The 8 Most Common Mistakes We Make When Growing Our Business
And How to Avoid Them
One of the best feelings we as managers and business leaders experience is seeing our businesses grow as a result of our effort and hard work. When it comes to large companies, these emotions may be result from watching a steady (or not-so-steady) increase in stock price. And that’s ok – creating value for shareholders and the firm helps companies invest in new technologies and continue that growth. For smaller companies, such feeling can emerge when we simply gain a new customer, or land a big deal. So we’ve been successful so far, some more than others; but how can we make our companies even better? How healthy is our business? And how sustainable is the growth we’re experiencing?
No matter how well you’re doing, there’s always room for improvement, especially over the long haul. To help you measure your success and to ensure you keep growing, here are 8 common mistakes companies make when growing their business.
1. Forgetting to Communicate the Strategy, the Plan, and Purpose
A huge contributor to the successful growth of your organization is the ability of your workforce to rally behind a cause and a purpose. The only way they can do this is if you regularly and effectively communicate the plan and the overall strategy. And if you don’t have one, you should probably create one. Don’t speak in executive code or keep your plans in the dark as much as possible. Communicating the strategy and the overall plan helps employees identify ways they can impact and contribute to the company in a meaningful way. A clear and meaningful plan enables employees to get involved. In contrast, failing to communicate the strategy is like putting blinders onto the organization, which in turn leaves a lot of room for interpretation.
2. Losing Focus of Core Strengths
Over time as a business grows, things will change and the market will drive you in certain directions. But it’s important for us as business leaders to remain dedicated to working our core strengths and not drifting away from what makes you special when compared to the next guy. To illustrate this point, think about the classic example of Kodak. The famous brand was synonymous with film production and development. But Kodak, at its core, was not a photography of film company, but instead a chemical processing company. However, when film began to disappear being replaced by digital cameras Kodak lost sight of this and followed the trend into an area outside their strength. Ultimately, Kodak could not compete with electronic companies like Canon and Panasonic, and as a result Kodak ultimately went out of a business. Our companies’ core strengths are what brings value to our customers. Remember that when you depart from using these strengths to their fullest, we are departing what it is that makes us strong and successful.
RELATED: Trying to find your core strengths? Try conducting a SWOT Analysis for your business.
3. Forgetting the Middle Line
The two most often talked about financial numbers for any company aresales, also known as the top line, and profit, also known as the bottom line. But about the middle line? Where did that go? The “middle line” as I like to call represents the expenses, the costs and the investments needed to do business, and to make the business better. But growing businesses tend to focus primarily on increasing sales and profit, often forgetting about the importance of the middle line – including things like investing in better equipment, funding sufficient research and development and making smart decisions that help the business grow. It’s great that you may have doubled sales in the past 10 years, but have you invested in your operation to make sure it sufficiently support those sales? Is your IT infrastructure up to date? Do you need to make improvements to your facility now in order to accommodate your plans for the future? Do you need to look at wages, to ensure you draw and retain the best people to your company? When your business is growing, the middle line of costs and expenses needs to grow with the top and bottom lines to ensure your company is well-positioned for the future. High profit is meaningless when your business is struggling to perform at the most fundamental levels.
4. Forgetting to Set Goals
Particularly for smaller businesses, the idea of setting goals may seem futile. A small company is grateful to generate any revenue at all, let alone a specific amount. Setting goals – and more than just financial ones – is important, though, because it helps establish focus around what’s truly important. Tracking progress to these goals over time helps us as business leaders make adjustments as situations change. Further, the process of defining goals is important to growing a business because it forces us as business leaders to balance growth across the organization. For example, growing sales by 5% in a year is great, but what about growing the number of customers by 10%? Or, you may want to reduce the time it takes to manufacture your product so you can be better than your competitor. Or you may wish to attend a certain number of trade shows in a year to help you spread the word about your company. Should you attend as many shows as possible? Or just the three most important to you business? The point here is that while finances are of course crucial to any organization, setting goals to grow your business in a balanced helps way drives the conversation away from just financial performance.
5. Setting Meaningless Metrics
So while setting goals and metrics is important because they capture performance and trends over time, there is a downside to goals and metrics, and that is the tendency for business leaders to track too much. Shouldn’t you want to know as much about your business as possible? Well, yes. But where growing businesses go wrong is by drifting away from the value gained by metrics. Measuring and tracking performance metrics takes time and energy away from the job at hand. Further, metrics have a tendency to drive behavior. When you establish a given metric, you will inevitably drive the organization to perform around that specific item, sometimes at the expense of other initiatives or critical activities. Thus, be cautious when rolling out a new metric or another item you want to track. Make sure the items you are tracking have real tangible value, and if you find over time you are not using the data, stop tracking it. Metrics should help you run your business better, not take excessive time away from doing the actual work and leading to non-valued activities.
6. Importance of Trials and Testing
Part of what makes small companies great is that they try and they test. And not just that they do experiment, but rather that they recognize that not every idea is a good one and that they need to put some things to the test before calling it good. When ideas don’t turn out as planned, they abandon them and move on. By contrast, larger companies have a tendency to take what has worked well in one part of the corporation, and simply carry it across to other parts of the firm irrespective of industry, products, or location. A sort of “one-size-fits-all” approach. As an example, taking core processes from an automotive area of a firm to the aerospace unit can introduce other problems. Why? Automotive is a high pace industry known for producing a lot of the same thing. Aerospace is a very slow-moving market, with highly customized, low volume products. So while best practice can be shared, pushing various tools and methods from one group into another does not always serve the intended purpose. Thus, don’t be afraid to run pilot programs and solicit feedback from employees to see if improvements can be made. Are the best practices useful, or are they not valuable for a different group or business unit? But equally, don’t be afraid to abandon initiatives if there is no intrinsic value in them.
7. Not Document (And Reviewing) Lessons Learned
As any business grows it will make mistakes. But by taking the time to document – and to periodically revisit – the lessons we learn along the way will help us avoid making the same mistakes again. These lessons will be only be magnified in terms of value as the business gets bigger and the magnitude of mistakes increases. Unfortunately, while many companies may capture lessons learned, they are often forgotten about and not used later to help drive decision-making or to help plan for the future. Nonetheless, the learning and knowledge you gain as you grow your business are like nuggets of gold for your business because they will often contain information and experience that your competitors may not have, which ultimately gives your business an advantage. Failing to record and reflect upon this knowledge will often lead to lost time and excess cost when we make the same mistakes later on down the road.
8. Forgetting to Celebrate the Wins
When it comes to managing any organization, one of the easiest things to do yet also one of the most forgotten is to celebrate your wins. Recognize individual and team contribution. Your employees are your most expensive cost and they are the ones whose efforts make your company successful. Throw a company picnic after a project is completed or give out T-shirts to recognize a team’s performance when a milestone is achieved. Simply put, to keep your business on a path of success, we need to be mindful of those that helped get us there. By recognizing and rewarding our organizations for our successes, we are planting seeds for the continued dedication and support in the future.
Watching your business and organization is always exciting. But be sure to remain focused on growing the business in a healthy way such that you’re well-prepared for the challenges that lie ahead. When that time comes, you will want to be fully attentive to those challenges, and not the fixing gaps and problems that emerged along the way.
For more on building a successful business, check out our article on the most important business strategy you’ll ever learn.