The biggest reason small businesses remain small is the owner’s small business mindset. They think like a small business owner, operate like a small business and set small goals.
The Case of a Small Travel Agency
I recently worked for a travel agency in Sherman Oaks, California. I was there for less than 1 week but the things I experienced made me realize why some small businesses remain small even after years operations.
This travel agency has been around more than 20 years. Most of its clients are customers they’ve had for years. The mere fact that it has been around for more than two decades means they are doing something right but the mere fact that it remains a small business means they are doing something wrong.
It remains a 2-man operation, the owner and one employee when I came in. It is surprising because I see the amount of calls they have on a daily basis. Even if we assume that they will only fulfill ten percent of the inquiries, it is still enough to hire one more staff and accommodate even more customers. The problem is that, in my estimate, they have a 95% fall out, and I’m being conservative.
The owner is a control freak. She is in the office four hours a day and she is the only one who knows how to fulfil the bookings. She refuses to train her employees to do the work she does because she can’t stand seeing things can get done even without her.
She hired a professional marketer but wouldn’t allow her to do something simple as post something on Facebook without her approval first. She was such a control freak that, at one point, she wouldn’t even let her employee get the phone number of the people who were inquiring. She doesn’t want her employee talking to “her” customers.
Old Style Marketing
Probably the most outdated concept of marketing is that it is equal to sales and she has that concept. When she asked her marketing officer to come up with a marketing strategy, it was natural for the marketing officer to look at the biggest problem of the company. It wasn’t that they weren’t getting enough customers, the problem was that they are unable to accommodate the customers that were coming their way.
The customer service was so bad that it didn’t actually take a lot of brain cells to determine that the first, and probably the only aspect in marketing that they need to work on is customer service. When that was presented to her, she blew up and said that’s not what she wanted. She needed events, email marketing, advertising, coop marketing and other sales efforts.
She admits the customer service sucks and it’s not like she can deny it but she doesn’t care. What she wants is advertising.
Underutilizing Employees Skills and Talents
She hired a great marketing officer but not only does she disapprove all marketing recommendations, she also gives the marketing officer menial jobs like filing, making phone calls for her and calling phone companies to dispute their bills.
Using Employees to Serve Them, Not Customers
One of the major flaws of bosses is thinking that their subordinates are there to make sure they look and feel good about themselves. It shows in the big and small things. When her employees are talking on the phone with a customer, she interrupts instead of letting the employees finish the transaction with their customer.
When she knows an employee is busy serving customers, she butts in with orders of her own instead of allowing her employees do their work in order to make a customer happy. Great bosses would normally look for ways on how to make it easier for her employees to do their work, she sets up things to be complicated and make it hard on her employees. Here are some examples:
- instead of coming up with a clear guideline on what her employees can decide on their own, she wants nothing to happen unless she approves of it even if it means making a customer wait or losing them
- instead of minimizing phone calls or conversations or meeting between her and her employees, she demands that every call be texted to her when she’s not in the office and almost every development
- instead of using technology to make communication easier such as using skype over text messaging, she insists on using what’s comfortable to her and not what’s more beneficial to employees
Lessons from Mark Cuban
Not Doing The Math
This is common to many business owners. When they get, let’s say, a questionable charge on their phone bill, they spend their whole day making calls to dispute it. They don’t realize that they could have done other things that could have resulted to sales or revenue instead of spending hours on the phone fighting with customer service representatives over a couple of hundreds of dollars.
She sets up events which takes up a total of 80 hours of their time. If an employee is getting paid, let’s say, $10 per hour, that 40 hours is $800. Then, she spends, let’s say $300 on food and $100 on other expenses. If she earns $2,000 from the people that will attend the event, is that worth it? No, it is not.
The people they invite in the event are customers that are already interested in what they are selling in the event. They don’t need to set up an event, they could have given these people a call. Even if they spend 10 hours with each person, it is still lower than $1200.
Not Treating Customers Equally
She prioritizes her corporate account which is understandable but other customers are suffering. She insists that her corporate accounts are important. However, it doesn’t guarantee her monthly income either.
Meanwhile, her retail customers are being left unattended. She doesn’t realize that the 95% that are falling out could very well triple the income she is getting from her corporate account.
Running the Business Instead of Growing the Business
Instead of getting and training people that can fulfil bookings and spending her time getting new corporate accounts and looking for new avenues to sell, she insists on doing every booking. She is more concerned about the day to day operation rather than the general vision and direction of the company. As a result, they are not getting new customers. They are relying on old customers. Then, they don’t serve them well.
Apparently the customers that continue to call them are customers that were served by other agents that are now gone and others who are personal friends of the owner. If the service continues to suck this way, it won’t be long until this business goes down the drain.
Essentially, there are things to be learned.
- Being a control freak has no place in managing a business. No business grew with only one man controlling everything. You need to relegate and trust other people.
- Before you think of beating your drums make sure the quality of product or service is worth advertising. There is no amount of great visuals, great copy or great advertising can cover up bad customer service.
- Maximize the talents of your employees. If they do something well, even if it is not their primary job, strategize in order to use their skill or talent for the company without making the day to day operations.
- Evolve. Technology is changing how people purchase things. It is changing the nature of marketing and advertising. It is influencing relationships. It exposes lies and truths easily and it can also magnify and exaggerate things. That’s why it is more important for you to make sure you product or service is its highest quality before even thinking of advertising.
- Actually do the math and know your targets. You need to know your most basic requirement in order to run a business. How much do you actually need to sell or earn daily to keep the business going. Know the value of your time and the time of your employees.
- If you want to be big, think big. Dress the part. If all you are thinking about is mere survival, all you will ever do is survive.
- It doesn't matter kind of business you are in, you don't sell books or clothes or insurance or travel deals or songs or whatever it is you think you are selling, you are selling service. You exist for the customers. Your company's focus, your life as an entrepreneur should be customers. If you have that to a tee, you'll be fine.
I used to have a boss who claims that he is the dumbest person in the office because he realized the value of hiring people smarter and more competent than he was. He surrounded himself with people who knew better than he did and it worked. His business grew from a one-man operation to a 200-man operation after only 18 months.
An entrepreneur needs to be a visionary and a great strategist. Let go of menial things, don’t bother yourself with the smallest details. You should be thinking about the big picture, not the pixel.