As you have probably seen on a lot of my other blog posts, I am always trying to keep my finger on the pulse of this thing we call “owning and running a business”. Often times, which is not a good thing, I see business owners winging it by the seat of their pants. Sometimes this comes in the form of failing to delegate, shiny object syndrome, jumping on the “everyone else if doing it” bandwagon or the steady stream of business now, will carry their businesses on indefinitely. Wrong!
In a blog post by Smart Company, check out 10 of the biggest business owner complacency traps that business owners can fall in to:
1. Not having a clear purpose
Many business owners aren’t able to clearly articulate why they are in business and what they are trying to achieve. Having a clear vision for this will keep you focused and drive your efforts, as well as give your staff and customers a clear indication of what you’re about and identify with how that relates to them.
2. Believing you don’t have any competition
There are few truly unique new ideas for products and services and many business owners fail to see this. Even if you have a unique feature to sell, it still doesn’t exclude you from having competitors. Your competition is anything that competes for your target market’s dollar.
That could be direct competitors selling a similar product or service; indirect competitors that provide an alternative substitute that helps to achieve a similar outcome; as well as completely unrelated purchases that your customers could choose to spend their cash on instead of buying from you.
Think about your competitors and how you’ll be heard and chosen above them.
3. No sustainable competitive advantage
When you’re up against the competition, having a sustainable competitive advantage that you can use to distinguish yourself is important. How you distinguish yourself could be based on price, value or by tailoring your offer to a niche market.
Once you’ve determined your sustainable competitive advantage you can use it in the short term to obtain staff and customers, and in the long term to drive business value.
4. Running out of cash
Many start-ups get caught out by not properly understanding the cashflow of the business and the cash required to fund growth.
As a result, they generally don’t have enough cash when they need it. To counter this, you need to plan ahead and have a cashflow forecast and budget which should be updated frequently to reflect your actual position and immediate upcoming needs.
This allows you to ensure you can meet any large commitments, including those relating to tax payable, which are often forgotten in planning stages; make decisions; and better plan for any growth activities.
5. Accepting any customers’ business
It’s tempting to accept any business when you’re a start-up hungry for sales and revenue. The downside to this is you could find yourself with a lot of painful, poor paying customers that take up time, drain profits and take the joy out of your workday dealing with them.
Better to define an ideal customer and target market that is likely to provide multiple sale opportunities, make buying decisions in a suitable manner and require a level of pre-purchase education and post-sale care that match what you can and want to deliver.
6. Having unrealistic goals
Many business owners map out some form of business plan at the outset, with goals that are based on guestimates. While start-ups don’t have a track record to rely on, a little research can go a long way in setting realistic objectives that can be tested to provide you with some actual data.
Using this information you can then set realistic and achievable goals that you can measure and feel the satisfaction from having accomplished.
7. Expecting you’ll earn a dollar right away
Start-up businesses are cash hungry, but not so quick to provide a return. If you’ve heard success stories and think you’ve got an idea that could turn you into an overnight millionaire, think again.
The reality still is that most businesses fail in their first few years and the successful ones, still require a lot of start-up capital and hard work to turn into a success.
As per point six above, set yourself realistic goals you can achieve and you’re more likely to be a success and feel like one in the process, rather than be disheartened by not meeting unrealistic expectations.
8. Underestimating strong leadership
As the business owner, your staff look to your example and follow your lead. What does the way you conduct yourself say to your team? Actions speak a thousand words, so you need to communicate and display the type of qualities you expect from your team.
You also need to give them adequate information to help steer them in the right direction and empower them to contribute to helping the business achieve its objectives.
This information includes the purpose of the business, the goals you have set, how you’re going about achieving them, what you expect their specific contribution to be on that journey and how you’re going to measure your progress.
9. Not having an end game
Business owners should always have an eye on the value they want to build in their business, with a view to one day achieving that return on their investment when they exit.
In order to do this, you need to have an exit or succession plan, a timeframe you want to achieve that in and a dollar figure you expect to obtain when you exit.
Working back from that figure you should have a strategy to build the business value over the life of your ownership.
Again, many business owners can have unrealistic expectations regarding their sale price and what someone else is willing to actually pay, so seeking some independent advice about this can help set an achievable target.
10. Getting stuck with another job
Initially you’ll be covering a lot of bases during start-up. However, if after some time you’re still trying to do it all yourself or, worse, have to do it because there’s no one else that can take the reins for a while, then you’ve got another job instead of a business.
Many business owners get caught up trying to do it all because they think they know it all and can do it best. In reality, no one person is great at everything and spreading yourself too thin means you risk losing it all when you burn out.
Your start-up plan should include a growth and resource strategy that allows you to bring skilled people on board at the right time to meet the business’s needs.
If you can match this against your own skill set and interests in the areas of the business you actually enjoy being hands-on with, then even better.