Business owners often make similar mistakes that impact their growth and success. As a business coach and strategist, I find that many of the businesses I interact with struggle with some of the same problems.
I approached Kim Brandley, CPA, a partner at the accounting and consulting firm J.H. Cohn, and asked her to share her expertise to help business owners overcome some hurdles in growing their businesses. My Q&A with her provides insights for businesses that may be making these mistakes and how to avoid them.
At the end of the blog post there is also an audio podcast of our interview where Kim gives more detailed responses to the questions.
Q1 – What are the top 5 mistakes that businesses make that can cripple their growth and success?
- Not having a strategic/business plan
- Not understanding cash flow
- Not understanding your competition
- Losing focus of core business
- Not asking for professional help
Q2 – Why is “not having a strategic/business plan” important and how does it hurt the business not to have one?
The business plan is like a roadmap. It’s not much different than when you’re driving down the road and you follow a map and you know where you’re trying to get to. Have a realistic business plan in place and goals that you know you can accomplish and things that you know you can get done.
Q3 – The second mistake is “not understanding cash flow. “Tell us why cash flow is king.
Cash does not equal net income and there are other metrics within the business that affect cash. There are times when you’ll have a good year in a business and you should probably either reinvest that in capital assets or things of that nature or try to put some money away, because inevitably there’s probably going to be a year that’s not a very good year compared to that one. Some questions I would ask are “do you measure your metrics on a weekly basis? What are your average days to collect for accounts receivable?
Some areas which impact cash flow are depreciation, taxes, people not paying you on time, taking out a loan, and how quickly you pay your own payables. Business owners need to have up to date financial information because it’s hard to base decisions on stale information.
Q4 – Why is “not understanding your competition” a key mistake?
Underestimating your competition is a mistake that business owners make often. It starts with a thorough understanding of target market and recognizing who the business leaders are, where they are located and what their needs are. Business owners need to know who else is capable and qualified to provide those clients with the products and services they are looking for. It is easy to track your competition’s activity through websites, social media, Google alerts, industry publications and associations.
Q5 – You mention the 4th mistake as “losing focus of the core business.” Why is that important?
It’s important to have a focused vision to remind you what you do best and why you’re in business. I think you have to be very careful not to take resources away from the core business or at least understand what resources you are draining from the core business and what impact that could have. If you’re going to take a risk and do something a little bit different, you need to manage very proactively rather than managing by crisis.
Q6 – The 5th mistake is “not asking for professional help.” Business owners think they can do it all themselves! Why is this a mistake?
In many cases businesses, particularly in this economy, don’t want to spend money, but sometimes spending money with the right professionals is clearly going to save you money in the long run.
You need to surround yourself with a group of professionals, whether that’s legal, accounting, consulting, and be willing to at least hear what they have to say and listen. Do what you do well and bring in professionals to do what they do well. Trying to do everything yourself as a business owner is most likely going to lead to many sleepless nights and probably a very exhausted business owner.
You need to have an open mind and be willing to listen to what the professionals are telling you. It doesn’t mean that you’re going to take every piece of advice, but you at least have to be open-minded that you’ll listen to some of the ideas. And be willing to take a step back and realize that you’ve probably made some mistakes and learn from those mistakes.
On an internal basis, are your people giving you what you need? Be willing and brave enough to make hard decisions to let someone go.
All these things tie together and are often not mutually exclusive. Often times these mistakes happen together.
Q7 – So what are some steps a business owner can take to grow their business?
- Have to have an open mind and be willing to listen to those people around you, whether it’s a formal board of directors or a personal set of board of directors where you have set up an advisory group.
- Be willing to think differently so that you can look at what you do well and try to turn that into additional revenue streams in some way. Look at the things with respect to the business that you know are going well.
- Make sure you provide excellent customer service.
- Ask for referrals.
- Get proper sales training.
- Focus on what you do best.
Kimberly Brandley, CPA is a partner with the accounting and consulting firm J.H. Cohn LLP. Kim has extensive experience providing audit, accounting and consulting services to privately held businesses and their owners. Kim can be reached at email@example.com or 732-380-8618.