7 Common But Deadly Business Mistakes
David Stowell
Most of us come into this business with an education background. There are lots of business things we don't even know about, nor do we really want to know about them. And many people succeed without delving into the depths of complicated "business stuff." Below I've listed 7 pretty common business mistakes that really are worth looking at. See how solving these can help move your business forward.
- Focusing on programs instead of students
For years I have been telling people about the long-term benefits of sending out newsletters to schools. A number of people have sent me their newsletters and I notice that they tend to be selling the main program that they use instead of talking about working with kids.
This is an easy mistake to make, especially if you have invested serious time and money on programs you really believe in.
But what parents want is for their children to become comfortable, independent learners. How you get them there is not that important to the parent. If you were having a house built, do you really care what kinds of tools are used? No, what you want is a house that meets your expectations. You want them to use whatever tools are necessary to get the job done.
The real ability here is the skill of the person using the tool. Put my hands around a hammer and what you tend to get is destruction. In the hands of a skilled carpenter, a hammer is an amazing tool that turns out beautiful results.
Are there parents who ask for certain tools / programs? Of course! But even in some of those cases, that tool might not be the best for that student.
Build your reputation as someone who is successful at turning struggling students into comfortable, independent learners. NOT as someone who uses the same tool on everyone.
- Failure to "keep score" and know where the business is at all times
If you have read much of my writing, you know this is HUGE. The profit margins in education businesses are pretty slim, especially if you are providing true one-on-one services.
As busy as owners are, it is vital to keep track of the numbers that hold the key to the lifeblood of your business. At minimum, you've got to keep track of:
- New inquiry calls each week
- Conversion rate from inquiry call to becoming a client
- Number of student hours each week
- Number of paid non-client hours each week
- A/R due for the month
- Bank balance each week (NO! Not each month, each week).
When you "keep score" each and every week, you can spot trouble coming. It's a look into the future. Inquiry calls going down? That means that in a few weeks, your student hours will be down. You can take action BEFORE trouble happens. Keeping track of "the numbers" will save you over and over again.
- Failure to "put a premium" on constantly making the phone ring
Your client base is always shrinking. At least if you are doing your job and moving students through your program, they are finishing and moving on. You are constantly working yourself out of a job.
No one goes into business because they love marketing and advertising. But if you want to stay in business, you've got to do whatever it takes to keep your phone ringing. Whether that is keeping your newsletter going (minimum three times per year), holding information events, advertising, or networking you've got to keep it going.
The best way to make sure you do it is to set aside days on your calendar to do nothing but marketing / advertising. Set aside a day a month for the next year. That way you can schedule around this vital activity.
- Failure to have a monetary reserve
If you want to stay in business, you absolutely must have a cash equivalent of at least a couple of months worth of expenses in the bank. The only way that will ever happen is to spend less than you take in, at least until you build your reserve.
In business, cash is "king."
- No long-term vision or plan for the business
It takes so much energy to get a business "off the ground." Without intense focus, the business just doesn't go anywhere.
But as the business grows and gains some success, it's really important to start planning the future. Where do you want your business to go? What do you want it to do? What do you want to add? What would move your business to the "next level?"
This isn't just about money. It's about how you can better serve more students. It's about how you can help change the paradigm about struggling students. It's about making the biggest difference possible in the lives of students.
That can only happen when you take the time to look ahead and make purposeful decisions about the direction you are going and wanting to go.
Business direction is one of those things you don't think about when you are an employee. Making the shift from employee to owner, it is one of those things that you must pay attention to. Take some time to plan your business future.
- Willingness to work too hard
While most would see this as a plus, it works against a business owner when it comes to business development.
Don't misunderstand; I'm not suggesting that you shouldn't work hard.
There is a trap here that goes back to number 4, the failure to create a cash reserve. Owners tend to get their businesses to a point where they are making a little money and they spend it all every month. Then they don't want to give up any of it to hire employees.
If you aren't willing to let other people work with your students, your business will always stay "stuck" at a much lower level than is possible.
And that means developing two new skills... leadership and management.
Let's face it, when you hire your first employee, you aren't managing, you're what I call "job sharing." But once you have 2 or 3 employees, it all changes. But only if you are willing to lead and manage.
The biggest reason to hire others is because you will never have the time to work with everyone who wants your services. By being willing to work too hard, you drain yourself, cheat your students, and never serve everyone who deserves your services.
- Fear of asking for money
This one is just HUGE with educators. Let's face it, educators tend to be altruistic. You didn't go into this business to be rich, but rather to help students in the most effective way possible.
Every time someone whose child needs your services tells you that they can't afford you, it just "stabs you in the heart" with guilt. And most of us just give in and give it away.
There are two problems here:
First, you have monthly expenses that must be paid.
Second, you deserve to be paid for the services you perform. You got the training, opened the business, and work way too many hours as it is. Don't work for free. Your doctor never works for free no matter how much someone needs his help.
This all sounds good on paper, but sitting across the table from someone and asking for money may be difficult. You run the risk of people telling you, "No!" And we all hate to be told, "No!"
Remember this: If everyone says "Yes," then your price is too low. If everyone says "No" then your price is too high.
And there will always be people who choose not to work with you based on how much you charge.
Many of those who say "No!" are simply making a decision about how they will spend their money. They are deciding that they would rather spend it in another way than to buy your services for their child. That is really their choice to make.
Finally, remember that the only difference between profit and non-profit businesses is who is paying the bills, not how much is going to be paid.
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