How to Start a Business
8 Things Not to Do When Starting a Business
1 – Don’t stay stuck – just go execute and get some reps under your belt.
When you’re starting out, remember that it’s all about adding value. When you can add value, you’ll earn revenue – but remember that you need to just get reps under your belt. You need sales – which we’ll talk about later on here.
You’ll need to work hard to understand what’s valuable to your client. Remember that value is in the eye of the beholder, and not every customer has the exact same value proposition.
To find out what’s important to them, your sales process needs to have a time of uncovering value by asking great questions, and then listening with your hands – you GOTTA TAKE NOTES! I’m dumbfounded when I meet a salesperson or business owner that’s not intentional about a discovery process and when they don’t take notes. Even if you’re a memorization wizard, you’re missing the opportunity to store away ultra-valuable information for your future employees about the client’s value propositions AND you’re missing an opportunity to communicate to your client how important they are to you. When you listen with your hands – by taking great notes – you are communicating to the prospect or client that this matters to you.
You need to uncover what’s valuable and important to each client, and then I HIGHLY recommend that you file those notes away in a CRM database or a centralized place for notes.
A CRM, or a “Client relationship manager” is a great tool – the idea is to have one database with phone numbers, emails, name, address, and then every note that you take – and every email that gets exchanged.
When you use a CRM, you’ll then be able to create context before each new interaction with that client because you can see email exchanges, notes, and anything else about your client.
I really like Hubspot’s CRM and Activecampaign for a CRM/email marketing hybrid.
If you’re trying to be low cost – I LOVE using Google’s G-suite professional email package for $10/month, and then using the Hubspot free CRM and basic sales and marketing tools. WHen you stack Hubspot with a GMAIL or GSUITE account, it will log every email that’s made (even between multiple FREE users on the hubspot account).
Then when you want to upgrade to their full sales tool – it’s $50/month per user, and then the marketing portion is $200 a month.
Activecampaign is a paid solution – but it’s probably the best value for when it’s time to combine your email marketing, with sales automation, and a robust CRM to monitor every sales process.
The first thing NOT TO DO – is to do anything other than focus on adding value to your client. That means you need to work to uncover each client’s value proposition by using great questions and inquiry, and then you should take excellent notes. Make sure you put all your notes and information in one place, so you can easily remember what’s most important for each client as you grow. A CRM system like Hubspot or activecampaign can help you file away good notes about your clients along with all their relevant information.
The second thing
2 – Don’t Get stuck in the weeds doing low margin, high energy work.
Low margin, high energy work can kill a new business.
Look, for each product or service you sell – you need to figure out if it’s actually worth it in the end!
Now, I’m not saying you shouldn’t work hard, but I AM saying that you need to find what will drive your economic engine, and stay away from strategies, products and services that are what I call “High energy, low reward” activities.
The idea here is you don’t want to be in a race to the bottom because you’re going after lower margin, higher complexity work – or work that’s so commoditized that it’s hard to make it about anything but price. You don’t want to build a business based on discounting – trust me. Discounting is one of the ways you’ll get stuck in the weeds… you don’t want to find yourself trying to save people money all the time – it’s much better to solve problems and provide value in exchange for profit.
It would be good to do an in-depth analysis on the total costs of time, money and resources that each service or product requires – then understand what your net profit would be for each one.
But if you’re just getting started- do some rough and dirty math.
One example of this is for tax professionals and cpas that are doing tax returns. Doing tax returns is a race to the bottom because they are competing with software – literally they have IBM’s supercomputer named WATSON working on the side of H&R block software… and Jackson Hewitt is in every Walmart – which means that tax returns are getting commoditized and it’s really hard to add unique value and avoid the discounting game. Doing tax returns is a low margin, higher risk, higher energy activity when you do the math.
Think of it – most small CPA shops and tax firms might charge like $300 dollars per tax return, and maybe $1,000 for an S-Corp return. That means that if they had about 50 businesses and 100 individuals, they would bring in about $80,000….. But then you start to realize that you’ll have to run about 150 meetings with people, battle out their financial statements, and nag them to get their paperwork in. Then you realize that you paid $6,000 a year for software, another $6,000 for your office, and $4,000 in other supplies.
Costs of $16,000 to drive $80,000….
Processing 150 tax returns is brutal by yourself – most firms with that many clients are going to need help. So, you hire an admin for $12/hour.
When you add on self employment taxes alone, you’ll be paying about $27,000 for 2080 hours a year.
That leaves you with a net profit of about $43,000.
That’s not bad – but it’s not great. When you realize that $300 per return is VERY high in the market, and that businesses aren’t all going to be at $1,000 per return, then you catch my drift.
Tax returns are a high energy, low profit or low reward activity – and if you get yourself so busy doing tax returns, you’ll never be able to give pro-active tax planning services, bookkeeping, accounting, and other higher reward services.
You need to avoid low reward, high energy work by finding your CORE FOCUS.
You need to find what services fulfill what Jim Collins calls “the Hedgehog principle”
The idea is to be more like a hedgehog, which does very few things, but does them excellent, rather than being like a fox, that does many things but none of them very well. The fox works far too hard for too little gain, while a hedgehog is fat and happy eating worms and hunkering in his niche.
The hedgehog concept says you should only do work that satisfies three criteria.
What will drive your economic engine?
What can you be passionate about?
What can you be best at?
This should lead you to uncover the strategies worth pursuing in the long haul. Remember, I’m saying that your initial efforts need to be about adding value and getting some reps under your belt, but then you need to be careful that you don’t get too busy doing low-reward work that you can’t take on the high reward work when it comes.
So the second thing not to do is waste your time on high energy, high complexity, low reward work.
The third thing is
3 – Don’t Neglect your sales process
Marketing funnels, analysis process, and logistics need to be thought out and mapped out in a basic manner.
Don’t flush good time down the toilet by wasting too much time on planning rather than execution, but then again, you need to work ON your business – not just IN your business.
There is power when you sit down in front of a prospect, and walk them through your process. It doesn’t have to be super fancy – but it communicates that you’re a real business that takes this serious.
It also creates a system that someone else can eventually take over in the future.
Don’t create an overly elaborate chart, but map out what your marketing funnel will look like, your sales process, and the logistics of execution.
If you neglect your sales process, you’ll also neglect monitoring where prospects are in the process. Your CRM and email marketing should help move people along in this process.
4 – Don’t Forget to open your Google my business page and get reviews after you’ve executed.
If you’re a local business – which not everyone watching this video is- you NEED to open a Google my business page and work to mature it.
The Google My Business page is tied to Google Maps and the Google local snippet. This is the primary tool that Google gives to local businesses to market to their local communities.
Here’s a tip – open yours up at Google.com/business – and they will send you a postcard to validate it.
As you get some wins under your belt, diligently invite your clients to review you on Google reviews by calling, texting, and emailing the link for the Google My Business Page.
Here’s another couple of tips – make sure your primary category, product, or service is actually in the name of your business page. If you are primarily a divorce attorney – you might consider putting that in the Google my business page name. This helps a great deal with Search engine optimization.
Another tip here is that you should only choose two categories – any more than that and you jeopardize your listing’s Google synergy.
The Google my business page is free, it’s incredibly useful to drive prospects, it’s an SEO powerhouse, and it’s worth your time to mature.
Don’t forget to open a Google my business page if you’re local.
Fifth thing not to do:
5 – Don’t neglect integrity – focus on relentlessly pursuing the best interests of your clients. Don’t lie or spin things.
Always tell the truth. Never lie. Don’t embellish things. Don’t over promise and under deliver.
Relentlessly pursue the best interests of your clients!
Don’t ever sell anything that you don’t feel great about.
Never sacrifice your values, mission or purpose.
On that note – make sure you’ve worked to develop your mission, purpose and values out ahead of time.
Your mission is WHAT you’re setting out to do as a company.
Your Purpose is WHY you’ll do it
Your VALUES is who you are, characteristics, virtues, and attitudes.
Then you have strategies – this is HOW you do what you do. And strategies should be determined by that hedgehog concept I talked about.
Don’t compromise your character or integrity – and never compromise the relentless pursuit of the best interests of your clients.
6 – Don’t be selfish, help other people and businesses!
You want referrals, help, and good public relations? You should probably get involved in doing that for other people.
Those who refresh others, will themselves be refreshed. We highly recommend that you build business liaisons – and work hard to support them! Feature them on your blog, send referrals their way, remember them when prospecting, use their services, tell your friends and neighbors about them!
The bottom line here is that you should work hard to help other people. When you serve others, it works in earning the favor of your community.
So don’t be a taker – always give more than you take.
Number 7 –
7 – Don’t Neglect prospecting
You need to make sales calls, set meetings, and bring people through your funnel.
The top thing a business owner should do is prospect, network, and connect with people.
If you don’t make sales – there will be NOTHING ELSE TO DO!
It’s a great deal like baseball, you miss all the balls you never swing at. You need to find people to introduce yourself to and to connect with.
Go door to door, make phone calls, network, ask your clients to introduce you to people – buy lunch for groups of people in exchange to share with them what you do. Do a lunch and learn, join the rotary, chamber, and buy people coffee to connect.
Get around people and ask for meetings.
And last, but not least –
8 – Don’t Be sloppy in your follow up and execution.
Pick up your phone right away, and answer it with more care and consideration than the local Mcdonalds. You don’t need to be overly formal, but the way you answer the phone says a lot about you.
My Dad made me answer the phone with a script when I was like five or six years old – “Satroms, this is Rob”
I always answer the phone with “This is Rob, how can I help you?”
You should email people back right away, pick up your phone and call people back. Don’t dilly dally with people and don’t neglect your execution.
There’s a balance here – you don’t want urgent, unimportant activity to clog up your day – but you also need to be on top of communicating with people.
What I’m saying here is that you should call people pro-actively, return their calls immediately, respond to texts quickly, and teach your clients when your “off hours” are, so they understand the expectations.
SO those are my eight things that business owners should NOT do when trying to grow.