I’m going to make an assumption: you want your business to succeed.
That’s usually how entrepreneurs feel. And while there’s no shortage of advice (including our own) on how to achieve that success, the vast majority of it is positive.
“Wait, what? Positive advice is a good thing, right?”
Well, yes. But so is negative advice.
Lost among the positivity and optimism are those crucial “DON’Ts.” As independent business people, we need to learn what to avoid just as surely as we need to learn what to aim for. We need to understand the pitfalls, snares, and other terrible things that can (and do) crush entrepreneurial dreams every day.
But we don’t want to sound negative, so we avoid talking about things like that.
Well, dear readers, I’m gonna bite the bullet. I promise to return to my upbeat, yes-you-can, “DO”-style advice just as soon as this blog post is done. But it’s time we talked about the monsters under the bed. It’s time we slayed a few demons that regularly slay new businesses. It’s time we faced the dark places.
It’s dirty work, but it has to be done.
There are three things I’ve seen people do that are guaranteed to destroy any business. These things won’t hurt your business, or slow its growth — they will destroy it. Permanently.
Some of these things may seem a little obvious (especially to more experienced business people). Some may be surprising. Some may be things you’re aware of, but with twists or applications you haven’t considered. Either way, burn them into your business brain. Tattoo them to your memory.
As you go forward, never forget to not do these things.
1. Neglect Your Audience
Inviolable rule of marketing: no audience = no business.
Every minute and every dollar you put into outreach is an investment in the foundation of your business. You could have the greatest product in the world, the best customer support, even the best advertising. But if no one hears it, it’s the proverbial tree falling in the woods, not making a sound.
The very first step in building a viable business isn’t necessarily creating a product. Yes, you read that right. The product shouldn’t come first; the audience should. Too many would-be entrepreneurs think that coming up with the Next Big Thing guarantees success. It. Does. Not. Period.
Instead, engaging with your audience is the first crucial move. Your business — and your product — should be guided by a conversation, not a monologue. And that conversation starts with you giving something, not selling or advertising something.
It starts with a little thing called content.
Content is what you offer your audience, in exchange for nothing. You offer it to build your authority, credibility, and good will. Blogs, videos, webinars, etc. are the way you start the conversation that ultimately creates your following. Most importantly, content creates something to which your audience can respond.
Once your audience is engaged with your content, you’ll start to hear back from them. You’ll see what resonates and more precisely identify the problems they’re struggling with. That, in turn, will allow you to tailor your product to their needs.
Give, give, and give some more.
The more valuable content you offer, the more engagement you’ll get. The more engagement you get, the more leads you’ll get. You’ll use your content to capture email addresses, and your email contact list to generate sales. Long story short: a percentage of your audience will ultimately become your customers, so neglect that audience at your peril.
2. A Bad Price/Value Ratio
We can summarize centuries worth of marketing, advertising, and sales advice in a single sentence. You can read all the books, get the highest level degrees, and spend decades in business, but all roads of business knowledge lead to the same universal truth…
People buy products for the ROI (Return on Investment).
That’s it. Consumer or business, all purchases are about one equation: is this thing worth it? This simple truth cuts across every variable, from price to competition to cost of production, from age to gender to nationality, from Monday to Friday, Winter to Summer. People either see the price of your product as a worthwhile investment, or they don’t.
Crazy as it may seem, it doesn’t matter whether the price is high or low.
You can be McDonald’s, and sell things for absurdly low prices, or you can be Apple, charging out the wazoo. What matters is whether the perceived benefits outweigh the cost. People buy McNuggets and iPads for the same reason: they feel like those things are way more valuable than the money they’re handing over.
Apply this basic fact to your product. The customer does not care how much it cost you to produce the product. They care less than you think about what your competitors are charging. All they want is a good deal. Your profit margins are irrelevant.
For example, take our SaaS product, WebinarNinja. We base our pricing on the value that our webinars produce; that is to say, lead generation. At most product price points, if a given webinar converts even a fraction of the audience into leads, and a fraction of those leads become sales, the monthly subscription has paid for itself!
That’s the ROI. For the cost of our monthly service, a subscriber can generate several times that cost in sales. It’s a win, potentially a huge win depending on the business.
Wins are what people really buy, not products.
You can make the same argument about The $100 MBA. The ROI is in the title — you can spend roughly 12 gagillion dollars on a university business education, or you can get the training you need for less than the cost of a night out. The math does half the selling.
3. Forget Old Customers in Favor of New Ones
Speaking of ROI, we all want growth. We all want to add customers to our lists. But the ROI of chasing down new business is nothing compared to the ROI of treating your current customers well.
Your absolute, hands-down greatest sales asset is your current customer base. These are the people who already trust you, who already see the benefits of your product. Depending on the business, it can take relatively few of them to sustain a company indefinitely.
Think about the following statistic: about 69% of all Apple sales come from (you guessed it) existing Apple customers. 69%! Over two thirds of sales come from people who already own an Apple product, because of course they do. These people are already invested in the company, and they’re happy. Selling to them is like shooting fish in a barrel.
About a decade ago, a blogger named Kevin Kelly wrote a legendary blog post called 1,000 True Fans. In it, he broke down the math on customer retention and revenue. Kelly simply pointed out that an entrepreneur can reasonably expect to source $100 per year in revenue from a given customer — but only if that customer is a true believer, a die-hard brand loyalist.
Multiply that by a thousand, and you have 6-figure annual revenue.
The goal, therefore, is not to chase down as many customers as possible. It’s to build a sustainable “fan base” and keep those fans delighted, year after year. The ROI on catering to loyal customers blows the ROI on marketing and advertising expenses out of the water.
To put it another way, look at your “churn” rate, the rate at which customers leave your business. If your customer base is growing by 5% every year, that’s great. But if 10% of your customers are falling away at the same time, your business is shrinking. You’d be better off devoting your resources to retention than marketing!
Then, factor in evangelism. Your customers aren’t just your most reliable source of revenue; they’re a reliable source of new business. Word of mouth, testimonials, and those oh-so-important customer reviews are priceless.
Now more than ever, consumers trust other consumers more than they trust marketing and advertising…by far.
There are plenty of ways to hurt your business, but the three no-no’s above will do worse than that. They are absolutely guaranteed to strangle your new business before it has a chance to reach its potential.
Develop your product, hone your skills, and continue your entrepreneurial education. But for success’s sake, remember what not to do.