Eliminate the 7 Deadly Mistakes Small Business Owners Make

Chances are that any small business either won’t still be operating or will have been sold to someone else within five years. Why?

The reason for both results is the same. The business results have failed to satisfy its owners’ needs and objectives . . . or have exhausted the owners’ resources.

While most small business owners think nothing of working 60 hour weeks, few will similarly discipline themselves to overcome the factors that either cost them the bulk of their success or cause the business to fail to sustain itself. An effective small business audit by an experienced professional can quickly and easily help such a business overcome its deadly mistakes.

Here are the Seven Deadly Mistakes and Their Antidotes:

Deadly Mistake #1 – Poor Business Model

A business model is who, what, when, why, where, how and how much of the ways a business serves its customers. Most businesses pursue business models that aren’t good enough to succeed to the business’s full potential because they have weaknesses versus competitors.

Common solutions include adding more appealing offerings, highly effective ways to attract customers, better processes for producing products and services, reducing customer costs and eliminating major financing needs. Most organizations will need to upgrade their business model at least every 3 years.

Deadly Mistake #2 – Incomplete Management Team

Few organizations can prosper without top talent in three areas – operations, marketing and finance. Most small businesses try to operate with top talent in only one of these three areas.

Common solutions usually involve hiring, recruiting of part-time professionals to play these roles and joint ventures with complementary organizations.

Deadly Mistake #3 – Lack of Profitable Focus

Small organizations are often pulled in all directions as the owner shifts constantly to pursue new opportunities. As a result, the business never becomes expert in or well identified with any particular activity that customers need.

If the owner cannot be self-disciplined, the owner needs to have someone who holds the owner accountable for picking and sticking with the pursuit of an appropriate, high-potential focus.

Deadly Mistake #4 – The Organization Imagines Itself Operating in an Environment that Doesn’t Exist

Many of those who failed with Internet businesses during 1998-2001 believed that Internet use was doubling every 90 days. Those organizations pursued that opportunity, even after it became obvious that Internet growth and size was much smaller than what the business press was saying.

Choose a business direction that’s the best way to go . . . regardless of the business environment. In other words, choose a strategy for all seasons . . . not just summer.

Deadly Mistake #5 – The Organization Has No Way to Learn What It Doesn’t Know that It Doesn’t Know

Small business owners like to skimp on professional fees. As a result, they may set up their own legal structure, implement their own program for protecting intellectual property, develop their chart of accounts and avoid buying insurance.

A better solution is to engage professionals who can fill in gaps in your knowledge so that you don’t make foolish mistakes.

Deadly Mistake #6 – The Leader Doesn’t Delegate

If you think bureaucracies are slow and ineffective, a small business can be even worse if the leader insists on doing everything herself or himself. Work and decisions are delayed for weeks as this overworked person tackles an endless mountain of insignificant details.

If you don’t know how to delegate, learn. If you don’t have anyone you can delegate to, you need a different set of employees, partners and suppliers.

Deadly Mistake #7 – Running with Inadequate Cash and Credit

Cash and credit are the life blood of any business. Run short of those financial resources, and you are no longer optimizing your business . . . you’re simply scrambling to survive. Like the swimmer who is treading water 40 miles offshore without a rescuer in sight, the end is obvious.

Either select a business model that’s very stingy with its cash requirements or match your plans to the resources you can provide.

Avoid these 7 deadly mistakes, and you may also not be in business in five years . . . because you have been so successful that you have either sold the operation for a high price or retired with the profits you’ve enjoyed. n