Beware of Magic Potions: 7 Bogus Business Ideas

When it comes to business ideas, if it sounds new, exciting and intriguing, companies want to believe in it.

While there may be exceptions to every rule, there aren’t many in this case. Some popular business ideas have actually raised havoc instead of profits.

There Is No Such Thing As a Simple Solution

We have all heard the term “customers for life.” Although the idea flies in the face of reality, there are businesses that cling to that motto uncritically. They believe that, in some miraculous way, they can—and will—hang on to customers forever.

But ask any salesperson if this is possible and you will hear the truth. Some customers last longer than others of course, but they all have a lifespan. To operate on the premise that customers are forever is delusional. The concept “customers for life” has lasted as long as it did because companies believed that the impossible (can you really keep customers for life?) was possible.

Then there was quality management, or QM as it was known. This was touted as the remedy for catching up with Japanese companies and being ahead of the competition. Companies large and small clawed their way onto the QM bandwagon, but it backfired.

And who can forget the highly paid guru who advocated creating chaos in the workplace. By the guru’s standards, a company like Enron was destined for unlimited success, while Wal-Mart was headed for the scrap heap. Creating chaos caught on, briefly, because it was new, different and exciting.

Then there was the craze and belief that the dot-coms would change businesses overnight. Countless companies and investors went for broke on the word of hoards of 23-year-olds. The short, dramatic result from this started off as going for broke to going broke.

Companies are always ready to go for the simple solution, the instant answer, or the magic potion. Each idea sounds exciting, but most are also bogus.

Considering ‘Simple’ Ideas? It May Cost You

Many business ideas appear profound, but they are usually also faulty. Here are seven popular bogus business ideas that get companies into trouble:

1. Valuing value-added. This concept continues to welcome undeserved popularity. What has allowed it to survive for so long? The answer may lie in the fact that the idea is meaningless.

Most of what businesses view as a value-added idea is either what it is doing already or it is worth so little it lacks value. Why is value-added always what a company—not the customer—wants to believe is valuable?

Of course, value should play a key role in doing business; that is what customers expect. But the focus should be on what customers value, not what the business believes is important. Value should be inherent, not something that’s added.

2. Overemphasizing profits. There is nothing wrong with the word profit; it is what business is all about. Not surprisingly though, most business owners and managers put “making a profit” as the No. 1 reason for being in business. While the response may be 100-percent predictable, it is also way off base.

What makes more sense is establishing conditions that produce profits, such as creating and cultivating customers so they can conclude that doing business with a particular company is in their best interest.

People who are convinced that they have made the right buying decision become enthusiastic and loyal customers—customers who buy because they believe in a particular company and do not go anywhere else because of price. Customers who buy produce what every business needs—profits. But it all starts with the right focus; not on profits, but in investing to create customers.

3. Constantly pushing for sales. It sounds almost subversive to suggest that generating more sales can be a treacherous business objective. Taking it a step further, pushing for sales generally leads to price-cutting and tarnishing the company’s brand.Pushing for sales can certainly produce short-term gain—along with the long-term erosion of market credibility.

Panasonic has long been a niche player in the PC business. Instead of trying to buy market share with lower prices, the company has taken a far more strategic approach. It is expanding its line of “ruggedized” Toughbook laptops that meet the demanding needs of users operating in adverse conditions. As a result, Panasonic owns this particular market, with pricey laptops that set the standard for durability.

4. Going for simple solutions. Is there a company anywhere that has not left a trail littered with an array of quick and simple solutions?

For decades, ad agencies have lived off “pot-of-gold-at-the-end-of-the-rainbow” projects. These often consist of a “great” ad campaign, a “fabulous” Web site or a “knock’em dead” brochure. Companies are no different.

Example: an organization approached a marketing firm about preparing a capabilities brochure. After asking the organization a series of questions on its proposed use of the brochure, its intended audience, and its overall marketing strategy, it was clear that the organization saw the brochure as a quick and simple solution to a highly complex issue. In reality, the issue demanded careful thought, research, planning, execution and budget.Unfortunately, simple solutions are almost always bogus.

5. Adopting a ‘Just-do-it’ attitude. Companies launch plenty of projects, programs and campaigns with great fanfare, but most end with a whimper. Whether it is creating a quarterly customer newsletter and never publishing it again beyond the first edition, initiating a prospect development program that stalls before it gets going or updating the company Web site, the problem rests not with the activities themselves, but in the execution.

The phrase “Just do it” makes sense in getting a project off the ground. But that is not enough. Without a plan, a process and accountability for implementation, “Just do it” doesn’t get it done.

6. Becoming a price addict. Why do companies focus on price even when the customer does not? The answer to these questions involves breaking what can be accurately called “the price addiction.” In other words, making the assumption that the only thing that will grab the customer is the lowest price. More often than not, it is the salespeople who lead the customer to focus on price.

If there is no value alignment, what is left for the customer to focus on? Price, of course. Or, if businesses assume that price is all that the customer cares about, then businesses fall into the price trap.

7. Viewing what you sell as a commodity. When talking with insurance agents about what they sell, you just may hear something like this: “We sell what no one wants to buy. They only buy insurance because they have to have it.” What an attitude! And, what a sad way to look at the products they sell. No wonder people avoid insurance agents whenever they can.

If businesses allow what they sell to become a commodity, they devalue it to the point where only the lowest price makes sense.

“A brand program should be designed to differentiate your cow from all other cattle on the range—even if all the cattle on the range look alike,” states Al Ries, author of a number of business and marketing books. Think about what Morton’s has done with a product as simple as salt, or Arm & Hammer has done with baking soda.

If you see what you are selling as a commodity, whether it is insurance, software or chemicals, be sure you have the lowest price. That is the only way to make a sale.

Ideas Affect Businesses’ Mentality, Performance

In business, ideas do not seem to count for much. A go-out-and-get-it-done attitude gets the votes, yet it should be obvious that ideas affect not only the way businesses think but in the way they perform as well.

Bad ideas, no matter how popular they may<

If you enjoyed this article and want to receive more valuable industry content like this, click here to sign up for our FREE digital newsletters!

Security Is Our Business, Too

For professionals who recommend, buy and install all types of electronic security equipment, a free subscription to Security Sales & Integration is like having a consultant on call. You’ll find an ideal balance of technology and business coverage, with installation tips and techniques for products and updates on how to add sales to your bottom line.

A free subscription to the #1 resource for the residential and commercial security industry will prove to be invaluable. Subscribe today!

Subscribe Today!

Get Our Newsletters