When it comes to achieving business success, many startups fail for reasons that couldn’t have been factored into the business plan. While business issues may be easy to spot, it can prove difficult when an entrepreneur’s innate trait, characteristic or behavior is what’s causing all of the difficulties. Here are seven “sins” I’ve seen entrepreneurs make over the years when it comes to running their business:
1. Self-sufficiency: Some businesses work as solo enterprises, but most need to be scalable. If you don’t know how you’re going to grow your business without cloning yourself, you’ve committed yourself to a life of hard labor with an unappreciative boss— yourself! In my experience, building enough margin into your pricing so that you can hire or outsource all of the business aspects you don’t need to be doing is the first step toward righting the ship.
2. Product worship: Being product- driven is a fast road to failure. It doesn’t matter how good your product is if the customer doesn’t want it. Know what the customer wants, what they need and what it takes to get what they want to them. It’s not enough to simply know your customers inside and out; you also have to be savvy about distribution.
3. Neglect: Most often seen in terms of legality, neglect also extends into business plans. It can be crippling to a good venture to indulge in neglect. When somebody mentions to me that I really ought to be thinking about “X,” I make a note of it and ensure that “X” is on my to-do list in the next 30 days. Sometimes “X” turns out not to be a problem, but if it’s a legal blunder that comes back to bite me, I’ll spend even more time and money solving a problem that never needed to exist.
4. Picking a tiny target: This is a sin that most of us commit at some point. If you’ve picked too small a niche for your business, growth will cease very quickly, either because your competitors have cornered the market or you expand to fill the niche and discover there’s nowhere else to go. You might be happy being the big fish in a very small puddle, but in my experience, it’s better to know if that’s your future be- fore you jump in and muddy the water.
5. Playing the equals game: This one doesn’t look like a sin at all, but it’s a business destroyer all the same. If you have business partners, it’s tempting (and often seems fair) to have equal shares in the ownership. In the long term, however, it’s unlikely that you and your partner will agree on all aspects of business direction. Deciding early on who will have the authority to make the tough decisions is important, and that individual will need to have sufficient investment in the business to stay motivated.
6. Time-is-right-ism: This one’s incredibly common, especially in potential startups. There are a lot of wannabe entrepreneurs out there who never get a business off the ground because they seek guaranteed success. They perfect their business plan until it’s awesome … and never deliver it because they’re too scared. For true entrepreneurs, the leap of faith is the launch pad, but for those “when-the-time-is-right” entrepreneurs, it’s the point when they stop dead. When I’m introduced to a prospective business partner with the “perfect” business plan, I do some research. I may find that they’ve been here before, and they just never pulled the trigger.
7. Overpaying for market share: Habitually spending too much on advertising or incentives is certain death to a business. The answer is simple: Perform a rigorous assessment of the potential return, and then test your assessment thoroughly. Ensure that you’re unlikely to spend more money getting customers than selling to them. And then enshrine your assessment as a rule so that as your business grows, anybody who has the authority to spend money on customer acquisition knows how to measure the cost of advertising, incentives or promotions against the potential return. I’ve found this to be the best way to ensure your business stays successful and on top.
Michael Conway is the managing director of Clothes2order.com, a fast-growth company supplying businesses with clothing for uniforms, promotions and events. Fun fact: Michael’s company produced its one-millionth uniform this year! Contact Michael at [email protected].