As business owners, we tend to have a LOT of numbers to look at. The number of leads coming in, the percentage of leads that convert, pricing, supply costs, tax, payroll, etc. The list goes on and on. The problems start when you make assumptions that you know certain numbers are “fine” or “good.”
Usually, when we start digging, we will find at least one number we’ve wrongly assumed is fine, AND make more profit because we’ve found the error and done some work on it! Here’s my list of the top five assumptions we make as business owners, and how they can cost (or benefit) you.
Assumptions That Are Costing Your Business Big Time #1: My Conversion Rate is Pretty Much 100%
Most people I know say, “I pretty much convert 100% of the people who call.” Sorry, but that is simply not true for most of us. It can definitely SEEM that way, but if you properly recorded every single lead, and then calculated the conversion rate (the people who became clients/total leads in the same period) you would probably find that it is closer to 50% on average, or possibly even lower.
Assumptions That Are Costing Your Business Big Time #2: I Know Where All Of My Leads Come From
For example, we sometimes assume that all of our leads come from Google or “somewhere online.” If you’re not tracking EVERY SINGLE LEAD and where they came from (easiest with online leads, harder with real-life walk-ins), as well as where else they have seen or heard about your company, you’re missing some very important information.
I once found that a company that assumed its (incredibly expensive) online Yellow Page advertising was doing the trick, was dead wrong—80% of their leads were actually coming from ONE DOCTOR. FOR FREE!!!! You can figure out how much money that client would save if they nurtured that one relationship instead of paying thousands a month for Yellow Pages, which wasn’t producing ANY leads.
It’s great if you ask, “How did you hear about us?” (please tell me you at least ask that), but you should also be asking, “Where ELSE have you seen or heard about us?” You see, it takes an average of 16-20 impressions of your brand nowadays before a new client takes action towards purchasing—you want to be getting more than ONE answer to that question, because they’ve definitely seen you in more than one place.
Assumptions That Are Costing Your Business Big Time #3: I Don’t Have to Advertise; My Dentist Friends Keep My Schedule Full
(in other words, referral sources will continue to send or produce (good) referrals)
Famous last words—you cannot assume that ANY lead source (Google reviews, friends or colleagues who refer to you, that old billboard on the highway that worked once upon a time) will keep generating customers for you. You MUST TRACK EVERY LEAD, and keep an eye on trends over time. Are you getting fewer leads from a source that used to provide you plenty? Go investigate! Are you converting fewer of those leads than you used to? Go investigate!
Assumptions That Are Costing Your Business Big Time #4: My Staff and/or Clients Are Happy, They Would Never Leave Me
Boy, do I understand how tough this one is!
You think you do everything in your power to retain happy staff and clients, and sometimes people still decide to leave (or worse, get hurt or killed). It happens. People leave (of their own free will, or otherwise).
You MUST have risk-mitigation plans in place for both clients and employees. You CANNOT assume that they will be there tomorrow, because sometimes they don’t even know where they will be tomorrow! Make sure to regularly collect feedback to make sure they’re happy, and create systems and procedures that are easy to replicate (easy enough for a temporary worker) if need be. And don’t put all of your eggs in one basket—have people cross-trained, and bring in revenue from many different sources to minimize risk.
Assumptions That Are Costing Your Business Big Time #5: We Don’t Need a Contract From a Lawyer; Let’s Just Shake On It
Hahahaha. I am seriously laughing out loud right now—but it’s NOT funny. It’s super dangerous and foolhardy to create a “handshake deal” when you should be signing a legally binding contract. This includes (but is definitely not limited to) subcontractors, employees, joint ventures, partnerships, purchases, consulting, contracts or agreements for just about everything!
Everything seems all hunky-dory in the beginning because you are just starting out and all you can see are rainbows, puppy dogs and dollar signs in your future. But things change, unfortunate things happen, and people lose their businesses because of oversights like these. Please, consult a lawyer you trust, and get things in writing.
For some different perspectives on assumptions that are hurting your business, have a look at this article from Entrepreneur.com or check out this video:
If you need more help to work on the assumptions that are costing your business, contact TMH Business Coaching and Consulting today for a confidential, free, no-obligation consultation to propel you forward. Also, please feel free to add yourself to our weekly coaching tips email!