The mistakes I've seen business owners make over the last 20 years

“It’s good to learn from your mistakes. It’s better to learn from other people’s mistakes.”

– Warren Buffett

As a professional accountant, business advisor and business coach, I work with a variety of really smart, creative and highly respected business owners. However, I have also observed them missing opportunities to improve their business and help them reach the level of success they deserve. Some of these oversights stem from a lack of financial knowledge. Others come from a lack of understanding of the connection between the day-to-day activities of the business and the financial results those activities will generate. But all of them can have an effect on the bottom line of the business - and not in a good way!

Here are some of the mistakes that I have come across.

The mistake of being too busy to learn new tricks

When you’re running your own business, you’re always working. Whatever stage of business you’re at, your to-do list is always full. And guess what? You’re never going to complete it as quickly as you tick things off, you’ll add new things. 

One of the major errors I see among business owners is letting immediate urgent actions push aside the much-needed activity of learning new tricks. We want to learn and improve, but it becomes secondary to rushing around, making sure clients are happy or our staff are looked after.

The problem with this common mistake is that it keeps your business the same as now, which would be fine if you could stay the same. However, the world around you doesn’t stay still, it’s always changing and what works now might not be effective in six months or five years.

The mistake of wanting results right away

We all want the satisfaction of instant results. When we do a marketing campaign, go to a networking event or build a new website, we want them to work NOW. We want immediate new customers, a big jump in our subscriber list or the phone to instantly ring with lovely people who want our services. Of course, we do we’re human.

But chasing instant wins can be a big mistake when you’re trying to build a successful company.

Our culture celebrates the overnight success, the first-time winner, the number one hit that comes out of nowhere. But there’s no such thing. Whether you’re looking at viral videos on YouTube, hit records or companies that make a hell of a lot of money, they’ll have taken one of two routes to ‘instant’ success.

1. Major investment and the backing of a skilled marketing team who apply a winning formula. This is what’s behind blockbuster movies, the rise of mega tech companies like Facebook, or the latest rap star.
2. Years of building up assets and skills, in the form of knowledge, connections and networks, loyal customers, processes, and learning from failures and small successes.

The mistake of not having a formal action plan in place for your business

In my years of coaching with business owners I observed countless savvy company leaders omit this critical step. I asked many of my clients the reason why they failed to put a plan in place, their answers indicate that often they don’t develop an action plan because they:

• Don’t know how to make a plan
• Don’t think a plan is necessary
• Are afraid of the process
• Don’t want to commit the time to create a plan
• Think it would be a waste of time
• Believe planning is only relevant for larger businesses
• Believe planning is something done only to acquire a loan
• Believe a plan must be a thick document complete with charts, graphs and well laid out chapters

Many business owners use one or more of these excuses to avoid making a plan but in fact a regularly updated formal plan of action to improve your business is necessary and relevant for all businesses regardless of size or industry.

The reality is that planning can be (and generally is) a simple and effective process – and I stress the word "process". The process of writing down your plan transforms it from a dream based on a vague idea of a desired outcome into a realistic path from point A (your business’ current state) to point B (what you want your business to be). Thus, the greatest value of developing an action plan is in the process of creating it rather than the end result.

The mistake of not having the right people doing the right things

Have you ever looked at your business in the context of your "organisational chart" to understand why you have it set up the way you do? Is the structure of your business clear and logical? Does it make sense, given how you need to operate your business?

Traditionally, when people are building a company, they look at the individuals they have and create the functions and roles around these individuals. However, this thinking is a bit backwards as it does not take into account the best structure of required functions that would work within the individual company. Rather, it merely focuses on the people available.

This leads to a common business mistake: suddenly you have the wrong people doing the wrong things trying to make a business successful. In other words, the road to success is not as straightforward as it could be.

For example, consider a company that has a person in a customer service role and although the individual may be a great person and employee, they have very poor verbal skills. The person may have been placed in this position without a thorough understanding of the required skill set for the role. It becomes more about the individual person rather than the individual position and the necessary functions of the position.

The mistake of not knowing your numbers

Many business owners don’t know their numbers. Knowing your numbers is one of the most important aspects of successfully running a business. From the cost of goods sold and profit margins to variable costs and break-even points, many business owners do not have a good handle on the economics of their business.

Why are the numbers so critical? Because when used effectively, they are the point of clarity and the basis for virtually every decision a business owner makes.

The challenge is knowing which numbers are the most critical to your business. While there are common profitability metrics every business should know, there may be more specialised numbers that are more crucial to certain types of businesses.

If you don’t know the numbers, you don’t know the business. Knowing your business and your numbers will only improve decision making and future outcomes.

If after reading this you can relate to any of these mistakes and would like to discuss the impact you can make to your business by addressing any of these issues, give me a call or book a meeting. I would be really interested in talking to you about your business and how I can help.