PENNY-PINCHING SIN #3: Skimping on legal services.
I went through a touchy legal matter several years ago. When I described the matter to an older business colleague, he had this to say: “Your attorney is a nice guy, and he’s good with general matters, but for this situation you need a killer. You need someone whose name strikes fear into the heart of opposing council!”
I took my colleague’s advice because I knew he’d been in my shoes, and I’m so glad I did! The matter went away quickly and was some of the best money I ever spent on higher-priced billable hours. For general matters, I like hiring young, new-to-their-firms attorneys whose rates are low and who are really trying to earn my business. But for matters in which your company’s survival is at stake, hire the best lawyer you possibly can.
PENNY-PINCHING SIN #4: DIYing branded materials.
“You have one chance to make a good first impression.” We’ve all heard this advice our entire lives, but too often, business owners forget it…often, to their detriment. We’ve all encountered a business that made a poor impression because their employees weren’t wearing uniforms or because their signage wasn’t professionally created…and don’t even get me started on forms, business cards, stationery, and websites made with ‘do it yourself’ kits! The fact is, customers are always going to judge businesses by their covers. So if you want to be paid like a great company, you need to look like one.
PENNY-PINCHING SIN #5: Relying on word-of-mouth marketing.
Have you ever heard of Budweiser? This, of course, is a ridiculous question. Everyone has heard of Budweiser. Among (many) other things, the company produces an endless stream of expensive, Hollywood-quality commercials just to remind consumers of the well-established fact that it sells beer. The point is, no matter how successful they are, great companies are always trying to communicate with and attract potential customers.
If I hear one more small business owner tell me that he or she believes in ‘word-of-mouth marketing,’ I may scream! Don’t get me wrong; customer referrals are very powerful and can really help drive your business. But I’ve never owned or worked with a company—even those with A+ BBB ratings—that owed more than a third of sales to word-of-mouth business. The fact of the matter is, if you try to save money by not budgeting for marketing, you’ll save your way right out of business. You simply must spend money to attract customers.
Here’s the bottom line: In business, you get what you pay for. If you try to skimp on something that affects the experience your company offers consumers or that compromises its ability to run efficiently, your efforts will probably backfire. As an entrepreneur, it’s good to be frugal…but it really doesn’t pay to be cheap.
Sean C. Castrina is the author of 8 Unbreakable Rules for Business Start-Up Success (Champion Publishing, 2013, ISBN: 978-0-989-10456-2, $14.87, www.newbizcoach.org) and the soon-to-be-released 8 Unbreakable Rules for Small Business Dominance. He is also founder of newbizcoach.org. A successful business coach and a true entrepreneur, he has started over 15 successful companies over the last 18 years. His companies have ranged from retail, direct mail marketing, and advertising to real estate development and home services. Sean is a sought-after speaker and can speak with authority on what it takes to start, sustain, and grow a business.