Top Business Owner Mistakes With Serious Consequences and How To Avoid Them

Every year over ? of the country decides to set New Year's resolutions. Of that, 87% believe they’ll keep their resolution throughout the entire year. Yet the average resolution only lasts less than 4 months and it’s so common for us to fail at our resolutions that the second Friday of January is colloquially known as ‘Quitters day.’?

Source: https://www.forbes.com/health/mind/new-years-resolutions-statistics/

Why then do so many people fail at their resolutions? It’s because at the heart of every commitment is a daily decision. Given enough time, stress and everything else life throws at us, it’s difficult to consistently make those same choices, even when they’re in our best interest!

The contrast between the decisions we make early on during our resolutions vs the decisions we make later is a fantastic segway into what we consider our first serious mistake that many small business owners make.

Running and operating a business comes with its fair share of ups and downs. Owners today have so much on their plates that it’s not uncommon for mistakes to happen. Much of the mistakes we make in business are minor and have relatively limited consequences. Every now and then, however, we make some serious mistakes that have lasting and severe consequences. These are the mistakes that we need to be laser focused on avoiding to the best of our abilities. Get this right, avoid these mistakes and you’re likely looking at significantly accelerated growth, sales and profits in a business. You’ll likely enjoy the work you do a whole lot more too!

Mistake 1: Decision Making Fatigue

One after another, they don’t stop. As owners, regardless of the size of our business, we need to make a series of decisions every day that can have unimaginable consequences (good and bad!) for our businesses. Whether it’s early on in a small business or in the more mature stages of business with complex issues and multiple employees, our decisions have an impact on the business and the people around us!?

It should come as no surprise then that one of the biggest hurdles owners need to overcome is the fatigue that comes with decision making. Decision making fatigue is a deterioration of the quality of decisions we make. As we make more and more decisions and the stress and mental effort that comes with those decisions it’s common for the quality of our decisions to actually suffer.

We make better decisions when we aren’t tired, stressed and worn out.?

There was a study done on parole hearings for inmates. The study looked at the decision making of the judge on how statistically likely they were to release the prisoners at different times of the day. It was found that first thing in the morning and then shortly after a recess for lunch or a snack were the best times of day to be up for a parole hearing and the most likely times of day that the inmates would be granted parole. There was more than a 6x likelihood of release early in the morning rather than later in the day.

It’s fairly clear that the decision making process by the judges was influenced by the stress and effort of ongoing decision making. This was corrected with proper rest and nutrition but shortly afterwards the inevitable load from the day again began to influence the decision making of judges. https://www.theguardian.com/law/2011/apr/11/judges-lenient-break

Imagine for a moment your decision making determined the quality of life of someone in front of you. You’d likely want to make the best decision possible.

As business owners, whether we recognize it consciously or not, many of our decisions will have an oversized impact on the people around us including our employees, partners and even our own families.?

Unfortunately, decision making fatigue is a very real and very common mistake owners make regularly. In today's culture, especially in the United States, overwork is not merely accepted, it’s lauded. Yet overwork is nearly a guaranteed recipe for compromised decision making.?

On the bright side there are a number of ways we can self-correct for decision making fatigue that are easy to implement and execute on. Here’s a few suggestions you can likely implement today.

Take Breaks

This should be obvious but it’s worth repeating. If you want to save an enormous amount of time, stress and money, take more small breaks more frequently.

Healthy Habits

Nourish yourself with healthy foods, enough sleep, exercise and methods to reduce stress. Decision making fatigue is at least partially caused by all of the above factors. By controlling what you can you’ll reduce the impact of poor decisions.

Prioritize & Limit

It seems like common sense but if continuously being put in a position to make decisions increases decision making fatigue, then we should be prioritizing what decisions are actually important to make and limiting our decisions to those. This should help reduce paralysis by analysis, overthinking and ruminating. It’s very hard to give up control and yet stepping back from too many decisions is an absolute game changer for a business owner.

Develop Routines

The great thing about routines is they put our brains on autopilot. The less we need to think about something the less willpower it takes. Willpower is a finite resource and when our willpower muscle gets tired our form will struggle. Not into the muscle analogy? The more routine you can develop around recurring decisions the less tired you’ll get and the better decisions you’ll make when it really matters.

If you’re struggling with decision making fatigue, consider joining one of our owner advisory boards. Owner advisory boards provide invaluable feedback to help ensure that owners make the best possible decisions on a regular basis. If you’d like to learn more about our owner advisory boards you can check us out here.

Mistake 2: Dependency and Bottlenecks

One of the biggest challenges to accelerated growth and ultimately selling a business for maximum value is owner dependency.?

We all want to be needed. It’s a natural part of being human. We want to be a part of a community and when we are the literal parent of something whether it’s children or a business it’s very difficult to let go and give up control. When we run our business out of this context it creates a fragile situation in which the business is dependent on the owner for critical operations and decision making. For a business to be run effectively it must be able to survive independent of the owner’s direct involvement.

When a business needs to run through the owner it creates bottlenecks to accelerated growth.

These bottlenecks might show up in many different ways but they almost always hamper the bottom line and they will certainly reduce and seriously discount the valuation of a business. It’s common for the bottlenecks to show up through roles, responsibilities and especially employees.

As a small business owner the business may still be highly dependent on you for certain things such as business development, financial management and customer relationships among others. Now picture this…your business is functioning smoothly and suddenly you’re dealt a blow with a major health issue of your own or someone you are close to. You are pulled away from the business and you can no longer actively play a role in the business the way you have been. A? business that is dependent on you will be severely impacted. If you’re pulled away from the business for long enough, the business will likely fail. Business interruptions like this happen more frequently than you might imagine and are a serious consequence we need to be vigilant against as business owners.

Not having the right employees taking on key roles keeps critical day-to-day aspects of the business dependent on you as the owner. When the owner is pulled away from the business and key personnel are not in place the damage can be extensive or even terminal.

Fortunately, we can address owner dependency and bottlenecks by being intentional in a few key areas.

Hiring Right

In what could be an entirely separate conversation, it’s frequently the case that when businesses grow, employees with tenure will often grow with it into key positions. However, tenure alone does not mean that existing or long standing employees are the best fit for key positions. Management and leadership require very different skill sets and training than being technically competent in a role. By being thoughtful and intentional with our hiring as we grow we can ensure we put the right people in the right positions for long term business success and reduce dependency on the owner. This becomes especially true when we make a concerted effort to empower and enable our employees to take higher levels of responsibility and accountability within the business.

Automate Processes

One of the safest ways to remove dependency involves automating what we can. By putting together processes with automation we are able to ensure our business runs even without 24/7 direct leadership oversight. This can create unbelievable freedom to a business owner. Often the oversight of these automated processes can be handed off to a specialist or another employee and helps remove the owner from the day-to-day functioning of the business.

Develop The C-Suite

If exit is on your mind as a business owner (and we argue that it should be for every business owner), then developing a c-suite is a must do. Forming a leadership team to handle the strategy and bigger picture decision making for a business on a regular basis is one of the easiest ways to maximize the value of a company and provide true freedom for an owner that’s looking for more than just a high paying job. The C-suite allows an owner the opportunity to be incredibly selective in how and where they engage within a business and provides an entire world of opportunities for growth, expansion and impact.

By setting intention to reduce dependency and eliminate bottlenecks we provide our businesses with the room to grow at an uninhibited pace. Investors and potential acquirers appreciate that the business can and is a success without the dependency on a single individual and this greatly influences the maximum value that can be placed on a business.

If you’re aware this is a problem and are looking for the structure and process to overcome this serious mistake we recommend you check out what some of the owner’s we have worked with have to say about us. Shoot us a note and we’re happy to put you in touch or you can head over to one of our testimonials and see for yourself.?

While there are a number of other issues that small business owners struggle with, the challenges of decision making fatigue and owner dependency are two of the most critical to address and be vigilant against. Whether you’re building your business with these challenges in mind or shifting how your business is run, mitigating these risks it will greatly benefit both your bottom line and overall wellness.

For more conversation on the challenges in business and solutions to overcome check out our newly rebranded podcast!