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.