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Great Ways to Lose Business

CEOs of fast-growing small companies describe their common sales and marketing blunders.

What's the worst business mistake you've ever made? Of the 586 chief executives who answered an Inc. poll, 27% cited sales-and-marketing snafus -- and some 30% of those involved sales that weren't thought through. That's not surprising, since those companies -- most with sales of less than $25 million -- grew 400% or more from 1987 to 1991. Other common errors: bad market timing, bungling customer relations, and mispricing contracts. Here's our true-confessions lineup:

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"I cussed out a client on the phone. It was a very frustrating project. We'd made mistakes, and the client had made mistakes. I lost my cool, and ultimately, we lost the customer."

-- Robert Dunlap of Remediation Technologies, a $23-million hazardous-waste engineering firm in Concord, Mass.

Upshot: "I've learned that in negotiations it's important to remain 'unconditionally constructive.' Assume the best of the person you're disagreeing with."

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"We lost a major customer because I took a steadfast that's-my-price stance. Later on, the customer told me he would have given me the order if I'd met the lower price. I still would have made a profit."

-- Joseph Persaud of Palm Tree Packaging, a $2.7-million maker of floral packaging in Apopka, Fla.

Upshot: "We learned what we had to do to keep margins the same and lower prices. Today our manufacturing is more efficient. Our 1992 margins hit 10%, up from 5% in 1991."

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"We put our customers under pressure to mail in their checks, telling them we had to meet our payroll. The rumor went out that we were having a cash-flow problem."

-- Rita Narasimham of Software Technical Services (STS), a $6-million software consulting firm in Atlanta

Upshot: STS moved someone into collection full-time, then explained to customers that any growing business needs cash to meet payroll, and never mentioned it again.

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"We started plugging 'Made in the USA.' Instead of figuring out how we should import, we kept trying to persuade our customers to pay the extra $5 because we were selling an American product. That worked for about a month."

-- Randy Amon of ABL Electronics, a $5-million cable manufacturer/distributor in Hunt Valley, Md.

Upshot: After sales dropped 10% from 1985 to 1986, Amon hopped the next plane to Taiwan to start a partnership with a cable manufacturer. His prices dropped, and sales rose.

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"When business was slow, we took a job we weren't experts at. I thought we should keep employees busy rather than lay them off. We finished the job, but the customer was unhappy, and we never got paid."

-- John Negri of Phonexpress, a $6-million distributor/installer of telephone equipment in Fairfield, N.J.

Upshot: "We do what we're good at: we stick with telephones now." -- Researched by Susan Greco and Phaedra Hise

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