10 Mistakes That Reduce Profitability

In my professional experience as a sales and marketing coach/consultant, I've had the opportunity to work with a number of small business owners on various issues related to sales and marketing. The owners who are struggling to keep their businesses afloat tend to engage in some, or all, of the following mistakes that reduce profitability.

Mistake #1: They fail to market or market inconsistently. Once you have committed to owning and running a business you must be equally committed to marketing and selling the products and services of that business. It is difficult, if not impossible, to stay and remain profitable without a commitment to ongoing concerted marketing.

Solution: Market all the time, every time.

Mistake #2: They hesitate to "ask for the sale". Rather than seeming pushy or obnoxious they let profit-producing opportunities pass them by. They worry more about what someone thinks of them than they do about bringing more money into their business. If you find it difficult to "ask for the sale", you can be sure that you're not bringing in as much money as you could be.

Solution: Practice asking for the sale.

Mistake #3: They don't ask for help or assistance in the aspects of the business where they most need it. Most business owners possess strengths in a particular area but whether by necessity or ignorance they often end up working in areas that aren't part of their strengths. When business is not going as it should they delay or procrastinate in asking for help. Each day that goes by with your business running at less than maximum efficiency means dollars lost from your pocket.

Solution: Get expert advice from an attorney, accountant, or other service professional before you really need it.

Mistake #4: They don't follow up with past customers. It is usually much easier to reactivate a former customer than it is to attract a new one. If you are not following up with past customers on a regular basis you are reducing your profitability potential.

Solution: Develop and implement a regular method for customer follow up.

Mistake #5: They don't take regular stock of their expenses. Savvy business owners regularly appraise their business expenses and find ways to reduce costs without sacrificing quality. If you haven't completed a cost analysis lately, you might be paying more than you need to be, which will reduce your profitability.

Solution: At least once per quarter review expenses and negotiate for adjustments as appropriate.

Mistake #6: They spend large amounts on glossy, slick marketing materials and expect business to pour in without any additional effort. Glossy brochures and slick marketing materials are a nice addition to more active forms of marketing such as meeting people, calling people and speaking to people. Brochures and business cards, no matter how beautiful, do not replace direct contact. If you are spending money on flashy marketing materials rather than marketing directly you will be less profitable than you could be.

Solution: Take those glossy brochures and hand them out directly to people at the next possible opportunity.

Mistake #7: They spend a significant amount of time in low-return activities (as measured by dollars and personal satisfaction). If you are spending the majority of your day completing tasks which are administrative in nature and/or which can be easily completed by other people you are reducing your profitability.

Solution: Track your time and figure out how much you're making per hour. Hire an assistant if you are spending the bulk of your time in administrative work.

Mistake #8: They charge less than they desire. This challenge seems to arise especially for consultants, coaches and solo entrepreneurs who sell services. It is often tempting to accept less money than you need - so you get "some money" rather than "no money". After time, working for too little can leave you exhausted and resentful and it takes a deep cut out of your profitability.

Solution: Commit that, at the next opportunity, you will ask for full fee. And then do it.

Mistake #9: They make infrequent or no use of technology which could save them time and effort. As a business owner, you have a fixed amount of time and energy within which you must maximize your profits. Technology can help you do this in the form of autoresponders, voicemail, wireless internet connections, speech recognition software and the like. All of these tools are designed to save you time and effort. If you are not making consistent use of technology in your business you are likely not as profitable as you could be.

Solution: Look for ways that you can make your business processes more efficient by using inexpensive technology.

Mistake #10: They adhere to outdated business models or plans. If you do not stay up with the trends in your business you will notice a steady decline in your profitability.

Solution: Attend meetings and conferences that will keep you on target with your market. Implement new means of doing business and update your business plan at least every couple of years.

If you are serious about improving your business' profitability, start by implementing the suggested solutions to these ten common mistakes. Together, these solutions will help you make more money and have more fun in your business. Try them and see.

(c) 2004 Dr. Rachna D. Jain. All rights in all media reserved.

About The Author

Dr. Rachna D. Jain is a sales and marketing coach, author, consultant and speaker. Sign up for her free email newsletter, "Sales & Marketing Secrets" [email protected]. To learn more or to contact Dr. Jain directly, please visit http://www.SalesandMarketingCoach.com.

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