Owning and operating a business is an extremely difficult feat. It takes patience, hard work, and persistence to nurture it into a successful, profitable company. One of the best ways we can ensure success is learning from others mistakes.
Here are 5 of the top mistakes businesses make when launching a company and how we can learn from them.
1. Not Prioritizing Quality Assurance
Think of that neighborhood restaurant whose food used to be delicious, but now guests are always left disappointed. The quality of a product or service a business sells is the number one way it will become successful or fail.
Long-term customer loyalty comes from trust and quality consistency. Consider the customer experience at each step of the sale or service. Make sure that the entire experience is positive for your customers, not just the product or service itself.
A productive way to monitor and optimize customer experienceis through quality assurance and customer retention software. Listen to customers and employees to improve and correct as needed.
2. Failure to Understand The Customer
In 2003, the seafood restaurant, Red Lobster, offered a promotional deal of all-you-can-eat crab legs. However, Red Lobster executives greatly underestimated the amount of crab legs their customers would eat and, infamously, lost millions of dollars. Their stock plummeted, and the CEO was fired.
It’s clear that the Red Lobster executives did not understand their customers or their market. Their customers are seafood lovers, and they did not think that seafood lovers would eat a lot of seafood. It’s not a complex concept, but it is important.
To understand the customer is to be able to know how to meet their needs and add value to their life while profiting from them. Know the customer’s buying habits and shape your sales tactics to appeal to that.
3. Poor Money Management
The numbers don’t lie. Overspending or poor spending can quickly lead to the downfall of a business.
Managing the finances of a business can be complex and daunting. If unfamiliar with the best practices, outsource to a reputable accountant.
Be realistic and closely monitor your overhead. Have a cushion in case of an emergency and always plan ahead for business spending to avoid poor decision-making.
4. Lack of Innovation and Flexibility
In 2010, the industry giant, Blockbuster, filed for bankruptcy. Their business model failed to adapt to the fast-changing world of online content and streaming services.
A crucial aspect of long-term success is the ability to stay open-minded and flexible regarding the direction and expansion of a business. People who refuse to make changes to aspects of their business that are no longer working will struggle to scale their business or keep it alive at all.
Always be looking for additional ways to add value to customers’ lives. Doing so will help prevent completion from taking customers and increase customer retention.
Apple is truly the perfect example of this. In 1997, Apple was on the verge of bankruptcy. As a company, they could not compete against Microsoft and were losing millions. After a pivot and focus on technology innovation, Apple now makes only 10% of its profits from computers. By shifting their focus to phones and other new technology, they filled an industry need. Today, Apple is one of the world’s largestand most profitable companies.
5. Unsuccessful Marketing Strategies
Successful marketing is essential to launching and scaling a business. Marketing is meant to communicate the value the business can provide to the target audience. Determine the brand’s voice and target audience. Then, set clear goals on how to reach as many people in the target audience as possible.
The biggest mistake in marketing is not communicating enough or communicating something incorrect or offensive. While marketing content should grab the audience’s attention, insensitive or offensive content can ruin a brand’s image for good and deter the majority of customers.
Stay current and up to date with content trends. Monitor what brings customers in and what doesn’t to see what works with the brand’s voice.
It’s easy to make business mistakes but hard to correct them. Remember to focus on the customer and provide value to their life through a quality product or service. Don’t be afraid to ask for help and, most importantly, stay confident.