Landis says this is a big one. Companies enter arrangements over time and build relationships based purely on trust. That works well in the beginning but can start to unravel when things get difficult.
“Not documenting key arrangements, like supply arrangements, arrangements in respect to assets, employee arrangements is quite common,” Landis says.
“You find that they have arrangements that have just grown over time without being properly documented. I suppose people just assume that things will always be okay and there won’t be problems.”
“Now, the reason to write things down at the start is that when you are trying to get into bed together, everyone loves each other and going to be nice to each other. But if you can work out things in advance from a position of relative equality between the parties then do. Otherwise if something goes wrong, then someone will be enjoying it from the underneath position.”
The key, therefore, is to make sure all documentation is in place.
Business coach Lindy Asimus says many companies make the strategic mistake of reactive recruiting.
“Often times they will recruit on the basis of ‘I am in a panic and need someone right away’ and they hire anybody for a role that might not be suitable for them,” Asimus says.
“They probably don’t have a good system for inducting them or telling them what they want them to do once they get there.”
“They need a strategy for looking at what they want to accomplish with this role, what are the things they need in order for the person to be effective in that role, to look at the outcome they want for that purpose and then hire accordingly.”
“It also needs to be an attitude thing as well as a competency. They not only have to be good at the job, they need to have a good attitude.”
“You can train people but if someone has a crappy attitude, that’s not going to be fixable.”
In the beginning, the entrepreneur wears all the hats, from answering calls and setting up supplier relationships to taking customer orders. Working in the business means you are constantly putting out fires. The problem is they take all your attention and stop you looking at the broader strategic issues, at the marketing and building the client relationships. Sooner or later, the entrepreneur has to make the decision about working on the business, not in it. And many struggle with that.
Thomson says he sees that all the time.
“It’s about people not valuing their time effectively,” he says.
“I have one client and we worked out his time would be worth $1,000 an hour if he put his mind to it. Yet he is the guy if there is a mistake in dispatch, he will be down there repacking the products and doing a job that he could pay a guy $20 an hour to do.”
Asimus says many make this mistake because they think they do not have the time.
“There’s a lack of appreciation of their own skills,” she says. “Some had had this business for 40 years and they don’t give themselves for credit for expertise. They may not be leveraging that position very well.”
To get around this, experts say entrepreneurs need to learn how to delegate. It can mean hiring a manager for the grunt work. They need to ask themselves the following question: what’s more expensive: paying an administrator or losing sales because of lack of focus?
In order to do this, businesses need to have solid profit growth, an empowered team committed to the company and good systems to ensure things keep ticking over.
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