Every Business Has Blind Spots. Do You Know Yours?
Micheal Gerber, author of the E-Myth book series, so eloquently explained that as business owners we are all juggling the roles of:
Technician – The doer who focuses on hands-on work and delivering the product or service
The organiser who brings order through systems, processes, and daily operations
Entrepreneur – The visionary who thinks strategically about the future and drives business growth
Very few of us have all the skills, training and experience to be able to know all that is required within each of these roles. When our businesses grow and become more successful, we can appoint people who are more qualified than us to fulfil some or most of these roles, giving us more time to work on, and less in, our businesses.
The fact that we are not knowledgeable in all these roles leaves us vulnerable and leads to blind spots. Do you know what your blind spots in the business are, and more importantly, how to address and compensate for it?
This article will highlight four typical blind spots found in small to medium enterprises.
1. Inferior Risk Management Practices
Neglecting risk management exposes businesses to unforeseen events that can disrupt operations. Many SMEs treat risk management as a compliance checkbox or afterthought. A lack of preparedness can result in significant financial and reputational damage.
Business owners tend to focus on growth and sales, assuming insurance alone covers “risk”. Mostly there is also no structured process for identifying, assessing, and mitigating risks.
Consideration can be given to implementing a formal risk assessment process, covering the elements of management, finances, operations, marketing, sales, IT, HR and financial planning. It is essential to regularly update the risk register and action plans.
2. Not Knowing and Measuring the Main KPIs of the Business
The main metrics evaluated in a business are focused on turnover, net profit and cash flow.
These KPIs are core gauges to monitor business progression, but there are also other considerations. Elements like the number of qualified referrals, the conversion rate on referrals, the number of products or services sold to existing clients as well as the quantum of each sale and the profit margin on products and services are also key levers of business growth and success.
Utilising dashboards and regular reporting can facilitate data-driven decision-making. Availability of these metrics enables and informs strategic planning and business growth.
3. Ignoring the Entrance of a New Competitor into the Market
It is said that ignorance is bliss. In business this adage can be damaging to business success. New entrants to the market necessitate the need to be informed about their value proposition, marketing tact and pricing structure.
Ignoring them can be at our own peril. A significant amount of information regarding competitors can be found in the public domain, including advertisements, websites, brochures, and social media posts. A competitor sometimes enters a market with a disrupting business model, new pricing strategies or targeting underserved customer segments. Having information enables a prompt and specific response.
We do not need to wait for competition to drive innovation in our businesses. Engage with customers to gain insight into their evolving needs and preferences, enabling proactive adjustments to products or services.
4. Ignoring the Hidden Cost of Business Debt
Business owners often focus on immediate cash flow relief provided by business loans, neglecting the long-term costs associated with debt. High interest rates, fees, and repayment obligations can strain finances, especially if revenue projections fall short.
Before taking on debt, conduct a thorough cost-benefit analysis, considering interest rates, repayment terms, and the potential return on investment. A prudent approach would be to scan the market for the best possible finance option which will not only address the need for finance, but also meet the operational and strategic intent of the finance application.
In closing
There can be multiple blind spots in a business. To a large degree we need to “mind our own business” by knowing our key numbers, our main competition, and to be aware of our own shortcomings in knowledge, skills and experience. This will go a long way to informing our decisions, strategic direction and operational focus.
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