Everybody makes mistakes. But it's better if you can learn from other people's mistakes before you make them, too.
In a recent speech to entrepreneurs in Brant, Ont., I offered my take on avoiding "the seven deadly mistakes" of entrepreneurs. Here is my short list of classic entrepreneurial errors:
1. Not charging enough: Most businesses under-price their goods. They're so spooked by today's cut-throat competition, or by some long-ago customer rejection, that they are reluctant to raise prices. I offered examples of entrepreneurs who have raised their prices and thrived – despite their employees' warnings that customers wouldn't stand for it.
2. Losing focus: There are two ways that fuzzy focus bedevils business owners: in completing their personal priorities, and ensuring their business sticks to its business priorities. Delegating non-core tasks, and discouraging time-sucking interruptions in the office, are essential to getting your To-Dos done. I quoted one entrepreneur who tells his subordinates, "Don't come to me with a problem unless you're also bringing me a solution."
3. Falling behind on adjacent innovation: A recent Canada-wide survey commissioned by Intuit Inc. found that 97% of Canada's business owners believe innovation is a key to success. And they define it not as massive change but as any tweaks that improve your business, such as new products and services, more focused strategies, upgrading technology, improving customer relations, or selling online. I quoted Mississauga, Ont. entrepreneur Ken Tencer, author of The 90% Rule, who learned about innovation while helping a soap company advance from one market to another, from products for women to products for children, teens, men and even pets – a pace that ensures you already know 90% of the product, production costs, market intelligence and personal contacts that you need to succeed.
4. Neglecting succession: Over the next five or 10 years, 60% of Canada's businesses may change hands. But many entrepreneurs don't realize how complicated business transitions can be, or how long they take. I suggested they talk to an accountant or succession consultant to learn how such transitions need to be managed to produce the biggest return and help new management thrive.
5. Ignoring social media: Social media allow multiple, dispersed groups with common interests (hockey, maple syrup, motor oil) to share the same conversations. More and more companies are using social media tools to promote their goods, listen to customers feedback, and engage clients in their brand missions. This isn't a chore or a sideline, but a major promotional and customer-retention opportunity. Increasingly, people expect to share this interactive experience with all the companies they deal with – including yours.
6. Losing sight of the customer: The most important person in your business doesn't usually come into the office: the customer. Your business's future depends on your ability to get inside your customers' heads and understand their problems, needs, wants and desires. One of the simplest tools for doing this is to borrow a tactic from Bank of Montreal: Start every meeting with a customer story.
7. Working in isolation: not inviting feedback: It's easy for a boss/founder/CEO to project an image of savvy aloofness – but it won't help you grow as a leader. Effective entrepreneurs create lots of opportunities for their subordinates to provide feedback on their decisions and performance. A great trust-building question to ask your people: "How can I help you be more effective?"
I finished by pointing out that competitive advantage is best gained not by new blockbuster products or services – which any competitor can replicate – but by creating fundamental internal strengths in "soft skills" such as focus, training, leadership and customer knowledge. As author Tom Peters has noted, "It turns out that things that are 'hard to copy' are easy to copy. And things that are easy to copy are much harder for everyone to copy."