5 Deadly Sins Which Suffocate The Success Of Your Business

You might have read the title and thought ‘blimey Shaun, is this a blog post, a sermon or a big screen thriller!’ Well, grab the popcorn because in my 20+ years of consulting I’ve seen more businesses slowly killed by uneducated owners, silly mistakes and plain bad decisions than I care to remember.

Business author Keith Cunningham puts it nicely: “all of my mistakes started out as bright ideas.” This is a good way of saying that more businesses are destroyed by good intentions and ‘bright ideas’ than by dumb mistakes.

Here is a quick list of some of the deadly practices that I’ve seen.....and done myself. If you’re doing any of these things make sure you stop now!

1. DEADLY EXPENSE EXPANSION

This is a classic. As your business grows so do your expenses. I have a saying "overhead walks on 2 legs". People generate costs. More payroll, higher overheads, more marketing spend etc. It’s very easy to chase new sales and throw money at the business without careful thought in the heat of battle, and find at the end of it all you have little to show for it! Make sure that you regularly interrogate your expenses and trim the fat otherwise you’re on the fast track to going out of business. 

2. DEADLY SHINY OBJECT SYNDROME

As an ambitious owner of multiple businesses over the years this one has cost me more money than I care to remember. You read about a fancy new marketing tactic or a great new program and you jump on it with untamed fervour… for 3 days… then the next shiny object comes into view. I used to get frustrated with my staff that they could not implement as fast as I can think. This displays a real lack of strategic thinking and discipline and will cost you time and money. 

I see a real sea change in this with companies who have broken through the £5m ish barrier. They are (and have to be) a lot more measured in what they go after and a lot more disciplined in relentless execution. Could that be one of the reasons those companies break through and others don't? I think so. Smaller firms need to be more nimble and can take advantage of that and pivot quickly but an action focused strategic growth plan, clear KPI’s and disciplined execution can help you a lot, without getting so structured you can't change. If you don't believe me ask your team! 

3. DEADLY GUT INSTINCT

Don't get me wrong, I have a high degree of trust in what my gut is telling me. I have learned to ignore it at my peril. However when does gut instinct without analysis become wishful thinking?

Talking about business planning… it never fails to astonish me how many business owners will commit significant resources to a course of action without proper financial and other analysis. Don't get me started on business owners and understanding their finances!

I had a client recently change his operational fulfillment model from subcontract to own staff. We hadn't taken the time to model it properly (which I contributed to) and found that rather than save money, the cost of having his own staff not utilised actually led to a drop of 4% in gross margin. This is in turn dropped straight to the bottom line which suffered a hit of 4% to net profit.

Thankfully with monthly management accounts as a feedback loop we identified the issue quickly and were able to take fast corrective action but it would have been better not to have had the expensive lesson.

Listen to your gut, but, if it's a significant decision, model the numbers and do the other due diligence you need to. If you need help you know where we are.

4. DEADLY AUDIENCE APPEAL

Here’s an odd one… immature businesses try to appeal to the widest audience possible. Mature businesses are very clear about their target audience and prefer to go after a smaller but devoted following. I've consulted with many businesses where we've had a look at what they're doing, narrowed down the focus, offloaded customers, reduced revenue and wait for it; made more profit and had more fun. Before you scale a business bear down on your business model and strip out the rubbish and get very good at what you do. When you do this scaling is a joy. If you don't, scaling makes a lot of mess and generates serious stress and risk.

So before winding up new sales, focus on retention first. How much profit do you make from which segment of your clients? Which segments resonate with you the most? Why do they buy from you? What are the key attributes they value from you? Narrow down your offering around these aspects and get very good and efficient at providing a ‘wow’ experience for your key target customer niches. You can't do ‘wow’ for a wide, varied group. No one does everything well. It’s better to pick a profitable audience segment that you can massively over deliver to than a larger audience you can just about satisfy.

5. DEADLY COMPLEXITY

When a business grows, the complexity required to control it increases. You cannot manage a £5m turnover business with the same people, processes and technology as a £1m turnover business. The breadth of expertise needed grows and needs careful management. We have a Business Diagnostic Framework which can give you and your team a common language to analyse your business and assess which of the 20 or so components are working well, which are not and most importantly what are the biggest priorities for development. You can't build capability in your business everywhere at the same time.

If you’re thinking to yourself “this all sounds great Shaun, but I’ve already got a lot on my plate, where on earth do I start?” you could always grab a quick call with one of our Strategic Growth Advisors to get a second opinion. These calls are free and help you gain massive clarity. Book one here.