Insights on how to bust them and have a more rewarding business ecosystem
Human beings form beliefs either through direct experience or by accepting information from people or sources they trust. Some beliefs are formed after conscious contemplation over long periods and sometimes they are formed quite impulsively. The consistency, conviction and confidence in the beliefs and resistance to change when presented with counter evidence also vary with people and situations. Here are some of the 10 most common myths related to businesses which have a direct impact on revenue and profits. They need to be obliterated before it starts reflecting on your judgment. As George Orwell rightly put “Myths which are believed in tend to become true!
1. Marketing is expensive and having a sales team is pointless – The resources spent on marketing is considered an extravagance by most businesses. They think that the baseline cost increases because of the marketing and advertising efforts. This belief arises because of inexperience in working with an integrated marketing plan. The quantifiable results that come from it is reason enough for investing time, money and effort on a sound well researched marketing plan. Your potential customers need to have access to factually correct and exhaustive information on your business. While the marketing creates the ideal conditions for a deal, it is the sales team that closes it. Managing leads, creating customer loyalty, trust and confidence and collecting feedback is managed better with a well chosen sales team. Both teams need to work together to achieve your goals.
2. The amount of sales done does not justify marketing- “We just sell a couple of units of heating coils every month through our regular distributors. Why bother with a marketing department for the same?” If your thoughts are in these lines, then it’s time for a relook. In a business of selling villas worth millions or shirt buttons worth just a few cents, the rule is the same. People need to know you exist and that you have with you something that they need. If it is not an obvious need, then it is up to you to create the need. Marketing department is the face of your company. They create materials representing the business and draw potential customers – most of whose existence you are not even aware of – towards your business.
3. Cost of operations and production are too high- A very common reason to cut costs on other important areas or to ignore them altogether is the preoccupation that businesses have with the high cost of operations and production. One of the reasons for this high weightage given to operations and production is because the after effects of not focusing on marketing do not manifest as quickly. However, lack of focus on marketing can create as much harm or even more in the long run. According to studies, the percentage of focus businesses pay to something like production and operations is about 90 % and marketing at 10%. However successful businesses focus 30 to 35 % of their time, money and energy on production and operations and allocate 65 to 70% of resources to sales and marketing.
4. Getting good human resources is very difficult – A few bad hires or not having a defined hiring budget and plan can be disenchanting. It would give rise to a misconception that there aren’t enough good people worthy to be hired in the market. Allocating a time and cost budget for hiring is a very effective and necessary way to get good human resources on board. Allocating a particular job to a person or group of them with the necessary skill sets helps you implement your SOPs easier.
5. A feeling that there are lots of competitors – Competition is a given in any field. Many vie for the same share of the pie. If you are the first mover in the market you could have an edge that lasts a few years. But eventually someone else would catch up. They would perhaps come up with improvisations after observing the possible pitfalls of yours too. So it’s imperative that you focus on innovation in your business. The competition must be met head on with confidence and with trust in the quality of your product or service.
6. Apprehension that good customers aren’t many in the market – The initial decision to start a business comes from the faith of having a market. The setbacks or experiences faced at the onset can sometimes give rise to misgivings that perhaps there aren’t enough customers for the market. Customers are just that. If they have a need for what you offer, they are your customer. Good or bad is often up to you to work with and figure out. If you set realistic expectations, communicate well, give good service and be assertive with the pricing involved, any customer can be a good customer. However a genuinely bad customer is bad for business in the long run and it is sound business sense to weed them out early.
7. Feeling that the current economic situation is depressing - Depressing economic situations come up more often than we can manage. With innovative methods of doing business and realistic standards of success, the worst of economic situations can be tied over. To beat a bear market, focus should be on cash flows, managing the inventories optimally, sticking to core businesses and skills and offering cutting- edge customer service to attract new clients as well as clients of your competitors.
8. The misconception that a great idea translates into great business – An idea that can’t be commercialized can only result in a business without profits. As sound as an idea might feel initially, without a clear business plan and a revenue model, the idea remains just that. If one goes ahead and starts a business out of it just because there is capital availability, it will be just a vehicle to drain money. A clear indication of profitability and growth prospects is a must before venturing out to make a business out of an idea.
9. Fear of delegation and impulse to control everything- With 24 hours at our disposal, there is a limit to what one person can do in a day. As a business grows, you won’t be able to make all the decisions or be part of them even. Also the larger the business grows, a single person will not possess the information, knowledge and experience required to make the decisions. Knowing to delegate effectively is a worthwhile skill to have.
10. Feeling that it is below dignity to sell or market because your product or service is good -
Markets are rife with products. Most of them are great too. We all have an active bias when it comes to anything we consider our own. They might really be the best in the market. Still, you need to get out there in the market and tell why your product or service is best. Who else but you to scream from rooftops about what is your own? If you are proud of it, then you should talk about it. That builds consumer trust. Marketing to the relevant audience is key for a profitable business. As Henry ford said “Stopping advertising to save money is like stopping your watch to save time”
Finally, it all boils down to ruthlessly examining your apprehensions, fears and beliefs. We are capable of forming beliefs when we lack even basic evidence to prove them. Knowing the nature and origin of your beliefs would help a lot in changing negative and limiting beliefs. In any business most often it is not the competition or the inferiority of your product or service that affects your business. What limits you are your beliefs. Baseless beliefs are myths. Openness to changing your mindset when confronted with evidence contrary to your beliefs is the starting point to running a sustainable business.
Harish Rao is a Curacao based Entrepreneur, Investor and coach. He is the CEO of Abaque group. Finsight global, Seguros Muskus (representative of New India Assurance in Curacao, Bonaire and the Windward islands), Partem education are some of the key ventures of the Abaque group.
Harish lives by his vision of “Empowering people to master themselves through education”. That perhaps, translates into his success as a business coach.