It seems like everyone has business advice for owners these days. Frequently, this advice is helpful. But sometimes following these friendly words of wisdom can actually put a company on the fast track to disaster. Here are a few stories from business owners who decided to follow the advice they were given – and ended up regretting it a few months later.
Lower Your Prices Until Your Business Gets on Its Feet
Many people believe that new business owners should set their prices low in order to build up a solid client base. This tactic is good for generating initial buzz, but, as Wendy Lee of Asian Fusion Weddings learned, it can actually end up pushing away clients when prices are later raised.
“This was a catastrophic piece of advice,” she says. “When I tried to raise my prices to what they should have been from the beginning, I ended up losing all my referrals except for low-end clients. It delayed the growth of the business and failed to bring the clientele that I desired.”
Instead of starting out low, Wendy suggests that new business owners offer a few complimentary products instead. “In hindsight, what I should have done was offer to do two or three jobs pro bono in order to attain testimonials and then promoted my business at the correct price point right off the bat.”
Rent a Fancy Office so You Look Legitimate
Appearances count for a lot when it comes to growing a business, but that doesn’t mean you should go and blow your budget on an office that you can’t really afford.
“When I was opening my law offices,” says Orlando attorney Sam Fischer, “I was told that I wanted to have the nicest office in the nicest part of town so that new clients would think I was a success and pay me more.”
Sam chose one of the best offices in one of the ritziest buildings in the city. The rent was about three times what he could afford, and it didn’t take long for him to realize he’d made a terrible mistake.
“All of my lunch money was going to rent!” he says. Knowing that his only choices were to downsize or to shut down, Sam decided to move his practice to a cheaper office nearby. It was a wise move. Even though his office wasn’t as fancy as it used to be, he kept clients coming in, and the lower overhead increased his profit margins considerably.
“The affordable office hasn’t hurt the business one bit,” he says.
Focus on Being “Unique”
According to Mike Schultz, the president of RAIN Group, “Probably the worst piece of advice I ever got was that we should focus on our ‘unique selling proposition.’”
While a focus on uniqueness sounds good in theory, it can often be a hindrance to small business owners. There are many factors that play into a customer’s decision to choose one company over another, and a determination to be “unique” can end up distracting people from more important things – like your quality of service.
“Think about it,” Mike says. “Do you want a unique massage therapist, or a good one? What about a unique babysitter? Eventually, we realized that being unique wasn’t the best way to make our company stand out. We decided to focus instead on providing an excellent service, and once we did that we were off and running.”
Use Shady Marketing Techniques
When you’re desperate to market your small business to potential clients, you might be tempted to relax your ethics for the sake of generating buzz. But engaging in less-than-legitimate marketing practices almost always backfires. Just ask author and Green and Profitable founder Shel Horowitz.
“In 1994, when I first got involved with the Internet, someone suggested to me that I use a bulk-email service to promote my then-latest book,” he says. “This was a doozy of a mistake. I received an immediate and harsh education on why spam doesn’t work.”
Shel was lucky enough to realize the error of his ways before his spam campaign got the attention of federal regulators. He killed his campaign before it broke 600,000 emails and decided instead to focus his marketing efforts on the forums and discussion groups that initially blasted him. Since then, they’ve become one of his most reliable sources of business.
“Even today, when I’m getting a lot less work from directly marketing to discussion groups, I’m still getting referrals from the industry experts whom I met originally on these websites years ago.”
Final Thoughts – Follow Business Advice That Works, Not What’s Supposed to Work
Every startup in this country must chart its own path to success, and that’s why the expert advice that worked for some companies may not always work for your company. So before you start listening to every tip you’re given, take a minute to consider whether or not the advice is consistent with your practices and beliefs.
If someone’s telling you to buy something you can’t afford, then don’t buy it. If you’re being told to market your company in a way you don’t agree with, don’t do it. Ignore what’s supposed to work for your business and focus instead on what actually works. If you do, you’ll avoid the kinds of problems that originally sidetracked these four successful entrepreneurs.
Wendy Lee, Lead Designer, Asian Fusion Weddings, @weddingsbywendy
Sam E. Fischer, Attorney at Law
Mike Schultz, President RAIN Group, Author “Rainmaking Conversations,” @mike_schultz
Shel Horowitz, Author, Director of Green and Profitable, @shelhorowitz