In 2002, I launched my first business: E-Z Moving, Inc. We offered moving services in Salt Lake City. We did well enough for several years before the business was sold, but still--I made several key errors.
We all make mistakes. There are some things that you just seem to learn best through experience.
Thankfully, I realized what I did wrong, and have avoided making these same mistakes in future endeavors.
Hopefully, my experiences can help you, too.
Here are five key mistakes I made that you should avoid next time around:
1. Undercutting the competition
There are times when you look around and realize that everyone in your niche is overpricing their services, and that you can do better for cheaper.
Those opportunities can lead to major market disruptions and industry revolutions.
It's a mistake, however, to price your services lower than everyone else's because you believe it will drive business. I learned this the hard way.
First, customers saw our rock-bottom prices and assumed we were offering inferior services. They didn't treat us well because they didn't expect us to treat them well.
Second, because our prices were so low, we weren't able to offer the kind of service needed to retain customers and get them to tell their friends about us.
Next time you need to price services for a company, look around at your competitors--and instead of undercutting their prices, look to step up your service.
2. Scripting instead of communication
We created a series of specific scripts for our sales staff to use to respond to inquiries.
On the surface, this seemed like a good idea. We wanted to make sure that our potential clients received a consistent message, and that our sales staff wasn't inadvertently making mistakes about our services.
This was very much the wrong thing to do.
We discovered that clients could tell when even the most engaged salespeople were reading scripts. They wanted engaged, unique conversations with people who could answer their specific questions. Our scripts were far too general, and our sales staff had difficulty pivoting to create responses.
There are occasions when scripts are helpful--if your sales staff has to deliver the same message on every call for some reason, for example.
But for new businesses, you should instead consider providing your staff with bullet points and letting them personalize the delivery. This gives them room to be engaged and interested, and meet the needs of the customer.
When I first started E-Z Moving, I thought of our brand as our logo and not much else.
I have since learned that brand is so much more. Brand encompasses core values, UVPs, websites, marketing, social media presence, and even the trucks we drive around town.
Make sure your brand statement is part of your business plan. Build from it, and reengage with it regularly to make sure that it continues to fit where you are as a company. Make changes as necessary.
4. Local involvement
As a moving company, I thought we'd automatically be involved in our local community. But every community has a lot of businesses, and I missed some great chances to connect with other local businesses and participate in fantastic events.
Look around for ways to connect with your community. It's great promotion and brand definition, and it's a way to thank the community for their support. Acknowledging that local customers keep local businesses open helps to drive sales.
5. Focus on cash flow
With a new business, it's incredibly important to keep an eye on cash flow--especially in the first year. You don't know yet when your flush seasons and dry spells will be, and you need to have enough cash on hand to cover contingencies.
This was not ultimately the cause of any major problems for our business, but we did have times where low cash reserves kept us from taking advantage of vendor deals or necessary maintenance.
Many first-time entrepreneurs face similar problems. What mistakes did you make the first time you started a business? What do you do differently now?