A Basic Business Principle

Most small businesses fail and they fail because their owners lose sight of some of the few basic principles on which any business, but especially a small business, must be founded. We operate in a free market economy and that means that, although you may think you know better and you may even be right, it's the market which determines who survives and who prospers. If nobody buys your product, you're dead, even if your right.

Many small business owners focus on their product. It makes sense - that's what they know. It is also deadly. Their product is not going to make them a single cent. It is the customers that bring in the money and that is where the focus has to be. Attention to the product is only in terms of whether it satisfies the customers. All the business's income comes from its customers.

Many small business owners don't know who their potential customers are and have even less idea of who is an ideal customer. They waste time on the demanding customers and often lose money on them while ignoring the quiet, pay-on-time, high margin customers who are carrying the business. A small business, by definition, has a small client base - it can choose its customers. It needs to choose the valuable ones and it needs to be able to recognize them.

Many small businesses waste money on advertising and promotion. It's not that they shouldn't advertise but a small business has small resources. Advertising and promotion must be funnelled to achieve high returns. If the ad is mostly seen by people who have no intention of buying your product, this is not efficient. Start by making sure your existing customers know what they can get from you. This is guaranteed high - return promotion. Then start targeting small groups similar to your existing customers. This approach is more work but it will get far better results than running a big ad in some general circulation medium.

If you're focused on your customers in all these ways, there's a good chance your small business will prosper.

FIRST PUBLISHED AT SUITE101.COM