When a company starts to grow, it can be both exciting and terrifying. It’s been proven that your formula is a winning one, but where is it all going to go? The unlimited potential and fear of it not being realized is what keeps entrepreneurs at night. You wouldn’t like to make any major mistakes, but you want to push it further and see it grow into a great, long-term thing.
Trying something new is necessary for survival and growth, which carries its own risk, so we present you the 10 most common mistakes businessmen tend to make when their companies grow. Smart entrepreneurs learn from their own mistakes, but it often happens that some don’t pay enough attention to the mistakes of others. Save yourself from a few painful situations and take a look at these routinely-made mistakes.
1. Slow to fire, but quick to hire
If you’re desperate to help because you’re growing quickly, don’t skip important steps when it comes to hiring – before you proceed to interview, validate applicant credentials and provide a proper job description. You probably won’t get the right kind help you if you don’t know exactly what you need. Never hire after only one interview, because you can easily slip and make a bad choice, or try to force-fit a certain candidate into the position. It’s expensive to have helpers, because one qualified person would take less to do a job than it would take to jointly finish it. On the other hand, if a new hire isn’t working, don’t hesitate to hire new help fast (but make sure to follow all steps in the process).
2. Relying on informal agreements
Today, you may all be best friends or spouses or strategic partners, but things can change quickly when pressured by the stress of a growing company. It often happens that early co-founders drop out of the business because of disagreements. They don’t forget about verbal promises their former partners made, even though the partners may forget about them. Eventually, when the business goes public or is trying to close on financing, the forgotten partner pops out, demanding their original share. Avoid this problem by issuing shares to all founders and incorporating right after early discussions. Unwritten arrangements are remembered differently by each party, which may lead to a financial war that can last for years.
3. Hiring only those who think like you or like you
Flattery doesn’t pay the bills, even though it can feel good. Practice active listening and look for thoughtful challenges to your ideas. You have a vision, so you need people who are intelligent, think progressively, and know how the business works. Some executives believe they can mix business and pleasure, by making inter-office relationships. Our advice is to choose your partners wisely and not fraternize with your employees.
4. Letting daily crisis situation shift your focus from important issues
To be able to focus on the most important things first takes effort and practice. What are the most important issues in business? It’s the issues related to beating your competition, customer service, low cost, and marketing. On the other hand, it also means reserving time for effective communication, knowing when to rest, and when to delegate.
The ability to focus on goals and set priority is lost when you allow yourself to be driven by the particular crisis of the moment. The key lies in personal discipline. It’s fine to handle all the issues and work in isolation during the startup’s creative phase, when the business owner is often both the architect, designer, and builder. As the company grows, you’ll have to make a shift from short-term to long-term thinking. When an unexpected situation comes, you have to react quickly, but may have lack of funds. Companies like ALC Commercial can be of great help, as they can make those quick moves possible by giving quick business loans.
5. Not investing in your business’ infrastructure
You have to take a hard look at your processes, equipment, and location, and see what they can handle. If you had twice the amount of work, would they hold up? What about five times the work? Your business must be scalable, so look for processes, equipment, and software solutions that can grow, following the growth of your company.
6. Letting your accountants manage the expenses
In reality, reviewing every expense with a stingy hand before the money goes out is every small company CEO’s job. Too many entrepreneurs think that it’s more important to work on customers and products, but the expense task should never be delegated. Promising a burn rate that you can’t deliver would be a big mistake, which will lead you to live on a budget and manage a bottoms-up budget process. Expense and budget overruns result in lost support from vendors and investors, lost credibility, and lost growth opportunities.
What other mistakes have you seen young entrepreneurs make as their business grows? Do you pay attention to those mistakes? Ignoring them would be a mistake, as well as ignoring and refusing to admit your own bad moves. The truth is that, by admitting mistakes, you’ll move faster towards learning. These are some of the most common mistakes that owners of a growing business tend to make. Avoid them and you’ll spare yourself some really big headaches.
Also published on Medium.