7 common mistakes new entrepreneurs make (and how to avoid them) Part 2
Last week I talked about the first 4 of 7 mistakes solopreneurs make and how to avoid them. This week we’ll talk about numbers 5 to 7.
5. Not understanding sales funnels
The backbone of your business is what is known as a sales funnel. And if you don’t understand what one is, how to work it, and how to feed it, you’re in trouble.
Simply put, a sales funnel is the process you have for getting people to notice you/your product, and then moving them closer and closer to the point of purchasing. There are tried and true methods and stages that make up a good sales funnel. The main stages are as follows.
Creating and then advertising a lead magnet. This is something you give away for free that gets people to notice you. Common types of lead magnets are checklists, guides, quizzes, webinars, etc. The purpose of a lead magnet is also to get people’s contact information.
Setting up an automated system for managing the contact information you have acquired;
Managing that list effectively (including protecting people’s privacy);
Contacting people on your list on a regular basis to build your “know, like, and trust” factor;
Developing products/services with different price points;
Creating and automating sales campaigns to sell those products/services (usually by email or regular mail).
A sales funnel is not something you can develop in just a few hours. It takes time, work, and trial and error to create a funnel that really works. But it is the main way that businesses find leads and turn them into buyers. (We will revisit the topic of sales funnels in future articles—probably more than once!)
6. Poor Time Management
This is a biggie. And it encompasses more than you might think. Most of us are aware of some of our common time wasters, but there are others that perhaps you’ve never thought of. So let’s take a look at some of my recommended “dos and don’ts”.
Don’ts
Don’t read an email more than once—read it and handle it right away. That extra minute or two spent re-visiting emails can add up!
Don’t answer the phone every time it rings. If you’re busy, let it go to voicemail.
Don’t surf the net during work hours. (One minute of surfing often turns into 30 or 60!)
Don’t drive during rush hour. If you need to run errands for your business, schedule them for those times of day when traffic is lighter. You’ll probably get back home much faster!
Don’t hold meetings (in person/online/by phone) unless you absolutely have to. Meetings tend to drag on much longer than they actually need to, so try sending emails with necessary information instead. This is often a more time efficient way to share/gather information.
Don’t be afraid to ask for help. Being self-employed doesn’t mean you have to do it all yourself! If you are feeling overwhelmed, find someone (maybe a family member or friend) to help out for a bit. Or maybe you might think about outsourcing some of your tasks, especially the ones you aren’t expert at.
Dos
Make sure you are organized. The more organized you are, the more efficiently you can work, and that saves time.
Set regular working office hours. It gets you into the habit of working a regular schedule, which in turn helps you produce more.
Take regular breaks. It’s too easy to lose focus and waste time if you aren’t refreshed.
Minimize distractions. Every time you’re distracted—by a phone call, a family member, an email alert—it takes a few minutes to get your mind back around to what you were doing when you were interrupted.
Get enough sleep. Being tired can cause you to lose focus, and work more slowly.
Get enough exercise. When we don’t exercise, we become lethargic. That, of course, makes it harder to stay focused.
Track the time you spend on various tasks. This is a great way to learn about how long things really take, and that in turn gives you insight into how well you are managing your time. You can then use that information to improve and fine tune your work habits.
Set timers. It’s far too easy to just “keep working” on things and then losing track of time. Setting a timer reminds you to stop at a certain time, and that allows you to move on to the next important task on your to-do list. Otherwise you may spend way too much time on one task, and not even get to others.
Use lists/checklists. This is a great way to speed through tasks you need to do regularly. For example, if you do month-end accounting, have a list of all the tasks you need to undertake to complete that chore. It helps you keep on track, makes sure you don’t miss a step, and also relieves the stress of worrying about whether or not you might forget something!
Think before you say “yes”. Taking on too many tasks can interfere with getting your important work done. So think carefully before you agree to something.
Have a plan. Too often, our routines are interrupted by something we “forgot to do”. Then, suddenly, that forgotten task becomes an important thing that we need to attend to—and we have to temporarily put aside whatever we were working on to deal with the missed task instead. Daily, weekly, and monthly plans will help keep you on track and help you get more done.
Develop ways to save time in all aspects of your business. That doesn’t just refer to small things—it also means things such as:
Taking the time to analyze your workflow and then fine tuning it by developing routines that are more efficient;
Using advanced features of software that automatically format/calculate things for you;
Spending time chasing leads that are likely to buy (chasing leads that aren’t likely to buy is not a good use of your time!)
7. Not knowing your numbers
It amazes me how many business owners don’t understand their own numbers or “metrics”. In fact, they often don’t even know what those numbers are. But there are some key numbers that you need to know in order to accurately judge the health of your business and to identify where you need to make changes or improvements. Here are a couple of key metrics you need to know about.
ROI. This stands for return on investment. It is a number that tells you how much profit you make for every dollar you spend on running your business. It’s expressed as a percentage, so an ROI of 50% means that, for every dollar you spent, you received $.50 in profit.
Why this number is so key is that it predicts whether your business will survive. For example, if you spend $20,000 per year on your business, and only make 50% ROI, your annual profit is only $10,000.
Ideally, you want to know the ROI for every sale you make. That means how much ROI do you make with each sale.
Time. This is probably the number one number that people don’t have a good handle on. How much time do you actually spend on a project? That includes everything from emails and phone calls, to doing the actual work, to driving to the store to buy supplies for the job. Many of us greatly underestimate the amount of time we actually spend on a project. But without this key number, your quotes/estimates will be off, your fees will be too low, and your business won’t be as profitable as it should be.
Estimating up front how much time a project will take is an art/science of its own. But you need to get a strong handle on this and truly understand the amount of time you are putting into things. That goes for client projects as well as other business activities.
Conversion Rate. This is the percentage of people that your ad/website/activity converts into buyers. In a way, it’s a type of ROI. It lets you figure out how effective your advertising is.
Let’s say you run an online ad on Facebook. Let’s further say that Facebook shows that ad to 1,000 people, and that 5 of them end up buying. The conversion rate for that ad is:
5 / 1000 = .005.
That means a conversion rate of half of 1%, and that’s not very good. Of course, it depends on your industry and product, but generally you want your ads to result in at least a 2% conversion rate. Otherwise, you probably aren’t getting much money back for all the money you spend on the ad in the first place.
By knowing what your conversion rates are, you can analyze the effectiveness of your ads/campaigns and identify when and where changes need to be made. But without knowing those numbers, how would you be able to tell?
There are, of course, lots of other numbers you need to know. These are just a few examples of ones that can make a big difference in how you run your business.
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So that’s my list of the top 7 mistakes I see solopreneurs make in their businesses. I hope it has given you some food for thought, and some incentive to hone your business skills so you can move your business further, faster.