Four mistakes family managed and small businesses must avoid.
2020 was a year of teachable moments. Looking back at the common mistakes business owners made, these are four mistakes family-managed and small businesses must avoid to ace 2021.
In his book, Start with Why, Simon Sinek narrates a wonderful story about a group of American car executives who visit a Japanese assembly line. They notice a step missing. In America, a line worker manually tests a door’s hinge by tapping with a rubber mallet. In the Japanese assembly line, there was no such step or line worker involved. Intrigued, they asked the Japanese how they ensured the door fit perfectly. The Japanese sheepishly answered, “We make sure it fits when we design it”. The takeaway here is the need to fit by design, not by default.
I picked this example because of how perfectly it fits (pun intended) with the theme of this article. In my work with businesses, I notice frequently how things fit by default but when they fall apart, it is difficult to put them back. Because, no design! And this generally is also the point where they set out to look for professional help.
Let us look at four common mistakes businesses make and how family managed and small businesses can use the learnings:
- Not knowing why your customers are choosing you: Enough and more has been written about consumer behavior. While we have managed to ace customer profiling almost to the precision of the FBI’s BAU folks and found (legal ofcourse) ways to spy on their digital footprint, sometimes thriving businesses fail when they forget why the customer chose them in the first place. When businesses lose focus on why their first few customers bought from them, what rational need was met and which limbic gap was filled, they tend to get lost in the chaos of changing market dynamics.
- Price always costs something : I recently moved to a new coffee brand. I paid full price the first time. Soon enough, as I began to order a bottle every month, I noticed deals and promos every other month. In January, I managed to buy 3 for the price of 2. In my head now, that’s how much it costs. I am on the last bottle of my haul now and I keep checking online for promos and coupons for my next coffee haul. Paying full price just doesnt feel right anymore. Discounts and promotions certainly help move products especially in this Covid struck market. But price always costs something. Either a customer or the perceived value!
- Repeat business does not guarantee brand loyalty : A true category leader will continue to enjoy customer loyalty even when there is reason not to. The Southwest Airlines case study is a quintessential example. So many brands that raked in repeat business during the lockdown saw an unexpected (or shall we say naturally expected) dip when local markets opened up full scale early 2021. It became imperative for them to introspect and reposition themselves to their target audience. Repeat business is when people buy your product or service multiple times. Loyalty is when they stick around even when there is a cheaper / better option. Businesses that work on inspiring loyalty have a higher chance of weathering storms when they hit.
- Just because it works doesn’t make it right : Even before Covid hit Indian shores, our economy was reeling in the aftershocks of the bank scams and real estate slowdown. This system failure as I call it was a result of a series of manipulations. Employees were manipulated with incentives, palms were greased, regulations were manipulated using interpretational differences and dissent was silenced. An overzealous flow of loans encouraged businesses and individuals to borrow more than they could possibly repay or the banks could possibly hold out. Manipulations may work but businesses have an obligation to create systems by design, not just ones that fit.
As we navigate the rest of 2021, let us look at these common mistakes as teachable moments. Let us also keep our learnings close. Let us not tap to ensure if the door fits, let us design doors that are sure to fit !