Seven Business Lessons Learned the HARD WAY

As an entrepreneur, we have made hundreds of mistakes. You'll make mistakes too, but I don't want you to make the sames mistakes I made. Learning from other people's experiences is one of the smartest things you can do. I want to share with you 7 costly mistakes I made so you can avoid them in your own business.

Not All Sales Are Good
I used to think "as long as it makes us money, it's a good thing". Now I now how wrong I was. High-maintenance clients will actually LOSE you money. Plus, they'll take so much of your time that your focus will be taken away from growing your business.

Use the 80/20 rule: 20% of your clients will suck up 80% of your time. Fire that 20% and go get more like the other 80%.

Also, detect what parts of your business are the most profitable and get rid of all the others. A few years ago I had a company that used to sell cool gadgets over the Internet. We were doing really well but we were too busy all the time to grow the business. My partner and I sat down and wrote down all the things that were taking a lot of our time. We realized that shipping internationally was very time consuming and so was gift-wrapping. About 5% of our orders were international and 7% of our orders were gifts. We decided to stop shipping internationally and we lost 5% of our sales. We decided to stop offering gift-wrapping and instead of losing 7% of our sales, we only lost 2% (as it turned out, some people were asking for gift-wrapping only because it was available, but they would've ordered from us anyway).

So, we lost 7% of our sales but we freed up 15 hours per week. We spent those 15 hours to market the company and tripled our sales in the following 6 months.

Analyze your numbers and time logs; identify what's sucking up a lot of your time/money and eliminate those parts of your business. Focus on what you do very well that makes a lot of money and do A LOT MORE OF IT.

We Tend to Lie to Ourselves
Nobody likes failing and because we don't like failing, sometimes we subconsciously choose not to see the truth. Our revenues have been dropping for the last 6 months and we keep telling ourselves it's just temporary. More and more employees leave our company every month and we tell ourselves there's something wrong with them. Our marketing doesn't work and we tell ourselves things will "pick up" soon.

Lying to yourself will kill your company. It takes guts to acknowledge there's something wrong with your company but it's the only way to get things fixed.

Take a sheet of paper and make two columns: problems and solutions. Now figure out what's broken and how you're going to fix it.

When Most of Your Income Comes from One Source, You're in Trouble
A few years ago we got a huge account. It was bigger than the rest of our clients combined. I was really excited. I started working 80% of my time for this client and I instructed the rest of the team members to do the same. This client was thrilled with our services but after 4 months they reduced their marketing budget and they stopped using us. I was devastated. Not only was this big client gone, but a few of our smaller clients had left us too. I was so focused on the "big guy" that I neglected everybody else.

Today, I'd rather have 30 clients each paying $2,000 a month than one client paying $100,000 a month.

If most of your income is coming from one single source, start working on changing that.

Reserves Can Save Your Business
No matter how strong you think your business is, things can always go wrong. Reserve cash can save your company when that happens.

Tags: Business Lessons

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