Larry's 9th HVA: Avoid Business-Killing MistakesFriday, March 15th, 2019
Companies that grow fast are prone to making big mistakes because the leader doesn’t have experience running a company of that size with so much change going on. While the home service business is fairly simple, things can go wrong that can ultimately bring you down.
Avoiding these six mistakes will help keep you afloat.
1. Running out of cash
It can happen. If you run out of money and can’t make payroll or pay your bills, your out of business. You could take on too much overhead and payments, then sales go down, and you operate below breakeven for a while – BAM! you’re out of business. That’s all it takes. Measure your spread, breakeven point, and watch your financials. Take action before you hit the wall.
2. Gamble and lose
When things are going well you may think you have the golden touch and let your guard down. You make a big bet on a new business or a huge expense on a campaign that is somewhat speculative. If things go wrong, you could run out of cash and the whole business is threatened.
3. Key people or groups leaving
If you are at odds with key employees or groups of them, one day you could wake up and they all leave. We’ve seen this happen where ex-employees join together and compete against you. This is part of being the kind of leader that people will follow – or not. You didn’t get here alone – respect and appreciate your team.
4. Losing your temper
If you blow up and say things to or in front of people when you are mad, it could easily chase them away. Nobody wants to bet their future on a leader who is crazy, angry, or unpredictable. Without your team, you have nothing.
As we discussed in our exercise “preventing fraud”, it can happen. Beware. It can kill your profits and cost you many employees when it spreads.
6. Too much debt
Buying brand new trucks and equipment is a luxury you may get used to. But remember that all those payments raise your breakeven. When a slow time comes in your business – and they always do – you can’t make your payments.
Have you taken big gambles? Have you made big mistakes by losing your temper or taking on too much debt or something else? Reflect on this. Always protect what you have. And avoid making big mistakes.
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