Leadership mistakes made by small business owners
Having worked with a number of small business leaders, I have noticed that they all commit some common mistakes. Here is my list of the top five mistakes they make:
1. Attitude towards employees: Some leaders do not value employees at all. Employees are not treated with respect and their work not valued at all. Small business owner syndrome is one of the main reasons why such organizations hit a wall. This is one of the most deadliest mistakes I have seen entrepreneurs make. High employee churn is expensive: cost of hiring, opportunity losses, loss of productivity all costs the small business when they cannot afford this.
2. Haphazard hiring process: Small businesses have scarce resources. Hence, employees need to be multi-skilled. They should have a â€œLet me do what-ever I can to make this workâ€ approach. Hiring an employee with no experience in small business is a mistake. Employees who have worked in large organizations have a silo mentality and are usually not the right fit and cannot adapt to the small business culture. Entrepreneurs do not spend enough time upfront during the recruitment process and evaluate potential employees. At best the recruitment process is haphazard and often times lacks strategy. Rigorous background checks are essential and so is â€œintegrityâ€ screening.
3. No feedback, monitoring and evaluation: Conflict avoidance leaders are not helping themselves by holding back constructive feedback. I recommend providing feedback as conversations during day-to-day activities when it is fresh in the mind rather than wait for a formal performance review. It also gives the leader and the employee an opportunity to evaluate and measure performance continuously. I came across this article on how a hiring decision can go bad.
4. Not communicating the organization’s vision and mission: I have never seen any small business leader say this without being prompted for one. Merely hanging this on the wall is not enough. Employees need to understand where the organization is going; what its goals and objectives are. If they do not know where the organization is going, they will be unable to help you reach organizational goals.
5. No marketing: Once a CEO told me after about a year I joined a small business â€œI was not in favor of appointing a marketing person. I did not think we needed a marketing person.â€ I cannot, for the life of me, figure out why would an organization not have a marketing strategy or a plan. It is as natural as breathing. There shouldn’t be any debate on that subject. Some CEOs do not see the relation between sales and marketing. For some reason, CEOs view marketing as an expense instead of an investment. (It does go down in accounting as an expense â€“ but we are not talking accounts here). Sales will get you the orders but marketing will retain them. Marketing is a strategic tool through which brand is established and sales pipeline populated, among other things. Failure to actively pursue marketing activities hampers your organization’s ability to compete.
6. Survival mode: Did I say five mistakes above? I could not resist to sneak this one in. I once worked with a small business CEO who often quoted this. And he used this as an excuse for his lack of business focus. In an attempt to get more sales, he would discount the order so much that the sale was no longer profitable. The worse was to reduce delivery time. This put a lot of strain on existing projects and developers churned out code that went directly to customers without comprehensive testing. Is it any surprise that the business continued in the â€œsurvival modeâ€ for a prolonged period? If your business is in survival mode for any considerable length of time (six months to a year as a thumb rule) you may want to look for an alternative career.
I’d love to hear from you what you think are the top five leadership mistakes that entrepreneurs commit.Leadership categories.