Costly Business Mistakes to Avoid
A successful remodeler once said to me, “If I had the money back from the business mistakes I’ve made, I would be wealthy beyond my dreams.” Mistakes are inevitable in business, but successful remodelers avoid the big ones and try to learn from the rest. Here is a list of 10 mistakes I see most often in remodeling businesses. Avoid these pitfalls, and the odds for success go way up.
1] Unmodulated growth. The pace of growth is as important as growth itself. Some companies grow too slowly; others, too fast. Five percent growth may be too little, but 30 percent can be too risky. Plan for growth that stretches your company without straining it.
2] Subpar personnel. To compete today, you need “A” players on your team. If you have “C” players, it’s either because of a bad hire or poor training. If you can’t train people to become “A” players, the sooner you move them out the better.
3] Too many opportunities. Most remodelers have a strong entrepreneurial spirit. That’s necessary when they are starting and running a business, but it can also lead them to pursue too many opportunities. It’s important to limit the kind and number of things you focus on.
4] Misalignment. Most owners are pretty passionate, but this doesn’t guarantee that others on the team are aligned with the owner’s vision. To succeed over time, everyone on the team has to be pulling in the same direction.
5] Lack of a champion. A good idea will go nowhere unless the right person is accountable for implementing it. Whenever I hear someone propose a new product or service, I ask, “Who will the champion be?” Don’t launch until you know the answer.
6] No definition for success. Ask five key team members to write down the criteria for
a successful project and you will most likely receive five different answers. Consistent standards are important. Otherwise, you have some people doing high fives because the client is happy on a job that lost money, and other people feeling great that a project achieved a high margin even though the client isn’t completely delighted.
7] Core competency. Companies don’t perform equally well on all types of projects. Selling and building kitchens is significantly different from selling and installing windows, and being good at one does not guarantee success in the other. Stick to what you’re good at and you will avoid a lot of trouble.
8] Leadership gaps. A growing business may have good people in key positions, but as the business grows, the jobs get bigger and the people performing those jobs need to perform at a higher level. Not everyone can—a perfectly competent bookkeeper, for example, may not be right for a position as staff accountant or controller. Some roles require more people management skills than technical competency. Be sure your people are properly matched to growing jobs.
9] Too soon or too late. Many owners yearn to move on and end up passing the ball to key team members too soon; others wait too long to transfer control. It’s not easy to know when the moment is right, and it may help to get some third-party advice.
10] Failure to change. If you don’t change, you risk becoming irrelevant. Managing change is difficult, and there’s no single formula that works for everyone. But standing still is not an option.
