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The Seven Deadly Sins Of Small Business
By Michael Adams
Owners and executives must be leaders first and managers second. As leaders
our task is first and foremost to be about doing the right things, and the
“seven deadly sins,” should be on the top of your list as leadership issues
you are dealing with on a regular basis. Building a small business is one of
the most rewarding, but risky ventures one could possibly venture into. Most
papers on small business deal primarily with financing and risk management,
which are only symptoms of the real issues. Your bank account is just the
scorecard of how well you have developed your leadership skills relative to
accomplishing the “right things.”
This paper will help you avoid many of the costly pitfalls of operating a
small business, assuming you heed the advice. Avoiding these pitfalls will in
turn help you to conserve cash, develop market share, increase sales, improve
customer loyalty, increase employee retention and build efficiencies into your
operation.
The “seven deadly sins” include 1) Poor or non-existent business planning; 2)
Lack of a strategic objective; 3) Lack of marketing strategies and tactics; 4)
Management in the place of leadership; 5) Poor or non-existent systems; 6)
Failure to utilize an appropriate leadership style; 7) Care and feeding of
sacred cows. Business owners and executives who do not understand them, do not
have experience with them and therefore do not appreciate their impact and
significance often ignore these critical leadership issues.
Thirty-five years of building and operating small businesses has taught me
that most small business problems are not money problems at all, and in fact
money is just an indicator that much deeper issues are at play. Beware; the
market is a wicked taskmaster, these “seven deadly sins” are like small doses
of poison injected into your operation by the very marketplace you are trying
to conquer, and they provide a slow painful death to the naive.
Here are the “seven deadly sins” in order of priority.
1) Poor Business Planning
Most small businesses do not have even a summary business plan, and of those
that do, many are cookie cutter business plans built with the help of a piece
of software. At a minimum a business plan should have an executive summary; a
company overview with company history and it’s current status; the companies
strategic objective; a description of the companies products and services; a
list of the companies intellectual properties including patents, copyrights,
trademarks, processes and know-how; a market analysis; a competitive analysis,
which includes competitors and their market position, and their strengths and
weaknesses; a marketing plan, which includes your marketing strategy, product
strategy, sales strategy, and pricing strategy; your customer service plan;
sales projections by product, in units, for at least three years; and finally
a set of financials which include projected income and balance sheets with a
Performa sales forecast.
Here are some other important suggestions and facts related to business
planning:
•Less than a third of small business startups have a business plan
•A business plan does not have to be incredibly detailed for
operational purposes
•It should be a work in progress updated on a periodic basis
•Particular attention should be paid to the marketing plan
•A business plan is part of the first fifteen percent of the business
development process which will assure the last eight-five percent will go
smoothly
•The executive summary should be written last, after the rest of the
plan is in view.
2) Lack of Strategic Objectives
A business strategy is made up of carefully crafted words making up templates,
which in turn act as filters through which all planning, tactics and decisions
are passed through before implementation. A strategic objective is therefore,
a business strategy developed to guide an organization in meeting business
objectives. A strategic objective is developed from the owner’s vision,
passion, core competencies and values for the business. Contact Emerald
Business Services or go to our website for a worksheet you can use to develop
these critical business development tools.
3) Lack of Marketing Strategies and Tactics
Marketing strategies govern the development of tactics, which in turn provide
the actions items contained within your planning process. The most important
aspect of your marketing plan is the development of promotion strategies and
tactics, which feed your promotion planning and provide you with sales
forecasting data. The promotion plan should also detail costs and anticipated
unit volume so you can set priorities and provide sales forecasting data.
4) Management in the Place of Leadership
So why is leadership so important in growing a business? Because leadership is
about doing the right things, management is about doing
things right . In many
ways, it is leadership that will grow your business from a sales and a
stability perspective, and management that will make, or keep it profitable.
Also, consider that the best companies focus ninety percent of their attention
on external issues, not internally , leadership is primarily a focus on the
external issues.
5) Poor or non-existent Systems
Most people think of computer systems when they hear the word “system.” But in
the since it is used here it means all systems, including the system you use
for selecting the right employee, for decision making within a department and
so on. One of the more telling statistics in this area is the fact that
ninety-four percent of all task or project failures are system failures2. Some
of the more common reasons for system failure include:
•Islands of automation verses integrated systems
•Absent or non-existent policies, procedures and user manuals
•Poor training.
6) Lack of Development of Leadership Style
Developing leadership ability has a lot to do with understanding the type of
leadership required at different stages of your company’s development. There
are at least six different leadership styles identified to be effective at
different stages of a company’s development including; Visionary; Coaching;
Affiliative; Democratic; Pacesetting; and Commanding . Understanding which
leadership style to employ has been found to significantly increase the
effectiveness, growth and heath of the companies in which leaders utilized
multiple styles. Just as important is the understanding of what a leaders
personal profile is. Armed with these vital bits of information a leader is
equipped to pursue the right leadership style for the task at hand.
7) Care and Feeding of Sacred Cows
I do not have a statistic on the amount of money, time and energy expended on
the sacred cows lurking in American businesses, but it has to be staggering.
This list details some of the types of sacred cows you can look for in your
business.
•The way we have always done it
•The product or service you keep pouring money into because you just
know it will take off and be your future, (these are almost never accompanied
by market research or even a promotional plan)
•Resistance to growth through change
•Idleness within the ranks, some experts believe ten percent of the
poorest performing people should be let go each year to make room for people
with fresh insights and ideas
•The company airplane, automobiles, and other perks, which drain
company recourses
•The dead weight relatives and friends of the family who would be
better off elsewhere, act as distractions, and add nothing to your bottom line
•The “expert” that no one can live with, who holds a noose around the
companies neck in the form of some expertise or an unwritten code of loyalty.
You could call this business “101,” however, most of the issues developed in
this paper are rarely taught in schools, much less heeded. These “seven deadly
sins” can impede your company’s ability to successfully navigate through the
turbulent waters of business development. If you do not understand all the
issues summarized in this paper, do the research; find a business advisor to
help you navigate these storms , you owe it to yourself, your business and the
people who count on you.
Conquering the devil in the details is what management is about, concurring
the “seven deadly sins of small business” is what leadership is all about. The
beauty of developing top-level leadership skills is that there is no downside,
only opportunity for growth in both your business and your personal
development. Leadership is what the entrepreneurial spirit is all about.
Develop your business plan, establish strategic objectives, establish
marketing strategies and tactics, lead, build effective systems, utilize more
than one leadership style and kill the sacred cows in your business, it might
be the only thing that keeps you and your company from becoming another
dreadful statistic.
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1. Inc.com article “Most Entrepreneurs Start with . . . No Business Plan”
2. Demming
3. Peter Drucker
4. Allan Weiss
5. Goleman
6. Keeping everything the same and expecting things to change is at least one
definition of insanity
7. Call us at (619)985-0799 for a free consultation Free Article brought to YOU by ArticlesOn.com, where you'll find Articles On Everything! Visit http://articleson.com to get more free content. Michael AdamsIdeas and Strategies for Business Emerald Business Services, LLCP.O. Box 1875RamonaCalifornia92065(619)985-0799United Stateswebsite:www.emerald-business-services.com
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