How much is fear costing you?
“Please come upstairs with me, I’m frightened of the dark.” I’m 7 years old and I’m pleading with my older brother who is ‘baby-sitting’ me and telling me to go upstairs to bed. “Take this hammer, if something tries to harm you, use it” Hesitantly I creep up the stairs clutching the hammer.
Of course there were no ghosts or demons. I learnt a valuable lesson – often what we fear is either imaginary or nowhere near as bad as we expected. Worrying achieves nothing. What do you fear in your business? What’s that fear based on? Is there any evidence to support the fear?
How much is fear costing you in your business?
For many businesses fear holds them back from achieving what they are really capable of. Call it lack of confidence or call it fear. Either way clients can smell it.
What is fear? Fear is an emotion induced by a threat, real or imaginary. It is a basic survival mechanism.
My friend, Jeff ran a company which had 3 major customers accounting for 90% of the business. Jeff’s company grew over several years as these 3 major customers gave them more and more business. Jeff bought himself a big BMW yet did nothing to reduce the over-dependence on the three. Jeff feared losing any one of his 3 customers so he didn’t increase his prices. Jeff’s fear passed to his team. The team did everything clients asked, often not charging for ‘extras’. As a consequence the profitability of Jeff’s company declined. Then one of the big customers left. Now Jeff was even more dependent on the remaining two. A few months later one of the remaining two customers left. Jeff’s company was completely on the back-foot. The last major customer then didn’t want to be the last major one and duly left. Eventually Jeff’s business went bust.
So how do we keep our fear under control? You can’t learn to swim with one hand holding onto the bar. You have to step up and be brave. Ask yourself: “What would you do if you knew you could not fail?”
Here are 10 tips to reduce the impact of fear on your business.
- Spread your customer base – no customer bigger than 15%. If you do have a client bigger than this then have watertight contracts with long notice periods. If we have one or two clients who dominate our business we are more likely to have a ‘buyer-supplier’ relationship rather than a peer to peer relationship.
- Focus on your long term goals. Don’t let short term goals compromise your long term goals. Think through the implications of your decisions and also any precedents you may be about to establish.
- ‘Make hay while the sun shines’ but build up your war-chest for that rainy day that will come. Build your reserves. Your reserves give you confidence to push back and be selective.
- Think about how fear affects your team. They will pick up on your demeanour. Confidence and lack of confidence are highly contagious and spread rapidly.
- Expect to lose 15-20% of your customers each year. Do not simply assume that today’s customers will be tomorrow’s customers. Build the pipeline of new business. Don’t wait till it goes quiet. Every week be prospecting for new clients. Do it consistently and constantly.
- Stay close to your existing clients. Listen for small cracks in the relationship. Sort the cracks before they grow and certainly before they go past the point of no return. Ensure you meet or exceed their expectations.
- Calculate the cost of your fear. What’s the cost of tolerating an unprofitable customer or not increasing your prices? What’s the impact on your bottom line? How does it affect your team and their morale?
- Have those courageous conversations to address issues which need sorting and changing. Don’t avoid or keep putting off the conversation. (on my workshops we prepare and practice how to have successful courageous conversations)
- Understand what your customers really value about your work and understand your impact on their business. If you are impacting their KPIs this demonstrates your value and builds your self-belief and confidence.
- Step out of your comfort zone – carefully. If you going to take a risk then think through the implications. “Take calculated risks. That is quite different from being rash” George S Patton.
What are your top 3 fears for your business? How can you reduce the likelihood of those fears coming to fruition? What can you do to increase your chance of success so you have little to fear?
Chris Merrington is the author of “Why do smart people make such stupid mistakes?” – A practical negotiation guide to more profitable client relationships. Chris regularly consults and runs workshops in the areas of Negotiation, Trusted Adviser Selling and Winning New Business.