The Key Mistake Made by Business Owners & How To Avoid It
This article describes the key mistake owners make that prevents business growth and their day to day fulfillment.
You’re very good at what you do. You’re a highly effective acupuncturist that heals chronic health conditions of your grateful patients. Or you make cookies that are pieces of art—with very loyal, returning customers. Maybe you graduated as a highly proficient attorney. Now to become a partner, you need to increase your billable hours and your clients.
We’ve developed ourselves in our “trade” or our offer to our clients. But where did we develop the business acumen that goes along with making us highly successful long term? That is not something we often learn in school.
And guess what? That’s where highly skilled professional business owners have breakdowns. One of the biggest challenges I see is that people are attempting to run a business from where they are most comfortable and most effective, i.e. their training and background, while neglecting other key areas of the business where they are less familiar and have less training.
As a business owner, you’re juggling many activities and areas of focus. But when you stay hunkered down in the production or operations area of the business, you are attempting to run a business from too low a sight line. You’re not owning the role of owner or CEO – who is also accountable for sales and marketing, the financials, the business of the business [business planning, objectives, purpose, operating principles and values, targets], staff development and more.
You’re fitting in all those other activities around the edges…entering invoices on weekends, returning emails at midnight, never quite getting to business planning because there are too many other things on your to-do list, too many other urgent issues that need your immediate attention. Even if you have staff accountable for some of these areas, it’s often lopsided—with not enough guidance, supervision, development of your staff for them to be successful—as you’re too busy earning revenue for the company, as an example.
But here’s the problem with that. [not excluding the obvious one of being detrimental to your well being, health and fulfillment]…you have breakdowns in the areas you’re not paying attention to.
THREE KEY AREAS OF NEGLECT
When you neglect this area of the business, it’s like you’re in the middle of a football game but you don’t know what the scoreboard says. The scoreboard informs strategy and appropriate action. If you don’t know it’s 3rd down and 10 yards to go, and you take action as if it’s 1st and 10—that impacts your effectiveness, your results and your success. You need accurate numbers and you need to be engaged with those numbers on a regular basis to be successful.
One of the most critical financial business tools to have in place is a working cash flow projection spreadsheet. This tool is essential to planning future equipment purchases, the timing of hiring, expansion plans and profitability targets, to name just a few. We highly recommend having both a personal and business cash flow template to manage your finances.
2. The Business of the Business
When you neglect this area of your business, there are a lot of day to day activities in the business but they are not necessarily lined up with your mission, your long term vision, your goals or targets. “Business of the business” is the time where you step back and look at your business from a different perspective, out of the day to day. When this area is neglected, business owners work harder not smarter—doing more activity, different actions or what they think are better actions—but end up with results that are less than they’d hoped for. If you spend 10 minutes in business planning—you open up HOURS later down the road because you’re following a plan. If you’re driving from Portland to New York, and you just get in your car and start moving…..you might end up in Vancouver BC. That’s not the best use of your energy or action in your business if your goal is to reach New York. Costs of ignoring this part of the business include burnout, less than stellar results, lack of focus and alignment of your team and in your company—to name a few.
3. Sales and Marketing
Many businesses are organized for business to come to them and they respond. They don’t necessarily set targets, benchmarks, bottomline and stretch goals. If you know what you’re aiming for, you’re WAY more likely to get there. At the very least, you’ll get further than if you hadn’t set the goal. I’ve seen business owners turn away sales because they didn’t know how to deliver on them or avoid requesting referrals because they’re uncomfortable. The result and cost of ignoring this area of the business: lower profits, cash shortages, and slower growth than was possible. One very common cost here is a boom and bust cycle: the owner gets in fear from lack of sales, generates a bunch of activity, generates sales, gets too busy,and then drops out the sales activity until sales decline and the business owner gets scared and starts moving on sales again. A very exhausting up and down cycle that is unnecessary and prevents long term growth.
How To Avoid This Key Mistake —
New habits and practices that help:
Have a regularly scheduled time daily or 3 times a week where sales are the focus. You’re reaching out. You’re networking. You’re setting up appointments to build relationship with others. Treat it like a scheduled appointment. If you need to bump it with another priority, you reschedule it somewhere else.
What do you need to do to have a current, accurate profit and loss statement? If it’s something you scramble to put together at year end, hire a good bookkeeper. You will make more money and feel better knowing where you are on the playing field of your business. It is an expense that gets a return in both results and your peace of mind. What would you be doing with your time if you weren’t spending time entering data—that would grow your business?
Create each year as a specific project. What are you building in your business this year? A foundation in place so you can grow? Taking the business to the next lane out of mom and pop into a scalable, organized business? Deepening your bench for growth? Identify the project for the year…vs. just having the calendar page turn and onward you go—with the next set of crises and demands shaping your immediate, short term actions. A sample project statement might read:
Our project for 2019 is to lay the foundation upon which to build a __________, __________, ___________ company, known for __________,__________, and ____________ and grosses $__________ in 2019.
Our project is to develop a team of people working together to achieve ________, ____________, ____________ and _____________ in 2019.
Then create a working business plan to fulfill on that project statement. Be clear what the purpose of your business is—what concern of your customer or your client are you serving. Why are you in business? Include key accomplishments for the year, financial targets, staff results or objectives, and a working cash flow.
Review this plan quarterly at the very least, monthly is better—and fine tune it as you go along. Businesses never go according to plan so adjusting, refining, and adding to the plan as you go—developing it further as you experience challenges perhaps that you didn’t anticipate when you wrote the plan. It’s a working plan, a road map. Use it.
Elevate your leadership. You are a business owner. Your trade or training is one thing you do, part of the business…one area of the business. Do not run the business from that area. Have practices and a scheduled time in place that is regular to address these other areas: financial, business of the business, sales & marketing. This way you allow yourself to take a different perspective and an elevated perspective of the whole of the business.
And hiring a business coach can help these changes. Not only does this put an accountability and support structure in place for you, an effective business coach can help you with:
1. working smarter not harder by providing a perspective out of your awareness of how you are keeping a lid on your business and growth,
2. being more effective in all relationships and communication, & creating alignment so everyone is working together and moving in the same direction.
Good business coaching should pay for itself within 3 months, and within 1 year, by creating 10 times or more return on your investment. A business coach can help you establish business basics in your daily practices in your business to get you out of the reactive mode to a more thoughtful, successful approach to your business.
“Habit is habit—not to be thrown out the window by any man, but coaxed down the stairs a step at a time.” —Mark Twain
By ourselves, without an outside perspective, we will most likely keep doing what we usually do—which is what we know—while responding to what is immediately in front of us needing attention. Change and growth will be incremental and potentially limiting to the long term growth of your business, not to mention your sense of satisfaction and fulfillment.
By creating new regular practices and an emphasis on areas of the business that are critical, but may not be your favorite, you are positioning you and your business for growth and increase success.
Avoid this common mistake and the growth of your business will accelerate.
I has been a business coach for almost 20 years—helping businesses increase sales, be more effective and organized, increase innovation and grow exponentially.
Contact me at firstname.lastname@example.org or call 503.888.7362 for an initial, no charge appointment about your business—both your challenges, goals and vision. I promise the conversation will be helpful even if we don’t work together in the future.