6 Ways Businesses Sabotage their Growth Potential

SBA states that over 50% of small businesses fail within the first 5 years. Business failure can be attributed to many things, some of them being unexpected growth, competition, over-investment in fixed assets, poor inventory management, and low sales to name a few. When entrepreneurs make the decision to establish a business, they go into the venture with high hopes of sustainable success and hopefully establishing a legacy that can outlive them. This is not an unreasonable or an unattainable goal, but it requires work, focus, planning and intentional execution.

So, how do businesses sabotage their growth potential? I’m glad you asked…..

1. Lack of effective managementr
Business owners and senior leadership team goes from one extreme to the next. They start out as a micromanager having the need to be involved in everything to a “hands off” manager who takes delegation too far. Businesses cannot be managed at 50,000 feet, nor can it be managed at 500 feet. Owners and their senior leadership staff must find a balance between allowing the staff to do their job with keeping a pulse on every aspect of the business. This can be done by having the right systems in place. Systems set standards, structure reporting, proper staffing alignment, smooth decision –making process, fosters accountability and establish clear metrics and expectations.

2. Lack customer intimacy
No longer can companies be satisfied with status quo and or customer service. Busienss leaders must take it a step further and assess how to better engage their customer base, as well as attract new customers. In addition to obtaining voice of the customer in terms of feedback on services rendered and/or products sold, business must create and nurture the customer experience. Gain an understanding of who the top 25 customers are and the bottom 25 customers. Why are they in that category? What are their likes/dislikes, favorite stores, birthday, anniversary, etc? What makes them buy from you? Is there something you can do that will make them buy from you more? Do you have incentives in place to honor customer loyalty, quick pay, volume buy, etc.? These are sample questions to ask yourself and your team as you strategize how to better court the customer and turn them into increased sales. Customers are more apt to buy more and become a loyal buyer when they have a great total buying experience.

3. Don’t engage and value workforcer
In a time where company loyalty is becoming extinct more and more each day, companies cannot forget about their most valued asset ~ their people (human capital). Businesses are operating in an era where they must be intentional in how they engage and value their workforce. Company’s inability to retain quality staff is costly and can ultimately affect their ability to grow, be productive and profitable. Time Magazine conducted a survey that reported only 45% of workers are satisfied with their jobs. From the business leadership side, 75% of leaders have no engagement plan or strategy even though 90% say engagement impacts on business success. (ACCOR). Think about how you can reward, recognize and engage your workforce. Do you have an employee recognition program? Does the senior leadership staff provide mentorship to aspiring leaders? When was the last time you held an employee town hall? Do you reward employees for creating innovative ideas to improve operations/the business? Workforce Mood Tracker survey says 69% of employees would work harder if they were better recognized; 78% of U.S. workers said being recognized motivates them in their job; and 49% of employees said they would leave their current job for a company that clearly recognized their employees for their efforts and contribution. Don’t underestimate or lose sight of your most valuable asset. There would be no business without a loyal staff.

4. Have financial blindnessr
Running a business requires financial intimacy. This means having the financial adeptness in terms of high cost factors: material costs, operating costs, production cost, environmental cost, taxes, leases, etc. as well as the cash cows of the business. Outsourcing this responsibility to a financial person is fine, but business owners and leaders must work with them hand-in-hand to fully understand what the company is spending, how money is being spent, how money is generated and how the decisions made affect the business financially. Transferring this knowledge or the basics down the pipeline to the workforce can empower them to make smarter decision in their daily work duties because they know the financial implications. In addition, there must be financial controls in place for any financial decision the company and/or employee is authorized to make. This ensures accountability, standardization and consistency; therefore, reducing the room for error and making it easier to trace abnormal transactions.

5. Ignore competitionr
Competition is what should keep businesses on their toes, but too often this is not the case. We already know competition is one of the reasons why businesses fail. Earlier, we talked about the importance of business owners having a pulse on their business financially, from a customer standpoint and an employee and customer engagement but business owners cannot solely focus on the operational aspects of their business and not stay abreast of what their competition is doing. If a company’s competitor out-sell them, out-market them and dominate the market, they will more than likely go out of business. That is why it’s crucial for business owners to stay on top of industry trends, technological advancements and their competition’s movement within the market. When was the last time you bench-marked other businesses within your industry? Do you know your market share? Do you have a unique selling proposition (USP)? What is your competition’s USP? Do you offer the latest product/service that aligns with the latest technology?

6. Confuse investment with costr
When building a business, money can be tight. So, business owners tend to take shortcuts to avoid hiring skilled professionals. This will work for some areas, but there are areas businesses can not afford to go cheap on. These areas include: atto
ey, accountant and bookkeeper. Making the investment in professionals who can keep you out of court and protect you from IRS is well worth the money. There are affordable professionals in these areas who support and specialize in small businesses. Check out Kendrick Law Firm for helpful tips and strategies in this area (http://www.slideshare.net/kendricklaw/educate-motivate-engage).

Are you willing to change or make adjustments for the success of your business? Running a business requires hard work, innovativeness and creative out-of-the-box thinking. That’s the serious side of being an entrepreneur. Being your own boss, the potential to increase your earning potential and not someone else and the endless opportunities are some of the rewards of entrepreneurship. Before business owners can fully enjoy these rewards, businesses must be structured properly. It is critical for businesses to have the correct infrastructure in place before they can begin to become a sustainable business. The infrastructure is driven by sound and effective operational processes, which serves as the nucleus of the business. Having a strong operational foundation yields a recipe for success. If you ask to see a business with sustainable success, you will see a business with strong operational processes for every component of the company.

For more information on where your business rate in terms of operational excellence, ask about our free business self-audit.