Building and maintaining a thriving business is challenging, to say the least. With so many decisions to make, a business owner is bound to make an occasional mistake. We know that “measuring twice and cutting once” is important advice we learned from tradesmen. It means that we should think carefully before acting—yet sometimes deciding on the most appropriate action remains elusive.
I have discovered that successful entrepreneurs and business owners avoid the following 5 mistakes to assure that they build a profitable and thriving business.
Choosing the wrong business strategy
It used to be a little easier choosing a business strategy for your company. It was a classical sequence—analyze the market, continue with rigorous planning and follow through with impeccable execution. This is a winning business approach when the environment is stable, and any market change is highly predictable (think Mars Candy Company). To win in this environment, a company had to increase in size, differentiate and demonstrate superior capabilities. However, things have changed.
In today’s current environment, a company cannot always have a direct impact, and changing conditions make sales results less predictable. Companies often find themselves adapting when a competitive advantage may be short-lived (think tech companies). How do you choose the most appropriate business strategy for your business? My suggestion is to reference Your Strategy Needs a Strategy: How to Choose and Execute the Right Approach, by Reeves, Haanaes, and Sinha. The authors present a simple framework which divides strategy planning into four styles. The styles are influence by the stability level your environment and the amount of power you have which can change it. Using this framework, leaders can match their strategic style to the conditions of their industry, business function, or geographic market.
Not taking customer service seriously
The quality of your customer service has an incredible impact on the attraction and retention of your customers. It should be taken very seriously. The convenience of the work staff is secondary. Overdelivering your services will be rewarded with glowing testimonials, positive word-of-mouth recommendations, and boosted sales. Customers can teach us a lot. Let’s say you delivered the wrong product to a customer. Yes, mistakes happen. That is not the point here. It’s how you remedy the situation that will make or break that customer’s opinion of your business. Did you quickly replace the product, at your own expense? If a customer leaves a negative comment on your social media page, did you respond to the comment, and learn about the problem and how you can solve it? Mistakes are made but, learning from customer expectations and changing needs is essential. No business will stay stagnant. Your business is either moving forward or falling behind. Whichever direction is heavily influenced by the customer.
Not “walking the walk”
Modeling the behavior and attitudes you expect your employees to practice is one of the most important leadership traits you can hold. As a leader, you need to be a role model for your organization. For example, if you are asking your staff to stay late to complete an assignment, you also should stay to help. In addition, consider how you handle your time at work. Are you spending time chatting at the water cooler, or wasting time on social media? Don’t be surprised if your staff follows suit. The same goes for your attitude – if you’re negative about certain situations with customers or vendors, you can certainly expect the same reactions from staff. Employees are watching you and how you behave. If you are enthusiastic about the future impact your company can have with the community, the ebullience will start to permeate. Show respect, build trust, add humor, and watch your organizational culture start to flourish.
Not integrating talent management with business strategy
If you want your business to reach its strategic goals, you are going to need qualified people implementing the process. This is no small feat. You will need to make certain that you hire the people who can do the work. Business strategies adapt over time to address changing competition and customer demands. The talent you hire also will need to be tweaked so that it can continuously support business outcomes. Aligning talent with business strategies drives your competitive advantage. Your personnel talent and capabilities are probably one of the most important assets of your company. Hire and train purposefully.
Not building profit into the budget
I have learned a lot from Mike Michalowicz, author of Profit First: A Simple System to Transform Any Business from a Cash-Eating Monster to a Money-Making Machine. He developed the Profit First formula for developing and growing healthy businesses. Many entrepreneurs and business owners use the “sell, pay expenses, and see what’s left over” method of profit creation. In such a case, profit becomes the afterthought. However, with this formula, Mike bakes profit into the daily operations. The classic budgeting formula looks like this: Sales-Expenses=Profit. Mike’s formula looks like this: Sales-Profit=Expenses. With his formula, you secure your profit first, and run your business on the remaining cash you have left. Profit should never be an afterthought. Many of us, left to our own devices, will tend to spend all of whatever is available to us. His formula guards against this all-too-typical human behavior. It’s a changed mindset that allows you, the leader, to protect your profits as you grow the business. It’s worth reading his book and learning how you can transform your business to sustain growth.
Entrepreneurs embark on business ventures to pursue the types of work they enjoy doing while making a profit. Thriving businesses can be developed by being realistic about the goals being set and thoughtful about the strategy being embraced. It’s always useful to learn from mistakes, but these can be mistakes made by others rather than having to experience these mistakes firsthand.
Download 5 Mistakes to Avoid If You Want a Thriving Business as a pdf.