Indianapolis CPA Explains: How To Have A Profit Explosion While Avoiding The Most Common Mistakes In Small Business (Part 3 of 4)

How To Implement Solid Management Principles To Support Your Growth

At the beginning of a new business venture, you are both the president and the janitor.  And if you don’t have too many employees to deal with, then management is pretty straightforward.

But then, once you grow to a certain point, effective management skills are what make the difference between being really successful and profitable, or just barely making and potentially failing.

And unfortunately, most small business owners are not trained or experienced in management, although many perceive it to be a simple matter.

For example, when I started my CPA firm in Indianapolis, I had great accounting skills, but I really didn’t know much about managing CPA firms.  So this is something I had to pick up overtime.

And how has this learning paid off?  Well, if I needed to start from scratch in a new city, I’m pretty sure I could get back to where I am now within about five years – as opposed to 20 years!  And not to mention, it’s really the only way to achieve successful growth.

So with that said, here are the most common management mistakes I’ve seen:

Not Having Any Written Long-Term Plans –

If you have not written down your long term plans and goals, then you don’t really have them.  And if you don’t have them, then you’re not going anywhere in particular.  You should always have milestones that you can recognize, according to the long-term direction that you have decided to go in your business.  This should then be broken down not only annually, but also to quarterly, monthly, weekly, and even daily plans.

Not Holding Up To Your Values (With Your Strategies, Plans, And Systems) –

As most of us know, if you’re not selling something you believe in, it’s much more difficult to sell.  And the same goes for your business and its values. This is why – for my firm – I developed “Marietta’s Mottos.”

Not Hiring The Best Employees –

I’ve known so many business owners who did not fairly compensating their employees, but then they wondered why their performance suffered.  Then there are other owners that simply haven’t learned how to recognize who the best hires are.  And finally, more than any other kind, I’ve known owners whose business models and systems are broken, but then they blame it all on their employees – so they would never know  difference.  But in any case, employees are a businesses number one asset, and hiring decisions should be made with that in mind.

Not Correcting Employee Turnover Problems –

Employee turnover is one of the greatest costs to the business, not only in the short-term, but also in the long-run.  In many ways, the number of employees that are coming in and out of your doors – without you doing anything to correct the real internal issues – represent opportunity costs.  The opportunity costs may not only be that you could have used that budget more wisely, but it’s also that you may have spent money without much to show for it.  At the least, if you’re always working to improve your business and it’s internal systems – and allowing your employees to help you with that process – then when someone decides to go, you will have made true progress.  Because otherwise, such turnover is waste.

Not Creating Job Descriptions –

If you do not have job descriptions, you should get this done immediately.  Because without them, it’s nearly impossible to know if people are in the right spots – or how to efficiently fill the spots that need to be filled. You just end up with confusion, overlap, and major losses of productivity.

Not Developing Good Managers –

Good managers are not only there to carry out their daily tasks, but they should also be able to help you carry out your vision.  Developing these types of managers is not easy, but it can be done if you persist and create an environment of continual learning and growth.  And it also helps to have proper aligned incentives.

Not Having The Right Systems In Place –

If you don’t know which systems and procedures in your business are the most value-adding to your customers, you’ll miss out on many opportunities to improve customer satisfaction.  And if the owner does not create these systems according to his priorities and goals for the business, then you’ll have a situation where everyone has to figure out their own way how to do things.  So instead of having one fluid, efficient system that works – which is duplicatable – you’ll be very limited in the growth of your operations.

Not Managing The Owner –

As difficult as it is to run a business, it’s easy for owners to be overloaded with the daily operations.  But if a business is going to be successful, it will take excellent time management on behalf the owner, so that he can take on higher priorities related to the growth of the business.

 

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