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What's Job #1 for the
leader of a wellness business?
Making decisions.
That requires
you to figure out what needs
to be decided....gather
information...reach a conclusion...and
get feedback on the eventual
results.
It's simple...if you
avoid the decision traps
that lurk
at every step.
These gotchas
are common mistakes that
managers at every level
and in every business typically
make.
1) The "Sunk
Costs" Trap
You've spent lots of
money on a project. It's
going badly. But instead
of pulling the plug and
trying something different,
you keep investing time
and money on an approach
you know isn't working.
Why? Because you've already
invested lots of time and
money in that flawed approach!
Crazy, huh?
But it happens
every, in both tiny and
enormous health and wellness
businesses.
We've worked with numerous
wellness businesses who
hated their graphic design
and web development firms.
The firms never returned
phone calls, the designers
and developers had high
turnover so our clients
had to constantly re-educate
new people about their business,
and worst of all their work
was sub-par, never on time,
and always over budget.
Why didn't they make
a change? Inevitably, it's
because "We've already spent
$12,000 on this website."
Or "We've already spent
hours taking them through
our business strategy."
You'll never get that
time and money back, so
ignore it and move on. Spending
more time and money on something
that you KNOW is a failure
is just throwing good money
after bad.
2) The "Opinion" Trap
We worked with the executive
team of a regional group
of medically-based fitness
centers. Everyone on the
team was a healthcare professional
and extremely knowledgeable
and confident about treating
patients.
However, because they
saw themselves primarily
as healthcare experts and
not as business managers,
they looked to everyone
around them for ideas on
how to run the business.
One of the most frequent
comments we heard, even
from the CEO, was "I know
I don't know anything about
business."
As a result, they jumped
willy-nilly from one decision
to another. One VP knew
an HR director who said
that corporate wellness
was a really hot topic.
So for a few months, they
chased new business through
employers. One department
head really believed in
preventive medicine - so
for a few months they focused
on networking with more
doctors. Another one had
a neighbor who ran sales
at a small software firm.
He was a fan of online advertising,
so you can guess what happened
next, I'm sure.
We encourage you to get
opinions, ideas and recommendations
from people outside your
business. However - test
those ideas against your
business vision and strategy.
Ask yourself if you're selling
similar products and services
to similar customers through
similar channels. If not,
do your homework before
jumping onto the next bandwagon.
3) The "Status Quo" Trap
We met Mark two years
after he established his
own consulting firm. He
had great expertise to offer
clients - but was struggling
to find paying customers.
His story: for twenty
years Mark moved up through
the ranks at a manufacturer
of health and wellness products,
eventually becoming a vice-president.
At forty-five, he made a
long-anticipated career
change. He started his own
consulting business, advising
retailers on how to develop
products for this market.
Mark's phone rang constantly
in his old corporate job.
He received daily invitations
to speak, participate in
panel discussions, and meet
with the press. He thought
this visibility would automatically
continue, not realizing
that it was his position
at a well-known company
that made him a sought-after
contact.
Most of us have a bias
towards preserving the status
quo - the way things are
and have always been. That
tendency is exaggerated
when we're faced with multiple
options. For Mark, it was
far easier to assume that
people would continue to
seek him out than it was
to weigh an array of new
decisions: "Do I need to
overhaul my website? Should
I hire a publicist? Should
I buy ads in business magazines?
Should I look into direct
mail advertising?"
Once we helped him figure
out who his target clients
should be, we were able
to rule out several marketing
possibilities and prioritize
others so that he could
finally get traction in
his efforts to win new clients.
4) The "Feelings" Trap
How you feel should be
part of every business decision.
But it shouldn't make
the decision.
Elaine and her business
partner came to us with
what we felt was a very
sensible goal. They were
passionate and excited about
starting a yoga therapy
practice - but sensibly,
they wanted to avoid racking
up serious debt. We began
brainstorming with them
on a methodical plan to
build a client list, locate
affordable facilities, and
recruit qualified part-time
staff.
About 35 days into the
project, they called us,
thrilled to announce that
they had decided to launch
their business with a bang.
They had cashed out 401K
accounts and taken other
actions to come up with
about $70,000 in loans.
With that funding, they
signed an upscale storefront
lease (with payments to
start immediately!) and
hired a contractor to remodel,
paid $7000 for a website
and $6000 for exquisite
marketing materials.
Unfortunately, their
enthusiasm led them into
a maze of problems. The
lease and buildout took
months to finish. Meanwhile,
they had never finished
their client marketing plan.
So for six months they had
to keep writing checks to
landlords and contractors
while they had no significant
client income. While our
original plan allowed them
to leave their prior jobs
and focus on the new business,
the cash burn rate meant
that they couldn't make
that change. Burning the
candle at both ends meant
excruciatingly slow progress
for the new business.
They closed their doors
two months ago, a year after
they first came to us. Total
client count: 22.
5) The "Wrong Problem"
Trap
A large and upscale health
club talked with us about
how to increase membership.
They had a full-time commissioned
sales force but the member
count remained flat. They
felt that buying a list
of email addresses would
be an excellent way to market
to people who were unfamiliar
with their club.
Turned out that they
were trying to solve the
wrong problem. Located in
a rapidly growing city,
they had plenty of prospects.
But their sales compensation
plan motivated the salesforce
to sign up every warm body
that walked in the door,
whether they were a good
fit for the club or not.
The result was that a third
of the new members were
there only while the free
month's trial applied...a
third simply didn't like
it...and the remaining third,
who were initially enthusiastic,
were totally turned off
by the actual experience
versus what they had been
led to expect.
Trying to buy email lists
to provide a never-ending
supply of new prospects
was a solution for the wrong
problem. Our client needed
to 1) get clear on which
customers they really wanted
to hang on to; 2) design
a marketing program to attract
those customers only; and
3) modify the sales compensation
plan to reward sales people
for finding only members
who actually became long-term
customers.
Read Part 2: Decision Traps #6
through #10.
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