The goal of every business leader is to achieve business growth. Making mistakes is perfectly normal, and an important part of how we learn and develop. However, we can learn from the mistakes of others too.
The aim of a teacher is to use their hard-earned experience to help people spot the mistakes they could be making before they make them. This article aims to introduce 6 such mistakes commonly seen in businesses, so that you don’t have to learn about them the hard way.
Underestimating business growth plans
Every business will have an idea of their strategic growth planning. What separates this from a business plan, is taking the time to write it out formally. Especially in smaller businesses, it can be easy to think this isn’t necessary, but underestimate at your own risk.
Taking the time to write out your business plan properly is beneficial for a few reasons.
- The act of writing it gives you a second look at what you’ve decided. It gives you the chance to consider why you made the choices you did, as well as an opportunity to spot things you’ve missed or mistakes you’ve made.
- An actual plan gives you something you can always refer back to. As the growth gets underway, surprises and necessary changes can happen. It’s useful to always have a guide as to why you’re doing things and how it all fits together.
- Larger investors, such as VCs, will often want to see your business plan when making a decision about you. If you don’t have this ready, you could have to scramble to make one that doesn’t show you in a good light or lose the opportunity entirely. Either way, you’re wasting time.
- Your plan can also come in handy internally. It’s important for your employees to be on board with the changes that you want to make. Depending on your structure, showing some or all of your staff can help keep them engaged and loyal throughout your growth.
Thinking short term
Many businesses suffer when they think too short term. This can be especially dangerous when funding is low. It’s tempting to cut back on things that will actually impact you far worse in the long term.
A common example of this is marketing budgets. A business’s money gets tight, so they cut money from their marketing and thus reduce spending. Except, now they can’t reach customers properly.
This short term gain isn’t actually helpful. Without new customers, growth will slow down. You need more people to spend their money on you, or your revenue will dry up.
Cutting down staffing can lead to loss of skill and loyalty. Don’t waste money on what you don’t need, but do consider what you’re losing when you let go of a person. Your employees are the lifeblood of your business; lose them, and everything will grind to a halt.
Likewise, switching to cheaper but lower quality alternatives is often noticed by your customers. If they don’t like the change, you could lose them to your competition, and it’s much cheaper to keep a customer than gain a new one after the change. Again, it’s about weighing up the money saved against the impact on customer experience.
Short term fixes can be necessary; the long term doesn’t matter if you can’t survive that long anyway. But, you should always consider the knock on effects of making a change. If it sabotages your long term ability to recover, then you’re only delaying the problem.
Planning your exit
An extreme example of this is not planning for your exit early on. A business exit strategy is one of the last things you’ll implement in your business, but should be on your mind from very early on.
How you plan to exit your business will change some of how you develop it. You want to make sure the right people are trained up and the right structures in place. If you want to achieve maximum value, you need to be ready when you want to exit.
It can take a couple of years to implement everything you need to. You don’t want your plans held back by having to plan your exit when you really want to have already left.
Knowing when to spend
Having savings in case of emergency is a good idea, but generally capital that isn’t being spent, isn’t being useful. It’s important to know when to spend and when to save.
If your business is struggling, this is the time to spend. Emergency savings can’t bring you back once you’re too far gone. Even if you’re not struggling, spending isn’t a bad thing.
Capital spent is an investment. Most routes to growth involve some initial start up cost, and holding it back just means you can’t grow.
This could be taking that step into a new market. This accesses a whole new range of customers to generate profit, and makes your growth more resilient.
Likewise, you could take this chance to buy the equipment to do something you outsource. In the long run this could save you money on the fees to rent their services and reduce the risk of supply chain issues.
Don’t rush into a decision without giving it enough research and consideration, but if you’re ready to make a change, then make it. That boost in productivity or production could save your growth rate and bring you back up to a good state.
Using old tech
A lot of businesses let their tech solutions grow organically, with little oversight. This often leads to bottlenecks and waste. Both will hold back your business’s ability to grow.
If a software or machine can only handle so much load, your growth efforts around it will still be defined by its capacity. This could be the time to upgrade to something newer and more scalable.
A lot of IT systems develop overlap and gaps. When different departments buy different solutions to solve their own problems, there’s a chance that one of them is unnecessary. Many softwares exists that can fill the role of multiple departments, streamlining the process.
This reduces time wasted by reentering data into a new format so the other department can use it. Many larger businesses lose time to their employees having to convert data formats into something their systems can understand. Or they lose time to supervisors having to enter data from their teams to be passed up the chain.
Cutting back overlap also saves money by removing superfluous spending. Always involve the teams that use the tech in the decision, and think about training requirements, but often streamlining will lead to growth.
Gaps in your system can also hold back your growth, preventing some important background process from properly functioning. Identifying where you need to expand your reach can be just as important as cutting back what you don’t need.
Not reviewing your strategy
Even the best laid plans can go wrong. Your planning is based on forecasts and modelling. Predictions aren’t perfect, and they can be proven wrong.
Even if everything you predicted seems to be working, unexpected crises can hit at any moment no matter the size of your business. This doesn’t have to be a global crisis. It could be as small as a key employee falling ill or a price increase from a supplier.
You shouldn’t assume your strategic plan is going to plan. If something isn’t working out right, you won’t achieve the business growth you were expecting. Find this out in advance, and you may be able to do something about it.
A strategic review is where your Board sits down and goes back over their strategy. You can compare your current progress to that which was projected and know how well things are going. If you’re behind, or the strategy just isn’t working, you have a chance to fix it or do something else without losing anywhere near as much time.
When a crisis does hit, an impromptu review can be a very useful activity. Every major change will impact in some way on your growth strategy. Figuring out what that impact will be, and modifying your plan to account for it, makes you much more resilient.
Not seeking support
Support is always available in the world of business. Even the most experienced CEO will face novel situations they don’t have the tools to deal with.
Some newer entrepreneurs may not think to look for it, or not know where to go, but there are plenty of options available.
Some may think it makes them look weaker as a business leader. This is categorically untrue. Those experienced CEOs almost certainly had a mentor in their time, and many investors care as much about your team as they do about you.
Experience is often earned the hard way. Making mistakes can cost you a lot, but they also grant learning opportunities. The greatest business leaders have had their own share of hard lessons and come back stronger for them.
You don’t have to make all those mistakes yourself, though. Many experienced business people want to share the knowledge they’ve learned so that others don’t have to make the same mistakes.
The quality of decision making when facing something unfamiliar will be much higher when you’re well informed. Using the opportunities provided to you, will help you achieve growth without suffering as many setbacks.
Where to find support
Where you go for your support depends on you. There are mentoring schemes available for new entrepreneurs all the way up to people already running their business. Mentors act as advisors to help you make important decisions and alert you to risks.
You can also hire a more experienced person onto your Board. It’s not uncommon for people to want to help step down from a successful position by working in jobs such as a Part-time Strategy Director for a newer business.
When you build your business, you inevitably gain connections. People will almost always be happy to share their wisdom or put you in touch with someone they know. So, use your connections.
Achieve your business growth
If you want to achieve business growth, you can’t be afraid to go for it. Finding out what’s holding you back, and taking the chances that are presented to you are key to making your plans a reality.
Remember that there is always help out there if you need it, and you’ll have everything you need to succeed.