Avoid These "Destroy Your Business" Pitfalls
Over his half-century career, business and social analyst Peter Drucker has consistently presented the business world with canny insights. After decades of observing business behaviors and outcomes, Drucker distilled the four typical mistakes that undo entrepreneurs at new and growing businesses. All of them, he says, are foreseeable and avoidable.
1. Knowing better than the market. The entrepreneur fails to contend with the fact that their new product or service is succeeding elsewhere than their target market. In essence, the entrepreneur rejects unexpected, unplanned success because it rattles their belief that they're in control.
2. Focusing on profits. Cash flow is the real name of the game, because growth-spurt companies need continual stoking with fresh money. Drucker says an entrepreneur should start planning the next round of financing six months before crunch time. Of course, few do-a failing Drucker attributes to financial illiteracy among most business people, not just fledgling entrepreneurs.
3. The management crisis. After about four years of normal, healthy expansion, a company usually outgrows its management base. The entrepreneur has gotten stretched to the max, and when things start to go haywire-as they invariably will-no one is available to take up the slack. Again, acting before a crisis is key. Twelve to 18 months before this bottleneck, the entrepreneur should gather those workers who show managerial promise and assign suitable roles. Then there's enough time for them to learn their specialties, for the team to coalesce, and for the owner to identify and replace any wrong choices.
4. Loss of perspective. Once the company is up and running, a different type of danger loom. Focusing on his or her desires or needs, the entrepreneur neglects to make the needs of the business the highest priority. An entrepreneur needs to be honest in determining whether they have the skills or strengths the company needs at that time. If not, then it's best to step aside or adjust one's role.
Excerpted from Extreme Entrepreneur: Intelligent Information from the Edge