I’m regularly asked questions that come down to “how come they can do …… and my business doesn’t seem to be able to ???”.
This leads me to the question … Why do some businesses achieve great success, while other seemingly similar businesses struggle forever?
My own answer to this is to look for the trail of clues that indicate why a business has (or will) succeed, or conversely why a business has (or will) fail.
The reality is that even though there are many businesses out there with great products and excellent services, they never seem to get beyond survival let alone achieving stellar performance.
Below are 5 critical mistakes that will kill your business’ chances of attaining above-average success.
I see these every day in businesses looking to sell, or raise capital, so I can say with great conviction …. If you make any of these 5 critical mistakes, your business will achieve average performance at best, and likely create a trap where you end up working long hours for mere survival, or even eventual failure and bankruptcy.
Feel free to read on and check to see where you and your business are at. Be honest with yourself when looking at these common, but highly-detrimental, mistakes.
1. Short-term focus
Most SME business owners are focused on short-term survival rather than long-term success. Typically, short-term cash requirements become the driver for most things that happen in the business.
If this short-term requirement is constant, the future development needs of the business are totally neglected. This also leads to feast and famine as the business pipeline is managed for next month rather than next quarter or next year.
This also tends to create transactional business rather than long-term relationship business. The cost of acquiring transactional business is 4 to 5 times higher than acquiring relationship-based business.
If you’re spend more than 10% of your time, as a business owner, putting out fires then you’re sealing the long-term fate of the business …. and it won’t be a good fate.
The only way to stop this sort of problem in the long term is to work on prevention in the short term, at least you will know that at some point “it will get better”. This means taking time out to analyse what’s going wrong and planning what needs to be done to achieve the long-term goals (as well as eliminate the things going wrong).
You need to become proactive instead of reactive if you want to achieve real success. You need to define what that success looks like and then develop a plan to get it. Then go out and make it happen.
As Yoda says “Try, there is no try. Do or Not Do”.
2. Haphazard advertising
Advertising decisions in SMEs are commonly made based on how busy everyone in the business is. The corollary being “let’s do whatever is easiest”. The signs are:
- There is no defined marketing plan;
- Advertising is initiated when sales slow down and stopped when sales pick up;
- Advertising is usually tactical/opportunistic rather than strategic.
This endlessly reactive cycle just tends to keep the business operating around the same level of sales (survival). In turn, this level becomes the limit to the future success of the business.
Smaller, struggling businesses tend to react by using price as their main competitive strategy. This sets up a knee-jerk approach to price setting and sales/marketing activity, creating a response from competitors that ends up damaging everyone’s profits and cashflow.
Marketing is about communicating to the market the distinctive reasons why your company’s products should be the logical choice compared to competitive offerings.
Successful companies determine their strategic advantages over the competition and then proactively communicate the value of those advantages to the market. More often than not, this style of marketing allows them to sell at higher prices than their competitors because they’re focusing on what customers really value.
3. Ineffective delegation
You can’t grow your business without delegating work to someone else. THERE IS NO OTHER WAY.
However, most business owners would prefer to do the work themselves rather than learn how to choose the right people, set them up with the right systems, then motivate and nurture them.
Partly this is a trust issue, but mostly this is a control issue. You just need to learn to hand the steering wheel to the Universe over to somebody else for a while and focus on the areas of your own business where you can significantly increase the capability/competitiveness of your business.
The trust/control issue is commonly caused by the business owner having expectations of employees that are not communicated clearly – therefore they don’t get the results they expect. The outcome will always be frustration followed by the assertion “you just can’t get good staff these days”.
The best managers know clear interactions between people and good relationships are essential to productivity, so they develop effective communication processes.
These include job descriptions, operations manuals, work instructions and appraisal systems to ensure that expectations about an employee’s role in the business are effectively communicated and understood and that the employee’s performance results are fed back and effectively worked through to the satisfaction of each party.
Delegation can then occur without frustration and antagonism, and everybody is clear about what/why/how/when leading to a highly-productive and positive work environment.
4. Ineffective control
Many business owners/managers are so focused on getting the work done that they never stop to check how efficiently it is being done or whether performance levels are improving/deteriorating.
Running a business without performance indicators is like walking across a highway with a blind-fold on (you just wouldn’t do it would you ???).
Some business owners/managers don’t even know what their financial position is from month to month. That’s like guessing how much fuel you have left, then being surprised when the car stops.
Many businesses stay at the level of growth where the business owner can physically see/check how hard people are working.
This method of maintaining control is self-limiting, because it puts a self-imposed cap on business growth. However, it is often also ineffective because activity and productivity are not the same thing.
Staff have a tendency to try to look busy, even when they aren’t working hard. Many managers are then lulled into a false sense of security by visual checking.
Without real performance measures that identify actual levels of productivity, operational costs and relativity to targets, a business has no real controls. Making this critical mistake almost guarantees that it will be impossible to achieve above-average success.
5. Doing it all yourself without looking for help
Significant achievement always involves help from others.
In small business it has long been accepted that you need external professionals for preparing accounts and dealing with legal matters.
However, it is also becoming commonplace to bring in specialist skills to work on improving specific business functions (eg: Strategy, Marketing, Sales, HR).
Running a successful business requires effort, and the effective leverage of everybody’s time. It is unusual to achieve without a significant amount of mentoring/guidance from people with the right experience and expertise.
It is accepted practice in all sports and almost every elite athlete uses a coach to provide external guidance and tips to improve performance.
The best business owners also accept this principal and look for advice whenever they can. It seems that only the poor performers try to go it alone and think they have all the answers themselves.
If you make any of these mistakes in business, your performance – and the businesses performance – will suffer and you will most likely tend to spend your time struggling to survive, or at least working longer hours than you want to get where you want to go.
Success leaves clues. Successful businesses operate in a different way from most average businesses …. that is why they’re successful.
Wouldn’t it be a good idea to find out how they do it and how you can eliminate the mistakes that keep you trapped in a business that is a continuous struggle and a constant source of frustration ?.
Feel free to talk with us if you want to break out of this “Cycle of Despair”.