By: Les Kollegian, CEO at Jacob Tyler
Your company’s growth can feel like a complex equation. Add a consultant here, subtract a client there, divide up this budget and hope for the best. The numbing reality is that the choices we make, more often than not, lead us to unanticipated outcomes.
At Jacob Tyler, we’ve been down the rabbit hole and been forced to choose between the proverbial “red and green pill.” We know what it’s like to be a small business craving a growth spurt. Now that we’ve experienced the growth, through our success and failures, we’ve stumbled upon fundamental lessons on what not to do. These lessons, as luck would have it, have played a crucial role in building our company. Avoid these ten pitfalls for stress-free, steady, and successful growth.
1. Do not rush the hiring process.
Small businesses often suffer from the “chicken/egg” syndrome. You don’t have the money to hire until you have the project set and when you finally have the project and money, you don’t have the staff to support the client. What do you do?
You may consider making a quick hiring decision. I won’t say this never works out, but many times, the person you hire, because you’re in a rush, isn’t the right fit for the position you’re trying to fill. Then you’ll spend extra time nurturing this employee to “fit” the required position. Save yourself the headache and repeat after me: slow to hire, fast to fire.
Instead of solving your problem with a quick hire, develop a hiring process that builds your pipeline of qualified applicants. Keep position descriptions up on your website and have a system in place for when you’re ready to push for new applicants. Then follow a vetting process. Know what you’re looking for, interview and interview again.
Taking this time upfront will save you time later. When you’re looking for that next hire, look for the qualities the previous employee (that quick hire we all regret) was lacking and be patient for the right person to come through your door.
2. Do not surround yourself with juniors.
The common denominator with most small businesses is lack of cash flow. Sometimes this can be a recipe for a hiring disaster because your inclination is to bring on a junior level person with little experience because you can get them at the perfect price. Well, you get what you pay for.
At Jacob Tyler, we’ve found that a senior level employee who makes roughly $75,000 a year can do almost six to eight times the work of a junior level employee making $20,000 a year and with less supervision. It’s important to consider the cost savings not only for the cost of work, but the cost of time from management, revisions and mistakes. In order to grow your business, you need to be doing what you do best and that does not mean spending the majority of the day teaching or fixing unnecessary issues.
Instead, invest in your talent. Why? Because investing in your talent is an investment in your brand. As a brand communications agency, we know the value of a brand and advise our clients to think of their brand positioning as the key element to ongoing success and growth. Your people not only represent your company, but they produce for your company. Simply put, your people are your brand. You wouldn’t want to devalue your brand, so don’t skimp on the quality of the employees you hire.
3. Do not rob Peter to pay Paul.
Handling and allocating expenses is really tough for small business owners. It’s very easy to lose track of where your money is going. Why? Clients don’t always deliver according to your cash flow plans.
As a result, sometimes funds are moved from where they should be allocated to perhaps your credit card debt. Over time, this can spiral out of control making it difficult to recover. As time goes by, you realize you’ve potentially racked up more debt and the money you’re making never seems to make it to the right place including your pocket. Instead of falling into this vicious cycle, focus your attention on developing a budget.
In order to budget properly, ensure a controller has an eye on your bottom line and prepares monthly financial reports for your review. This type of administrative and financial work won’t necessarily improve your bottom line, but it will help you anticipate financial bottlenecks and pinches ahead of time.
4. Do not take a project just to make a paycheck.
Oftentimes, as small business owners, whether you work alone or have employees, we stress about payroll, vendor payments, bills, and more. Then, the perfect client prospect walks through the door. Why perfect? Because he has money. I can tell you from firsthand experience that just because he can pay, does not mean the business will be profitable. In fact, the wrong client can cost you much more time than money. When meeting with new clients, it’s important to look for the warning signs such as:
· Do they appear high maintenance or require a lot of handholding?
· Do they really understand your business or need too much education?
· Did they have issues with another vendor that is making them switch to you?
· Are they asking for something beyond your core competencies?
While taking on a client will get you the quick pay day, it may cost you far more in time and in the long run, a major loss in profits. Not to mention, this client can waste your valuable time that you should be spending on searching for ideal clients.
Take the time to interview your potential clients in depth and make sure they know what it will be like to work with you. Once they understand, make sure your contracts are iron clad complete with expectations for rounds of revisions, changes in scope and additional requests. Otherwise, these issues will lead to unnecessary additional meetings that distract you from your daily goals.
5. Do not lose sight of your core strengths.
It’s easy to fall into the trap of wanting to be everything to everyone. It makes sense right? The more services you offer, the more money you can make. The problem is that you better be good at everything you do. The saying about being a “jack of all trades, master of none” is not a compliment.
Whether you’re a Web designer or a tax attorney, make sure you’re the master of your core strength. This will enable you to be recognized as an expert in your field and help you to build your business brand. Be the best at a few concentrated activities and stay focused on investing in those strengths.
Furthermore, a core strength of your company can and should be innovation. How are you providing your clients with new value? How are you pursuing the next big thing? Stay connected with your clients and continue to listen to what they want and learn how to better serve them through innovation. Discover a blue ocean and you will make the competition irrelevant.
6. Do not mistake the importance of your brand.
You know the saying in Real Estate: Location, Location, Location! Well, the same should go for all businesses: Brand, Brand, Brand!
Most small business owners don’t realize how important their brand is to the success of their business. If your current or potential customers don’t perceive you as the best at what you do, your business will have a difficult time growing. In addition, you will have a challenging time attracting the talent you need to build your team.
Whenever possible, dissect your brand. Constant brand reflection is needed because, let’s be honest, your competition is breaking down your brand and looking to exploit your shortfalls. Uncover ways you can improve your brand and be humble enough to take action.
7. Do not grow for the sake of growth.
In 1998, I was the Creative Director of a fairly large interactive agency in San Diego. I clearly remember going to an “all hands” company meeting where the President stated we would be at 180 employees within six months. That would almost triple the staff in a very short period of time. Why? Because ego got in the way of smart business decisions.
My thought at that time, “Why not have profit triple and try to maintain a reasonable staff size?”
While that’s an extreme example, some small companies tend to focus on being bigger versus being better. There is no glory in being big and sacrificing quality, thus profits. It’s important to be patient. If your business is steadily expanding and not just in spurts, then you’re meant to grow. Take your time and make sure you only bring on staff when necessary.
8. Do not forget to market and treat yourself as a client.
The old saying goes, “The cobbler’s children have no shoes.” Much like the cobbler, small business owners often become so busy dealing with customers, projects, and the day-to-day minutia of running their company that they completely forget about taking care of themselves and their family, which in this case is the business.
Building your brand and business requires that you market your abilities and invest in yourself. Yes, unfortunately this requires a monetary investment and will certainly impact your profitability and cash flow. However, that’s the cost of doing business.
Successful leaders are willing to take a couple steps back in order to move many steps forward. Be smart and use your marketing dollars wisely. Make sure you track your return. Certain collateral you create for interactive or traditional marketing tactics may have a higher impact and result depending on your business. Find out what works for you and continue on that path.
9. Do not stop networking.
I used to have a close friend that complained he couldn’t find a date. My response was, “That’s because you don’t have any women walking through your living room. You need to get out of the house!”
The same goes for business owners. We spend most of our time working and not enough time making connections with potential clients. It’s who you know that creates and builds relationships with people you don’t know. For example, when you receive an email with a resume from someone you don’t know, you may or may not pay attention. However, if your friend asks you to look at a resume because they know that individual, you’re far more likely to review.
Be a corporate partner, build connections when possible, go to events and remember that life and success begin outside of your comfort zone.
10. Do not mistake your instincts.
One of the biggest lessons I’ve learned over the years is to trust yourself because you’re more than likely right. For example, there have been times when we’ve taken on a client and it wasn’t worth the money and our instincts told us that it would be more of a headache, but we gave it a try regardless. Those relationships didn’t work out and was just confirmation that we should have listened to our gut. It’s important to look out for red flags and when you see one, believe it. We have instincts in business and business owners let them slip because they think they might be wrong. Always stick to your instincts.
We’ve learned many lessons over the years that have shaped who we are today as a company. While making mistakes and learning from them is all part of the process, if you can avoid them, it will allow you to focus more on the company’s success and moving forward rather than having to dig themselves out of a rut.
About the Author: Les Kollegian is the CEO at Jacob Tyler, an award-winning, full-service, brand communications agency specializing in brand development, print collateral, web design, web development, product design and online marketing. Contact Les at email@example.com.