Top Three Mistakes Businesses Make

Over many years of working with Founders, Shareholders and actually operating our own companies, experience tells me that I feel that the three common mistakes when running a business:

• Focusing on Revenue Over Margin: Generally, margins are tight, and they do differ widely from business to business. Profit and cash are generally the best metrics to measure in a business so focus on those rather than headline sales revenue. I hear Founders say “ we are doing great xx% year on year sales growth” , well good for you is my initial thought, but how much of this is profit and how much is that translated to cash in the bank?

Also look at margin by customer and or by product/ service. You will soon see what your most profitable lines of business and which size and type customers are generate the best levels of profitability. Focus on what creates the best margin and cash generation.

• Lack of a Fully Costed Business Plan: Lifestyle businesses often focus on day-to-day cash flow rather than strategic value. A comprehensive plan is essential if you are looking to build longer term and sustainable success.

A well thought through 1,000-day business plan which everyone has an opportunity to input in to can help mitigate risks and navigate challenges effectively as your whole team embrace it and deliver against the stated objectives. Just remember to have stated and mutually agreed objectives that are communicated to all of your stakeholders,  measure the progress, challenges and successes monthly, taking time to celebrate the wins and run a postmortem on the challenges.

• Complacency in Revenue Management: Founders may become complacent once recurring revenue covers costs. It’s crucial to stay data-driven and proactive. Check out our post on Its all About the Data we all know about the importance of clean and accurate data that you can easily access and create actionable outcomes.

Don’t rest on your laurels once costs are covered, profit is not a dirty word, it allows you to gain financial freedom, create choices for shareholders and allows you to build a sustainable business.

There are obviously 100s of other mistakes Founders, Management Team and Stakeholders make, most of which we have successfully helped them overcome.