I watched one of my entrepreneur friends go from making great money for a two year period to having to get a job after a very short period of declining revenues: I saw it coming but I failed to stop it.
I strongly believed that they person needed to build a brand and to market themselves with that brand using the usual blogs and social media relationship building. Out of the three elements of my money spot program they only had one element on lock-down: distribution. My friend was selling very successfully via an online portal and to be honest as their revenues were better than mine I felt they wouldn’t listen to my advice. Why should they?
Why did I think they were working on the wrong things?
They got it right by starting with and focusing on one product. However, they spent all day, every day ordering and managing stock plus packing and shipping product to customers. This, in my book, is one of the worst things an entrepreneur can do.
These kind of tasks are some of the easiest to do and the most straight-forward to pass on to someone else. I did ask my friend to hire someone to do it but they ultimately said they enjoyed and preferred to do all these operations themselves. Fair enough.
If these admin like tasks were only taking one maybe two hours per day, I would have been like fine, it’s not a big deal, however, this was not the case – they consumed most of the working day.
Why did the strategy fail?
By spending all time on admin, no time was spent on building a strong and attractive brand and no relationship was being built with potential new customers. This meant the person was just selling another commodity rather than a lasting brand identity.
If they had spent some time building a following then in hard times when sales were poor they would appeal to their fans with promotions etc. The only emails to-hand were those of existing customers and unfortunately most of those had already bought all the items they would have wanted from my friend’s store.
Unconvinced by the potential for social media, the dream life that had been worked on so hard was neglected.
How can you avoid the same trap?
I have three simple tips. Don’t be satisfied with selling another commodity:
If you’ve been selling another commodity – sit down and strategize your way out of this sticky situation – selling a commodity will fail you in a recession.
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Heather on Wealth
I enjoy helping people think through their personal finances and blog about that here. Join my personal finance community at The Money Spot™.