Business Failure 2: Managerial Error

This continues our series on reasons businesses fail so you can avoid them in your business

According to Forbes article Why Do Companies Fail?, managerial error leads as the number one reason companies fail. Michael Gerber, the author of The E-Myth Revisited, highlights that most “entrepreneurs are technicians having a spasm of entrepreneurship.” He describes the designers, plumbers, programmers, or inventors who start businesses because they love what they do. However, they may not manage well. They focus on doing the work, rather than moving it forward.

Typical Managerial Errors

Examples of management errors:

• Continuing to do the work, when you should manage others doing the work
• Neglected and poorly managed risk management contributes to employee dishonesty and theft alone causes 30% of all business failures
• Focus on the technical work and not the sales, marketing, billing, or accounting
• Spending more money than you possess or can earn in enough time
• Failure to adapt to changing market conditions
• Growing too fast financially, or hiring too many employees
• Renting facilities too soon, too large, or in the wrong location
• Lack of technical know-how, managerial know-how, or vision

Avoiding Managerial Error

You can avoid management errors through several methods:

• Read or listen to great management books
• Attend management seminars or workshops
• Join the Chamber of Commerce or other business association
• Develop a mastermind team to give you feedback or brainstorm ideas
• Consult Small Business Development Centers or SCORE on key decisions
• Outsource accounting, sales, purchasing, or other skills you do not possess appropriately
• Agile, Lean, & Pivot before spending money

More Information

Check out these sites ideas about how to avoid common managerial mistakes:

• Lyve Alexis Pleshette shares 8 Deadly Mistakes of Small Businesses
• Starting Up Tips contains multiple articles that may help
• Gaebler outlines Family Business Mistakes
• Budget Tracker reviews Small Business Budgeting Mistakes (Are you making one?)
• Dummies.com published Recognizing (and Avoiding) Common Management Mistakes
• Goke Ilesanmi wrote 13 Fatal Errors Managers Make and how You Can Avoid Them
• MindTools provides 10 Common Leadership and Management Mistakes

Saturday we examine explaining away the brutal facts rather than confronting them