Hindsight is 20/20. Who could have predicted in 2000 that bigger wasn't always better when AOL and Time Warner agreed to merge the two largest media companies in the world? Against even skeptical business advice at the time, it went through.
The deal became the poster-child of disastrous business mistakes with the collapse of Dot.com bubble and the introduction of high speed internet. $100 Billion in stock value was erased almost overnight due to a near-complete loss of advertising dollars.
Dial-up was dead and so were the hopes of a New Age media revolution.
BUSINESS ADVICE 101
It can be tempting to place too much stock in advice given from your peers. What worked for them could possibly work for you. What seems like a 'no-brainer' most likely will turn out to be exactly that - a solution that has no merit in intelligent decision making. To understand how business works, you must realize the uniquely individual circumstances of your own success. There is never a magic bullet that solves every issue, and there's no common path to positive growth.
To this end, here are five pieces of free business advice that should never be followed blindly.
After all, you get what you pay for.
THE CUSTOMER IS ALWAYS RIGHT
In 1985, the Coca Cola Company revealed it's re-formulated soft drink 'New Coke,' after a mistaken belief that the youth of America demanded a sweeter, more syrupy taste in their soft drink. Market research had shown that Pepsi, which had that taste, was quickly gaining shares and the folks at Coke were nervous.
It is no secret that the experiment failed, and New Coke was removed from shelves after only three months. The outrage from loyal customers was unexpected as sales plummeted. What Coke thought was what the customers wanted was completely off base.
Satisfying customer needs is important, but it is not the final answer to business success. Though a common piece of business advice, it does not take into account the damage caused by re-branding to meet a poorly conceptualized market demand. The customer is not always right.
For small businesses, a daily issue is bowing to every customer who demands a discount. They insist the know what will make them satisfied, and often money is the only solution to their issue. This can be harmful as well. Take each request for a price adjustment in stride and balance the options. Each pacification hits your bottom line.
A customer does not take into account your profit margin when demanding a 'break,' and does not have the inside track on the maintenance of your bottom line. Instead of providing a dollar discount, perhaps counter their demand with an upgrade or perk to please them.
For small businesses, a daily issue is bowing to every customer who demands a discount. They insist the know what will make them satisfied, and often money is the only solution to their issue. This can be harmful as well. Take each request for a price adjustment in stride and balance the options. Each pacification hits your bottom line.
A customer does not take into account your profit margin when demanding a 'break,' and does not have the inside track on the maintenance of your bottom line. Instead of providing a dollar discount, perhaps counter their demand with an upgrade or perk to please them.
NEVER TURN DOWN A PAYING CUSTOMER
Believe it or not, there can be a thing as too much business. For small businesses, there exists a saturation point where too many customers means a decrease in quality of services. Limited employees means a finite ability to provide quality service, and taking on more than you can handle decreases the quality for existing customers.
A decrease in service is noticeable, and a small business can soon discover their customers are leaving in droves to a competitor who can satisfy their needs.
To combat this, know the limitations of your service and focus on giving the highest quality you can. Your existing customers will appreciate it and remain loyal.
YOU MUST SPEND MONEY TO MAKE MONEY
It would be great to have the latest technology, the newest model of delivery vans and a top of the line insurance plan for your employees. But by depleting your cash reserves or extending your credit line can turn disastrous quickly.
In 2005, News Corp Billionaire Rupert Murdoch wanted to add to his empire and spent $850 Million to purchase the social networking site, MySpace. The concept was clear - monetize the insanely popular website by introducing advertising to its platform.Instead of clicking on the advertising, users of MySpace flocked in droves to Facebook, an upstart, add-free alternative with a more user-friendly approach.
Murdoch lost a fortune, selling the company for a paltry $35 Million and tweeting, "We screwed up in every possible way, learned lots of valuable expensive lessons."
The lesson here is to not be in such a rush to make a buck.
HIRE THE MOST EXPERIENCED PEOPLE
It's often noted that there's no substitute for experience, but that isn't always the case. Experienced personnel may know how to perform in the manner the business is accustomed to, but their fault is they often don't have the ability to step outside of the box and provide new concepts.
The world is constantly changing and to keep up, a small business must be prepared to change with it. By hiring employees who are eager, young and ready to learn, a company can expect to be inundated with fresh ideas to broaden its horizons. A millennial with a briefcase filled with unique proposals can do more with one idea than an experienced salesman with a Rolodex stuffed with old contacts.
STICK TO YOUR PLAN
Business plans are living documents, meaning that they should be adjusted to fit the direction your business is heading. Sometimes, the unexpected opportunity arises outside of your plan's spectrum, and you must jump on it to succeed.
As business advice goes, this one can surely do the most damage. Keep on top of developments in your field, have operational funds earmarked for the unexpected opportunity and always be open minded.
In 1974, Kodak engineer Steve Sasson developed a way to translate photographic images into binary code. This was the birth of digital photography.
Though the Research and Development branch of Kodak invested billions of dollars in its development, a conservative cadre in the upper echelons of the company stalled the technology's release in fear of losing a profitable edge in traditional film and paper photography.
When the company finally got on-board with digital in the late 1990s, it was too late to capitalize. 50,000 employees were laid off and the company filed for bankruptcy in 2012.
Though the Research and Development branch of Kodak invested billions of dollars in its development, a conservative cadre in the upper echelons of the company stalled the technology's release in fear of losing a profitable edge in traditional film and paper photography.
When the company finally got on-board with digital in the late 1990s, it was too late to capitalize. 50,000 employees were laid off and the company filed for bankruptcy in 2012.
When the opportunity arises to change for the better, take it.
TAKE BUSINESS ADVICE SERIOUSLY
The next time you attend a networking event or find yourself chatting over a cup of coffee, be conscious of the business advice being shared. It may not be detrimental, but blindly taking advice without looking at the possible impact can be damaging to a small business. Weigh out the pros and cons, and at the very least, get a second opinion.
What's some of the worst business advice you've ever received? We want to know, so leave your comments below.
What's some of the worst business advice you've ever received? We want to know, so leave your comments below.
