If you own a business or are considering starting one, make sure not to repeat those 3 deadly business sins.
When starting / running a new business, you may be uncertain about many things. That’s Ok.
There are plenty of business sins / examples to learn from the many blunders and botches of major corporations.
Here below, I list my 3 deadly business sins that I firmly believe (based on my personal experience) any business should be aware of, and work hard not to repeat.
3. Announce a Major Decision Before Thinking It Through
At times, business can be, sadly, a game of trial and error.
There will always be certain risks to take and leaps of faith to make, all in the name of progress or innovation.
Some of such decisions will be simply terrible business sins mistakes, but by the time you realize that, you’ve already announced it to the public and your shareholders.
Take for example Netflix.
On September 18, 2011, Reed Hastings, Netflix CEO and Co-Founder, announced that DVD-by-mail service would be a separate service called Qwikster, claiming such move is aimed at concentrating on its online video-streaming.
In its early days (in 1997) Netflix started out renting DVDs by traditional mail to its customers.
Afterwards, (i.e. in the digital age) Netflix switched to streaming movies and TV shows.
As time has shown, the whole idea behind Qwikster was to conceal a 60% price hike decision – with a schism of DVD and streaming services.
As time eclipsed, Netflix’s master plan was obviously not thought-through well, and just started to fall apart.
For starter, the Twitter handle for Qwikster was owned by Jason Castillo, a marijuana-enthusiastic teenager who was not willing to sell.
Netflix’s subscribers affected by that decision (estimated to be over 12 million users) vented their anger for the inconvenience of having to use two different websites, and to pay for two services; streaming and DVD-rental.
Wall Street followed suite and the Netflix stock lost 25% of its value in the 3 weeks that followed the announcement.
The final result was very messy that Netflix canceled the split after less than a month, and decided to keep everything under one roof.
Shortly around the time of this controversy, Netflix lost the rights for Disney shows and movies.
(Agreed, Qwikster may not have been the direct cause for losing the Disney rights, but it must have contributed somehow!)
Lesson learned: Think it over, thoroughly, then go ahead with it. If things go south, admit it, then start fixing it.
2. Overreacting to Statistics & Panicking About Them
Statistics are important, no doubt there.
They can tell you what people prefer to buy, what businesses are more likely to fail, and the market rate for certain items.
However, there are times when we can disregard statistics, which normally blows up in the face of those who do so.
Yet there are worse times, when some people overreact to statics and reports.
HP contested on what stance to take on tablet PCs.
Statistics revealed that Apple sold more computers then HP.
But how can that be when Microsoft Windows’ market share is more than 90%?
Well, that’s because those statistics in particular considered iPads as computers.
Yes, Apple sold more iPads than HP sold computers.
Obviously, those stats got HP thinking that tablets are a game changer.
After all, they outsold HP’s computers. So HP goes out and buys near-bankrupt Palm and their WebOS for a whopping $1.2 Billion. In doing so, HP doubles down on WebOS!
It made perfect sense at that time, right? HP thought to have the advantage that Apple enjoyed.
HP can control the OS and the hardware, just like Apple. Rest, as they say, is history.
Things started going down hill as WebOS tanked and did not live up to its hyped expectations. Eventually, HP had to sell WebOS to LG for pocket money on Feb 25, 2013.
Lesson learned: What actually happened is that HP overreacted to figures showing Apple selling more tablets than they did PCs.
HP tried to be like Apple and failed, which brings me on to point number 1.
1. The Mother of all Business Sins: Trying To Be A Company You’re Not
HP tried to be the next Apple to no avail. That speaks well enough.
If you want to stand out, your company should be a unique company.
Your sandwich and coffee shop is not Starbucks, and that’s a good thing.
Be your own company, not another one. HP clearly couldn’t be another Apple.
You don’t have millions upon millions of dollars to spend on your business, so you’re not likely going to be the next big chain store.
What you can do however, is be your own company, think about what you can do to be innovative over other businesses in your category.
If cash flow was negative, then you should re-consider your decision and make some major changes in your policies and plans.
Make that shift before you are shifted outside.
Lesson learned: Get to know what you own. Look at your statistics, ask your customers what they think.
Develop your own image regardless if that’s handmade food or cheap clothing.
Just find something unique and stick with it.