Th Big Opps! Common Mistakes that Small Growing Companies Make

Here are some tips that every business manager can use especially when in start up mode. Brought to you by Martin Swilling at Forbes Magazine.  I have shortened it a bit for a quick read but for the full article, click here.

I’ve been advising and mentoring startups and growth companies for years, and find myself always pushing them to try something new, for the sake of growth and survival.  When you try new things, you make mistakes, and I’ve seen many. Smart companies learn from their own mistakes, but some don’t pay enough attention to other people’s mistakes.  In the spirit of saving you a few lifetimes of pain, here are some common mistakes that seem to happen routinely:

1. Wait until your company is up and growing before you formalize it. Some entrepreneurs can’t decide if they want to be a Limited Liability Corporation (LLC) or a C-corporation.. The simple answer is to do something, and start simple. In almost every state, you can incorporate as an LLC with a minimal effort, and a cost in the hundred dollar range. This step shows everyone you are serious, and limits your liability on any mistakes. It also forces you to pick a name for your company and put other intellectual property stakes in the ground.  It’s not that hard to change later to a C-Corp..

2. Rely on informal agreements with partners. You may all be friends, or spouses, today, but things do change quickly in the stress of a growing company. The same principles apply to strategic partners. Early co-founders often drop out of the picture due to disagreements, and you forget about them, but they don’t forget about the verbal promises you made. Later, when your venture is trying to close on financing, or even going public, that forgotten partner surfaces, demanding their original share. 

3. Quick to hire and slow to fire. If you are growing quickly and desperate for help, you may skip on the homework of a proper job description, or validating applicant credentials are a fit before you proceed to interview. The message here is that if you don’t know exactly what help you need, you probably won’t get it. Hiring after one interview is like hopping a red-eye to Vegas to get married after one date. 

4. Only hire people who like you or think like you. Flattery feels good, but it doesn’t pay the bills.  Look for the thoughtful challenge to your ideas, and practice active listening, when you are selling your vision. 

5. Be super-conservative on your cash needs. Double-check both the money you need before funding, and the size of investor funding requests.  You will be amazed at how many items you forgot to cover, and how fast the cash disappears. You should buffer the first by 50%, and the second by 25%. Severe cash flow problems are a big mistake, and may not be recoverable. 

6. Let your accountants manage the expenses. Too many founders think it’s more important to work on products and customers. In reality, the most important task of a every small company CEO is to review every expense with a miserly hand before the money flows out. Do not delegate this task. 

7. Make all the decisions yourself.  One person making all the decisions doesn’t mean better decisions, and certainly not faster ones.  For a company to grow, the team has to grow, and decisions must be delegated.  Smart growth companies hire decision makers, not more helpers. 

8. Defining the strategy is a one-time process. Assume your initial strategy will be wrong. Most startups I know have “refined” their target market and “pivoted” their operation several times during their rollout and growth phases. So be alert and be flexible. Plan for strategy changes by scheduling an adjustment review every month. 

9. Let the daily crisis keep you from the “most important” issues. It takes practice and effort to focus on the most important things first. In business, “most important” means time to market, customer service, low cost, and beating your competitors. It also means knowing when to delegate, when to rest, and reserving time for effective communication with your team. If you allow yourself to be driven by the crisis of the moment, you will lose the ability to set priorities and focus on goals. 

10. Ignore the mistakes of others. The biggest mistake of growing companies is failing to learn from the mistakes of others, or even from your own mistakes. You can only learn from your mistake after you admit you’ve made it. Wise people admit their mistakes easily, and move the focus away from blame management and towards learning. 

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