We are all sinners – at least in the business sense. And, it is hard not to be a business sinner today. In our current pell-mell state of rushing about putting out current “business fires” it would be beyond the capacity of mere mortals not to make one or more of the so-called business sins. Knowledge of these seven great business sins will not make you perfect, but can allow you to be a better business manager.
1. WORSHIPING HIGH PROFIT MARGINS
If you maximize your profit margins, you’ll also maximize your competition. High margins mean your competition will lower their costs just to beat you out. Rather than have the highest profit margin, go after market share instead.
2. MISPRICING A PRODUCT OR SERVICE ON WHAT “THE MARKET WILL BEAR.”
Maximizing the price of a product or service based on what people will pay will not increase your market share. Find your niche, stay in it, and price your product or service to bring in more clients and customers.
3. USING COST-DRIVEN VS. PRICE-DRIVEN PRICING
Cost driven is taking in all your costs and adding a profit margin on what you sell. Price driven is coming up with a price that will cause your product or service to move. It’s usually a lower price, but with that comes less competition. If you get a handle on costs, become price driven and get market share—you will beat out the competition.
4. FINANCIALLY STARVING THE OPPORTUNITIES & FEEDING THE PROBLEMS
Because business owners often have trouble focusing on more than one concern, they put capital into old problems rather than putting it towards new opportunities. Old problems keep you stagnant whereas new opportunities are potentials for growth and can bring in much-needed revenue.
5. PLANNING YOUR BUSINESS FUTURE IN AN ECONOMIC VACUUM
Day-to-day activities of running a business keep many business owners unaware of what’s going on in the economy. This causes them to react to changes instead of planning for it. Seeing beyond the forest will help you prosper in what will be a turbulent economy.
6. NEGLECTING THE TOP LINE (SALES)
Unless your sales and revenue are growing, your bottom line will eventually shrink. Just being a good money and production manager is not enough. You must be a good marketing manager to bring in more business, referrals, and sales.
7. STRAYING FROM YOUR CORE BUSINESS
Don’t go into a business that you know nothing about. It’s foolish to branch out if your second business doesn’t increase your sales significantly and adds to your bottom line. Unless you maintain a certain rate of return on your invested capital, you may wind up losing both.