The Five Biggest Business Mistakes
By: Bill Parisi, BBA, C.S.C.S.
Founder, Parisi Speed School and Parisi Franchise Systems
After being in the fitness industry for as long as I have, I have heard pretty much every question in the book. The one however, that I get more than any other is this…”What makes you so successful?” People always want to learn from someone’s success. I am here to tell you though that you will learn more from an individual’s failures, than you learn from their success. Since I started my business over 20 years ago, I have made my share of mistakes but there are five that I believe can derail a business faster than all of the rest. The key is that I learned from every one of them and it only made my business stronger, and me a better leader.
1. Not Being a Master Communicator with Your Staff
A bad hire can cost your company up to 24 times the person’s salary. Your interview process matters a lot, so you really need to master it. That means you need to do background checks; require non-compete and non-disclosure agreements; establish reimbursement contracts; and remember that this is a business. As much as you may want to, you can’t save everyone. If someone’s not a good fit you’re doing him or her a favor by helping them move along.
2. Not knowing your numbers.
Another common mistake—and I’m going to keep saying this—is not knowing your numbers. If you don’t understand your financial situation; if you underestimate how much things really cost or how long they take … you’re pretty much doomed to fail. Or at least tread a lot of water. Running a successful business is a numbers game. So get to know them. Make them your friend and ally. Make sure that you learn basic accounting and never let just one person manage your numbers if it is not the sole business owner.
3. Not Appreciating the Importance of a Back Office
Speaking of numbers … another common mistake—number three on today’s hit list of what not to do—is not appreciating the importance of a real back office and the power of having a designated collections and payables. This is especially important when you have more than one operation. The value of having the right software, picking the best vendors, consultants, and partners cannot be overstated. One strategy I have followed was to always pay my venders early or on time. On time for me would be late. By paying early, a level of trust is built up and it is something they really appreciate. The reason is if cash flow ever gets tight and you need some slack, you now have an open and trustworthy relationship with your vendors. Chances are, they will cut you some slack and help you out when you need it.
4 Letting Success Go to Your Head
And fourth … being successful at one aspect of your business does not automatically make you successful in other areas. This kind of hubris and self-deception has led to the downfall of more enterprises than I can count. Don’t let success go to your head. Remember … when you start making real money—an entirely new set of challenges occurs. Employees are all on board in the beginning. When the business is new, they are excited to work extra hard to help get the business going. But when the business is successful and making money, they expect more. This is why is it critical to have preset compensation plans in place that lay out their growth as the business grows. I cannot stress enough how important it is to have job descriptions, employee reviews and compensation plans mapped out. This is something that has to be looked at every year.
Despite how confident you might feel, you can never be over capitalized. There’s definitely such a thing as too much risk. Don’t get greedy. Come up with an income that makes you happy and then set a course that allows you to grow slowly from there.
5 Not Identifying What’s Really Important
The fifth mistake people often make–and this applies to almost everyone—is losing sight of what’s important in life. You have to ask yourself—on a regular basis—what’s more valuable to you? Time or money? Because one you can always make more of. The other … you only have a limited supply of. This changed for me when my kids reached the ages of 8 and 10. Being around them was more important than making more money.
So know your limits. Remember your kids are only young once. You’re only young once. If you skip YOU time and fail to meet your individual needs … what’s it all worth in the end? Keep your priorities straight. Respect them. Balance them. Or just like with too much physical training …. You’ll burn yourself out.
Well, I gave you the plan, but I can’t make you act on it. You can read and research all of things that you should do to run a great business but when the rubber meets the road, it is up to you to make the call and do it. This is just roadmap to success and it is up to you to follow it.
For more information about Bill Parisi and the Parisi Speed School, check out www.parisischool.com/businessopportunity