The odds of a new business succeeding are not good – according to a recent Forbes article about 90% of all startups fail. I have been fortunate enough to have exited an EdTech startup, recently sold a property management company, and currently co-own SmokyMountains.com, which one of the fastest growing niche travel listing sites in the country.
These successful journeys have been filled with difficult choices, emotional turmoil, and sheer exhaustion at times. At one time, I believed every lie on the list below. The lies, which are dangerous and a real threat to your business, need to be exposed.
LIE #1: THE CUSTOMER IS ALWAYS RIGHT
Unfortunately, we live in a society with plenty of narcissistic, entitled people. We have all seen these people at restaurants – they complain and expect a refund after they finish the meal.
When you run a business, it is important to know that 5%+ of your customer-base cannot be pleased. It is an excellent goal to strive for perfection and 100% satisfaction. In reality, 100% perfection will likely not produce 100% satisfaction.
I vividly remember a Wal-Mart customer yelling about the ‘piss-poor customer service’ an employee was providing. What was the egregious customer service crime? The cashier was not going to allow her to use her food stamps to purchase a flat-screen, TV.
This customer received excellent customer service, but could not be pleased. The Wal-Mart employee had to follow the procedures that were enforced by both her employer and the federal government.
If you understand that 100% satisfaction is not possible AND have knowledge of dissatisfaction motivators (i.e. refunds), you will simultaneously protect your emotions and your business.
Since the customer sometimes cannot be pleased, should we even focus on providing excellent customer service? Yes! Our duty to provide exceptional customer service is not relieved by someone else’s attitude or actions. It is important to stay true to your core values and not allow someone else to motivate you to compromise these driving principles.
LIE #2: GREAT WORK ETHIC + GREAT IDEA = SUCCESS
This is lie that is spread by successful entrepreneurs. The origin is rooted in pride. Successful people want to think it was our efforts that produced the great end-result. While our efforts play a huge role, there are an infinite number of factors that influence our long-term success.
One great example is the recent biz failure of my friend Nick Perisco, co-founder of Smart Host. This guy had an incredible work ethic, brilliant idea, and beautiful product. It failed. The market was not ready for the dynamic pricing engine even though Nick and his team had a great idea and worked tirelessly.
A more personal example would be the Smoky Mountain Wildfires. On the evening of November 28, 2016, wildfires raged through the Great Smoky Mountains National Park destroying $2 billion of property and catastrophically eliminating 20% of the homes we managed.
Our business was scheduled to divest a very valuable portion (owner contracts) 36 hours later. Thankfully, we were still able to sell off the management business, but this event was completely out of our control. Real value and real dollars were obliterated that night. I am thankful for this event, which instilled an appropriate sense of humility regarding my success.
This lie damages lives, relationships, and leaves people feeling worthless. People aren’t always the reason for the failure, but they always pay the price.
LIE #3: YOU ARE NOT YOUR BOSS
To start with, I want to dispel a common myth. Owning a business does not make you your own boss. Instead, choosing to be an entrepreneur literally makes everyone your boss. Every single customer is your boss.
When we started SmokyMountains.com, this profound fact was clearly demonstrated in week two of the business. After working about seventy hours that week, I was out to dinner with my family on a Saturday evening and my phone rang.
The customer on the other end of the phone was concerned that she had paid $1500 for a vacation rental with my company and the forecast was calling for a chance of snow. She wanted me to waive the cancellation policy for the stay, which was eight days in the future, and refund her money. When I told her that I could not do this, she told me she would just contest the stay with her credit card company.
Keep in mind, she had been offered travel insurance, she agreed to the cancellation policy during the booking process, and the snow was not even likely going to be a factor (it was not).
With a fiduciary responsibility to the property owner that we represented and a desire to provide strong customer service, I missed that meal with my family. My kids will only be young once. I can’t get that time back.
If I were my own boss, I would have told me that I deserved some downtime with my family after the long hours I had put in that week. I am not my boss. Everyone else is.
LIE 4: IF I CAN GET XX%, I WILL BE RICH.
At one point or another, this enticing lie has trapped all of us. Why? Because it is rooted in truth and derived from due diligence. The reality is we might be rich if we could pull off that small percentage.
The problem with this logic is it usually does not provide a reasonable path to the minute percentage. It ignores foundational business concepts like the cost of customer acquisition. Typically, a large market is nearing perfect competition where introducing a new company is most difficult.
If I start a new brand of cola tomorrow baed on the premise of I only need 1% of the global demand for insane profits, i will fail. This example exaggerates the obvious problems – I am ignoring the cost of producing goods, cost of customer acquisition, challenges with obtaining new customers, and likely don’t have a reasonable path to win over that percentage of customers.
Instead of buying into this market size lie, use the formula below:
(Lifetime Value of Customer – Cost of Customer Acquisition) * (Reasonable Number of Closed Customers) = Potential Biz Market
It does not matter how many fish are in the sea. What matters is how many you can catch and how much effort that will take.
LIE 5: I DON’T NEED NEGATIVITY NEAR MY BUSINESS
If you decide to start a business, you are likely an optimistic person. Most businesses ultimately fail – there is a high likelihood you will join the failure club at some point (I have).
Although negative comments are disheartening, oftentimes it is solid business advice disguised by an immature delivery – these people care about you and want to help. To avoid/ignore this advice is a mistake. When you feel someone is being negative, stop and ask questions. A simple, ‘Why do you believe that?’ has helped me de-emotionalize the moment and distill some solid advice.
In addition, even hostile comments serve a purpose. When someone tells a determined person they can’t accomplish a goal, that negative comment will motivate. The hostile comments that are rooted in ill-will should be printed out and hung on a wall. Prove the naysayer wrong. If a few negative comments can demotivate you, you don’t have what it takes to succeed.
Being an entrepreneur is fun, challenging, and rewarding. Don’t believe these lies. These lies can lure you into bad business decisions and cause you to spin your wheels for the wrong reasons.