Many first-time entrepreneurs are looking for any and every way to become competitive. Some think they will get a competitive advantage by lowering their prices below market rate. However, what many entrepreneurs fail to see is that most potential customers know little-to-nothing about their business. When this is the case, a potential customer will immediately associate price with quality.
A company that offers low prices often receives no revenue, no matter how much it lowers prices. Low prices are associated with products that are understood as being cheap and of poor quality. The cheap get no revenue while pricier vendors consistently and quietly take business away. Vendors equate quality with price. Your lowest price should be equal to the market rate, but have the courage to price higher. You'll see the results.
Investing Time Searching for Venture Capital Money
Universities have created entire majors and lesson plans devoted to the art of becoming an entrepreneur. Students spend years being taught and brainwashed that there is a methodical way to become successful and many believe that with enough notes and classroom strategies, they will one day earn big money.
It's not true. Entrepreneurship is an intangible subject and the art of owning your own business takes intuition and hard work. In taking too much time listening to venture capital firms and glorifying a possible $50,000 - $100,000 pay-off, you will miss countless opportunities to get into the field and have a hands-on learning experience. Stop wasting time pursuing venture capitals and dive into your intended career field.
Skimping on Advertising, Marketing, and Exposure
A tell-tale sign that entrepreneurs have not thought out their business plans is their choice to forego advertising, marketing, and exposure in order to save money. This is not the place to cut corners. Do not make cold-calls, because they annoy the customer and weaken the entrepreneur's brand. There is no ROI in hitting the phones, only embarrassment and frustration. Also, do not invest in pay per click ads. The average bounce rate on these ads (if you're lucky) is 50%, meaning half of the people that land on your page switch to another website immediately.
A company must market itself in a methodical way and control its own exposure. Pay for the type of marketing and advertising that will brand your company as a competitive leader in your field. If entrepreneurs are not careful about keeping the bounce rate low, they will lose the web surfer's attention. Even worse than that, they will increase their Amex bills and lead to the demise of their companies.
Doing Business with Friends
Starting a business is not a party. A business is exactly what it sounds like - A business. The first-time entrepreneur must gain a work ethic and focus that is going to allow him/her to not only penetrate a market, but also eventually dominate it.
Every now and again, you hear about two or so friends getting rich off a dual business venture. While it sometimes works out, this route more often leads to distractions and arguments that wear friendships and do not help to build a business. Choose your colleagues wisely and build your business through your employees. Think of your company first and your friendships afterwards.
Investing in Consultative Selling
Consultative selling attempts to ask the right questions, but the many annoying questions often lead to a lackluster close attempt. The fact of the matter is that most incoming prospects say they know what they want, but are typically wrong or confused. Don't sell them what they want. Sell your customers what they need and what you can successfully give you.
The entrepreneur must view himself as an expert, one that does not only sell dreams, but honest results. Do not let your customer take control of you. Provide a set number of options (thereby creating cognitive dissonance) and position your company as a leader in the field. Skip consultative selling and sell your company through your own hard work.