Being an entrepreneur isn’t for the fainthearted. It requires fearless resolve, long hours and a vision you’re willing to fight for. But if all entrepreneurs are driven and determined people, what makes some succeed while others bite the dust?
Quality of leadership plays a huge role in the success and well-being of any company. And while there may not be a secret formula to guarantee your company’s success, there are beliefs and behaviors that can certainly deter it.
This week we’ll look at three common mistakes that company founders make, and how you can change your thinking and habits to avoid them.
Mistake #1: Allowing your ego to delude yourself and your team.
In general, founders are creative and energetic visionaries. They are bull-like in their desire to succeed, believe they know it all (or at least know more than anyone who works with them), and are impatient and highly demanding. (I know because I’m one of them!) Don’t get me wrong– these traits can be extremely helpful in getting a company off the ground. But at some point they become counterproductive to the growth and development of the company, especially if you’re taking on tasks that are better off in someone else’s hands.
The antidote: Put your ego aside and hire people who are better than you. Surround yourself with advisors that will speak the pure, unbiased truth to you and your management team. Make tough decisions even if it impacts you in a humbling way.
Mistake #2: Merging yourself with your company.
You are no more your company than you are your own child. In other words, you and your business are two separate entities. Many business owners pile so much responsibility on themselves that the entire operation becomes unsustainable.
The antidote: Repeat this daily as you develop your business: “I am replaceable.” This doesn’t mean that any Joe off the street can do what you’ve done, it means you should establish your business processes to allow it to thrive without you. Only then will you build a sustainable company.
Mistake #3: Not understanding the role of the CEO.
Though it varies depending on company size and stage of development, the CEO has a defined role in any company. Here’s a quick primer on the early stages of building a business enterprise.
- In the earliest stage, the CEO wears all hats. She is the revenue driver, the product specialist, the finance and HR manager and sometimes even the janitor.
- In the first revenue generation stage, the CEO removes and reassigns some of her hats. She hires staff and delegates mundane tasks as funds become available.
- In the second revenue stage, the CEO starts initiating processes, driving leverage and improving efficiency while focusing on what she knows she is good at.
Conversely (and unfortunately), this second revenue stage is where many CEOs start to relinquish the functions she really should keep managing and driving. Very often she gives up the sales function by hiring of a head of sales. This abduction of involvement is a bad idea- she should continue to oversee this crucial aspect of the company.
- In the third stage of revenue the CEO must transition from micromanaging business activities to managing the processes that manage the business.
But to their own detriment, many CEOs bungle the nuances of these stages because they don’t understand that the role of a CEO is ever-changing and developing.
The antidote: Once again, hire game-changing talent but don’t hire someone to replace what you do best. Give staff the tools to succeed. Set up Key Performance Indicators (such as client satisfaction ratio, prospecting to opportunity-to-close-the-deal ratio, response time to client inquiries, revenue, net profit, gross profit, and many more.) Hold the company vision by focusing on purpose, principles and performance. Keeping these early stages in mind will help you more effectively drive your enterprise.
Next week, we’ll explore three more entrepreneurial pitfalls to look out for. In the meantime, which of these has been the greatest challenge to you?