Many things can prevent seasoned entrepreneurs from realizing their business’s growth potential. Fatigue, burnout, and lack of capital all play a role. But roadblocks, if not dealt with properly, don’t just stall progress, they can put it into reverse, potentially harming the business.
According to Forbes magazine, around a third of businesses eventually fail, with many more not succeeding in the way that they should. Savvy entrepreneurs know, therefore, that it’s not just a matter of dealing with roadblocks when they arise, it’s also about preventing them from interrupting their firm’s growth trajectory in the first place. Business leaders need to be able to adapt and remain flexible, even if that means going off-piste from time to time. Adaptability is essential in the modern world.
So what roadblocks could your business face and what can you do about it?
Low Productivity
Startups are famed for their high productivity. It’s easy to track the effort of each team member, and everybody has an incentive to work as hard as possible. But for medium-sized companies, individual contributions are no longer so clear. Some low productivity team members can hide behind the high output of their department, essentially getting a free ride.
Dealing with low productivity is essential if you want to be cost-effective and achieve profitability. Amazon CEO, Jeff Bezos, knows about the problems of productivity intimately, which is why he instills rigorous behavior in his teams, especially those doing higher value-added activities. For instance, there are two rules if you want to be in an Amazon meeting. First, you need to have something that you want to say planned ahead of time. This stops people from turning up who aren’t directly involved in whatever requires planning. The second rule is that colleagues should leave meetings as soon as they become irrelevant. Bezos himself has been known to abruptly leave a conversation as soon as he feels there is no need for him to stay.
Low productivity can also be the result of poor scaling, especially when it comes to software. Team management and staffing software can help to prevent communication bottlenecks and keep team members talking to each other. Automating administrative tasks removes the need for human input and reduces error rates. If you suspect that a particular job is hogging your staff’s time, see if there is an app that can do it faster and cheaper.
Lack Of Skilled People In Your Team
Founding members of startups are usually highly skilled people who have a passion for what they’re doing. But as a business grows, they’re contribution can be diluted by less talented or enthusiastic people. Whereas once the company could do no wrong, now lower quality employees create problems and issues with customers.
The most important aspect of your business is the brand. When you employ low-quality staff, your brand suffers, and suddenly your customers think carefully about looking elsewhere. The trick here is to remove anybody from your team who is toxic. A toxic person is somebody who can negatively affect others and lead them astray. Most people in your team will be followers, whether they know it or not, and so when there is a strongly negative toxic person, they follow their lead. Lisa Crocco, director at Incfile, says that the first thing that entrepreneurs need to do is to seek out these people and remove them so that they can unleash the true productive potential of their other hires.
She also says that businesses need to stop focusing on people with hard skills and, instead, look out for individuals who have seen companies through growth in the past. Staffing roadblocks are often experience-based when few people in a team have adequate knowledge of scaling.
Failing To Understand Cash Flow
Wells Fargo wanted to find out how much small and medium-sized businesses understood about cash flow. Their results suggest that around four-fifths of companies don’t have a clear understanding of what having good cash flow means, and their accountants aren’t helping much.
Cash flow issues can crop up all the time, even for companies with healthy balance sheets. The problem is not so much generating a profit, but having money available as and when required by the firm.
Cash flow issues can be a major headache for businesses without a rainy day fund. Not only do they prevent expansion when opportunities arise, but they can also ruin relationships with customers and suppliers if lack of money prevents promises from being kept.
Crocco says that companies need to be constantly aware of their financial situation, always monitoring their cash flow using the correct cash flow accounting methods. Although a company might look profitable over the course of the year, the actual cash it has on hand can vary wildly. Savvy business leaders know that is important to keep credit channels open so that when finances get squeezed, there’s always a new source of money to keep the business operational.
Failure To Organize
There comes the point in any business’s growth where the founders must let go of their original responsibilities and hand them over to somebody else. For many, this is a wonderful time when they no longer have to do all the grunt work, but some find it hard to let go.
The best entrepreneurs know when to delegate tasks to others. They know that they need help if they want to stay organized. Some businesses can fail if they don’t correctly manage their accounts, customer relationships, or pay bills on time. Fines can accrue, customers can leave, and some companies may be liable to legal action, costing even more money.
Organization not only helps to prevent losses, but it also makes the day-to-day running of the business easier. Staff know where to find things, supplier payments remain up-to-date, and scaling is less of a hassle.
Roadblocks can stand in the way of any business, even the biggest. But by ensuring that your company is a well-oiled machine, you can avoid many of them on your path to scale.
