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6 Critical Mistakes All Small Company Managers Must Avoid

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This post originally appeared on THEsmallCOMPANYBLOG.

Before I get too far into this article, I need to point something out.  Like hundreds of people before me, I could have used the 1,000 words that follow to declare that running a successful small company is about things like taking risks, accepting failure, multi-tasking, finding creative solutions to problems, and never accepting ‘no’ for an answer.  But anyone who regularly visits this blog knows that 1) these things are implied, and 2) running an entrepreneurial company is as much about avoiding big mistakes as it is about being some kind of Mark Zuckerberg prodigy.  In order for you to get some value from this article, it is important you understand this.

With the above in mind, the Yin and Yang of small business is this: for every skill or tendency a small company manager SHOULD have, there is one critical mistake he or she must avoid.  In my close to 20 years of small company experience, I have seen six mistakes regularly made by managers—all of which have slowed the growth of the organization, and a few of which have brought the organization to its knees.  If you have one you would like to add to the list, please feel free to enter it into the ‘Comment’ field at the bottom of the article . . . because the only thing I love more than a Retweet is a great piece of feedback.

Mistake #1: Having (or Attending) too Many Meetings

Anyone who works in the public sector has seen first-hand that a “culture of meetings” is rapidly taking over big corporate America.  Among my close-knit group of colleagues, many will admit that meetings fill all but 30 minutes of each work day—and most agree that their “organizational value” is directly tied to the number of meetings they are involved in.  Not surprisingly, these same colleagues complain about their organizations being slow to move, slow to react, and short on resources for new initiatives.  It’s tough for a company to be quick or productive when employees’ butts are glued to conference room chairs all day, and meetings are one area where small companies NEVER want to emulate their larger competitors.

Mistake #2: Not Dealing with Difficult Employees

When it comes to management strategy, avoidance is a technique practiced by far too many managers these days—even experienced ones who happen to run the company.  And nowhere is avoidance more damaging to an organization than when the issue being avoided relates to a difficult or under-performing employee.  We’ve all worked for (or with) someone who transfers tasks to overworked employees, allows negative situations to persist, or absorbs work themselves . . . simply to avoid an uncomfortable conversation with a difficult subordinate.  But the fact is, good managers and entrepreneurs don’t work around difficult employees—they either fix them, or replace them.

Mistake #3: Turning into Someone Who Only ‘Manages’ Things

I am, and have always been, a firm believer in the “hire smart people, and get the hell out of their way” management philosophy.  That said, I also believe that managers at small companies need to understand what their employees do AND how they do it.  After the dot com bust in the early 2000s, progressive companies finally realized that loading growing organizations with people who ‘just manage’ can be a recipe for disaster.  When it comes to management, the line between “tactical” and “strategic” isn’t nearly as defined as it used to be—and managers who want to develop high-growth companies have to know how to get things done on their own if they need to.

Mistake #4: Being a Poor Project Manager

Although coming up with great ideas is a key piece of leading an entrepreneurial organization, the ability to bring ideas to life requires a little something called ‘project management’—and the fact is, the vast majority of managers are horrible at it.  Executives who expect to successfully execute their company’s vision need to be well-versed in things like budgeting, communication, acquiring resources, defining requirements, and scheduling.  That said, over two-thirds of the world’s projects don’t come in on time, are over budget, and have less than a coin flip’s chance of ever being completed . . . much less completed successfully.  Hundreds of thousands of people participate in formal project management training each year, and people who manage small businesses should be sitting at the front of the room when project management classes are delivered.

Mistake #5: Making Emotional Financial Decisions

True story . . . a few years back, I worked with a managing CEO who insisted his relatively small organization needed a top-tier CRM system, because he learned at an industry event that all of his larger competitors were using one to manage their customer databases.  After nearly a year of development, implementation and integration, the system was up and running.  Unfortunately, the implementation costs—not to mention the seat licenses and ongoing maintenance fees—were so high that the company was essentially paying $10 every time an employee accessed a customer record.  The manager in question should have known the cost of the system would amount to nearly 6% of every transaction going forward (the average customer spent just $180), but was blinded by his desire to “keep up” with competitors he perceived were running better organizations than him.  The lesson? When it comes to business, gut feelings and envy are no substitute for a thorough Cost-Benefit Analysis.

Mistake #6: Motivating by Fear or Intimidation

In a perfect world, all managers would motivate their employees with things like autonomy, promotions, raises, bonuses, and positive feedback.  But unfortunately, there are still plenty of managers and business owners who use things like layoffs, wage freezes and massive decreases in benefits to get people to work hard.  Managing by threat of negative outcome is a great strategy for most executives . . . if their goal is to encourage their best employees to look elsewhere for employment.  The secret to motivating employees is really not much of a secret anymore—communicate the company vision, build a sense of team, and put rewards in place when company-wide goals are met.

Comments?  Questions?  Please feel free to reply to this post.

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February 2nd, 2011 at 7:12 am