As the owner of a small business, you no doubt receive a lot of advice on how to run your brand from friends, business associates, management books and leadership TED Talks, and blogs, but a lot of that ‘conventional wisdom’ is not worth taking. Here are 7 pieces of small business advice that you should NOT listen to.
1.) “There’s No Additional Room for Your Product (or Service) in This Market.”
You don’t need to reinvent the wheel, nor do you always have to go to a completely empty area to start or enhance your small business. Starbucks wasn’t the first company to sell coffee at retail, but they were able to win the market by not just selling coffee. They sold an “experience” along with a wide array of coffee products as well as pastries. And despite the dominance of Starbucks, there are many other boutique coffee retailers across the country, even though there may be a Starbucks on the next corner.
You don’t have to come up with a completely novel idea. Just look to fill a niche that has a large potential market.
2.) “You need to sell cheaper to beat the competition.”
Many small businesses, especially younger companies, feel that they need to discount their prices substantially in order to compete with larger or more established firms. That’s not necessarily the case. While you need to bring in new business, if you’re bringing in new customers at prices that are unsustainably low, it will cost you in the long run. Adding additional value to the marketplace is a better way to differentiate your business.
3.) “You should retain 100% ownership of your business.”
If someone with special skills or experience can help you double or triple your sales, wouldn’t it be worth it to grant them some ownership in exchange for their services? Would you rather own 100% of a $500,000 business or 75% of a $2 million business? If another person or group can provide a substantial impetus to your firm, perhaps you should consider relinquishing some of the equity to them, if they’re interested in taking it on.
4.) “If you want something done right, you have to do it yourself.”
Don’t spread yourself too thin! Trying to do everything will take time away from important tasks that you as the owner need to do. If your plate is full, start delegating and make room and time for the strategic decisions that need to be considered and made. While you need to understand all that has to be done within the company, you should also hand off some of the tasks to others. Just make sure the people you hand work off to know how to do it.
5.) “You know more about your customers than they do.”
This advice flies counter to the basic concepts of marketing and consultative selling. You need to make sure that you know what the customer wants, not what you think they need. If you’re selling B2B, you need to understand the customer’s current situation, their strategy, and how they view their outlook. If you don’t understand the customer, you won’t be able to provide them with what they need.
6.) “Hire people you know.”
It’s better to seek out individuals with the right qualifications and experience – whether you know them or not. You need to focus on the expertise and skill sets the company needs, rather than trying to find jobs for friends. And if an individual is not meeting the needs of the company, it will be much more difficult to fire a friend than someone who you did not previously know. Firing a friend creates a conflict between you as the head of a company and you as a friend.
7.) “SBA loans are as easy to obtain as other commercial loans.”
Loans backed by the SBA provide benefits to small business borrowers that include interest rate caps and flexible repayment terms. But loan approval is not necessarily easy, largely because of the large number of rules and regulations required for approval. Often, going through a private lender would be quicker and easier.
Private lenders are an alternative source of financing available to small businesses. These lenders are typically willing to lend to businesses that would not meet traditional lending standards but that the lender judges, after conducting due diligence, to have a positive outlook and are good credit risks. The interest rates they charge reflect the additional risks they are taking. Private lenders can be located in a number of ways, including Internet search, checking the site of the American Association of Private Lenders, and checking the Private Lenders Network group on LinkedIn. Find a few lenders you’re interested in and compare them. Find out which lender best suits your business’s needs and give them a call.
Bad advice is commonplace in business. The acceptance of conventional wisdom is often a sign of inexperience, but even highly experienced business people can fall into this trap. To counteract this tendency, business owners need to continually educate themselves about developments in their fields and in business generally. They should also be aware of new management techniques, and of advances in technology that will help them continuously grow and improve their business.
Lew Koflowitz is an associate of Harborcove Financial, a factoring company in New York City. With an MBA from Columbia Business School, Lew is a financial professional with experience in financial journalism, marketing communications and economics, as well as extensive experience within the financial services industry.