5 Common Mistakes Business Owners Make That Hurt Their Business

Every business owner makes mistakes. That’s part of the job.

A mistake or two won’t sink your business. Usually, it’s the mistakes you don’t recognize or don’t address that create bigger problems down the road.

After more than 27 years working alongside owners and leadership teams, I’ve seen the same patterns show up again and again. These aren’t industry-specific issues. They affect companies of all sizes and across all markets.

Here are five common mistakes that can hold a company back and what you can do to avoid them.

1. Poor Talent Positioning

Our Accelerate Your Business™ model is built on three pillars: People, Plan, and Execution.

We always start with People because getting the right people into the right roles changes everything else that follows.

The right people fit your culture. The right roles play to their strengths. When both are true, the business performs better.

One of the most common issues we see is poor talent positioning, which usually falls into one of two categories:

• The right person in the wrong role (a turtle-on-a-post situation)
• The wrong person in the right role (someone who is technically proficient and gets results but doesn’t fit with the company culture).

When you don’t have the right people in the right roles, the entire organization suffers.

Either through-put will suffer due to poor job performance, or your team’s culture will suffer damage because of a mismatch in values.

How to Avoid This: Get the Right People in the Right Seats

Effective teams start with a clear structure.

If you need to revisit your organizational structure, start with the work that needs to be done, not the people you currently have.

Define the key roles your business needs. Clarify responsibilities and expectations. Then evaluate whether the people in those roles are the best fit.

When hiring, make core values a priority from the beginning. Skills can be developed. Value alignment is much harder to achieve.

When you consistently put the right people in the right seats, performance improves, accountability increases, and success becomes much easier to achieve.

2. Undefined Core Values

You can’t hire and lead around core values if you don’t know what they are.

I once visited a company’s office and noticed a list of values displayed prominently in the lobby. When I mentioned them, the receptionist rolled her eyes.

“The owner copied those from another company down the street,” she told me.

That’s the issue with values that exist only on a wall. People know the difference between values you live and values you borrowed.

If your values aren’t shaping decisions, behaviors, and expectations, they’re just decoration.

How to Avoid This: Clarify Your Core Values

Get your leadership team together and ask some simple questions:

• What do we want customers to experience when working with us?
• What kind of workplace are we trying to create?
• What behaviors do we value most?

Answering these questions will help your leadership team come up with fundamental values and the definitions of each as they apply to your company.

Once you’ve defined your values, communicate them clearly and consistently.

Your core values should influence who you hire, how you make decisions, how you run meetings, and what you tolerate (or don’t tolerate). When they’re woven into everyday operations, they become part of your culture rather than words on a poster.

3. Being Under-Capitalized for Growth

Everyone knows it costs money to run an organization, but a common mistake is being undercapitalized going into new periods of expansion.

If you don’t have built-in capital reserves or an adequate line of credit, you’re going to be handcuffed in your growth.

The irony is that success itself often creates the problem. More sales usually mean more people, more inventory, more equipment, and higher operating costs before the additional revenue arrives.

Growth you’re chasing costs more than growth you’re predicting.

Your marketing and sales team can help define the growth you’re pursuing. Your historical results can only tell you what the business has achieved in the past.

If you’re planning to grow aggressively but funding the business based only on what happened last year, there’s a good chance you’ll run short at exactly the wrong time.

How to Avoid This: Fund the Growth You Want

Build your reserves and access to capital around the growth you’re intending to achieve, not just around historical trends.

Once you’ve secured the capital needed to move forward, shift your attention to growth. Don’t let the pursuit of perfect financing, perfect information, or perfect certainty slow your progress.

Chasing every last dollar of financing or getting bogged down in details can consume valuable time and energy while adding little value.

Momentum over perfection.

4. Staring at the Rearview Mirror

Numbers are important.

The challenge is that many leadership teams spend too much time looking at measurements that only tell them what has already happened.

Income statements, balance sheets, and historical financial reports are valuable. But they’re all backward-looking.

It’s like driving down the highway while staring at the rearview mirror.

You might get away with it for a while, but eventually you’re going to miss what’s coming next.

How to Avoid This: Create a Windshield

Alongside your financial reports, you need leading indicators that help predict where the business is headed.

That might include:

• Sales pipeline activity
• Marketing performance
• Customer retention trends

These indicators help you spot opportunities and problems before they show up in your financial statements.

In our Accelerate Your Business™ model, we use both Growth Metrics and a KPI Dashboard.

Growth Metrics tell you where you’re headed: the high-level, outcome-based numbers you’re tracking toward over the next quarter, year, and three years. The KPI Dashboard tells you what to do about it this week: the operational, leading-indicator numbers your team reviews together, before a problem becomes a crisis.

Together, they’re how you stay looking through the windshield instead of the rearview mirror.

5. Lack of Coachability

Owners, leaders, and entrepreneurs are usually independent people. Sometimes, to a fault. Because of this, many are under the impression they can do everything themselves and don’t need outside help.

For example, we often meet entrepreneurs who are operationally focused. They invented the widget and they know how to build the widget. But they may not know how to mass distribute or sell it. Or maybe they’re not doing a good job of keeping track of inventory or accounts receivable. But boy can they build that widget!

These blind spots can cripple your organization if left unaddressed.

Being “coachable” is about the willingness to fill those blind spots by relying on professional resources.

Without the willingness to learn from others, even the most well-intentioned owners can drive their businesses into the ground.

How to Avoid This: Learn from Others

Growing a business is hard to do entirely on your own.

Learn to be coachable, to ask for help, and to ask questions. As a business owner, you should always be learning, and your ability to learn can expedite your own success.

That’s why we built The Team Behind Your Team™ approach. Leadership conversations need facilitation to stay on track, and an outside perspective is what draws out the answers a team already has but can’t quite get to by itself.

Week after week, our advisors work alongside business owners and leadership teams, asking tough questions and sharing lessons learned from working with hundreds of companies.

Owning a successful business goes hand in hand with owning one’s mistakes. And while these five mistakes can represent major stumbling blocks for an organization, with the right mindset and knowledge, they can be easily fixed.

I once heard the quote, “Wisdom has been chasing me, but I’ve always been faster.” It makes me chuckle, and many executives I’ve met over the course of my career resonate with it as well.

The goal isn’t to avoid every mistake. That’s impossible.

The goal is to recognize mistakes sooner, learn from them, and make adjustments before they become bigger problems.

May this wisdom catch you – wherever you are in your journey of business ownership.

Ready to Fix What’s Holding Your Business Back?

If you’re recognizing some of these challenges in your own company, you don’t have to tackle them alone.

Our Accelerate Your Business model gives you a clear way to see where you stand across Plan, People, and Execution, and a partner in the weekly work of fixing it.

Schedule a growth consultation with one of our business advisors.