We move through with world with sets of assumptions. And thank goodness! Because society needs them. It makes life easier. When we drive a car, we assume the drivers around us know the rules of the road. At a good restaurant, we assume the food will be fresh and prepared in a clean kitchen. As entrepreneurs, we assume our staff are doing their best and that our customers will pay their invoices on time. But as with everything, there are limits. Here are 4 assumptions that can hurt your business. Read these and consider if you need to reevaluate your beliefs and expectations.
1. Assumptions about staff: thinking employees are as dedicated as you are
Remember that for them, it’s always a job. When a company is new and scrappy, it often feels that everyone is in it together. But when the business grows, it’s not unusual for staff to feel resentful. They see the owners getting a bigger slice of success than they get. Even with a competitive salary, perks, and a bonus, there may still be a sense that you are benefiting more from their hard work than they are.
Tips on how to manage this assumption:
- Recognise the imbalance between owner and employee, and never assume staff are as dedicated as you
- Document all tasks, policies and procedures so new staff can step into roles with minimal disruption to operations
- Keep all business activites (email, documents, files) in company drives and systems
- Don’t let staff do any work for your business using their personal email
- Benchmark their compensation to confirm salary and benefits are in line for their role
- Share compensation data so they see they are being paid fairly
Here is an example. I know a CEO who puts in 50-60 hour weeks, often steps in to fix staff mistakes, and has significant personal investment in the success of the business. The employees are paid well with full benefits, flexible hours, and work from home options. I just happened to be waiting at the company head office to meet with this CEO for a coaching session, when I overheard one of the staff say “I’m the only one who works around here.”
2. Assumptions about pricing: thinking your rates are too high
It’s a natural reflex. When sales are slow, or a lead goes nowhere, it is easy to assume that the price is too high. You may actually hear prospective customers say that your rates are too high. But instead of slashing prices and giving away valuable profit margin, take a step back. Because is cutting rates really the answer? Or are you just not reaching the right audience?
Tips on how to manage this assumption:
- Research the market and chart what competitors are charging
- Clarify where your brand is positioned and how you compare among competitors
- Know your customer avatar. Use this worksheet!
- Review marketing message and placement to see if it aligns with your branding and target customer
- Analyze all marketing data to see if you’ve been reaching your target customer
- Readjust marketing if necessary
- Adjust prices only if it better aligns with branding and target customer
3. Assumptions about suppliers: thinking you have the best deal
All businesses have suppliers. It might be parts for manufacturing, software to keep a product operating, or items used by staff. Supply chain management is a bigger task in some sectors than others. However, every business has some dealings with other businesses. Sometimes, there relationships are set up and then left alone, for years.
Tips on how to manage this assumption:
- Add supplier review to your annual strategic planning
- Check in on quality and pricing every year
- Monitor their financial health and customer ratings
- Forecast growth for the coming year and confirm your supplier can keep up
- Stay aware of who competes with suppliers. A small firm that wasn’t a fit 2 years ago may have grown and be able to better meet your needs now
- Talk to your network for referrals and feedback
4. Assumptions about customers: thinking you know what they are thinking
It’s always thrilling to get a positive review from a customer. Personally hearing great feedback can make you feel on top of the world. But don’t think that all your customers feel the same way. That assumption closes down opportunities to make changes and improvements.
The fact is, not everyone shares feedback. And when customers like you, they are less likely to speak up. Here is an example. When I ran my household service franchise, we introduced a new quality control review process. That revealed one particular employee who wasn’t meeting standards. When we approached the customer, they shared that they “liked him and didn’t want to say anything.” So we thought the customer was happy, but she was actually tolerating sub-standard services for the sake of being nice. But we were losing out on referrals, and it explained a couple of cancellations. That assumption cost us money.
Tips on how to manage this assumption:
- Include a feedback loop into the customer experience journey that is easy to complete. Digital forms can be added to email footers and invoices.
- Allow anonymous feedback surveys to get full honesty
- Investigate every compliment and complaint to fully understand what is working, and what is not working, in your business
- Monitor all sources of customer feedback, appropriate to your business. This may be Google Reviews, BBB, TripAdvisor, Yelp, TrustPilot, OpenTable
Questions for entrepreneurs to check assumptions
Do you have KPIs that you use to monitor the output and quality of your staff, or do you go by what they tell you and what you observe?
Do you provide customers with an anonymous evaluation process, to gather their honest feedback about their experience with your company?
When was the last time you asked staff for feedback on your performance as a leader?
Have you checked benchmarks for your industry to see how your business performance compares? Profit margins, year over year revenue growth, clickthrough rates?
Have you mapped out workflows to check for duplication, gaps, and opportunities to improve efficiency?
How assumptions can hurt your business
These are just 4 assumptions that can hurt your business by causing a loss of revenue, profits, productivity, and opportunity. Being aware of these expectations and biases is valuable for keeping your competitive edge. Include this awareness and these questions in your regular strategic planning process. This will help keep you open to change and improvement.
