best products, services, plans, business processes will go absolutely nowhere without clients and customers. So how do you quickly fill up and maintain a ‘full’ fuel gauge?
The biggest milestone in any customer relationship is getting them to spend their first pound with you. Once they have parted with money, however small, they have a trust in you and the relationship can grow from there.
However, the thought of sales activity often conjures up negative emotion. In a lot of business owners the thought of ‘cold calling’ (which is the thought that usually accompanies the thought of sales) has an attachment to ‘pain’ in their minds. As human beings we are designed to avoid anything that we perceive to cause pain, and therefore we will busy ourselves doing anything else to avoid this crucial activity in our business. But sales activity is not all about cold calling, in fact that is the last place to look for customers and to get cash into the business.
You need to feel positive and emotionally energised to do your sales activity. Feeling good about what you need to do is crucial.
It is not about what you think you should be doing, but about what you feel about what you think you should be doing that will motivate or stop you.
As mentioned in the previous chapter many businesses focus all their attention on constantly getting new customers which is the most difficult, expensive and time consuming way to get revenue in. There is huge value in your customer base that you can feel good about mining.
If you want instant revenue, look to your existing customers as it is 10 times easier to sell to existing customers than to new.And you want to be selling them your most profitable products.
Think about what products you could sell to existing customers that they are buying, but not from you.How could you encourage them to buy more frequently?Could you set them up on a regular replenishment system? What else could you do to make it easy for them to buy more from you, and more often?How can you up-sell more of what works now?
If you want more revenue, look at your best customers’ needs and develop products and services to meet them.Ask your customers what else they would like to buy from you.
Think about what products your customers are buying elsewhere that you could provide. What don’t they know you sell, that if they did they would buy? What value added products or services could you add to increase their perceived value?Could you add a product or service to alleviate a pain your customers have, such as something they are finding hard to get?What services would add on really nicely to what you provide?
Once you have looked at all the opportunities to increase revenue with your existing customers, you can start to think about gaining new customers.
Think about a niche you do not sell to now that you could sell to. Who else is buying your products, but not from you? The best strategy here is referrals. Ask your existing customers as the new customers you are looking for are likely to have the same profile, and your existing customers will know more people like them.
Are there customers that used to buy from you that don’t now? Consider other businesses that are non-competing with you that have the same customers you are after and look for joint venture or partnership opportunities here. How can you help them ‘look good’ by offering their customers what you offer? What could you offer to get a new customer to try you?
Going after ‘cold’ customers is the path of most resistance and where a lot of people have a fear of not succeeding. This is cold contacting, networking, trade shows etc. Spend time and money on this ONLY when all opportunities in the other areas have been fully explored. This is often the area where cash is taken away not found. Recognise that it is an investment of time, money and energy to get results here.
However for start-ups, this is often the only area you have, so think about who could you get a strong alliance with to help support and ‘vouch’ for you to their customers? Make it easy for them to work with you.How can you develop your PR to get your products and services known?Think about building a relationship with your potential customers first with some free advice or newsletters. Also what guarantees can you offer to take the risk out of buying from you? This is a slow burn area and it’s about developing a sustainable long term business.
What you need to do
Again there is so much that you could do to get started on this, but here are some key activities to start developing your biggest business asset.
** You need to focus your efforts for the best return on your time, money and energy, and to do this you need to know what you are selling that is making you the most money and who is buying it.
What are your most profitable products?
Do you have any unprofitable products?
Can you make them profitable? If not, ditch them
How could you increase the volume of your low profit products to make them more profitable?
To answer the above questions you may need to do some research.
Rank your products in order of their profitable contribution to your business:What are the costs for each product or service you deliver?
Direct costs – those directly associated
Indirect costs - % of overheads shared across products
Gross profit = Revenue – Direct Costs
Net profit = Gross profit – proportion of indirect costs
Who are your most profitable customers?
Do you have any unprofitable customers?
Can you make them profitable? If not, ditch them. When did you last ‘fire’ a customer that wasn’t making you a profit?
Again you may need to do some research.
Rank your customers in order of their profitable contribution to your business. Consider which buy more frequently, what they are buying, length of relationship, lifetime value, to what extent they value you etc
Customer profit = Revenue – cost of supplying + indirect value
Once you have identified your most profitable customers, look at their profile and work out how to get more like them.
Always be adding huge VALUE to your customers, meet their needs, do a good job and they will like you, trust you and buy more from you
What could you do this week to make your best customers feel really special?
Want to know about Mistake Number 4? Register now and you will automatically be emailed parts 4 to 7 of this report over the next few months, plus you can download parts1 and 2 for FREE right now.
