Three Fatal Flaws Business Owners Don’t Know They Make / by Kerri
Three Fatal Flaws
Most entrepreneurs have blind spots. Before we even address the core mistakes entrepreneurs consciously make, I want to expose the three fundamental flaws most business owners don’t even know they are making. They are:
- Weak Plan
- Weak Team
- No Communication
Indeed, there are other factors. We’re focusing on the three most widespread. And they are connected. How well, or how poorly, you do any of these feeds the other two.
These three flaws are almost universal in businesses where owners are consumed with crisis management and operational details on a daily basis. These flaws are so prevalent because of the blind spots we’ll address in a later post.
Talented, educated people with 10-20 years industry experience leap into starting their own business, creating a product, or hanging out their shingle in the previously disproven belief “if I build it, they will come.”
In their past lives, they never had to prepare product plans, project plans, marketing campaigns, cost and sales projections for the company’s product or service. They had a team and resources in the company to do the research and prepare these plans.
In their own business, they have a choice. Either shoulder all these jobs/responsibilities themselves and slow down the release of their product or hire a team to help.
The Opportunist, without planning beyond a conversation or back-of-the-envelope bullet list:
- Boldly leaps into building product
- Confidently closes sales
- Maybe racks up huge credit card bills to finance the company with no short-term or long-term plan determining:
- Who or what constitutes their market
- The size of the market
- The revenue potential for the company
- Their break-even point or
- Any other key performance indicator
This is the No. 1 flaw in the foundation of more than 90% of all businesses (not just startups or small businesses). If this describes your business, you are not alone.
Far too often, that same Opportunist who’s reaching for the brass ring is the owner who leaps into his or her business willing to do everything, wear every hat, with a solid “do whatever it takes” attitude to make the business a success.
In principle, that is a necessary commitment to ensure the business will succeed. However, there’s a secret these entrepreneurs learn fast or the hard way. I want you to learn it fast.
The sooner and faster you ask for help and
surround yourself with experts
so you can focus on what you do best,
the farther you will take your business.
That’s a key element to long-term goal achievement and every success in your business and beyond.
Very often, the entrepreneur who gets overwhelmed and recognizes it, will proactively hire a team. But there’s still a problem, it’s still the wrong team.
They need a team they can delegate pieces of the business to who will “own” the job and get things done, and not require close supervision and training. This applies equally to your:
- graphic designer
- office manager
as it does to your:
- Design engineer
- Sales manager
- Marketing manager
- Tax advisor
- Experts on your Board of Directors
you need to surround yourself
with experts – not subordinates.
Good owners lead their teams well. A great business owner inspires team members to lead themselves to excellence.
Other entrepreneurs, in the false belief that they are being responsible and frugal, don’t hire anyone. They don’t ask for help and drag the business down by getting no help, or relying completely on books and courses, attempting to become a master of all things in their business.
This is the No. 2 flaw in the foundation of more than 90% of all businesses.
A lack of communication can be a serious obstacle to taking the business all the way. It can be a hidden flaw owners don’t even know they have.
Most companies fumble communications because most entrepreneurs do not have a background or focus on communications. Communication seems trivial and not the best use of the owner/engineer/inventor’s time. Entrepreneur/owners are so consumed with the business, holding the entire business in their head, that even when they do speak, they know all the implications and facets of what they are saying – but no one else does. They know what they’re talking about but their various audiences don’t!
Because they have no communication skills, never developed a communications plan and do not implement communication procedures, it’s a problem for everyone else. The problem is that no one else has any context for any announcement, decision, plan or offer the owner does remember to share.
Admittedly, most entrepreneurs are so busy in the business that they feel they can’t afford to take “time off” to document everything about the business, never mind debrief the team after a major milestone or client success. Lack of good communication creates the following risks:
- It creates a void between the entrepreneur and everyone around them (staff, advisors, investors, vendors, clients, media, Board of Directors). That void opens the opportunity for misunderstandings, miscommunications and totally preventable problems.
- This lack of communication to/with any stakeholders in any form, puts the entire business at risk until communications systems are fully implemented. This is critical, even if the CEO does not recognize it, because if that same brilliant CEO who carries the business in his or her head were incapacitated for any reason, or unreachable for any reason, no one else in the business has enough information to make a decision, take action or solve a problem.
- When the entrepreneur insists on tight control of intellectual property, financial data, and how to run the business, he or she actually restricts growth and reduces the market value potential of the business. It’s the exact opposite of what the entrepreneur expressly set out to do!
This is the No. 3 flaw in the foundation of more than 90% of all businesses.
Moreover, there’s actually a fourth flaw.
Develop Only an Income Plan
Most people instinctively start and launch their business as fast as they can to get revenue in the door. They implicitly understand the principle: “Nothing happens until you sell something.”
They get so busy in the business making money; they don’t develop a financial plan, living out of the checkbook. A few years down the road, they are in the same place, making good money (income), but working harder than ever, not getting ahead, with no end in sight.
That’s because their unconscious business model is based on an income plan, not a wealth plan. They are still running their finances on a cash flow statement (maybe even out of the checkbook) and never planned for or implemented any strategies to put a wealth plan into motion.
It’s the single biggest financial mistake you can make – regardless of the size of your business. That’s because you have not created your exit strategy, the essential component of the wealth plan that lets you scale or sell the business profitably.
Form your clear mental vision of what you want,
and begin to act with faith and purpose.
Wallace D. Wattles