As a business advisor who has worked with hundreds of businesses over the past 25 years, from startups and community-based nonprofits to large established organizations, I’ve observed patterns of behavior and thought that are recurring roadblocks for many leaders. After countless meetings, strategy sessions, and heart-to-heart discussions, here are the top ten lessons I wish my clients would grasp more quickly:
- Employees are not family. While we often hear the phrase “we’re like family here,” this mindset can be a trap. Employees are not your relatives. They are part of a professional transaction. As wonderful, dedicated, and loyal as they may be, they work with you primarily to earn a livelihood. Recognizing this difference allows both parties to maintain appropriate boundaries, expectations, and mutual respect.
- Don’t have different rules for family members in the company. One of the challenges in family-run businesses is ensuring that everyone, family or not, is held to the same standards. The most successful family businesses I’ve encountered are those prepared to make tough decisions, even if it means firing or demoting a family member. Consistent standards preserve the culture, prevent resentment, and attract high-quality talent.
- Finance isn’t someone else’s job. Passion for product development, sales, or relationship-building is great, but it doesn’t absolve you from understanding the financial aspect of your business. At the end of the day, the numbers must add up. Ignoring or delegating this reality to someone else without oversight is a recipe for disaster. You need to fully understand the basic economics of your business model and the financial levers you can pull to affect positive outcomes.
- You can’t take more money out of your company than your business model is creating. Businesses need to be nurtured. They require reinvestment. Too often, owners siphon off more funds for personal use than the company can handle, forgoing strategic investments and jeopardizing the company’s ability to weather economic challenges. And, never go into business debt to subsidize your personal lifestyle.
- Be very mindful of client concentration. Diversification isn’t just a principle for investment; it also applies to your client base. When too much revenue comes from one or a small number of customers, you’re at risk. Clients, even long-standing ones, can and will eventually take their business elsewhere. Being overly dependent on a few customers can be a strategic vulnerability.
- Working harder is rarely the answer. The adage “work smarter, not harder” holds weight. An obsession with the sheer hours spent working can lead to burnout, diminishing returns, and increased mistakes. Balance and efficiency are essential. If you are always burning the midnight oil and/or operating on minimal sleep, maybe you need to step back and reflect on the value of what you are doing.
- Hire slowly and fire fast. Don’t take shortcuts with your recruiting process. A rushed hiring decision can cost more in the long run in terms of training, cultural fit, and potential disruptions. However, once it becomes clear that an employee is not the right fit, it’s in everyone’s best interest to part ways promptly. Handle it professionally and learn from it, but don’t delay the inevitable.
- Avoid being the smartest person in every subject area, especially on your leadership team. If you always have the answers, it’s time to rethink your team. Surround yourself with experts in their respective fields, and trust them to guide and inform your decisions. Join peer groups to share best practices. If you have a small organization, leverage the wisdom of outside subject matter experts.
- See professional development as an investment, not a cost. The business world evolves rapidly. To stay ahead, continual investment in your team’s training, skills, and tools is essential. When you view professional development as an expense rather than an investment, you jeopardize your long-term competitiveness. Your success in business and life will be directly related to your commitment to continual learning and growing.
- Plan your work and work your plan. Reactive leadership, constantly shifting focus based on the crisis of the day, is exhausting and inefficient. Successful leaders prioritize, remain disciplined, and stick to a well-thought-out plan. While it’s essential to be adaptable, having a clear vision and strategy is equally crucial. You need to know where you are going with a roadmap to get there, so if you get off track, you know how to course correct as needed.
Sadly, far too many leaders make their role harder than it needs to be. Leadership is both an art and a science. There are time-tested guidelines on how to be effective. You can still have freedom of thought and action, but this must be grounded in solid fundamentals. In high-performing companies, the leaders and their teams make success look relatively easy, and they enjoy themselves most of the time. They have a knack for wanting to avoid reinventing the wheel. They learn from their mistakes and welcome advice and counsel with an open mind. They approach everything with a spirit of continuous improvement. They ride the wave of business excellence rather than fight against the leadership current.