Two factors critical for business success include having a quality, profitable product and providing a great customer experience. But long-term business success requires more. I have 20+ years experience working for Fortune 500, midsize, small and start-up companies in a variety of marketing, operations and management roles. Here are my key reasons why companies struggle or fail, even if they have a great product.
No Planning. Did you develop a business plan to start your company? Do you set quarterly and/or yearly business goals (e.g. revenue, EBIDA, customer service metrics, etc.) that all departments use to develop their department goals? Do you have a marketing plan that outlines your marketing and sales strategy and goals for the year? If you answered no to any these questions, you have work to do. Planning is critical to prioritize how you allocate company resources (money and people). Without it, your business is inefficient and ineffective. If you haven’t done any real planning, take a step back and do so before it’s too late. And not sure how? Hire a business consultant to help you through the process. It will be money well spent.
Not Following Plans. I can’t tell you how many times I’ve seen companies who have plans but don’t follow them. The reasons I’ve heard for not following the plans include 1) lack of executive leadership; 2) general laziness; 3) not all department stakeholders having bought into the plans; 4) frequent plan changes so why follow them at all; and 5) companies want to be nimble to react to the marketplace and planning makes them less nimble. Effective planning starts from the top. If you don’t have the right senior team in place to plan and be accountable for the plans, nothing with change and your business will suffer.
Poor Financial Discipline. This goes hand-in-hand with lack of planning. Regardless of the stage of your business, you must have a senior financial strategist. While vital, a bookkeeper doesn’t cut it. A comptroller or CFO will help you determine 1) how your company will make money, 2) how the company will spend the money you make;’ and 3) financial processes to ensure company compliance. Depending on the stage of your business, the financial strategist does not have to be full-time. Part-time or a consultant will do until the point your business can afford an internal sr. resource. From financial planning to projecting to controlling, successful companies are disciplined and if you are not, you will fail. It’s that simple.
Inability to make the tough personnel decisions. Many companies get to a point where they grow or stagnate. One of the main reasons companies stagnate is not having the right sr. personnel in place. In a lot of cases, the team that got you where you currently are may not be the team to get you where you need to go. Good leadership makes the personnel moves needed to have the right team in place for growth. Making these tough decisions is not easy but it’s crucial. Sometimes it involves friends, family or colleagues you’ve worked with for years. But as a senior leader, your responsibility to the organization overrides this relationship. You have to do what’s best.
So, is your company or department having a hard time scaling? If it’s not an issue with your product or customer experience, take a hard look at the reasons above. See what you need to do to take your company or department to the next level.
Photo by Tim Mossholder.