Profit Minded11 Common Mistakes Business Owners Make
Since small business owners wear so many hats, they can make mistakes. However, mistakes in managing and operating a business can threaten the organization’s long-term viability. Consequently, it’s important to identify the organizational priorities never to overlook or neglect. Here are 11 of the most common mistakes.
1. Unclear Purpose
Every organization must articulate why it exists and what it’s striving to achieve. Owners must focus time and attention on developing a mission and vision. It doesn’t matter if the business is a delivery service, neighborhood dry cleaner, or mom and pop restaurant. Every organization needs to understand its reason for existence, which is the anchor for all business decision making.
2. No Plan
There is an old saying, “if you fail to plan, you plan to fail.” Developing a strategy and having a plan to achieve objectives is critical to any organization’s success. Large or small, every business needs a plan. Devoting time, at least once a year, to review the strategy and organizational goals, helps to ensure the business is moving intently in the planned direction.
3. No Written Goals
Goals are how businesses achieve objectives. First, the business must develop the goals by writing them down and assigning accountability to someone for achieving them. Without taking these steps, it’s difficult to achieve objectives. Each goal should have an identified employee who is responsible for achieving it within a defined timeline.
4. No Budget
It’s not uncommon for organizations to operate without a budget. The owner doesn’t create a budget oftentimes because of the time investment in the process. Nevertheless, to ensure profitability, the owner has to budget annually to continuously fund business strategies and goals. There are many successful organizations that don’t operate with a budget, but organizations that do can allocate dollars to those things that will ultimately improve and grow the business.
5. No Employee Accountability
Organizations that fail to hold employees accountable for job responsibilities and goal achievement are guilty of mismanaging resources. Employees who are paid wages or a salary without fulfilling job responsibilities are providing no value to the organization. Managing employee performance and how work is done is critical to any organization’s success.
6. Not Anticipating Market Changes
The market changes quickly in every industry making it important to keep an eye on shifting trends in areas such as technology or customer requirements. Along with tracking changes, the owner has to include the responsibility of day -to-day operational tasks.
7. Not Understanding Customers
Customers pay the bills so small businesses need to take the time to learn how customers use their products and services and to create systems and processes to meet those needs. Many organizations develop products and services based on what they think the customer wants. It’s important to learn about the customer experience, which is accomplished by simply asking them. Customer expectations are a moving target so keeping a finger on the pulse of changing needs is critical to maintaining satisfied customers and growing a solid customer base.
8. Not Considering Employees the Most Important Customers
Employees are the organization’s hands and feet and are usually the first contact customers have with the business. It’s important to manage with employee-friendly policies that support and encourage workers. Employees need to have clear job expectations and the training to perform job responsibilities. They need to be monitored for completing job tasks and rewarded for doing a good job. Well-managed employees are happy, and happy employees have a direct impact on a positive customer experience.
9. Lack of Communication
Poor communication is a problem in many organizations. Successful organizations create structured processes to manage how information is shared with both employees and customers. Organizational transparency creates a business environment that employees enjoy and customers are drawn to.
10. Not Always Looking for Ways to Improve
Continuous improvement is how organizations develop and enhance products and services by constantly looking for ways to improve how and what they do. The owner should always review the internal processes of developing and delivering products and services in an effort to identify improvement opportunities. Whether it’s delivering a service to a customer or manufacturing a product, it is important to look for improvement opportunities.
11. Not Celebrating Successes
The burden of the daily grind keeps organizations from taking the time to stop and acknowledge how far they’ve come. Celebrating success along the way helps to build strong teams and strengthen employee engagement.
Running a small business is a challenging endeavor so it’s critical to create systems and processes that regularly look at how the business is performing. Also, the owner has to find ways to improve how work is done and at the same time look for ways to improve the employee and customer experience. Successful businesses understand that happy customers and employees have a direct impact on the bottom line.
Patricia Lotich is the founder of The Thriving Small Business and a small business coach. Patricia helps business owners solve problems and develop strategy and goals to achieve objectives. Schedule a free 30 minute phone consultation with Patricia to see how Thriving Small Business can help your organization.
