We all know there are a lot of common misconceptions about what it takes to build and run a business — from startup costs to employee salaries to profit margins and beyond. What don’t people understand about your business or industry?
The biggest misconception I see for almost all businesses is that despite all the media hype…there are rarely any “overnight success” companies…
Growing any company takes years (if not decades) to really take root and grow into something substantial…
…but if you stay with it and try to compound the knowledge, experience, and capital that you gain each day…over time… it’ll grow and grow…until one day you’ll look back and wonder how you got big and profitable.
People need to forget about being the best and focus on just getting better
Hi Loren…so many possible answers here! May I have 3?
1) That the more they invest in the relationship the further their money will go
2) That amazing results (geometric returns, remarkable differentiation, unique IP) rarely, if ever, begin with an ROI discussion.
3) That hunches and intuition are far more powerful than we give credit.
I suspect there’s a theme here around trust and courage. Having done this for 21+ years, I can confidently say that only a tiny number of businesses appreciate (and embrace) these two key ideas. Why not?
Because it’s scary.
And because the business canon teaches most of us to think in terms of inputs—>outputs. Because most business research is focused on publicly traded companies OR venture startups and ignores creative, owner-run firms. And, lastly (as Ken Beck masterfully articulates) most business advice is guided by organizations in the extraction phase of their evolution (as opposed to the creation and scale phase - think early days of Hewlett-Packard)
PS: if I can have a fourth misunderstanding it’d be that real transformation and impact takes longer than most think. I’d say the average is 2-3 years, especially if it’s about changing a business’ public-facing brand/persona/way of working.
Capacity. Or just impatience. I've found business leads that want to go hot and heavy immediately are the worst leads. ERP and Software development is a time-taking effort, i'd call it a marathon of effort. We cant pack 100 hours of effort into 2 days because a client needs something by Friday.
We let them know, hey great idea; it would totally work. However, you'd be waiting until September until we start, and its approx $20-$30k. Do you want to still have meetings to flesh this project out or do you want to think about it?
Typically, these customers think that if they hoot and holler enough, they can get what they want. All I need is time and budget, give me that and I can make something work. At the same time, I also need the client's focus as well. Approx. 20% of our time needs the client input, so for 100 hours in two days, we then need about 20 hours in 2 days from the client (in the rushed example).
They want to say "I want a system that does this X, Y, and Z" and they think that is all the input they need to give and we will go execute independently.
In the end I totally understand, if we are working with a $10mln/yr revenue business, and we factor the executive's value per hour; assuming a generous 1840 working hours in a year (for vacations etc), that is about $5.4k/hr of value that executive is managing.
Add about 10 employees (which divides the rate by 10 + same assumptions), then we are talking about $543/hr, even at the employee level it becomes difficult to spend time with us because there is literally something more valuable than spending the ~$350/hr by talking to us. That spend + opportunity cost is ~$900/hr.
They would have to have a substantial problem to attain a reasonable ROI, the problem is that typically no one has run that kind of math on their challenges; and we are the battleground for that internal struggle.
How valuable is saving 10 hours a week for a single employee, it would mean (probably) $5.4k/week, or $50k a year. So why are we fighting my $20k quote? ROI is same-year.
All we do is say, great idea, here is the cost, and our schedule; if you want to be the next project it is 2x. The prospect can self-select the value if its worth it or not. Doing the math for them is like hiring someone to go the gym for you. They just wont appreciate the effort.
My mentor, Dan Kennedy often mocks business owners who think that their business is different. While there are minor niche differences and certainly market differences, the basics, which I believe you are referring to are similar.
The biggest reason for failure is usually a lack of capitalization and a failure to focus on cash-flow and profitability. That’s true of professional practices, brick and mortar stores, manufacturing and online.
The next is a failure to get the proper advice. No one knows everything. Many businesses fail because they lack the experience-based wisdom to anticipate hurdles and rely on bad advice or fail to get any.
Self-help and Do-it-yourself is wonderful for some things; not for specific business advice.
This is as true for business transition and sale as it is for startups. Failure to get the appropriate advice can result in the loss of hundreds of thousands of dollars in a sale as well as complete failure in a startup.
As an editor/copyeditor, I have found that a lot of authors think I'm going to force them to do everything MY way, which isn't true. I'm a collaborator, always knowing that the author's vision will likely be different from mine, and my only job is to help make that vision clear to readers.
Authors also often think I can give them an absolute timeline/cost based on either the number of pages or words they've written, without realizing neither number tells me very much. Are the words the right ones? Too many? Not enough? Fully fleshed-out ideas or overdone?
What size page did they use? What size font? Single- or double-spaced? Size of margins?
Until I see the entire manuscript, I have no idea what I'm facing or how best to help.