4 Indulgences Your Business Can't Afford
Everyone feels tempted to indulge — whether it's an extra trip to the fridge before bed or taking advantage of a two-for-one deal when you didn’t even need “one” in the first place. Some give in to the temptation while others fight it off in favor of discipline, control, and a vision of what they really want to accomplish in the future.
Every business owner and entrepreneur is tempted to indulge, too. But instead of an extra scoop of chocolate peanut butter ice cream, small business owners indulge themselves with business spending that's counter-productive — or worse.
1. Product Infatuation
I sometimes lose patience with people who have great ideas to solve real problems with unique products and services but neglect paying attention to the most important two-part question of all: Will anyone actually part with their hard-earned money for your product or service, and, if so, who are they? If your passion and excitement for your product is blinding your ability to identify who your paying customers will be, then you are guilty of Product Infatuation.
Here is the litmus test to determine if you are guilty of this sin: when you tell someone about your company, do you spend all your time talking about how great your product is, or do you tell them about your customers and how much value you are adding to their lives?
2. Marketing Worship
Once you have some paying customers, it is possible to become obsessed with telling the world about yourself. Marketing is necessary to grow your business, but it has to be done with constraint and a focus on what generates the best return on investment. A common example of marketing worship is spending money to broadcast your message to a group of people of whom only a small percentage are potential customers of your product or service. Those who worship marketing will rationalize this behavior as “branding.” It may be cool to see your logo on a billboard, but if your target market doesn’t drive by, it’s a waste of valuable resources.
3. Overhead Abundance
When a business breaks through its need to bootstrap every part of its operations and cash flow becomes healthy, many business owners and entrepreneurs are tempted to indulge in some “wants” that are not necessary to running the business. These might include fancy vehicles and expensive, long-term lease contracts in high-profile office space. But over-spending in overhead pushes up your break-even point, weakening the company’s ability to withstand a decline in sales. In fact, when the economy began to struggle at the end of 2007, the most common occurrence for business failure among small and medium-sized businesses was slow reaction to overhead abundance followed by operating losses gobbling up prior year earnings and cash flow, crippling many organizations beyond repair.
4. Competitor Obsession
Every business has competitors. They deserve your attention and respect, but not your obsession. Every minute you spend thinking about them is one less minute you have to improve and grow your own business, so give time to your competitors sparingly. If the first thing you do when you arrive in the office every morning is visit all of your competitors’ websites and stew about what they are doing, then you have a competitor obsession problem. Don’t be distracted by them; focus on making your company better and taking great care of your customers. Find your points of differentiation and accentuate them and develop them further. Be an expert within one or more niches and spend your energy improving your influence in those spaces.
It’s okay to give proper attention to your product and competitors and to spend on marketing and overhead appropriately to grow your business. But it’s not okay if doing so distracts you from your objectives, impedes your progress, and starves your business of the cash it needs to grow. The trick is to find the right balance, and the best way to do that is to focus on your customers and solving their needs. The more you do that, the more irrelevant your competitors, the more targeted and higher impact your marketing, the more desireable your products, and the more appropriate your overhead spending will be.