“In my own business, I’ve experienced and struggled with issues and challenges similar to what my customers face,” said Jonathon Goldhill, president and owner of consulting company The Goldhill Group, Agoura Hills, Calif. “So many business owners face similar challenges, but think they’re alone or that their challenges are unique.”
Goldhill hosted a webinar Sept. 23 highlighting the “15 Fatal Business Errors Made by Contractors.” Presented to an audience of more than 150 company owners and association heads, Goldhill addressed the importance of overcoming these business blunders, particularly during struggling economic times. This is when more effort needs to go toward keeping existing customers, and more marketing dollars need to be spent to attract new ones.
“I call these errors fatal not because they’ll cause you to go out of business, but business they hinder businesses from living up to their full potential,” he says. “Business owners shouldn’t let themselves off the hook from any of them. They instead should develop a mindset to fix them and reach their full potential.”
Fatal Error #1: Running an Owner-Dependant Business
Goldhill asks, “Do you run a business or does your business run you?” Business owners limit their company’s growth if everything depends on them. If a business can’t run consistently and predictably without the presence of the company owner, then weak, inadequate systems are in place. According to Goldhill, 90 percent of small businesses have weak operating systems - the other 10 percent have clear goals, standards and management of key performance indicators. “If you can’t step away from the office for an entire day, your business may be broken and you have more of a job than a business,” Goldhill says.
Fatal Error #2: Doing Too Much Low-Value Work
Goldhill discusses the difference between working in a business and on a business. Instead of focusing on the “blue collar” work - which comes with high frequency but low value, business owners should focus on “green collar” work - which occurs with low frequency but high impact. To truly build a company, business owners need to spend the majority of their time making the hard decisions. “Do you think Donald Trump deals cards at the blackjack table?” says Goldhill. “If you’re spending 20 to 40 percent of your time doing blue collar activity, you’re stealing money from your company.”
Fatal Error #3: Teetering on Greatness
Many companies are organized with great people on top and ordinary people on the bottom. The best companies take the talent at the top and leverage it to the ordinary people on the bottom. This occurs after solid hiring and training systems are in place. “Start with hard work and then put great people at the top who establish good systems upon which good ideas are generated and results happen,” Goldhill says.
Fatal Error #4: Firing Slowly and Hiring Quickly
Goldhill shares a story about hiring a candidate who looked great on paper, but was ultimately his “competitor’s reject.” “He took one day to hire and six months to fire,” he says. Business owners should put serious thought into who they hire and why, looking at more than just the experience listed on their resume. Great employees are loyal and emotionally engaged with their jobs. Hiring slowly and firing quickly should be the mindset company owners should have.
Fatal Error #5: Not Investing in Training
“Employees want to know what’s expected of them, and they want to be challenged and appreciated,” Goldhill says. “Letting your people know what they’re expected to do is the best way to utilize the talents of the people you hire.”
Managers need to be sure to motivate their employees, while giving them the authority to take action, grow and be accountable for their choices.
Fatal Error #6: Not Doing Any Kind of Job Testing
Keeping bad employees costs money - experts say one bad hourly hire can cost a company $5,000 to $7,000, while a poor manager can cost a company up to 1.5 times their annual salary. Employees should be tested in many areas: loyalty, honesty, aptitude. Are they a leader or a follower? At what pace do they prefer to work? How influential are they when managing others?
Fatal Error #7: Hogging all the Information
Goldhill says it’s important for business owners to share their company vision and where they want to take it. Unfortunately, the majority of business owners don’t share specific company information, like financial data, margin and long-term goals. “What additional performance could get from your people if they were better equipped with the right information?” Goldhill asks. “If employees knew what it takes to run a company they might be more understanding in other areas.”
Fatal Error #8: Accepting - and Giving - “Yeah, but…” Excuses
It’s far easier to criticize than to create solutions. Company owners who give these excuses are avoiding the bigger issues. Company owners who accept these excuses are letting their employees stifle growth.
Fatal Error #9: Advocating, Not Delegating
Goldhill relates the following scenario: A business owner realizes he works too hard and that he needs to delegate some of his responsibilities. He chooses an employee who has been at the company for a number of years. He fails to train him properly and ultimately sets that employee up to fail. The employee fails and, while the company owner is aware of his lack of training, deems the employee an idiot. The CEO then thinks, “He was my best employee - if I can’t trust him, I can’t trust anyone,” and resumes doing all the work himself. Moral of the story, company owners need to learn to delegate appropriately.
Fatal Error #10: Saving the Way to Success
“Cost cutting is fairly limited in business, but revenue generation is endless,” Goldhill says. “While tough times require managing costs, business owners should be sure not to squirrel away the nut which cut off risk and innovation.”
Instead of pinching every penny, CEOs should focus on how to deliver their product in more effective way and differentiate themselves from the competition. This will give the company a unique message which will attract customers.
Fatal Error #11: Differentiating Sales and Marketing
Sales is converting leads into customers or clients. Marketing is generating those qualified leads. This is done though being visible, speaking, writing, gaining referrals and being in the media. “Many of my customers don’t take time to generate leads by looking at what’s working and what could work better,” Goldhill says.
Fatal Error #12: Over-Servicing the Bottom 10 Percent of Customers
Many business owners make the mistake of spending too much time with the “dogs” and not enough time with the “gems,” Goldhill says. The “dogs” are those clients that cause the most headaches and problems, and spending too much time with them eats away at profit margins. “Like the Law of Prosperity, CEOs need to get rid of what they don’t want to make room for what they do want,” Goldhill says. “It takes a boldness and faith to practice because it’s hard to know what you what before you know what you don’t want.”
Ultimately, business owners have to have the guts to raise their prices to compensate for headaches some customers cause them.
Fatal Error #13: “Field of Dreams” Thinking
If business owners think business will run smoothly without written goals and strategies, they’re mistaken. Goldhill suggests a simple one-page business plan owners can follow year after year. “Many owners hope everything will work out come tax time,” Goldhill says. “But this won’t happen without watching the numbers and knowing the key performance indicators.”
Fatal Error #14: Failure to Get Outside Help
Many CEOs experience the “loneliness at the top” syndrome, Goldhill says, meaning they have no one to talk to confidentially about their business. To avoid this, business owners should partake in networking and couching opportunities to talk to their peers in small, controlled environments.
Fatal Error #15: Executive Indecisive Syndrome
It’s a common theory among successful entrepreneurs that you must take risks to grow. “With so many doors to choose from, how many CEOs have stopped taking chances?” Goldhill says. “Too many spend too much time thinking things over without action.” Successful business owners look at failure as feedback and use it to figure out what they could do better next time.
