Eight biggest mistakes of business owners
Eight biggest mistakes of business owners
The following eight mistakes of business owners are not meant to be a comprehensive list because as all of who are business owners know the list is a lot longer than 8 points. However, I believe that if you address the following 8 points, those actions will have a massive impact on the profitability and success of your business.
These points are more about mindset changes as opposed to specific activities.
1. Being driven by money and not a passion for delivering value
Sure we have to make a good profit to remain in business. It’s no good having a wonderful business which you love if you do not make enough profit to live your desired lifestyle and help your teams of people do the same.
In the end, the money your business makes is a direct reflection of the value it offers and the number of people it delivers that value to
However, if your focus is ONLY on the profit, you will not build a strong growing business. A business is only as strong as the idea behind it and the value it delivers to its customers. Bear profit in mind but swing your mindset more to offering as much value as you can to your customers. The more you can grow and differentiate the value your business offers to your customers, the more “Raving Fans” you will build. Therefore, the word of mouth recommendations you get will significantly improve, and the more your business will grow.
Look at every one of your products and services. Focus ONLY on the ones that you believe you can offer extraordinary value to your customers and either ditch the rest or find a way of outsourcing that to someone else. This focus will make your systems and teams increasingly better, which will keep adding value and keep growing profits.
2. Not thinking long term sustainability
A business is not or at least should not be in the game of beating its competitors (unless it’s a sports team) It’s not about the competition – it’s about sustainability.
Business owners that focus on beating the competition simply do not understand the game they are playing. In sports, the game has a defined time limit, a defined set of rules and a referee. Your business has continually changing competition across the world; there is no time limit; there are no clearly defined rules and certainly no referee.
A business is in an infinite game where the game is really – To Stay in Business. You lose the game only if you go out of business.
If you want a long-term sustainable business, you have to start with the intention of growing a long term sustainable business not simply beating the competition.
Think long term. Build the best you can now and apply the Kaizen principle – Continuous and never-ending improvement.
- Keep your best people long term and keep helping them to improve.
- Build your systems for the long term and keep improving them
- Improve your products and services continually
- Build your financial reserves against a rainy day
- Protect your intellectual property – the way you do what you do
3. Not working on your personal development
Every business is a reflection of its leader or leaders. The way you think determines the culture and actions of your teams and ultimately what your business does and how it does it.
Working on your business is like adding extra apps to your phone. Very useful and certainly adds value if the apps are good.
Working on yourself as Leader is like changing the operating system from a mobile phone which simply makes calls to the supercomputer you probably have in your pocket right now.
Working hard and getting coached on your personal development will change how you think, your life and business strategies and how you interact with the world. Growing personally will inevitably change your life for the better.
4. Not working on your business culture
Your business has a culture irrelevant of what you do. Your culture is how you, your teams and your business behaves. The question is – How effective is your culture in winning your business game.
In the 1960s Douglas McGregor wrote a seminal business book called the “Human Side of Enterprise” about Theory X and Theory Y companies. – Google it to learn more
Basically, theory X companies work on command and control – They believe people need to be controlled, told what to do and how to do it.
Theory Y companies believe people are generally good, self-motivated and self-directed and want to produce a good job. They prefer the autonomy of being allowed to work to the best of their abilities.
Both methods can produce excellent results. It’s just one is much more fun to work in, less stress for the business owners and potentially is more sustainable in the long term.
Today in a fast moving and ever more complex world, the most talented people are increasingly mobile and well connected. They know their own worth and are only attracted to companies where they feel valued and can work with purpose-driven highly capable teams. It’s not just the money. In the first five years of Google, nearly everyone who worked for them took a salary CUT to join them because they were excited to work in a high performing autonomous culture.
You cannot hope to run a great business by yourself.
Building a great culture to attract extraordinary people who will help you grow your business with more fun and less stress is essential in today’s world.
5. Not measuring team members performance properly
You can make every effort to employ the right people and build a great culture, but still, some people will underperform. You or their team leader may feel that underperformance in their guts but its really hard and time-consuming to pin down. If you or a team leader gives a person a bad appraisal, that person can simply dismiss that appraisal as the “Boss is just a ********! – He /she doesn’t know what she is talking about. They then carry on regardless, doing the same as before or worse still simply paying lip service to the feedback.
So what’s the answer?
360 Degree anonymous reviews for every person in the company and especially team leaders and the boss from at least five other people who work closely with them. The results should produce average scores against a whole range of criteria.
It’s easy to dismiss parts of your appraisal because the boss is a ******** but practically impossible to do so if it’s all the people you work with giving you an average low score in a particular area of your performance. It does not matter what you think. Whether you think the score is fair or not is irrelevant – the fact is that other people who work closely with you believe this is a correct indication of your performance – so nearly everyone will take more notice of the results.
It’s essential that a 360 review system is put into place to help people develop because hopefully most of your people want to do a good job. Most of us are simply blind to our weaknesses. People should want to know how to improve otherwise, why are they working with you?
Following that 360 appraisals, a personal development plan should be agreed with every employee and regularly discussed and progress tracked by team leaders.
A team leaders MAIN job should be to get the best from his/her team
This regular feedback and tracking to help low performance in certain areas are essential for everyone. Across your company, this will produce extraordinary results. Across the board, low performers can be moved to other roles to give them a chance. Ultimately, low performers are likely to deselect themselves as it is very difficult to continue work in a team when you know everyone thinks you are underperforming. You will either strive to improve, or you will leave or the company.
Sometimes the company will have to “ask” some people to leave.
If you have to go through the correct disciplinary procedure with a few people who underperform you are protected. Its very difficult for them to claim unfair dismissal when a whole team of their peers are stating in their records that they are underperforming in key areas.
For your good people – they know they are doing a good job. As such they really want to know their lower scores (which they may well be blind to) and how they can up their game.
Measuring performance fairly across a range of key criteria and following it up properly will produce high performing and happier teams
What gets measured gets managed.
6. Not enough focus on attracting, identifying and engaging great people
Many companies boast about how great their training programs are. If you spend more time energy and resources on attracting, identifying and engaging great people you can spend a lot less on training. Great people are self-motivated. They will identify their weak areas and self-train without the need for much help from you. Smart, engaged people can learn how to do most things well provided there is someone to teach them.
In my opinion, there is NOTHING more important than doing everything you can to employ the best people.
Until you are certain you have a fantastic team of HR people with a highly systemised and proven record of employing great people do not leave it to them.
How can you be certain?
Develop scorecards and questions to determine the attributes you want for every prospective employee. Your performance management system should be checked back against the scorecards produced when that person was engaged. Were the scores in line with the actual performance the employee produces?
If not adjust the employment process and questions asked to improve your engagement process to only hire world-class people.
It’s currently x10 harder to get a job with Google than it is to get into Harvard business school. That’s not because they are a highly successful company now. They are a highly successful company because they work extremely hard to get the right people and build a culture for those people to perform well.
7. Not building systems for everything
Great people are essential, and they can even get around bad systems, but why should they have to?
Everything in the business should be part of a system with strong checklists.
You should have the attitude of: To err once is human to err twice on the same thing is stupidity.
If something goes wrong and you have a system – the first thing you should do is blame is the system – most bosses blame the person when in fact the error is probably the fault of the boss for not having a proper system. If the system is at fault talk to your people on how to improve the system, so the fault does not happen again.
Does this mean all your people become robots? Absolutely not – their role is to identify exceptions to the system, faults in the systems and have the authority to act accordingly without fear. They should also be architects of improving the systems and therefore will be engaged in making it work.
With great highly engaged people constantly looking to make 1% improvements to the company systems, the company continually improves to win its game.
8. Not having a coach
All of the above points take a lot of time, energy and resources.
All great performers have great coaches, and I believe it’s almost impossible to perform well without one.
A great coach will question your beliefs and thinking from which all your actions and results are driven. They will hold you accountable to drive forward when things get difficult, and you wonder if you will ever fix big problems. They will remind you that all big problems can be resolved with a good strategy and hard work even if it takes years.
A good coach keeps you in your business game and helps you win.
Enjoy the journey
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