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. For large companies, these emotions may result from watching a steady (or not-so-steady!) increase in stock price. For smaller companies, such feelings can emerge when we simply gain a single new customer, or land our first big contract.
We’ve been successful so far, some more than others. But, here’s an idea: 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 a 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 troops need to know the plan, and they can only do this if you regularly and effectively communicate the overall strategy. If you don’t have one, you should think about creating one.
Avoid speaking in “executive language” or keeping your plans in the dark as much as possible. Talk to your people. Communicating the strategy and the overall mission helps employees identify ways they can impact and contribute to the company in a meaningful way.
Poor transparency or failing to communicate the strategy altogether is like putting blinders on the organization and asking it to run a race. Don’t leave things up to interpretation!
2. Losing Focus on Your Core Strengths
Over time as a business grows, things will change and the market will push you in certain directions. Even so, it’s important for us as business leaders to remain dedicated to working our core strengths and not drifting away from what makes us special when compared to the next guy.
To illustrate this point, think about the classic example of Kodak. The famous brand was once synonymous with film production and development. But Kodak, at its core, was not a photography or film company, but instead a chemical processing company.
However, when film started 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 companies like Canon and Panasonic, whose core strength was packaged electronics, and as a result Kodak ultimately went out of a business. Our companies’ core strengths are what brings value to our customers. 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 are sales, 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 it, represents the expenses, the costs and the investments needed to do business, and to make the business better. The middle line is basically our entire operation in numerical form.
The problem is this: growing businesses tend to focus primarily on increasing sales and profit. These are undoubtedly important, but this focus often drives business leaders to forget about the substance 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 can 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?
- Is your customer service in top shape?
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.
RELATED: Be Brilliant at the Basics
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.
Goals – and more than just financial ones – are helpful, though, because they drive focus around what’s truly important for both management and the staff.
Tracking progress towards 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.
RELATED: How to Set SMART Goals
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 faster than your competitor. 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 your business?
The point here is that while finances are of course crucial to any organization, setting goals to grow your business in a balanced way drives the conversation away from just financial performance.
5. Setting Meaningless Metrics
While it’s important to set goals and metrics that capture performance trends over time, there is a limit. Goals and metrics make it easy to track everything which can lead to a 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 losing sight of the value gained by metrics.
Measuring and tracking performance metrics takes time and energy away from the job at hand. Moreover, metrics often drive behavior. In other words, 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 you want to track. Make sure the items you are tracking have real tangible value and you can take action using the data. If you find over time you are not using the data, stop tracking it.
Carefully defined metrics should help you understand and 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. However, it’s not just that they experiment, but they recognize that not every idea is a good one. When ideas don’t turn out as planned, they abandon them and move their scarce resource onto other things – sometimes this can be a matter of survival.
By contrast, larger companies may 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. It’s 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. Automotive is a high speed industry known for producing a lot of the same thing. Aerospace is a very slow-moving market, with highly customized, low volume products. In this case, the notion of copying processes from one type of business and pasting them into a different one assuming it will work may backfire.
So, while best practices 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. Equally, don’t be afraid to abandon initiatives if there is no intrinsic value in them.
7. Not Documenting (And Reviewing) Lessons Learned
As any business grows it will make mistakes. And those mistakes are extremely valuable. However, failing to record and reflect upon this knowledge often leads to lost time and excess cost when we make the same mistakes later.
Taking the time to document – and to periodically revisit – the lessons we learn along the way 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 and not used to improve 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 organization. That experience will often contain information and knowledge that your competitors may not have, which ultimately gives your business an advantage.
8. Forgetting to Celebrate the Wins
When managing any organization, one of the easiest things to do is also one of the most forgotten – celebrating your wins.
Recognizing individual and team contribution is essential. Your talented employees are your most valuable resource 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.
RELATED: How to Retain Employees Without Spending Money
Simply put, to keep your business on a path towards success, you need to be mindful of those that helped get you there.
By recognizing and rewarding your organizations for your successes, you are planting seeds for their continued dedication and support in the future.
Grow Your Business in a Healthy Way
Watching your business and organization grow 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.