This series of articles is the result of research studies conducted with more than 500 small businesses. Professor Steve Hadar compiled the most important material and prepared reports on the top 10 common mistakes made by small business entrepreneurs. This is the first in the series.
Failure to understand marketing and implement an effective marketing plan.
This is the biggest and most common mistake that leads to business failure. The sobering fact is that roughly 90% of businesses are just winging it without any written plan whatsoever! If you don’t have a plan, you are planning to fail! Here’s how you avoid this mistake. It’s not that hard. Let me show you how. You’ll want to include the following in your business plan.
Set a specific, clear, precise, dollar goal for each year for your products or services. Break this down to how many items you must sell to reach this amount. How many sales you need to make. How many prospects you must contact to sell the number of items you need to sell. Base this on past experience. If no past experience, use a 20% closing ratio.
- Set a specific dollar goal for each month. Go through the same breakdown as above except for each month.
- Objectively evaluate all the different marketing strategies that will help you reach your monthly and yearly goals.
- An exact description or procedure of the marketing strategies that you decide to use with reasons for their selections, and how much this alternative will cost you in money, time and materials.
- Techniques to use to capture and track your prospects and customers.
- Techniques to use to help you sell the back-end to a new customer.
This is really the bare basics that you’ll need for a plan. With this information alone you’ll start to stack the odds for your success. Go a step further and add precise deadlines for each step, then take these steps and break them down into action steps that you perform on a daily basis to reach your monthly and yearly goals.
Written Business Plan
The key here is to have a written plan, not a concept in your head. A written plan has magic and power in it. Now even though it is on paper doesn’t mean that it can’t be changed. It’s flexible. As your business grows, you’ll want to update your marketing plan. Look at it weekly and reevaluate it as necessary.
Next get professional assistance with advertising, brochures, flyers and marketing communication. If your computer breaks and you know nothing about computers, except how to turn it on and operate the software, would you fake it apart and try to fix it? No! You wouldn’t be saving money trying to fix a computer that you knew nothing about. The same goes for your advertising campaign.
Most budding entrepreneurs think that they know what they are doing when actually their efforts are usually self-centered and unfocused on the needs of and benefits desired by their customers. For this reason it is better to hire a consultant to do the job right. Businessmen who write their own ads usually brag about the company and product and don’t move the customer to action. Unless you are effectively moving the customer to buy, you are wasting your money in advertising.
Part of your marketing effort should be a market analysis. Another reason for failures: most businesses never precisely determine who their market is, and what the markets’ desires, needs, wants and passions are. Conversely, almost all successful companies have done this.
The successful marketer can tell you precisely who he’s marketing to, and what they want. He knows the age of his best prospect, who this person is, where this person is, the education and income levels, and other critical information.
If you want to own your market, discover your customers’ real wants and desires. Search out their passion and needs. Once you have that information you will be armed to corner your market.
Unique Selling Proposition
The next part of your marketing plan requires establishing your Unique Selling Proposition. Your Unique Selling Proposition, or USP, is the unique advantage that you have that the customer usually cannot get anywhere else. It’s the philosophical foundation of your business, and its essence should pervade everything that you do. It’s important to your advertising campaign and gives you focus in the market place. Carve out your niche. Examples of companies’ USP: best service, highest quality products, open 24 hours, lowest prices, one-hour service, best education, etc.
Once you have carved out a market with an effective USP, be careful not to sabotage it by trying for a larger market and compromising your unique selling point. Many inexperienced companies opt for universal appeal. They target the poor and the affluent, the young and the old, the mod and the conservative. They try to be Jack-of-all-trades and wind up being master of none. Don’t compromise your USP. Remember, the wider the range of targets, the greater the likelihood of missing then all.
Of all the mistakes that people make in business, the most frequent ones and the most costly ones are in marketing. Avoid mistakes in marketing and your odds for success will improve dramatically.