TEN HORRIFIC BUSINESS MISTAKE
Nearly every entrepreneur has faced the need to learn from at least a few horrific mistakes
During 40 years as a businessman I have made several foolish business mistakes. Many have caused the painful end of an aspiration to build an award winning business. When it comes to folly, however, I am far from alone. There are legions of “wannabes” who have killed their dreams as well. They range from small mom and pop operations to global juggernauts. In my personal world, I can count at least several companies within my investment portfolio whose business founders did the unthinkable as well.
Will I continue to make the same mistakes in the future? The scars on my back are a powerful reminder not to do so. Have I learned from past errors? One would hope so. As a warning to other business builders hoping to celebrate utopia, here are the ten most significant company-killing mistakes leaders must avoid at all cost. Please note that any one of the following is a death knell:
1. Dishonesty
Every day we read of business leaders who are crooks. They have lied, cheated and stolen the assets of shareholders, employees and vendors. They have knowingly engaged in unethical, immoral and criminal behavior in the pursuit of self aggrandizement, power, and wealth. They have carefully hidden their misdeeds hoping to avoid the bright light of truth. How often do we see managers make a promise to a client, an employee or an investor to learn later that they never intended to keep it? Sadly, it’s a common occurrence in America. It’s my belief that the quickest path to destruction, for both the individual and an organization, is a manager without integrity. It’s also just a matter of time until such nefarious behavior becomes known and results in the collapse of the enterprise and its people.
2. Corrupt Culture
Organizations that mistreat employees and abuse customers are ripe for failure. Firms that base their philosophies’ on “win-lose” thinking, seeking to take advantage of relationships, can neither survive nor prosper. Such an approach generally begins with leadership that is arrogant and greedy. They, in turn. hire and promote mangers of the same attitude and behavior.
3. Terrible Money Management
Many firms with excellent potential for growth and fame are brought to their knees by leaders who do not know how to manage cash. The worst case is a company that runs out of money and is unable to make payroll, accounts payable and loan payments. Often, company management has not developed a financial plan that considers three scenarios: conservative, expected, or extraordinary performance, and what to do financially with each situation. Or they have a plan, but don’t follow it. Unfortunately, the moment company leaders learn the company is insolvent; it will be too late to fix the problem.
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4. Pathetic Revenues
Companies that don’t generate sufficient sales with appropriate gross margins are doomed to fail. No firm can grow or prosper without planned revenue attainment. If there are insufficient paying customers, both current and potential. to sustain an enterprise in the short and long term, economic viability is questionable. Likewise if management is clueless on routes to the customer, is not providing a competitive solution to client needs and has miscalculated pricing, there is little hope for the enterprise.
