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Friday, 21 August 2009

The 8 Traps Causing Failure3

Trap 6 - Poor Marketing

The first priority of every business is to get and keep customers. No matter how good the service; no matter how excellent the product; nothing happens unless you have customers.

‘The best advertising is word-of-mouth’ is a maxim that has harmed more businesses than any other truism. It’s not because it’s untrue, word-of-mouth is probably the best advertising. After all, it is free, it is believable and it works. But too often it is used as an excuse for having no marketing at all.

So even if an enterprise adopts word-of-mouth advertising as its preferred marketing strategy, it should formulate a plan to stimulate its customers to talk to their friends. What if it isn’t bringing in new customers at a fast enough rate to remain profitable? I see so many clients who buy coffee shops and then sit back and wait for customers. You can’t grow that way.

When you get down to the basics, marketing is fairly simple really. You need to know exactly what features your product has and benefits your customers derive from those features. You need to know what sort of people your existing customers are, and then explore how to present you product/service to the same sort of people.

Whatever your business is, you should strive to make it ‘different’ in some way. No two restaurants should be identical even if offering the same cuisine. Be independent and innovative in what you do and offer something different-even if it is in the quality or personal service. Give customers a reason to come to your restaurant instead of the one up the road.

Take the time to explore ways of increasing the number of customers. Sales seldom increase without some effort, and a business standing still with no new customers is a business beginning to die.

Trap 7 - Poor employee Management

Despite their good reputation for employer/employee relationships, small businesses often mishandle staff. Small business proprietors continually complain of the poor staff on offer. They complain of employees not taking direction, being unenthusiastic at work, taking sickies and long lunch and tea breaks.

Disgruntled workers are poor performers who chase customers away. Yet it has been proven that the cause of most of these problems is not the poor quality of the staff offering themselves for jobs, but inept staff management.

Very few small business proprietors have formalized training programs for their staff. Nor is the typical small business owner particularly skilled in hiring the right staff. If the employee who is hired does not have the necessary skills when hired, then lack of suitable on-the-job training ensures that she will never acquire it.

Another problem for the small business owner is that because the closeness with which he works with his staff he becomes so friendly with them that he lacks the necessary assertiveness to create a happy, co-operate environment in which quality service is given.

In most cases of failing firms there is a low or complete lack of morale.

So check the morale of your staff. If you think poorly of them, it’s odds on that they think poorly of you. Do something about it because low morale is another sign of a failing business.

Trap 8 - Assuming the proper role

Why is it that one restaurant succeeds and grows while another with similar service, location and capital just doesn’t get off first base? Usually the difference is in the skills of the owner.

The skills required change as the business changes. We all know about the chef who prospered while he spent most of his time in the kitchen doing what he did best. His troubles started only when the business grew to the extent that he needed to be out of the kitchen so much that he needed to employ other chefs and kitchen staff.

While he was doing everything, he could easily keep all the things he needed to know in his head. Now he can’t, and the records have not been put in place so that he know what’s going on.

He forever lurches from one crisis to another, from one angry supplier to another, from one dissatisfied customer to another, from one angry employee to another. His business is doomed if he doesn’t realise that his role has changed.

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The beginning business needs an operator. Someone who can get his hands dirty and perform any of the functions that are required. As the business grows the owner can be a chef no longer but needs to assume the role of manager. Paperwork has multiplied, staff and equipment have increased and the role of the top man has been made more complicated. Failure at this stage to grasp the new role may mean the failure of the business, too! The owner can be a chef no longer!

It is difficult for the small business owner to know when each stage of his business has been reached and the business may never reach the transition stage because he fails to allow it.

This is the reason small business owners must be careful in their choice of accountant. If his accountant merely produces tax returns each year without advising on the health of the business-then the owner is alone, indeed!

Contact Kelvyn Peters CPA & Associates. You just need a little help, you will find it at

Kelvyn Peters is one of Australia's longest serving Tax Agents. Kelvyn was registered in February 1962.

He is a director of Restaurant Catering Qld Inc the peak employer representative in Queensland, and advised the hospitality industry for many years.

His speciality is moving in to rescue ailing restaurants.

Kelvyn Peters CPA has spent over 20 years experimenting and researching methods to help small business in meaningful ways that are affordable.

Kelvyn and his associates have perfected it with their local clients now they are going global.

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