Many great entrepreneurs have something in common. At one point they failed in business but then they later became smashing successes. Some of these entrepreneurs include Henry Ford, Walt Disney, Mary Kay, Bill Gates, and Richard Branson. The difference between these entrepreneurs and other business failures is that these individuals learned from their failures and used those lessons to build successful enterprises. Education is a short cut to experience.
Recently, three of my colleagues and I shared some lessons learned from the front. You can avoid some of the mistakes which will lead to failure by taking note of these lessons.
Q. When you develop a business plan why do you put it aside and forget it.
A. Many businesses put in the effort to develop a business plan but then fail to take action on the plan. The plan is a living document and it needs to result in the creation of goals, action steps and measurement of progress. If you have an organization the plan needs to be cascaded down through the organization. Everyone needs to have goals that are aligned with the business plan. Many failures occur because the enterprise does not take action steps on the plan and their people do not know about the plan.
Q. What is the right pace of growth?
A. The right pace of growth depends on your organization, your product or service, and your internal resources. Your organization needs to adapt to increased customers by having the processes in place. There have been many times that a business had explosive growth relating to one customer. The business reacts by changing its structure to accommodate that one customer. Businesses have failed when they lose that customer. Manage your growth and don’t overextend because of one large customer.
Q. How do you stay in tune with your customer and not just your profit?
A. The bottom line profit is important. However, profit is a lagging indicator. It tells you what happened. In order to remain profitable you need to measure the voice of your customer. While profit is a lagging indicator customer loyalty is a leading indicator. One very powerful question to ask your customers is, “How likely are you to recommend us to your friends?” Create loyalty by under promising and over delivering and exceeding your customers’ expectations.
Q. Is there a big obstacle standing in the way of a small business owner’s growth?
A. The biggest obstacle to growth is that the business owner will not let go. When a business is started the owner does everything. But as it grows the owner will have to hire employees. It is not efficient for the owner to continue to control details. It is now time to hold others accountable for the details while the owner looks at the overall performance. It is also just as important to hire the correct people--those that have the skills and the shared values of the enterprise.
Applying the lessons learned by others can avoid many failures and clear the road to business success.