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You face many complexities when you begin a company. As a founder, leader, and seller of a start up, and as a consultant to many CEOs and founders, I am well-versed in the risks that could lead to your financial ruin. No matter how successful your product is or how many investors you’ve raised, these mistakes can cause your business to fail. We’ll take a closer look at these five mistakes.
1. Underdelivering and overpromising
Leaders must set the vision and expectations, take ownership for their actions, and then deliver. It is essential to have big goals that you can achieve for employees, customers, and investors. However, these goals must be realistic. Unrealistic expectations will cause unnecessary stress to your team, and can also damage your image in the market and among investors. It is better to exceed realistic expectations than ruining your reputation by putting your foot in front of your face.
A clear example of this mistake was hydrogen truck maker Nikola (NASDAQ: NKLA) and their now infamous “rolling a truck” downhill video that, once found out, crashed their stock by over 80% and destroyed their biggest partnership. Another recent example was when Lordstown Motors (NASDAQ: RIDE) faked its order numbers to inflate their value. It is not worth the reputational harm that letting people down can cause.
2. Not being patient
You can be too eager and make poor decisions that have long-term implications. You should not work in a large corporation if you are too patient. Real strategic planning and finding the balance can make a huge difference for you and your team. It can also help to fix unrealistic timelines and other issues.
Most entrepreneurs are optimists, which explains why we continuously take on so much risk with a very slim chance of success — half of startups fail within the first four years. Being impatient can create unnecessary, and sometimes risky, “promising-looking” shortcuts that in the long run can be just a band-aid solution.
Psychologists use the term “Planning Fallacy” to refer to our tendency to underestimate how long it takes to accomplish a task. The book Thinking Fast and Slow by psychologist Daniel Kahneman suggests that two factors are responsible for estimation errors.
- It’s easy to forget how much time it took us to accomplish similar tasks in the past.
- Assuming there are no complications which could cause delays
Although leaders may have an idea of the time it might take to achieve a goal, it is important that they realize it almost always takes longer. It is important to allow yourself and your team some breathing space, as most entrepreneurs never complete many of their tasks.
3. 3. Micromanaging
Micromanagement is a surefire way of causing high turnover in staff, low productivity, little creativity, and a lack of communication. Micromanagement can lead to a lack of innovation, resentment and a feeling that people are not being trusted and dissatisfied. You don’t have to be a master of everything as a leader. Instead, you should be focusing on finding the right people and giving them permission to accomplish your goals. You are not helping if you constantly hover over and give your final words every step, In fact, you are actually hindering the flow of information, creating more chaos, and adding to everyone’s workload.
Leaders need to be clear about what they expect from their staff and how to stop them. A CTO at a growth stage company is often involved with SEO, PR and budget approvals. Instead of focusing on the product’s value for customers, this is an example.
It is important to focus your efforts on each individual responsibility. Leaders need to be able trust their employees and walk the line between being involved and being too hands-on. The entrepreneur is the first person to assume almost every role in a company’s growth. As the business grows, entrepreneurs become the coaches who make sure everyone plays their role and performs at its best. This Gallup Guide of signs, causes and solutions can be a good place to start if you think you may be making this mistake.
4. Don’t value your team members.
Nothing is worse than feeling taken for granted, and not getting properly compensated. This is a mistake that leaders should make. They need to think hard about creating an environment in which people are given positive reinforcement and fair compensation.
A team that is focused on the success of their employees can be motivated to do more. Everyone wants to be proud of the work they do. Resentment can lead to a lack of progress and a loss in motivation. Leadership should be able to praise their employees and reward them for outstanding work. This will create a happy workplace.
Paying your employees less may actually be more expensive. To remain competitive in the competition for top talent, leaders must be willing to raise salaries in high-demand positions. With remote work increasing, companies are constantly competing to hire the best talent. Low morale and high turnover will be the result of leaders who are unwilling to pay employees at market rate. According to some studies, replacing a salaried worker in a company will cost the business 6-9 months of salary. Long-term costs can be higher due to the high costs associated with hiring, including interviewing, screening and training.
People who feel valued and well paid are more motivated and loyal. Entrepreneurs who are too quick to cut corners and make a profit will fail to build the company that can compete at the top levels. The reason the Patriots, Real Madrid, and Lakers are so successful in sports is their ability to pay. You can use options, stock options, restricted stock units and bonuses to retain and attract the top performers in your organization. The Harvard Business Review has a great guide on compensation that is essential and cannot be overlooked.
5. Don’t take on too many
If a company attempts to accomplish too many things too quickly, it can lead to overextending their resources, confusion, and ultimately, a loss of purpose. The sheer volume of complicated projects can cause overwhelm in employees, which is not good for their mental and physical health. An early stage startup should not over-commit and handle multiple projects simultaneously. Leaders should make it a priority to determine the best number of projects the company should pursue and prioritize them according to ROI.
A biotech company that is working to develop new treatments, launching a network of clinics and launching a product line for supplements would be an example. Investors may be confused by this three-pronged strategy. They will lose focus on the best ROI opportunity, which is the creation of a novel drug treatment.
You must ensure that the work gets done and not compromise the company’s reputation or quality. It’s not always possible to do everything. Entrepreneurs need to recognize that sometimes less is better. This can lead to failure for all, even yourself.
The bottom line
Even small, unremarkable positive changes will eventually become significant. An organization’s failure is inevitable when it has too many errors. Leaders should be more concerned about their present trajectory than with the results. The outcomes of a change in direction are the lagging indicators of what is happening. These five leadership mistakes don’t have to be repeated. Being aware of your surroundings, paying attention to feedback and being attentive can help you avoid making them worse.
Publited Sat, 21 August 2021 at 18:29.45 +0000