Business owners are famous for being self-sacrificing. Besides the long hours, in many enterprises they're the last to sit down at the table to eat. I spent 23 years as a business owner in specialty retailing and I often read business articles advocating “pay yourself first.” Boy, that seemed easier said than done, and I long considered the advice to be fantasy.
But I came to realize that this philosophy is, first of all, a state of mind. And it is not nearly as selfish as it might appear. For the past couple of years I have been attending the big restaurant show in New York City every winter to try to pick up knowledge about the hospitality industry for some of my clients. Previously my only real experience in this sector was washing dishes at a cafeteria for a month in high school.
I've heard two presentations from a restaurant consultant, David Scott Peters. He's a no-nonsense, in-your-face speaker who could make a Marine drill sergeant blush.
Peters has a slide in his talks titled “Your Responsibility as a Restaurant Owner to Run a Profitable Business.” But this goes beyond the food service industry. Just scratch out Restaurant from the title and mentally write in whatever your business is.
You may have heard some clichés about knowing your customer. Perhaps you’ve heard some about knowing the products or services you sell. This post is about what happens when you do and don’t know either and what it can cost your business.
Let’s start with the services (or products) a business sells. As an owner of an IT services company, over the past 15 years we have had to stay on top of the technology curve to ensure we deliver the most effective and efficient services to our clients. The only thing that is constant with technology is change and it certainly happens at a furious pace in the IT world. This means our clients’ needs are rapidly changing and the services we need to sell and deliver to them must match that pace.
We have learned many lessons trying to sell services that we were not competent in. The main one being that when things go wrong, it gets costly very quickly. An example of this was when we tried our hand at selling VoIP services about seven years ago, to meet some needs of our clients. We ended up selling the services before we took the time to become subject matter experts and really know how to support our offering. It cost us big. Not only did we spend many hours supporting and addressing call quality issues, we stressed some our most valuable assets, client relationships. In the end, we licked our wounds and found a competent partner company that could deliver the service efficiently and expertly.
Next let’s discuss clients. When you have established relationships with your clients and understand their needs and culture, transactions tend to go smoother. It can be expensive to get to know an account. In our world, we need to assign non-billable resources like account managers and Virtual CIOs to gain insight on our client’s business operations and needs. If we don’t do it, and prematurely sell services to the client without fully understanding their needs, we can make a bad sale that can stress the relationship and jeopardize the future of the account.
Everyone needs more revenue. But think twice about the smartest way to get it.