Avoid These Common Business Mistakes and Watch Your Profits Soar Part 3 of 4

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When you first start a business you are both the president and the janitor.  As long as you are doing most of the work, management is easy.  Once the business grows to a point where you can’t do it all by yourself anymore, having strong management skills is what separates the highly profitable from those businesses that fail or are just getting by.


Unfortunately, most business owners have little or no training or experience  managing a business.  I use myself as an example.  I was a good CPA when I started my business, but I really had no idea how to manage a CPA firm.  I had to learn on the job.


How important is this?  If I had to start over in a new city tomorrow, I am convinced that I could grow my business back to this point in about five years, rather than the 23 years it has taken.  This is the power of learning how to manage your business.  It is also the only way to grow a successful business, which is why many business owners end up failing when their business grows.  These are the common mistakes I see.


They don’t have long-term goals or a plan for reaching them.  If you don’t have goals, you are just drifting.  If you do have goals but no plan for how to reach them, you are only dreaming.  Every year you should have set or reevaluate your goals, and every month you should have a plan for making progress towards those goals.


Not aligning your goals, strategies, and business systems with your values.  Trying to sell something that is against your morals is a sure road to failure.  I once passed all the tests to sell insurance and retirement products to my clients.  That only lasted six months, because I couldn’t get over my feeling that I have lost my autonomy with my clients.  I found myself sabotaging my sales because of this conflict with my values.


Not recognizing a new threat or opportunity.  Too many businesses have failed to notice a trend and either fallen into severe financial trouble or been completely eliminated.  My favorite example is Blockbuster, who failed to notice the opportunity in digital content.  If they had done an annual SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) they might have been able to continue as a major player in the home entertainment market.  Instead, they are fighting for their very survival.  What threats or opportunities are you missing?


They don’t know how to hire good employees.  A good employee is often a business’s most important asset.  A bad hire can cost thousands of dollars to fix.  Learning how to hire good talent is a crucial skill many business owners simply do not have.


Not keeping good employees.  Once you have hired the perfect employee, you must have a system in place to direct them, monitor their work, and reward good performance.


Not having job descriptions.  Without job descriptions it is impossible to have the right people in the right spots.  This leads to confusion, overlap, and loss of productivity.  It also leads to your employees creating their own jobs in order to fill the time.


Failing to develop leaders and managers.  If you want to grow, you must have strong managers.  This takes time and patience, so don’t wait until you absolutely need a manager.


Micromanaging.  Too many business owners think that the only way to get the job done right is if they are involved in every single aspect of their business.  This stifles employee productivity, reduces initiative, and makes it difficult to keep quality employees.  Stop being a meddling taskmaster and focus on growing a profitable business.


Lack of systems and procedures.  It is almost impossible to provide your customers with a consistent experience without procedures and systems.  I tell my business owners they do have procedures, even if they didn’t design them.  They are whatever your employees decide will be the best (or fastest!) way to finish the job.  This is obviously not what you want.


Failing to manage the owner’s time.  Running a business is complicated and can quickly overwhelm the owner.  It is very common to get so lost in the day-to-day operations of a business that you end up ignoring the important work of growing your business.


Be sure to check out Part 4 where we review Money Mistakes Small Business Owners Make.