Have you ever wondered why so many businesses go bust? Around 12% of companies go out of business every year – that’s about 1 in every 8 going to the wall, with all the subsequent impact on owners and their families. There’s plenty of reasons why. All you need to become the director of a limited company in the UK is an idea, £12 and an internet connection. Notice I didn’t say a ‘good’ idea; some businesses don’t make it because they’re providing a product or service no-one wants. The majority of the others simply run out of cash.
However, once you’ve set up your limited company and gone out into the marketplace with your product or service, there are plenty of ways to wreck your business. As a coach, I see many owners who are highly skilled at the technical work of their business; tradesmen, retailers, bookkeepers, web designers and so on. Does that mean they’re skilled a running a business that does technical work? Not at all. This is the main premise of ‘The E-Myth Revisited’, a seminal work on why small businesses fail and what to do about it, written by Michael Gerber. It’s essential reading for owners of any small business.
So let’s take a look at 5 great ways to wreck your business. Once you know these, you can avoid them at all costs and grow your company year on year.
Use the amount of money in your bank account as a measure of how well your business is doing.
All you need to do is log in every day and check the balance. If there’s plenty of cash in the bank, things must be going well and you can pay your staff and your bills. If you have an overdraft or a credit card, when big or unexpected bills come in, you can use them to cover the cost.
Antidote: Good businesses set budgets, track expenses and forecast cashflow so they have complete control over the cash cycle.
Let your company’s culture develop by accident, not design
Let your team decide how customers and suppliers are going to be treated. If they’re having an off day and they miss a few calls, or let customer service standards slip, you can catch up on another day. When a customer asks for a quote, tell them you’ll get around to it when you can.
Antidote: As the owner, you must design the culture in your business from day one. Suppliers, customers and staff should know the core values and standards you expect in your company.
Allow people to work at their own pace
Don’t set any objectives and productivity performance indicators. Let people work at their own pace and allow the output to be what it is.
Antidote: Good businesses set outcome-based performance indicators. They give staff clear targets to aim for and allow the owner to track the overall performance of the business.
Let the future take care of itself while you work really hard on this week’s tasks
Use your email inbox as the planning tool for your business. Make sure it is empty at the end of every day. Address the immediate needs of your customers, suppliers and staff to make sure everyone is happy.
Antidote: Make an action plan and keep it up to date. Plan your marketing campaigns, plan the expansion of your team, plan the growth of your business. Set a destination for your business and ask yourself every day ‘Is what I am going to do today getting me any closer to my destination?’
And finally, work so hard that you don’t have any time to learn
Put in a big shift every day. Be there from opening time to closing time. Come home, grab a bite to eat and then get cracking with some invoicing and debt chasing in the evening. Hit the sack every night exhausted but satisfied that you’re working as hard as you can.
Antidote: Work hard, but set time aside for personal development. Work out which skill, if learned or improved, would have the biggest impact on your business and then make time to add that skill to your repertoire. Read at least one business book every month. Make a habit of lifelong learning, because the more you improve, the better your business will get.
I’m not being flippant here – many business owners make these mistakes early on in their business careers. It’s only natural when you’ve not had any training on how to run a business well. There’s many more that I could add; the good news is that it doesn’t take much time, energy and effort to do these things well.
Start with the habit of lifelong learning and you’ll soon have the skills you need to run a great business!