How NOT to run a business




A colleague of mine and I used to comment fairly often that we were going to write a book entitled, How NOT to Run a Business. We would say this, partly in jest but partly being very serious, because the owners of the company where we were employed as executives were noted for either making very bad decisions or not making decisions when it was so painfully obvious that a decision should be made. Over the years I have compiled a list of things that will hinder a business from growing or will completely do a company in. Certainly, this is not an exhaustive list and there may be a time when I will feel compelled to add to this list, but here are some of the ways that you do NOT run a business.

You do NOT run a business by promising things that you cannot do or do not produce. One particular head of a small company was famously known by the company’s employees to often promise to clients things that the company was not capable of doing. Larger companies might get away with this for a while if a sales person or business development person in one division of many does this, but small businesses cannot get away with it for long at all. And we didn’t.

You do NOT run a business without understanding what your costs are. I heard a company leader say more than once, when told that something he was proposing was a money-losing proposition, “We’ll make it up in volume.” I know, that’s a punchline from an old joke, but he was serious. Unless you know your costs, how do you price your services? As far as I know, that company went for years not knowing what it cost to perform their service. Scary.

You do NOT run a business when your ego is bigger than the company. The really smart business people surround themselves with people smarter than they are. When your ego is bigger than the company, even when you do have smart people around you, you won’t know it. Smart people keep you out of trouble – and when the ego is kept in-check, even when you are the smartest person in the room, it’s not because you need to be.

You do NOT run a business if you can’t make the hard decisions. I have seen leaders who make decisions and then back down from those decisions because someone comes into their office and pleads and begs until the leader’s mind is changed. Assuming the leader goes through the appropriate decision-making process, when a decision is made, there should be a good reason for it and leaders go with their decisions. Respect is lost when leaders are not seen as decisive.

I’m sure there are many other ways you do NOT run a business. Feel free to share some that you have seen in the space below.