5 Sales Pitfalls That Could Hurt You Long-Term Chasing near-term revenues at the expense of a good business "fit" could be your downfall.

By George Deeb

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

As a serial entrepreneur and growth consultant at Red Rocket, I have encountered hundreds of companies and some of the common pitfalls they run into related to sales. I've seen the impact those pitfalls have on effectively growing these businesses long term.

Related: The 10 Biggest Mistakes in Sales

Below are five pitfalls I see that commonly challenge entrepreneurs when they chase near-term revenues. These are pitfalls that often create long-term hurdles for these business down the road.

1. Dependence on one industry

Sometimes an entrepreneur has no choice. If he has a car-parts manufacturing business, for instance, he is pretty much tied to the ebbs and flows of the automotive industry (which is highly cyclical and tied to the health of the overall economy). But he (or she) should aspire to have a mix of customers across many industries. That way, if the economy negatively impacts his industry, it does not take his entire business down with it. I have seen a lot of companies watch their revenues get cut in half overnight, based on some unforeseen economic event (e.g., 9/11 in 2001, the mortgage crisis in 2008). Don't let your business be one of them.

2. Dependence on one customer

As with the pitfall described above, you want to avoid dependence on any specific customer; you never want to have all your eggs in one basket. In a perfect world, no one customer should represent more than 10 percent of your overall revenues. That way, if you lose that customer, you are putting only 10 percent of your revenues at risk. Too many times I have seen companies living dangerously close to the edge, with more than half of their revenues at risk with just one customer. You lose that customer, you lose your business. And that is not a good situation to be in.

Related: Not Closing Sales? Look to These 5 Mistakes.

3. Not recognizing that not all customers are good customers

Too often, a startup is so desperate for revenues that its owners will take them from wherever they can get them. They'll do this even if they are going outside of their "comfort zone" in terms of what is a perfect fit for their business. That is a recipe for long-term disaster. Engaging with customers that do not fit squarely into your core competencies puts both the company and the customer into a bad position. This might entail taking on a project that is too difficult to fulfill or working with a customer who is never satisfied and has you constantly spinning your wheels. Walking away from a customer or project that is not the right fit is always acceptable. Don't get so seduced by near-term revenue that you lose sight of long-term fulfillment costs, resulting in heartache.

4. Customized sales

Where you can, it is always best to "productize" your business. You want your sales team perfectly trained on those products, and your operations team fine-tuned for fulfilling those sales. The reason: Nothing causes more chaos in a business than custom sales requests. The sales team is unsure whether the company can fulfill them, which slows them down. The technology team needs to squeeze in time for custom development, slowing their work on your product road map. And your operations team is not sure how to fulfill the custom deal, slowing them down. Certainly, custom sales are sometimes okay, if the product being customized was already in your long-term product road map, so that you are merely accelerating it for a paying customer. Sometimes if a big client requires a custom sales request, you need to protect the relationship. But as a rule, "custom" is a bad word in sales. So make sure you understand how best to productize your business.

5. Using your clients as guinea pigs

If you are not sure your product or service will be successfully delivered and have a high probability of success, do not sell it. Period. Instead, make sure you have done a proper quality assessment of the product, on your own, before pushing it live into a client deliverable. The worst thing you can do is use your clients as guinea pigs, to test out your products, unless those clients understand and are fine with being used in a test-pilot situation. Because when things do not deliver as planned, you will have soured the relationship, and most likely, lost a customer. Not to mention the negative feedback that that customer may spread to other, prospective clients calling for references.

So, when looking to close your near-term sales opportunities, keep these pitfalls in mind. Remember: You don't want to be paying down the road for costly mistakes you make today.

Related: Three Common Mistakes that Kill a Sale

George Deeb

Entrepreneur Leadership Network® VIP

Managing Partner at Red Rocket Ventures

George Deeb is the managing partner at Red Rocket Ventures, a consulting firm helping early-stage businesses with their growth strategies, marketing and financing needs. He is the author of three books including 101 Startup Lessons -- An Entrepreneur's Handbook.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Related Topics

Devices

Get a 15-inch MacBook Pro for Less Than $375

Save on this refurbished MacBook Pro for a limited time.

Business News

2024 Could Be the Year that Makes or Breaks a Lot of Small Businesses, According to a New Report

About a third of small business owners indicated on a Slack survey that they aren't sure if their businesses will survive the year.

Productivity

SMART Goals May Be Holding You Back — Try This Effective Goal-Setting Technique Instead

Everyone suggests SMART goals, but this framework is flawed. Learn why and how to create goals properly — ones that you can actually achieve.

Business News

I Tried 3 AI Headshot Generators and There Was a Clear Winner

Aragon AI, Momo, and FastShot AI all generate headshots using AI, but which one actually works for LinkedIn?

Business News

Red Lobster Changed Its 'Endless Shrimp' Promotion After Losing $11 Million in One Quarter — Now It's Hauling Out Another All-You-Can-Eat Deal

The restaurant chain reported a record $12.5 million operating loss in the fourth quarter of 2023.

Marketing

Enhance Your Website's Visibility and Dominate Your Competition With These Powerful Techniques

Mastering backlinks and content intent is key to ranking higher on search engines. Our guide can help you learn the right techniques and strategies for improving your backlinks and content quality.