Much has been written and spoken about running a small business. And while certain principles seemed to have achieved immortality—they are virtually looked on as gospel in business circle—some of these are suspect.
Keeping that in mind, here are eight common myths that could be busted upon closer examination.
- The customer is always right. If this aphorism were true all the time, very few business operations, if any, would be profitable. The fact of the matter is that customers might be wrong sometimes, but the customer is still important. Listen to what customers say, and factor their input into your business decisions. But do not allow customer opinions to overrule logic or derail your business mission.
- Build a better mousetrap. Even if you develop an innovative product or unique service, there is no guarantee that consumers will line up in the aisles to buy it. Of course, offering top-quality goods is one of the keys to success, but so are the methods of marketing and distribution. Do not overlook these critical aspects in your business plan.
- Under-promise and over-deliver. The idea is that your company will be appreciated more by a customer if you set low expectations and subsequently exceed them. But the main problem with this axiom is that you have to obtain the customer in the first place. If the bar is set too low, you might not have the opportunity to retain the customer. Do not under-sell what your company can do.
- Sales figures are top priority. They can be good indicators of where you are heading, but good sales numbers do not necessarily mean that the company is profitable. It does not make sense to continue to pump up sales if the company keeps losing money. A better idea is to focus on cash flow and how to best manage it.
- Money is the only way to “keep score.” It is one way to measure success, but it is certainly not the sole method. If you focus entirely on what you take in, you can miss problems relating to the amounts going out. Emphasize both sides of cash flow, and the financial rewards are likely to follow.
- There is no “i” in team. Undoubtedly, teamwork in a business operation can lead to success, but a viable small company often needs a strong leader at the helm. Do not confuse teamwork with the need to arrive at a consensus for every single decision. Although staff members must work together toward a shared goal, it is still up to the business owner to call the shots.
- Offer the lowest price. Low pricing can be seductive, but consumers usually want it to accompany high quality and good customer service. It is generally difficult, and not advisable, for a small company to attempt to compete on price alone. Instead, emphasize the ways the company’s products or services can be used to solve problems or fulfill needs.
- You have to spend money to make money. In actuality, this phrase should read, “You have to spend money wisely to make money.” Simply throwing money at a problem will seldom work and can be quite wasteful. Spend your money carefully, and measure the results to determine when it is useful.
Final words: It is clear that there is some truth to these commonly quoted business principles, but they should not be followed religiously at all costs. Use a healthy dose of common sense and rely on your business advisers to steer you in the right direction. Remain flexible so you can meet the changing needs of your business.