Are you a small business owner looking to boost your success in 2023? Look no further than JTB Consulting’s Little Big Small Business Handbook! Our team of experts has compiled their top tips and advice to help you navigate the ever-changing landscape of small business owners in the coming year.
From entrepreneurial qualities and mistakes to customer service, a startup needs to focus on; our handbook covers what is, in our view, the essential topics to help you grow and thrive in 2023. So please grab a cup of coffee, sit back, and let’s dive in!
Small Business Mistakes. Our 10-Point Checklist!
As a small business owner or a new startup, it can be challenging to avoid inevitable mistakes, especially when facing a situation for the first time. However, even experienced CEOs can fall into common entrepreneurial blunders. Take a self-assessment and award yourself ten points for each mistake you are making, and deduct five points for those you have avoided. Keep your score confidential and seek help if needed. Here are some of the common mistakes made by the small business owners we meet:
Small Business Mistake #1: Big Customer Syndrome
If more than 50 per cent of your revenues come from any one customer, you may be headed for a meltdown. While dealing with a few significant customers is easier and more profitable, you become pretty vulnerable when one contributes the lion’s share of your cash flow. You tend to make silly concessions to keep their business.
You make notable investments to handle their unique requirements. And you are so busy servicing that one big account that you fail to develop additional customers and revenue streams. Then suddenly, for one reason or another, that customer disappears, and your business borders on collapse. Use that burgeoning account as a cause for celebration and a danger signal. Always look for new business. And always seek to diversify your revenue sources.
Small Business Mistake #2: Creating Products in a Vacuum
You and your team have a great idea. That is a brilliant idea. You spend months, even years, implementing that idea. When you finally bring it to market, no one is interested. Unfortunately, you were so in love with your idea that you never took the time to find out if anyone else cared enough to pay for it. You have built the classic better mousetrap.
Do not be a product searching for a market. Do the “market research” up front. Test the idea. Talk to potential customers, at least a dozen of them. Find out if anyone wants to buy it. Do this before anything else. If enough people say “yes,” go ahead and build it. Better yet, sell the product at pre-release prices. Fund it in advance. If you don’t respond well, go on to the next idea.
Small Business Mistake #3: Equal Partnerships
Suppose you are the world’s most excellent salesman but need an operations guy to run things back at the office. Or you are a technical genius but need someone to find the customers. Or maybe you and a friend start the company together. In each case, you and your new partner split the company 50/50. That seems fine and fair right now, but as your personal and professional interests diverge, it is a sure recipe for disaster.
Either party’s veto power can stall the growth and development of your company, and neither holds enough votes to change the situation. Almost as bad is ownership split evenly among a more significant number of partners, or worse, friends. Everyone has an equal vote, and decisions are made by consensus. Or, worse still, unanimously. Yikes!
No one has the final say, every little decision becomes a debate, and things bog down quickly. To paraphrase Harry Truman, the buck has to stop somewhere. Someone has to be in charge. Make that person CEO and give them the largest ownership stake, even if it’s only a little more. 51/49 works much better than 50/50. If you and your partner must have total equality, give a one per cent share to an outside advisor who becomes your tie-breaker.
Small Business Mistake #4: Low Prices
Some entrepreneurs think they can be the low-price player in their market and make huge profits on the volume. Would you work for low wages? Why do you want to sell at low prices? Gross margins pay for marketing and product development (and great holidays). Remember, low margins = no profits = no future. So the ‘grosser’, the better.
Set your prices as high as your market will bear. Even if you can sell more units and generate greater dollar volume at a lower price (which is not always true), you may not be better off. Make sure you do all the math before you decide on a low-price strategy. Figure all your incremental costs. Figure in the extra stress as well. For service companies, low price is rarely a good idea. How do you decide how high? Raise prices. Then raise them again. When customers or clients stop buying, you’ve gone too far.
Small Business Mistake #5: Not Enough Capital
Check your business assumptions. The norm is optimistic sales projections, too-short product development timeframes, and unrealistically low expense forecasts. And don’t forget weak competitors. Regardless of the cause, many businesses are undercapitalised. Even mature companies often do not have the cash reserves to weather a downturn. Be conservative in all your projections. Ensure you have at least as much capital as you need to make it through the sales cycle or until the next planned round of funding. Or lower your burn rate so that you do. And when needed, look at these Small Business Funders in South Africa to help you.
Small Business Mistake #6: Out of Focus
If yours is like most companies, you have neither the time nor the people to pursue every exciting opportunity. But many entrepreneurs – hungry for cash and thinking more is always better – feel the need to seize every piece of business dangled in front of them instead of focusing on their core product, service, market, and distribution channel.
You are spreading yourself too thin, which results in sub-par performance. Concentrating on a limited area leads to better-than-average results, almost always surpassing the profits generated from diversification. Al Reis, of Positioning fame, wrote a book covering this subject. It’s called Focus. There are so many good ideas in the world; your job is to pick only the ones that provide superior returns in your focus area. Don’t spread yourself thin. Get known in your niche for what you do best, and do that exceedingly well.
Small Business Mistake #7: First Class and Infrastructure Crazy
Many startups die an untimely death from excessive overhead. Keep your office humble and your furniture cheap. Your management team should earn the bulk of their compensation when the profits roll in, not before. The best entrepreneurs know how to stretch their cash and use it for critical business-building processes like product development, sales and marketing.
Skip that fancy phone system unless it saves time and helps make more sales. Spend all the money necessary to achieve your objectives. Ask the question, will there be a sufficient return on this expenditure? Everything else is overhead.
Small Business Mistake #8: Perfectionism
This disease is often found in engineers who won’t release products until perfect. Remember the 80/20 rule? Following this rule to its logical conclusion, finishing the last 20 per cent of the previous 20 per cent could cost you more than you spent on the rest of the project. When it comes to product development, Zeno’s paradox rules. Perfection is unattainable and very costly at that. Plus, the market changes from under you while you get it right.
On top of that, your customers put off purchasing your existing products waiting for the next new thing to roll out your doors. The antidote? Focus on creating a market-beating product within the allotted time. Set a deadline and build a product development plan to match. Know when you have to stop development from making a delivery date. When your time’s up, it’s up. Release your product.
Small Business Mistake #9: No Clear Return on Investment
Can you articulate the return which comes from purchasing your product or service? How much additional business will it generate for your customer? How much money will they save? What? Do you say it’s too hard to quantify? Are there too many intangibles? What do you expect your prospect to do if it’s too difficult for you to figure out?
Do the analysis. Talk to your customers, and create case studies. Come up with ways to quantify the benefits. If you can’t justify the purchase, don’t expect your customer will. Sales are a slam dunk if you can demonstrate your product’s excellent return on investment.
Small Business Mistake #10: Not Admitting Your Mistakes
Of all the mistakes, this might be the biggest. Eventually, you realise the awful truth: you have made a mistake. Admit it quickly. Redress the situation. If not, that mistake will get bigger and bigger, and… Sometimes this is hard, but bankruptcy is more complicated. Assume your costs are sunk. Your money is lost. There is good news: your basis is zero. From this perspective, would you invest fresh money in this idea? If the answer is no, walk away. Change course. Whatever. But do not throw any more good money after bad.
Providing Excellent Customer Service in 10 Simple Steps
Many people have experienced poor customer service at some point, and it’s not a pleasant experience. It could be due to a product or service not meeting expectations or a company not responding to calls or emails. Sometimes, businesses fail to keep their promises, or they are unhelpful when customers try to report an issue or seek assistance.
All these negative experiences boil down to a lack of customer service, which usually results from not focusing on the customers. It appears that many businesses have forgotten their core purpose: serving customers. Rather than valuing the age-old adage, “the customer is always right,” many companies now seem annoyed by their customers. Some businesses have even joked that their company would be great if it weren’t for their clients. However, the truth is that clients are the reason businesses exist, and we have to serve them. When customers are unhappy, it’s an opportunity to learn, improve, and deliver better services.
Therefore, it is essential to listen to your customers, commit to treating them well, and make excellent customer service a priority. Good customer service is one of the most effective and affordable marketing tools available, and delivering beyond customers’ expectations will lead to happy clients who will refer you to others.
On the other hand, if you disappoint or mistreat a customer, they will likely tell others about their negative experience, potentially damaging your reputation. Unfortunately, bad news tends to travel faster than good news.
The good news is that providing excellent customer service is not a complicated task. It requires awareness, prioritisation, and attention to detail. Here are ten tips that can help you offer stellar customer service:
- Be Accessible: Provide various ways for customers to contact you, such as email, phone, mail, or fax.
- Respond Promptly: Make it your policy to return all calls or emails within 24 hours. If that’s impossible, determine the maximum time frame and tell your customers when they can expect to hear from you.
- Listen to Your Customers: Sometimes, customers call or write to complain and want to be heard. Take the time to listen to their concerns before responding or defending your product or service. They may have valid points.
- Treat Your Customers with Respect: Always show respect regardless of how a customer behaves. Don’t lower yourself to their level by reciprocating their rudeness.
- Don’t Argue with Your Customers: Winning an argument with a customer means losing business. Instead, focus on solving the problem or finding a solution.
- Honour Your Commitments: Keep your promises, whether answering emails or fulfilling guarantees. Nothing damages a customer relationship more than not keeping your word.
- Do What You Say: If you say you will call on a particular day, call on that day. You must follow your promises to earn customers’ trust and respect.
- Focus on Building Customer Relationships, Not Just Sales: Long-term customer relationships are vital for your business’s success. Avoid sacrificing relationships for short-term sales gains.
- Be Honest: Don’t exaggerate the results your product or service will provide; don’t make promises you cannot keep to close a sale. Honesty is the best policy.
- Empower Your Team: Train and empower your team to deliver excellent customer service. When everyone in the company is focused on providing top-notch service, it becomes part of the company culture.
Avoiding 8 More Mistakes that Could Hurt Your Startup
Entrepreneurial skills (entrepreneurship skills) can be taught. Have you ever realised that inevitable mistakes can gradually harm your business growth for months or even years if not addressed? These errors exist in all stages of business growth and can affect established companies and rookies. Even some seemingly successful businesses that have been around for a decade or more still make these mistakes, resulting in lost time and money.
While some of these mistakes may appear to target service companies, they are relevant to any industry. Here are some examples to support this statement:
- Underestimating Project/Service Time: This applies to both service and product companies. Time estimation is critical for service companies. You should estimate how long it takes to complete each service in your repertoire. If you do not, you will get burned, and the only option is to learn from your experience. You can watch your best employee do the task, then add extra time to estimate. Logistics can cause timing issues for product companies, so be mindful.
- Not Knowing Your Company Numbers/Incorrectly Setting Prices: Many businesses make the mistake of using a competitor’s price without understanding why they use that pricing structure. You will likely encounter trouble if you take a competitor’s price, cut it by 10%, and start selling. It is crucial to understand your business’s cost structure before setting prices. You can use competitors’ prices as a starting point but do not base your entire strategy on them.
- Not Charging for All of Your Time and Costs: While giving a little extra here and there shows you care, it is still vital to cover your costs. For example, if your service company provides a standard service that your competitors do not, do not undercut their price to steal a job. Instead, ensure the cost is included in your rate, and advertise this upfront.
- Not Getting Paid Fast Enough: Prompt billing is vital to maintaining a good cash flow. Small businesses frequently lack the procedures or systems required to generate invoices promptly. As a result, billing is delayed, which impacts cash flow. Making the quickest payment deals possible with customers and the slowest possible with vendors and employees is critical to slowing or halting a regular cash flow.
- Failure to Have Solid Systems and Procedures in Place: While too many procedures can be frustrating, not having any systems in place can lead to chaos. Depending on the industry, business owners must strike a balance. Some examples of where procedures or techniques are necessary include billing, collections, payroll, HR, manufacturing, equipment maintenance, inventory, and sales calls/visits.
- Spending Advertising Money to Say You Advertise: There is no point in spending money on marketing if you cannot track the results. Conducting marketing campaigns without a system to measure their effectiveness is wasteful. Some businesses fail to follow their previously successful campaigns, assuming they will work indefinitely.
- Spreading Yourself Too Thin: This is a common mistake all entrepreneurs make. Recognising when you are “wearing too many hats” and delegating tasks effectively is critical. You can outsource or hire additional employees to help with tasks, not in your expertise.
- Failing to Adapt to Change: To remain competitive, businesses must adapt to changing market conditions. Failing to adapt can result in lost customers and revenue. Staying abreast of industry trends and adjusting your business plan accordingly is critical.
From Hobby to Career: 4 Rules Every New Entrepreneur Needs to Follow
Starting a business can be an exciting and rewarding experience, and in today’s world, with technology levelling the playing field, more and more people are leaping into entrepreneurship. However, it’s important to have a plan and consider the big picture to be successful. Here are some practical tips for new entrepreneurs:
Starting a Business Rule #1: Keep Your Day Job for Now
While it may be tempting to jump into your new business venture full-time, starting part-time is often a better idea while you still have a steady income. This allows you to take the time to build your business and ensure that it’s viable before you rely on it for your livelihood. Start small, manage your time and finances, and grow your business gradually.
Starting a Business Rule #2: Find Your Niche
With so much competition in the marketplace, finding a unique selling point that sets your business apart is essential. Consider specialising in a specific area or catering to a specific group of people with an unfulfilled need. Don’t try to compete with the big players; instead, find your niche and dominate it.
Starting a Business Rule #3: Build an Online Presence
In today’s digital age, online presence is crucial, even if you don’t plan on selling products or services online. A website or social media page can help promote your business and expand your customer base beyond your local area. Use online marketing tools to get the word out about your business and what you offer.
Starting a Business Rule #4: Persevere Through Failure
One of the most important traits of successful entrepreneurs is their ability to persevere through failure. It’s rare for a new business to succeed overnight, and setbacks and failures are inevitable. However, it’s essential to learn from mistakes, stay positive, and keep pushing forward. Remember that every failure is an opportunity to learn and grow.
Starting a new business can be daunting, but following these practical tips and staying focused on your goals can increase your chances of success. Building a successful business takes time, effort, and perseverance, but the rewards are worth it.
Overcoming Fear as an Entrepreneur
Winners in both business and life are distinguished from those who are struggling and falling by the wayside by many differences, and one significant difference is how they handle failure. Successful entrepreneurs maintain a positive mindset regarding the experience of failure.
When they fail, they regard it as a result. They analyse the “x” steps they took to produce “y” results. If “y” didn’t work, they returned to the drawing board, changed the formula, and tried again.
Many new business owners do not make it past the starting line because, as soon as they fail, they assume, “Who am I kidding? I knew it wouldn’t work,” and quit. If everyone had that mindset, we would not have had electricity, aeroplanes, or vaccines…in fact, we would have very little!
Every single success in the world was preceded by one, two, or a thousand failures! Babe Ruth holds the record for the most home runs, but did you know he also holds the record for the most strikeouts? Thomas Edison failed more than a thousand times before he perfected the light bulb.
If you are not failing, you are not pushing yourself enough. You remain in your comfort zone and cannot expect to reach the level of success you are capable of. Failure is what allows you to learn and grow. If you give up when you face failure, you will always remain in the same place.
You may have to seek guidance from someone who can offer you expertise. Someone that’s been there. Done that. Failed miserably. Stood up again. And tried one more time!
You may need to form a team around your project to inject new perspectives and talent. Fear of failure is one of the most significant obstacles that hold new business owners back. Failure should not be feared but embraced because a life lived in fear is half-lived.
If you are stuck and unable to move forward because of fear of failure or because you have failed in your previous attempt, seek support and guidance from someone else to help you move forward.
Fear is a common obstacle that all entrepreneurs face at some point. Acknowledging and overcoming these fears is crucial to achieving success. Here are some techniques that can help you overcome your fears:
Overcome Your Fear as an Entrepreneur Tip 1: Acknowledge Your Fears
The first step in overcoming fear is to acknowledge it. Fear can hold you back from reaching your full potential even if you don’t want to admit it. Listen to that little voice that tells you you can’t do it and recognise that it is your fear of speaking.
Overcome Your Fear as an Entrepreneur Tip 2: Visualise Success
Instead of your worst-case scenario, focus on what you want to achieve. Visualise yourself succeeding and achieving your goals. See yourself closing that big sale or launching a successful product. The more you focus on your success, the more likely you are to achieve it.
Overcome Your Fear as an Entrepreneur Tip 3: Change Your Inner Voice
We all have an inner voice that can either help or hold us back. When your inner voice is negative, find ways to change it. Remind yourself that you can achieve your goals and that failure is a part of the process.
Overcome Your Fear as an Entrepreneur Tip 4: Seek Support
It’s important to have a support system when you’re an entrepreneur. Find people who believe in you and your vision, and seek their support when you feel overwhelmed. Avoid seeking support from people who doubt you or don’t understand the entrepreneurial journey.
Overcome Your Fear as an Entrepreneur Tip 5: Build a Personal Development Library
Investing in personal development is key to overcoming fear and achieving success. Build a library of books, podcasts, and other resources that inspire and motivate you. Seek stories of successful entrepreneurs who have faced their fears and achieved their goals.
In conclusion, facing your fears is critical to becoming a successful entrepreneur. Acknowledge your fears, focus on your goals, seek support, and invest in personal development. Doing so can overcome your fears and achieve your entrepreneurial dreams.
Small Business Marketing: 7 Tactics to Help You Stand Out and Succeed
As a small business owner, you may have dreamed of being your own boss and achieving success to the best of your ability. While it can be stressful at times, with the right strategy and planning, you can overcome any obstacles that come your way. Successful marketers have developed seven tactics to make your business as successful as theirs.
- Firstly, create a unique selling point that emphasises the benefits customers will receive from doing business with you. You don’t need to create new products or services to get attention; add a special benefit to your offer. Emphasise benefits that your competition cannot or is not willing to provide.
- Secondly, use testimonials as they play an important part in advertising, especially for small businesses. They can be used as marketing tools to build credibility and gain trust with prospective customers. Creating a group of satisfied customers and sharing their experiences can help increase your business’s credibility.
- Thirdly, upsell your products or services. It is much easier to make sales to someone you already have a relationship with, so take every opportunity to increase your sales volume within your current customer base. Offer a product that complements the one they are purchasing at the register.
- Fourthly, make your price seem smaller by breaking it into smaller, more manageable payments. Customers are more likely to purchase if they believe the price is affordable.
- Fifthly, paint the benefits of your product or service in a way that stirs up emotions and drives purchases. Use word pictures to let customers “feel” the benefits.
- Sixthly, create attention-grabbing headlines that telegraph a message in twelve words or less. Use attention-grabbing statements that promise a positive benefit or ask a provocative question.
- Lastly, provide an offer that customers can’t resist. This doesn’t necessarily mean cutting prices but increasing the perceived value of the product or service by adding bonuses that cost you little but are perceived as valuable.
In conclusion, as a small business owner, it’s essential to use these seven key tactics developed by successful marketers to achieve success. By creating a unique selling point, using testimonials, upselling, making your price seem smaller, painting the benefits pretty, creating attention-getting headlines, and providing an offer they can’t resist, you can take your business to the next level.