4 Mistakes Entrepreneurs Keep Making
I was recently asked to be on a podcast by a client of mine. She runs a successful podcast where she gives a variety of tips and tricks for moms, entrepreneurs, and mompreneurs. The email invitation included an idea of what she wanted to talk about. "Clint, you see lots of businesses throughout the year. What 4 mistakes do you keep seeing entrepreneurs make?" This really got me thinking. Part of my role in Alluvio, my consulting business, is to assess new and potential clients. I have to "check things out" before we decide to pursue them further as a client. This job is challenging and intriguing. After 15 years and nearly 1000 clients, I can definitely spot patterns.
1. Waiting for change This one really confuses me. The entrepreneur is the one driving the car, or should be, and yet they are waiting for something else to happen so that they can be successful. Let me help you: if you are waiting for something else outside of you to happen so that "things can be different" you are not an entrepreneur. Entrepreneurs feel and observe market pressures and they respond. They aren't waiting on something. They are making things happen. This always sends up a red flag for me. Another way for me to figure this out is to ask this question, "Why isn't the business more successful?" If the answer is anything other than "I am the reason" then I bail. If you are an entrepreneur or wantrepreneur reading this then listen up. You are the change agent. If something is broke, fix it. If something is failing, pivot. You are holding the steering wheel. Quit waiting for someone to come rescue you.
2. Not having a vision This is a tricky one to uncover. Often entrepreneurs are really focused on things but then they have lost focus on the vision. Where is this whole thing headed? What will this business look like in 5 years? An unfocused or unmotivated team is always a clue to no vision. If the team spends their time focusing on internal issues then the vision is lost or missing. I feel too often they operate with the same M.O. as Dory in Finding Nemo "Just keeping swimming. Just keep swimming," hoping the current takes you in the right direction. Please, for the sake of your staff's sanity and your customer's benefit, pick a vision. Share it. Work towards it.
3. Not knowing the numbers In 2005 I had a local businessman ask me if my company was profitable. I said, "Pssshhh, yah. Absolutely." The truth is, I had no idea. I knew there was lots of cash floating around and I was taking home some of it but I had no idea if my business was profitable. I always try and ask this question. I find I always get one of 3 answers.
- "I have no idea" - I can work with this.
- "Yes, last year we netted 5% or no, last year we lost 5%" - I can work with this.
- "Pssshhh, yah. Absolutely" - I can't work with this.
Here are the numbers that often serve as the dashboard and dials to your business. You wouldn't feel comfortable driving your car with your speedometer and gas gauge broken, so why would you run your business without knowing these?
- Cost of Good Sold or Service Rendered
- Labor costs
- Cost of customer acquisition
- Lifetime value of a customer (Lifetime profit of a customer)
- Amount of debt
- Cash runway
Now there are hundreds of more numbers that might give a better overall health picture of the business, but I need to know if they can drive this vehicle. These numbers influence day to day, moment to moment decisions.
4. Not knowing the customer I have to be honest, this one probably chaps my ass the most. I will say something like, "Who is your customer?" And they say something like, "Oh, we serve everybody really. I mean, it would be too hard to narrow it down." Listen up buttercup, no business serves everybody. Can you imagine a hunter going hunting but not knowing about the geography, animal species, animal habits, local laws, the right tools to hunt, etc? Can you imagine a pro team not studying the opponent? Absurd right? Then why in god's name do more businesses not know their customer. They can tell me who won the last The Batchellor or who 08 is in Stranger Things or who they are trading on their fantasy football team but they can't describe their customer? If you do nothing else in 2018 for your business, get to know your customer.
If any of these slapped you in the face, maybe it is time to chat.