By Bill English, Partner
Most entrepreneurs have several characteristics. Among the more prominent is a level of confidence – some would say arrogance – that enables them to believe they can beat the odds when taking a risk to win. Most of them are pretty good at what they do: They are competent at a trade, skill, craft, or they have a novel idea that can be monetized.
In the early years of a business, the entrepreneur wears many hats – sales and marketing director, product development, CEO, controller and so forth. But as the business grows and expands, the entrepreneur is tested in ways that MBA programs can’t teach and either the entrepreneur has, or doesn’t have, the maturity to develop alliances (both inside and outside his/her business), deal with conflict, develop trust and make wise decisions quickly. The personality – the character – the personal dysfunction of the entrepreneur will dictate the success or demise of the business.
Here are eleven danger signs one can check for before such tests pop up, not presented in any particular order, but numbered for easier reference. If you see three or more of these in your business, find help to fix them. If you see four or more danger signs, you need help right now.
1) As Your Success Has Become Obvious to Others, Your Business Has Become More About You, the Founder
Yep, when you started out, you were customer focused. You were customer centric. But over the years, you’ve made money, you’ve won awards, you’ve gained public recognition and notoriety and you’ve heard the praise – really heard the praise. So, you start using your business to create perks for yourself: tickets to sporting events that are not business related, massages, golf lessons, a new car, personal vacations written off as a business expenses, new toys, larger office – all if it contributes to the perception by your employees that your business is now about you.
2) Most Decisions, and Certainly All Important Decisions, Must Route Through You.
You think that no one can make good decisions without you. When something goes wrong, you blame people and talk in terms of “what’s wrong with” him or her. Perhaps they aren’t trying hard enough. Forget the fact that your micromanagement pushes employees underground who end up doing only what they are told to do – confirming your suspicion that they are substandard talent. When you look at all the people you’ve hired, you don’t have one single leader who can manage your company. Not one. And you blame your employees for this, not yourself. You don’t understand that you’ve gobbled up all the leadership in the organization and have stifled your employees’ development.
3) You Only Focus on the P&L Statement, Not Cash Flow.
In every turnaround with which I’ve been associated, the owner lost control of cash and only paid attention to the profit/loss statement. She or he didn’t know how to read a balance sheet and certainly didn’t bother to have a cash flow report generated. They had no way of tracking future cash expenses and thus, no “headlights” into the future financial performance of their company. They just keep doing what they had always done, expecting better results would come from it.
4) You Don’t Pay Attention to Expenses.
You don’t take time to learn about how cash exits your business. Cash coming in seems good; it may even be increasing, so you simply assume you’ll always have the cash needed to pay your bills. When you’re suddenly told that you can’t meet payroll, you wonder how that happened, and you blame someone or something else for not seeing this train wreck coming.
5) You Avoid Conflict.
You let others stew in their conflict with you, but you act as though nothing is wrong. You tick off employees, partners, customers, vendors, but you act as if nothing is wrong. These people keep working for or with you, but they are probably looking for new employment, vendors and customers. You’re surprised when they turn in their resignation(s) or take their business elsewhere.
6) You Lost Track of Industry Changes and Your Products or Services Become Stale and Outdated.
What got you to the party is now being challenged by competitors, but you don’t see it. You might resent that these less experienced people are challenging your leadership position which you’ve built over time. “They won’t last”, you think. But then you find out one, then two, then three, then more of your customers are leaving for your competitors. You don’t stop to take stock of your company, your products, your customer relations. Nope. You just blame others and grouse about how these customers will come back once they have had a bad experience with your competitors. But they don’t come back. And that’s because your competitors probably have a better product, a better service or a better price point.
7) Your Debts are Mounting, But You Don’t See This as a Problem.
Because your revenue is probably increasing, you don’t see your mounting vendor or bank debt as a problem. But if you’re going into more and more debt and don’t ask yourself, “where is that money going?” the mounting debt will kill your business and possibly send you into bankruptcy.
8) You Incur Unnecessary Expenses Just to Lower Your Personal Income Taxes.
You’re willing to spend $100 on an unneeded expense just to lower you tax bill by $30 or $35. And you think this is a smart decision.
9) You Can’t Retain Top Talent.
You keep hiring good people who want to do good work, but after a year or two, they leave. Their reasons for leaving are usually different – there isn’t a common thread in why they leave. But they always leave. Perhaps you’re on your fourth COO or CFO within as many years. Maybe your sales managers seem to last between 9-12 months and then they take off. Or perhaps your top technical talent seems to find higher paying jobs elsewhere after working with you for a few years. While some transitions are inevitable and good for your company, too many transitions of recently hired top talent should indicate to you that your business is headed in the wrong direction.
If you want to really be successful in life, you’ll take some time to look at yourself and gauge if this article, at least in part, describes you and your business. If it does, then humble yourself and seek help. Either ping me at firstname.lastname@example.org, or reach out to someone else who will help guide you to a more sustainably successful future.