JAN NIBJ: Four big mistakes local businesses make over and over again

At North Idaho’s Small Business Development Center, we coach and teach hundreds of business owners and leaders every year. Time and time again, we see them struggle with the same four pitfalls, failures, and challenges. What are these pitfalls and what can you do to overcome them?  

You didn't validate your assumptions

This is by far the top reason why a new business fails. It’s also why a product or service extension fails. Not validating business assumptions is like building a house on shaky ground. Without a solid foundation of validated assumptions, you risk making decisions based on flawed or incomplete information. This leads to:

• Misalignment with Market Needs: Your product or service doesn't address the actual needs of your target audience, leading to poor market fit and lack of paying customers.

• Wasted Resources: Without validation, you invest time and money in developing features or aspects of your business that customers don't find valuable.

• Missed Opportunities: Failure to validate assumptions causes you to overlook potential opportunities and underestimate certain challenges.

• Customer Dissatisfaction: If you haven't validated assumptions about your customer preferences.
In all cases, before you take action and spend money and time, you need to validate your assumptions. You can do this in two primary ways:

• Conduct Discovery: Audit your competitors — what’s working and what isn’t for them? Talk to owners of similar businesses in different markets — what hard lessons did they learn that you can avoid? Interview the people you think would become your “best” customers — the ones that would pay you the most and give you repeat business.  If you already have customers, interview your best ones to figure out how you can acquire more just like them. 

• Launch an Experiment: Instead of relying on gut feelings or assumptions, experiments allow you to gather concrete evidence about the effectiveness or feasibility of a particular idea or strategy while minimizing risk and loss. Your experiment should be designed to be small in scope and cost while vast in learning and insights.  

You aren't focusing on your leadership enough

Most business owners neglect leadership development — for themselves and for those who work for them. This can have several consequences. You will have a team dependent on you making too many decisions, you will be overwhelmed with micro-managing, and you risk becoming disconnected from your team.

Your goals should be to increase the autonomy of your team, be free and spend more time focusing on what’s important, and reconnect with your team in a meaningful and impactful way. Two changes can help you become a better leader:

• Work on the business, not in it. “In the weeds?” “Fighting fires?” Sound familiar? Stop micromanaging your business and start leading.  Mark your calendar and set aside recurring time every week for two things: 1) business strategy and 2) meeting and coaching your people

• Be a better coach. Rather than simply give marching orders, work on being a good listener, a great communicator and a source of motivation. Your people want to feel heard and understood, so start by really tuning in to what your employees are saying. Listen and provide guidance with a light touch.

You are guilty of voodoo hiring
The average cost a business spends on a bad hire is $15,000 so why do you use “voodoo hiring?” Voodoo hiring is a term used to describe the hiring process when it lacks transparency, consistency or a clear rationale. Voodoo hiring decisions seem mysterious or arbitrary as if influenced by magical or inexplicable forces. We call this “hiring by gut.” This happens when there's a lack of structured processes, objective criteria or a systematic approach to evaluating candidates. Decisions are based on personal biases, gut feelings, and subjective judgments rather than on a thorough assessment of skills and qualifications.

To make better hiring decisions, start a more rational and data-driven approach to hiring.

• Create a Scorecard: describes exactly what you want a person to accomplish in this role description of outcomes (not activities the candidate will be doing, but stuff they must get accomplished) and competencies (e.g., analytical skills, attention to detail, persistence, proactivity) that define the job well done; the scorecard is NOT a job description.

• Interview with the Scorecard: as you interview the candidate, grade the candidate against your scorecard. How likely are they to achieve the outcomes? How well do they demonstrate the competencies you need? Finally, insist on references.

• Conduct Reference Interviews: Take your Scorecard and interview your candidate’s previous managers. Check the claims your candidate made — does the manager corroborate what the candidate said? Be thorough. Most former managers will only share nice, superficial things. It’s your job to surface meaningful feedback.

You are not demonstrating unique value

A Unique Value Proposition, or UVP, is a clear statement that communicates the unique benefits and value that your product or service provides to your customers. It answers the fundamental question: "Why should your customer choose your product or service over others in the market?" A compelling UVP differentiates your business from competitors and highlights what makes it special in a way that matters to the customers you want.

A good UVP typically includes:

• Unique: It identifies what sets your product or service apart from your competitors. Hint: claiming you're the “best” or “cheapest” won’t take you very far.

• Value: It communicates the specific benefits or solutions your customers will gain from using your product or service.

• Proposition: It is a concise statement that captures the essence of what your business offers and why it's valuable.

Without a UVP, your business is destined to get lost in the noise and at risk of competing on price, and price alone.

To set yourself apart from your competitors in a way that matters:

• Create a compelling UVP: Think of who are your best customers. These are the customers who pay you the most, the ones who keep coming back, and the ones who say good things about you. What is it about your product and service they highly value? This is the meat of your UVP.

• Communicate your UVP: You may have a UVP but do you communicate it clearly? Quick test. If a visitor goes to your website and doesn’t know your UVP in 5 seconds or less, then you aren’t clearly communicating your UVP.

Now what are you waiting for?

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Michael Angiletta is a business coach with the North Idaho Small Business Development Center.