5 Bad Ideas That Are Great For Business

Pared down to the basics, running a business should be easy. Choose a widget or service you think you can provide. Secure a location from which to conduct business. Set a price for the widget or the service. Finally, ensure that the money flowing out doesn't exceed the amount of money flowing into the business. Follow those rules and you will realize a profit.

But things are never that simple.

Competitors can revolutionize the way your particular widget is manufactured, undercutting your costs and enabling them to sell the same product for less money.

If your business grows, employees need to be added. Bad employees can cost money by being a drain on productivity or by being poor ambassadors for your company.

There are ways to minimize and avoid these pitfalls though. Some of them are simple. If you don’t want your manufacturing costs to be undercut, invest more in research and development. If you are worried about bad employees, just fire the bad ones and raise pay to attract higher-quality replacements.

Occasionally, though, the tried and true solutions don’t work. Sometimes business owners don’t have the cash to pump into R&D. Cash flow may prevent increases in the payroll budget.

When common business constraints are making growth — or even survival — difficult, business owners need to break with accepted principals.

For example, California-based Apple, Inc. has grown into a technology juggernaut by abandoning many of the commonly accepted rules of its industry.

The Cupertino company long ago ignored the notion of producing affordable products, instead choosing to manufacture high-quality, expensive alternatives. They manage their own stores and maintain tight control on manufacturing in a soup-to-nuts supply, manufacture and market approach that few, if any, technology companies employ. Steve Jobs was a notorious micromanager, which is a big no-no in the business world. And the company shunned partnership with others.

Present a business plan like that to investors and you are not likely to get much interest. Yet, no one doubts Apple’s success. It is offered here as proof that shutting out the advice of experts and trusting instincts can make your business a success. That may seem counter-intuitive. It is. But doing so can reap huge rewards, particularly if done before your competitors catch wind of it.

Here, then, is a list of five other counter-intuitive business practices that can be used for businesses big and small.

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5 Pay Employees To Quit

This is hardly news. Amazon’s CEO Jeff Bezos has received a lot of press recently for mentioning the company’s policy of paying employees up to $5,000 dollars to quit their jobs if they are unhappy.

But a closer look at the practice would reveal that online retailer Zappos — a company Amazon acquired in 2009 — has being doing it for years.

Yet that still leaves unanswered the question why any company would destroy its workforce by encouraging its members to quit.

The answer is that a disgruntled employee can cost well more than their annual salary in lost productivity and lost customers. An upset employee who makes a modest $40,000 a year from a small company can easily drive away numerous $10,000 clients with a poor attitude and poor service. Paying them $5,000 to leave is a smart move even if it saves one client. The math makes sense even if you don’t have Bezos’ cash.

Paying someone to quit also makes the break happen on much better terms, without a lengthy disciplinary process or possible lawsuits.

Not smart at first glance, but definitely smart in the long run.

4 Kill Your Best Product

The iPod is typically credited as the one product that breathed superhuman life into Apple. In one product release Apple opened the door to huge revenues from not only the iPod, but also from selling digital music to customers through its iTunes Store.

Then it would be foolish for Apple to create something that would kill the sales of its most popular product right? Wrong.

Apple has continued to grow by constantly killing off its own products. No one doubts that the release of the iPhone cut into sales of iPods.

So if you think you have the goose that laid the golden egg, the lesson here is that you had better kill it before someone else does.

No sane business person would do this. But sanity may just be overrated in a rapidly changing market. Apple has been able to stay relevant because it’s been willing to destroy sales of its most popular creations to replace them with cutting-edge alternatives.

Staring at a balance sheet won’t make that seem smart. But a savvy business person will find the next-best thing before their competitor does. Even if it means abandoning a steady revenue stream.

3 Help Your Competitors

It is commonly accepted among sales professionals that speaking ill of the competition is poor form. First and foremost it makes you appear weak, or like you have something to hide. Stay positive, promote yourself. That’s the accepted sales approach.

Most know this. But to expand on the practice and actually help a competitor increase their customer base is something that most business people would be unwilling to do. In many cases though, failing to do so would be a mistake.

Abandon the notion that there isn’t enough business to go around.

Stuck in a small town with the only restaurant on a street? Don’t disparage the second restaurant that might open. Instead, help it grow. Doing so could, if both restaurants are any good, turn the street into a destination for diners. Seven restaurants on a street is better than one almost every time. Traffic equals business and friendly competition keeps quality high.

They say a rising tide raises all boats. Develop a relationship with your competitors and help each other grow. It is more fun than hating each other and it is usually more productive.

2 Stop Setting Goals

The common lesson taught to those who seek success is to set a goal and then work hard to achieve it. Proponents of this method argue that it is the key to bootstrap success. Having a goal in front of you spurs you to work harder, they say.

But goals can handicap a company, forcing it to abandon core principles or trusted ways of doing business.

Consider a sales goal of $1 million for a given year. If a prospective client comes along in February with promises of $250,000 in business, the impulse may be to pounce at the opportunity. The client would, after all, mean that a huge step had been made towards achieving that goal.

But if the client demanded more time and work than a combination of ten smaller clients the loss in productivity and focus could impair the ability of the company to reach the ultimate goal of $1 million.

Better, some argue, to turn away that business and focus on the things that keep the company healthy. That may seem like a riff on the “don’t put all your eggs in one basket” theme, but it’s not.

Abandoning goals means that a company simply doesn’t set them. It means, instead, the company chooses a course of action and then sticks to it. Doing so keeps the focus on healthy business practices and customer service rather than chasing internal numbers that clients couldn't care less about.

If you want a healthy, long lasting business, consider never setting a goal.

1 Don’t Try To Grow

Forcing a business to grow prematurely can cause real financial problems. That is tough for some to accept in a world dominated by the message that growth has to happen in order to survive.

In a time when many are avoiding debt and relying on cash in both personal and business budgets this lesson may seem irrelevant. Few are willing to take the risk of acquiring debt to start a business.

But a sneaky form of debt that many retailers allow to creep in is what vendors call “dating.” Retailers typically jump at these deals, as it means they can sell a product and reap a profit before they have to pay for it.

The pitfall is that it forces retailers to grow their inventory too quickly and sometimes the bills come due before the products sell. That’s what happened to Laura Zander, who promptly abandoned the practice that all retailers love.

Her restraint has been rewarded. Her online and retail business, Jimmy Beans Wool, is thriving with $8 million in annual sales.

Filling your shelves with inventory at no cost seems like a no-brainer. It’s not. Forget the “grow or die” mantra.

It seems as counterintuitive as all the other ideas listed here. But a closer look shows that it, and the others, really make perfect sense.

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