One of the most valuable lessons I've learned in my life is: Do not cut corners in anything you do that is of value to you, whether it is in business, relationships, or personal. I can remember going through college (undergrad) and just coasting along -- essentially "cutting corners" -- not giving it 100% and thinking once I graduate things will just fall into place. Yeah, well that is not how life works nor should it. The same goes for business. Let's say you want to start your own business or work for a company that is: A) just starting out or B) has been around for a while but is struggling to maintain a profit. What do they all have in common (typically), limited access to money, resources, and human capital, right? So what is the typical answer to this issue? Free work! Free software! Free whatever!
In the modern, digital world we have these expectations that things should be free -- everything from information to education, tech-platforms, and applications. In some instances this is true and many free pieces of information, technology and applications can be beneficial and useful when operating a business, and should be leveraged. Some products/services that come to mind are: Wix.com, Google Docs/Drive, Skype, Zenefits, Social Media Channels (Hootsuite, Facebook, LinkedIn, Twitter, Pinterest, etc.), Blogs, Dropbox -- there are many more either free or affordable platforms and software one can use to enhance their business operation and market penetration. Someone can even take FREE classes online at MIT, Stanford, and Yale if they were feeling ambitious -- doesn't mean you'll get a degree from said school or even finish the class. These are all good, positive and productive ways to cut costs and improve efficiency at the same time; however, there are areas where "cutting corners" in business can be a detriment, completely destroy what you sought out to build, and make all the hard work and time you've invested up to that point a waste. Many of these examples of cutting corners have been commonplace over the last 30 or 40 years, but are no longer viable for various reasons.
The first of which is free employment or un-paid internships. Don't get me wrong, I am all for the internship position and believe there can be value created for both the intern and the company as long as it is the right fit. The right fit would be an intern that is passionate about the industry, wants to learn, grow, and contribute; work hard with the intention to further their career, build a valuable skill-set that cannot be learned in a classroom; and understands the outcome prior to starting (e.g. college credits, 3 month trial period, possible employment when internship is fulfilled, pay or no pay, etc.). The company must be honest from the jump of their intentions, the duties expected to be performed, challenge critical thinking skills of the intern -- not just have them get coffee or take out the trash; communicate clearly its intentions, the duration, and the possible outcomes. Nothing is worse than a company that offers an internship to a high-performing individual that is expecting to work for 3 months and then either be brought on full/part time (paid) or after the 3 months move on with a great learning experience and professional references. I have a theory I like to promote to businesses that act unethically and manipulate free work to benefit themselves, and that is: If you cannot afford to pay someone what they are worth, or close to it, to perform their duties at a high-level (after discussed duration of internship is up) then you'll have to find someone else whom may or may not be as efficient and productive as the last, thus potentially wasting more time and money. Or you'll have to perform the duties yourself, chances are you won't have the time nor the technological knowledge. Or you can try to automate some of the tasks (costs more upfront). If none of the above are feasible, it may be time to reevaluate your business model and ask yourself, why your company is failing to move forward and increase revenues and market share. As the old saying goes, "It takes money to make money."
The second example of cutting corners in business that will most certainly end up costing you more in the long-run would be to not invest in your product/service offered. In today's global market place, consumers are extremely informed, transparency is on the up-swing, competition is fierce, and everyone has a voice (social media). What does this mean for businesses? Well, it means an inadequate products/services will not last nor will it be profitable, particularly when starting/launching a new product/service. We all know about the endless recalls from major car manufactures from Toyota to GM, which can be viewed as cutting corners in the manufacturing costs; however, while it is still damaging to their brands, they have the longevity, capital, and loyalty to overcome something as catastrophic as recalling millions of cars. This is not something a new start-up or SMB can sustain, as a matter of fact, the product/service should be your primary focus when building your business model, as it is the major factor that will separate you from your competitors and enable sustainable growth. We've all seen, owned, or worked at a company where their mentality is to invest as little as possible into their product in order to maximize the salaries at the top. Well, that may work in the short-term, however, in the long-term they are setting their businesses up to fail, and they most likely do within a few years, without an attempt to correct the quality of their product/service. Bottom line, invest in quality, you will not be disappointed.
Another tried and true example of cutting corners in business that will most certainly end in demise at some point is to under pay your employees and/or not offer perks to supplement lack of salary. As I have written in the past, the most valuable asset to a company, particularly a start-up or SMB is its team. In a highly competitive work environment, competition for top-level talent is fierce and the ability of a company to attract and retain such talent is mandatory in order to remain competitive and innovative across all industries. The age of technology has changed the way business gets done: increasing productivity and efficiency. Let's face it; a highly efficient and competent individual can essentially perform the duties of 5 or more people from 10 or 20 years ago. So how does a business owner retain and attract a high-level individual -- through either a high salary, perks, flexibility, equity, or a combination of. When business owners fail to address/offer any of the aforementioned, they will experience a high turnover rate, inefficiencies in the the day-to-day operations, lack of motivated employees, the inability to attract and retain top performers, and the list goes on and on; all of which end up costing the company heavily in the long-term. A truly sustainable and viable business should have no problem attracting and retaining the best talent possible, which is relevant to each company's specific needs. Just to give a quick example: Let's say you have a new tech start-up and you are looking for a top programmer for your new app, the question you should be asking yourself is what can I offer to lure him/her away from Apple or Google? I know I can't offer a salary anywhere close to Google or Apple, but maybe I can offer equity and flexibility? Money is not the be all end all when it comes to job satisfaction, at least not to the extreme as in the '80s -- thinking "Wall Street".
Cutting corners may sound like a good idea in the short-term; however, the long-term outcomes are typically not positive and prove to be quite costly. As a start-up entrepreneur or small to mid-sized business owner, it is important to understand your business, your competition, the macro/micro environment, and your long-term growth strategy. The goal of your business should not be to make money, but to create value in the market place, provide superb customer service, and build the best team possible -- making money will come as a result. It can even be wise to ask yourself, instead of where can I cut costs; what areas can I improve to make the business run more efficiently? The old school way is to find areas to cut, the new school way is how to maximize efficiency and productivity. Thanks technology!
As always, I'd love to hear your comments and thoughts on this topic.
If you are in need of any business and/or marketing consultation, feel free to shoot me a brief introduction note at: modernbizstraetgy@gmail.com.
Cheers,
ModernManTellsAll
This one is all too common as well. You have a great product/service that is ready for market, perfect let's start making some money! Right?? Well, of course one wants to make money, but who exactly are you selling to? A small business or startup (typically) does not have the resources to just get a company off the ground and start selling to anyone and everyone that is ready (or not) to buy. Furthermore, marketing can be an expensive business unit, particularly without a clear target market(s), as much will be wasted (time and money) while you're testing to see who is going to be a viable customer for your business. Determining your target market(s) should be done prior to launch, again a proactive approach, not a reactive one.
Many new (and sometimes experienced) entrepreneurs and small business owners fail to do this as they just jump right in and start producing and selling their product/service. I am all for initiative and motivation as that is what is going to enable your company to survive and thrive, however, prior to launching I'd recommend putting the data tracking applications in place. This can be accomplished through the use of Excel, Quickbooks, Quicken, or any other new app/software that is out there in the market place (there are a lot of them). Again, this may seem like an obvious implementation, but you'd be surprised how many business fail to have this in place, or have started it but stopped for whatever reason, too busy, lack of spreadsheet knowledge, I'll do it later, etc.
