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The Seven Deadly Sins of Small Business
By Michael Adams



Owners and executives must be leaders first and managers second. As leaders our task is first and foremost to be about doing the right things, and the “seven deadly sins,” should be on the top of your list as leadership issues you are dealing with on a regular basis. Building a small business is one of the most rewarding, but risky ventures one could possibly venture into. Most papers on small business deal primarily with financing and risk management, which are only symptoms of the real issues. Your bank account is just the scorecard of how well you have developed your leadership skills relative to accomplishing the “right things.”

This paper will help you avoid many of the costly pitfalls of operating a small business, assuming you heed the advice. Avoiding these pitfalls will in turn help you to conserve cash, develop market share, increase sales, improve customer loyalty, increase employee retention and build efficiencies into your operation.

The “seven deadly sins” include 1) Poor or non-existent business planning; 2) Lack of a strategic objective; 3) Lack of marketing strategies and tactics; 4) Management in the place of leadership; 5) Poor or non-existent systems; 6) Failure to utilize an appropriate leadership style; 7) Care and feeding of sacred cows. Business owners and executives who do not understand them, do not have experience with them and therefore do not appreciate their impact and significance often ignore these critical leadership issues.

Thirty-five years of building and operating small businesses has taught me that most small business problems are not money problems at all, and in fact money is just an indicator that much deeper issues are at play. Beware; the market is a wicked taskmaster, these “seven deadly sins” are like small doses of poison injected into your operation by the very marketplace you are trying to conquer, and they provide a slow painful death to the naive.

Here are the “seven deadly sins” in order of priority.

1) Poor Business Planning

Most small businesses do not have even a summary business plan, and of those that do, many are cookie cutter business plans built with the help of a piece of software. At a minimum a business plan should have an executive summary; a company overview with company history and it’s current status; the companies strategic objective; a description of the companies products and services; a list of the companies intellectual properties including patents, copyrights, trademarks, processes and know-how; a market analysis; a competitive analysis, which includes competitors and their market position, and their strengths and weaknesses; a marketing plan, which includes your marketing strategy, product strategy, sales strategy, and pricing strategy; your customer service plan; sales projections by product, in units, for at least three years; and finally a set of financials which include projected income and balance sheets with a Performa sales forecast.

Here are some other important suggestions and facts related to business planning:

• Less than a third of small business startups have a business plan

• A business plan does not have to be incredibly detailed for operational purposes

• It should be a work in progress updated on a periodic basis

• Particular attention should be paid to the marketing plan

• A business plan is part of the first fifteen percent of the business development process which will assure the last eight-five percent will go smoothly

• The executive summary should be written last, after the rest of the plan is in view.

2) Lack of Strategic Objectives

A business strategy is made up of carefully crafted words making up templates, which in turn act as filters through which all planning, tactics and decisions are passed through before implementation. A strategic objective is therefore, a business strategy developed to guide an organization in meeting business objectives. A strategic objective is developed from the owner’s vision, passion, core competencies and values for the business. Contact Emerald Business Services or go to our website for a worksheet you can use to develop these critical business development tools.

3) Lack of Marketing Strategies and Tactics

Marketing strategies govern the development of tactics, which in turn provide the actions items contained within your planning process. The most important aspect of your marketing plan is the development of promotion strategies and tactics, which feed your promotion planning and provide you with sales forecasting data. The promotion plan should also detail costs and anticipated unit volume so you can set priorities and provide sales forecasting data.

4) Management in the Place of Leadership

So why is leadership so important in growing a business? Because leadership is about doing the right things, management is about doing things right . In many ways, it is leadership that will grow your business from a sales and a stability perspective, and management that will make, or keep it profitable. Also, consider that the best companies focus ninety percent of their attention on external issues, not internally , leadership is primarily a focus on the external issues.

5) Poor or non-existent Systems

Most people think of computer systems when they hear the word “system.” But in the since it is used here it means all systems, including the system you use for selecting the right employee, for decision making within a department and so on. One of the more telling statistics in this area is the fact that ninety-four percent of all task or project failures are system failures2. Some of the more common reasons for system failure include:

• Islands of automation verses integrated systems

• Absent or non-existent policies, procedures and user manuals

• Poor training.

6) Lack of Development of Leadership Style

Developing leadership ability has a lot to do with understanding the type of leadership required at different stages of your company’s development. There are at least six different leadership styles identified to be effective at different stages of a company’s development including; Visionary; Coaching; Affiliative; Democratic; Pacesetting; and Commanding . Understanding which leadership style to employ has been found to significantly increase the effectiveness, growth and heath of the companies in which leaders utilized multiple styles. Just as important is the understanding of what a leaders personal profile is. Armed with these vital bits of information a leader is equipped to pursue the right leadership style for the task at hand.

7) Care and Feeding of Sacred Cows

I do not have a statistic on the amount of money, time and energy expended on the sacred cows lurking in American businesses, but it has to be staggering. This list details some of the types of sacred cows you can look for in your business.

• The way we have always done it

• The product or service you keep pouring money into because you just know it will take off and be your future, (these are almost never accompanied by market research or even a promotional plan)

• Resistance to growth through change

• Idleness within the ranks, some experts believe ten percent of the poorest performing people should be let go each year to make room for people with fresh insights and ideas

• The company airplane, automobiles, and other perks, which drain company recourses

• The dead weight relatives and friends of the family who would be better off elsewhere, act as distractions, and add nothing to your bottom line

• The “expert” that no one can live with, who holds a noose around the companies neck in the form of some expertise or an unwritten code of loyalty.

You could call this business “101,” however, most of the issues developed in this paper are rarely taught in schools, much less heeded. These “seven deadly sins” can impede your company’s ability to successfully navigate through the turbulent waters of business development. If you do not understand all the issues summarized in this paper, do the research; find a business advisor to help you navigate these storms , you owe it to yourself, your business and the people who count on you.

Conquering the devil in the details is what management is about, concurring the “seven deadly sins of small business” is what leadership is all about. The beauty of developing top-level leadership skills is that there is no downside, only opportunity for growth in both your business and your personal development. Leadership is what the entrepreneurial spirit is all about.

Develop your business plan, establish strategic objectives, establish marketing strategies and tactics, lead, build effective systems, utilize more than one leadership style and kill the sacred cows in your business, it might be the only thing that keeps you and your company from becoming another dreadful statistic.

--------------------------------------------------------------------------------

1 Inc.com article “Most Entrepreneurs Start with . . . No Business Plan”
2 Demming
3 Peter Drucker
4 Allan Weiss
5 Goleman
6 Keeping everything the same and expecting things to change is at least one definition of insanity



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About the Author

Michael Adams, Emerald Business Services
P.O. Box 1875
Ramona, CA 92065
619-985-0799

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