Yesterday we looked at the first two of Five Top Errors entrepreneurs make as they build and grow their businesses: paying too much attention to trends and competition; and misplaced measurements that cause loss of customer loyalty.
Error Three: Taking On the Wrong Initiatives or Working On Them the Wrong Way
Why is this an error? It is one of the most wasteful uses of resources, a lot like gambling or hoping to learn from mistakes as the worst case.
Improvement or development efforts are tricky and hard to focus, whether on products or changes in operations. How do you know if the projects you select will get you where you want to be? The most common error is choosing to gamble on projects whose payoffs you can’t predict and whose results you don’t assess comprehensively. Testing is not based on frameworks that cover all effectiveness arenas in a systemic way, and in particular the financial effects. Often you don’t know until months later whether a project will contribute to earnings, margins and cash flow. But this does not have to be the case.
New Business Acumen: Understand and work with the factors of product, organizing, market and financial effectiveness when assessing an initiative. Make the prediction of success more accurate at its core. Know what actions correlate with each of these arenas. Knowing in advance is what matters—not adding up effects after the fact.
To be continued . . .
There are a few hundred more ridiculously common errors, all of which spring from good intentions. At The Responsible Entrepreneur Institute, we educate and develop people in the core business acumen needed to avoid them. Our track record includes building successful small businesses and growing them with strong financial and responsible platforms. Learn more about our programs and get an introduction to the five new business acumen arenas on January 10, 2013 at 5 pm Pacific Time. The call is free but space is limited. You must register to attend. If you register and are unable to attend, you may receive a free recording of the call within a few days after January 10.