10 Common Mistakes When Running a Business

A business can have strong talent and great products and services, but still not perform well. It may look good on the outside, but the data shows the business is not run well and profitability is below industry benchmarks.iStock-873806068

The business is missing its potential. I’ve seen it as we have pursued acquisitions and as I’ve been approached by leaders to provide advice for their organizations.

So why do some organizations soar and others stall?

Here are 10 common mistakes:

  1. Leaders are not making decisions.
    They get too much input, fail to use data or spend too much time analyzing. They may also be overly collaborative or take too long to move. Good leaders are decisive and are willing to make the hard decisions.

  2. They hang on to employees too long.
    They don’t let people go. It’s uncomfortable. So, they overlook the incompetency. They work to make the person “fit” into the organization. This affects the culture and brings down the performance of others. It spirals into a bad situation that is difficult to get out of, and it doesn’t reflect well on the leader.

  3. The leaders don’t have experience running a business.
    It’s common to see the leaders charged with running the business with little to no experience or expertise in doing so. A person could be a good sales rep, attorney or CPA, but they are not necessarily the best at running a company. The skill sets are different.

  4. Top performers dictate decisions.
    Even if top performers are not charged with running the business, they can become highly influential in decision-making. Leaders cannot let the top performers choose the organization’s path. That’s the job of the leadership team. 

  5. They lack execution.
    The intentions often are good. They may even bring in third-parties to provide analysis, strategy and plans to improve the organization. The recommendations are sound. They can name three steps to take and agree on them. It looks promising, but the organization fails to act. Wanting it to happen is not the same as making it happen.

  6. They get caught up in personality when hiring.
    They hire based on the likability of candidates instead of the core competencies they hold. They tend to hire people just like them. They fail to hire based on the gaps in the organization or to augment their own weaknesses.

  7. They determine success only by annual growth.
    While annual revenue growth is an important indicator of success, it is not the only one. Effective organizations benchmark not only against themselves, but what good looks like in their industry. Not having defined goals and metrics leads to “best efforts” versus determined results.

  8. They justify data.
    Even if they are using data and benchmarking, they are quick to justify or rationalize why the data is trending downward. They discount the data, saying “our market is different” or “our customer is different.” They blame the economy, their market, the industry and other factors instead of looking inside and holding themselves accountable. 

  9. They stay on defense.
    They worry too much about the competition instead of looking at how they can set the pace. When we were building the business, I never looked at our competition. I stayed on offense and where we needed to take the company to be successful.

  10. They like being “old school.”
    Or they don’t realize they are. They lack technology to work smarter. An “old school culture” impacts their ability to attract contemporary workers and young professionals. This may mean they overvalue longevity of employees rather than how well they perform. Employees who have been with the organization the longest aren’t necessarily the best. Yet in many organizations, they can dictate decisions and hold the organization back.

Do any of these reflect your organization? Even effective leaders may struggle now and again with one or two of these. Ask your trusted advisors how many are true for your organization and be willing to make a change. Your organization will thank you.

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Topics: Growth