8 Ways to Overcome the Obstacles That Kill Businesses
Encountering obstacles is one thing we all have in common. The thing that sets us apart, however, is how we deal with obstacles. Some people allow obstacles to derail them; others have learned to jump the hurdles while running.
The majority of obstacles can be avoided. They are the result of unmanaged emotions, ingrained habits and habitual mistakes we make with other people. Unattended, these obstacles become emotional thieves that we allow into our lives. They steal our focus, sap our mental energy and, sometimes, thwart our most important initiatives. What can we do to close the door on these obstacles so we can capitalize on our opportunities to succeed? Here are eight strategies to help.
Listen to your gut when it comes to people.
We all have a built-in radar that tells us when we are about to make a mistake involving people. But we often choose not to heed that signal. Research shows that one in four startups fail. One of the major causes is managerial incompetence.
Choosing the right people, especially the right co-founder, is crucial. Some entrepreneurs end up picking a co-founder based on friendship, on having been like-minded buddies working together in the past. In the excitement of starting a new venture, you may ignore the feeling in your gut that tells you the person you are about to pick does not have the managerial competence for this next step. They may lack execution skills, or they may be weak on strategic thinking. Instead of bolstering your weaknesses, they compound them. Don't let this be an obstacle to your success.
Make frugality a company value.
"Living too high for the business" is another cause for failure cited in research. That's one obstacle you can easily avoid. It's not uncommon to witness a startup that gets some funding and begins to spend like a Fortune 500 company. Euphoria and the thrill of the win replace common sense. We all recall the famous 1993 "Shrimp and Weenies" memo sent to all Microsoft employees asking them to be frugal with company money—to order weenies, for example, not shrimp, when the company pays the bill. It asked employees to think of Microsoft as "the biggest small company in the world." Keeping the small company mentality is good advice, not only for startups but for any company.
Know the perils of emotional pricing.
One of the challenges small-business owners often face is having the right pricing strategies for their products and services. Sometimes, our emotions dictate the price we charge. For example, we may fear we will lose the sale and start charging too little, thereby continually lowering our profit margin. This can create insurmountable obstacles down the road. Emotional pricing can also result from a feeling of pride—what one consultant called "the joy of the hunt": getting the contract at all costs and feeling good that you beat the competition. On closer analysis, this is a hollow win. Price with your head, not your heart. Know what your costs are, keep your ear to the ground regarding your competition and periodically reevaluate your prices.
If you regularly fail to get a positive answer to your proposals, ask customers for their feedback on your pricing. Many are happy to help, and this can yield some useful information for you on your niche market. All of this will lead you away from emotional pricing into more rational pricing. (If you need help on how to price your products or services, check out the primer on pricing strategies fromOxford Learning Lab.)
Be willing to abandon what doesn't work.
Some products or services you include in the business might not work. We tend to fall in love with our own products and services and find it hard to let something go. It's almost as if we develop blinders that prevent us from seeing what is very clear to outsiders, but not to us. If you're going to play the game, you need to know when to fold the cards. As Gary Hamel put it in What Matters Now: How to Win in a World of Relentless Change, Ferocious Competition, and Unstoppable Innovation, "There's a simple, but oft-neglected lesson. To sustain success, you have to be willing to abandon things that are no longer successful.”
Evaluate what doesn't work and have the courage to walk away from it before it becomes a major obstacle. The energy you will have released from letting it go will increase your concentration on what works—it will allow you to apply the intensity of a laser focus on the right target.
Replace old strategies with new ones.
Some obstacles are the result of our ingrained habits—clinging to outdated modes and ways of doing business because it's what we know best. One such example is relying on outbound marketing tactics without considering the value of inbound marketing strategies. Inbound marketing is the brainchild ofHubSpot. It means attracting customers through a variety of avenues such as blogs, podcasts, videos, social media marketing and many other forms of content marketing. It is the antecedent of outbound marketing, which includes strategies such as cold calling, direct email marketing and spam, to name a few.
This humorous HubSpot video illustrates the difference between the two modes of marketing. Don't stay behind the times. Embrace social media, create valuable content that you can share freely and hire a professional to help you optimize your website.
Know the "Panama Canal" in your business.
This idea comes from Julia Pimsleur, who asked 800 entrepreneurs from 30 different countries what is the "Panama Canal" in their business—meaning if you could eliminate one big obstacle in your business that would allow you to grow exponentially, what would it be? (Completion of the Panama Canal saved ships months of travel around Cape Horn and generated billions of trade dollars.)
The number-one answer was "finding and training the right people to grow the business," and number two was "easier access to capital." What would your answer be? What is the Panama Canal in your business? Gaining clarity is the first step toward taking some action steps now to prevent the obstacle from obstructing your road to success later.
Don't distance yourself from the sales function.
During the startup phase, entrepreneurs generally act as sales chiefs. They know their product or service best because they created it. As they grow and start to hire staff, some founders may remove themselves from the sales function. They slowly start to distance themselves as they focus on financing, people management and other operational issues. They may end up losing their grip on what matters most: sales. As we all know, sales can make or break a business.
Research shows that 55 percent of managers, for example, are too busy to train or develop their sales team. And yet, as another study indicates, across a range of industries, there is a direct and consistent correlation between the caliber of the sales force and organizational growth. Common advice usually given to entrepreneurs is not to wear too many hats, not to micromanage the business. While this is true, when it comes to sales, it is prudent to always keep sales in your peripheral vision so you are not caught off guard and can make adjustments en route before the obstacles pile up.
Stick to the knitting.
Simplify and stay focused on what you know, and what you do best. In other words, stick to the knitting. Tom Peters and Robert Waterman coined this phrase in their book, In Search Of Excellence: Lessons From America's Best Run Companies. As the authors put it long ago, be wary of business diversity. Three decades later, we hear the same message from Scott Heiferman, CEO of Meetup, who says that "startups die of indigestion not starvation." Don't layer more onto your business, and stay focused on your core product. If you believe in your product, and you know that it adds value, don't go looking for the next exciting thing. Take Heiferman's example as an inspiration: Boring pays.
Bruna Martinuzzi is the founder of Clarion Enterprises Ltd., and the author of two books: Presenting with Credibility: Practical Tools and Techniques for Effective Presentations and The Leader as a Mensch: Become the Kind of Person Others Want to Follow.
This article was originally published at AmericanExpress.com