Top 9 Mistakes that CEO's Make
Even the best leaders make mistakes when running a company, especially if they’re doing it for the first time. Since the biggest indication of a company’s success is often the leader (no pressure) you’re going to want to learn from the experience and mistakes of CEO’s who have been where you are and learned a lot of lessons the hard way.
#1. Assuming Company Culture Isn’t Important
We understand the task of creating a company culture might seem like a low priority right now. As a new business owner, you’re just trying to keep your head above water. However, a happy workspace is a productive workspace. Disengaged employees cost US organizations between $450 and $550 billion annually, so you can’t afford not to have a good culture and working environment for your employees. Don’t let yourself make this mistake like many new business owners do. Structure your company in a way that encourages employees to take charge of their responsibilities and feel grateful to work where they do. This will ultimately benefit your organization as a whole making it more successful and efficient.
#2. Losing Focus of Priorities
This is a big one. Don’t get too caught up in all of the new opportunities of owning a business- there is a lot to be done, all the time and it’s easy to get distracted. Take the time to create a point of reference that identifies the goals, benchmarks, and strategies for each quarter that you can look back on. Distracting tasks leads to work overload, which decreases productivity by 68% in employees who feel they don’t have enough hours in the day to complete their tasks. Working hard is different than overworking. You’ll be much more efficient if you focus on the most important tasks first.
#3. Not Asking for Feedback
It’s not that we don’t trust you’re great at what you do, but no one’s perfect. There’s a lot on the line here, and as the man or woman in charge, you want to make sure you’re in the know about everything going on. If an employee is frustrated, wouldn’t you rather know before they get fed up and leave the company? A good way to make sure everyone is happy and things are going as well as you think they are, is to send out anonymous surveys to your employees asking for their honest feedback on how things are going. Ask them to identify three things going well and three things you, as the CEO, could improve. Aside from just being a better manager overall, managers who received feedback on their strengths actually showed 8.9% greater profitability.
#4. Not Protecting Intellectual Property
This is something business owners often overlook at the beginning stages of a company. Protecting your intellectual property is absolutely crucial. If you don’t, your competition can take all the hard work you put into research and development and get a head start in your industry. Protect your IP, patents, trademarks, copyrights, and other valuable information. Patent’s can be expensive, costing up to $25,000 to secure, but trademarks and web addresses can be obtained without a lawyer and can be as cheap as $100. You can also protect your intellectual property by creating an Invention Assignment Agreement for those employees who will be exposed to your sensitive information.
In the early stages of a company when every decision is important, maintaining control is a true art, and really hard to get right. It’s easy to go too far and micromanage employees. A survey conducted showed that 79% of respondents had experienced micromanagement. Approximately 69% said they considered changing jobs because of micromanagement and another 36 % actually changed jobs. Be the leader that leads with trust.
#6. Focusing Only on the Numbers
Many new business owners get tunnel vision and focus too much on the metrics when they are starting out. Yes, the numbers are important, but there is more to focus on. Do you understand your customer? Do you understand their needs and pains? Do you know how to connect with them emotionally? Does your product or service provide value or solve a problem? If all of these things are taken care of, the metrics will fall into line. As Warren Buffett once said, “The process will eventually turn into proceeds, so start with the process.”
The truth is, anyone starting a business in a new field doesn’t know exactly what they’re doing, despite what they may tell you. You figure it out as you go along, that’s the beauty of entrepreneurship. The good news is that no one else knows what they’re doing either, so own it. Don’t be afraid to ask questions, it takes hard work to find the solutions and humility to put ignorance to the side and learn from those around you who. “Nothing in all the world is more dangerous than sincere ignorance.” – Martin Luther King
#8. Not building an effective Sales team
I know that we just told you not to focus ONLY on numbers, but another big mistake is to ignore them. Regardless of your industry, cashflow is the lifeblood of every business. How do you create cash flow? Sales. To get the ball rolling in your new company, someone needs to sell something. There is no other department within your company that plays a more pivotal role on cash flow than sales.
Salespeople bridge the gap between the problem the customer has and the solution you are going to offer. It doesn’t matter what you’re selling, you need to understand the market demand and how it’s evolving. In order to do this, you need to make decisions with the people who are closest to the customer- your sales team. Sales will play a key role in the success of your company so be sure give it the priority it deserves.
#9. Picking Favorites
This sounds like an obvious no no, but it happens more than you would think. We are humans who inevitably are drawn to some people more than others. It’s your job to steer clear of showing any preference towards specific employees. Some employees are smarter, more experienced or easier to work with. This should be acknowledged in their salaries, not in social situations. Showing favorites is a good way to quickly kill office moral and discourage employees in their work. Treat everyone equally and make everyone feel like a first class citizen. See and give recognition to the value each of your employees add to your organization. When managers focus on employee strengths, they are 30 times more likely to be actively engaged.