Thirteen Mistakes Most Solopreneurs Make Trying To Grow Their Business And How To Solve Them
The COVID-19 shutdowns have permanently shut down 34% of small businesses in South Florida. The public health policies of shutting down all but “essential” businesses has created one of the most catastrophic events in business in US history and it still continues as more information is updated as it can take up to 3 years to file bankruptcy. Sadly, we still don’t know the full impact of the shutdowns.
As a result, many business owners have downsized down to just themselves or are starting new businesses. This puts them in the role of Solopreneur – a business owner with only one employee, themselves – which can be a very difficult place from which to attempt to scale your business.
From my perspective as a Business Coach, being a Solopreneur differs in many ways from a day job. Most Solopreneurs make much less money working for themselves instead of working for someone else. Most Solopreneurs do not know how to scale their business to the point they can begin hiring employees and they end up sacrificing all of their precious personal time with family, friends and leisure activities to complete their work each week.
If you are a Solopreneur, here are the top 13 mistakes that you typically make when attempting to scale your business:
1. You haven’t developed a strategic plan, so the vision, mission, values, and objectives of your future team are poorly defined and constantly changing. Strategic direction and decisions are made by the shareholders without input from the rest of the team.
2. You have no month-by-month budget to forecast revenue and expenses and deliver desired earnings and owner drawings. Your current management and financial decisions are made based on bank account balances and sales estimates.
3. No Unique Selling Proposition and a Guarantee and or Positioning Statement exists in your mind or in any future managers, team members, clients/customers, and prospects. The only point of differentiation is price, so your business has no significant value proposition. An unclear and confusing message is and will be communicated by you or your future team.
4. You have no business plan to forecast cash-flow, determine working capital requirements, and calculate the company’s ability to pay back debt and make a profit. Your planning is done only in reaction to the immediate needs of your business.
5. No marketing plan exists to produce a predictable number of leads, improve conversion rates, increase the average revenue per transaction, and increase the transactions per customer. The results of spending on marketing and advertising is unmeasured and unmanaged. You currently are doing virtually nothing to proactively drive revenue growth.
6. You have no formal or tested sales process, and your activity is not measured or managed on a regular basis. If you try to hire salespeople, there is a large gap between high and low performers. Your sales force compensation (or complete absence of one) is currently structured around salaries with little emphasis on delivering results.
7. You have allowed fixed costs to bloat and sales to decline to the point where revenue is below break-even, essential costs are not being covered, and debt is increasing continuously.
8. When you try to hire people, you pay little to no attention to strengths when assigning roles. Your new team is plagued by lack of trust, unhealthy conflict, low commitment, and poor execution, yielding unacceptable business results.
9. You have allowed receivables to grow unchecked, vendors have tightened their terms, and price pressures and inefficiencies have cut gross margins. Cash flow problems are increasing indebtedness and investments are being postponed.
10. You have not identified key performance indicators and no metrics are being measured, reported, or managed with any regularity other than those deriving from basic financial statements. Any future team members will have only a general sense for how their individual performance is making or breaking the business.
11. You haven’t figure out a compensation plan that incentivizes future employees who will leave their passion, motivation, and creativity at home each day and contribute the minimum required effort to keep their jobs. As a result your future employees will expect base pay and benefits with nothing at-risk and no incentive to care.
12. You aren’t proactively managing multiple recruitment strategies. The flow of qualified candidates applying for open positions is sporadic at best and the candidates generated are usually under qualified.
13. Your employment candidates are not screened using psychometric profiling benchmarks and a skills-based, test-drive process. Your post-hire performance data is not measured and used to monitor the effectiveness of your hiring model and the mis-hire rate is very high.
At Venable Consulting, here are our magic solutions to these difficult errors:
1. Develop a Strategic Plan – An evolving, written plan that sets forth the vision, mission, and values of your company, long and short-range goals, and KPI’s to measure progress so that your team moves together as one.
2. Create a Revenue and Profit Budget – A reliable budget that forecasts discretionary cash-flow, identifies your required working capital, and demonstrates your ability to service debts and deliver a return to investors.
3. Develop a Unique Selling Proposition & Guarantee & Position Statement – A persuasive value proposition that removes risk and compels your ideal customers to do business with you, instead of your competitors, because you’re different than all the rest.
4. Develop a Current Business Plan – A credible, written plan, detailing a company’s unique selling proposition, strategic plan, and revenue and profit budget, designed to induce financial partners to invest in the business.
5. Develop a Tactical Marketing Plan – An aggressive, measurable plan to increase your leads, improve your sales conversion rates, and increase your average spend per customer per year so your profits increase exponentially.
6. Develop a Sales Management System – A practical system for building a top-performing sales force by scripting their approach, managing their activity with a CRM (customer relationship management) solution, measuring their performance, and tying their paychecks to results.
7. Develop your Break-Even Plan – A multifaceted plan to cut expenses just enough to stop the bleeding of cash, while relentlessly selling enough to cover your essential costs, including personal drawings and debt service.
8. Develop your Team Building System – A reliable system for placing your team members in roles best suited to their strengths and building them into a powerfully cohesive and committed team that delivers business results.
9. Create a Cash Gap Plan – An efficient plan to quickly collect your outstanding receivables, get your customers to pay faster, and negotiate better terms with your vendors so your bank account always has plenty of cash in it.
10. Create your Key Performance Indicator System – An elegant system for measuring and reporting the critical numbers in your business so everyone knows how their efforts are either making or breaking your business.
11. Develop a Performance Incentive Plan – An incentive plan that rewards your team members for exceptional performance and motivates them to work as hard as you do and care about the business as if it was their own.
12. Create an Employee Acquisition Plan – A practical plan to win the battle for top talent by consistently generating more than enough leads, screening out non-performers, and using a skills-based test-drive process and psychometrics to choose team members that deliver results.
13. Utilize a Psychometric Profiling Process – A proven process for avoiding mis-hires by using psychometric assessment tools to evaluate and de-select candidates based on position-specific benchmarks.
If you found this material helpful but you aren’t sure how to implement these solutions on your own, you should consider hiring a business coach.
Call our firm today at 754-333-5350 and schedule a complimentary coaching session with one of our certified coaches to find out if we can solve the number one challenge in your business today.