The Top 3 Things Businesses Do Wrong

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The Top 3 Things Businesses Do Wrong

I took all the experience I have as a business consultant over the last 20 years or so and came up with the top three things I see companies do wrong. While these do apply to large companies, I usually refer to small and medium-sized businesses, since that's where most of my experience has been.

Here we go, listed in order:

1. They don't fire employees that need to be fired.

This one item I believe destroys more profit and more employee productivity on more levels than just about any other thing I see companies doing wrong. Managers and owners simply refuse to fire people that they know damn well need to be fired. Crappy employees who are allowed to stay for years and years without getting fired waste company money, murder employee morale, increase the time, costs, and stress for other employees required to pick up the slack, and damage productivity all around.

I am 100% convinced that if tomorrow morning, every employee of every company in the Western world who did a terrible job was fired and replaced with someone who's performance and work ethic was at least minimal-mediocre, the economy would immediately experience a renaissance unseen since in the United States during the 1950s and early 60s.

This is not only because we would no longer have energy sucking employees working at these companies, but also because those fired employees, at least most of them, would eventually find work more suited to their personalities and skill levels. Most people don't understand that often, firing an employee is actually helping that person, not punishing them. I got fired from my very first full time job, and believe me, I needed to be. It was exactly the jolt I needed.

2. They refuse to hire more salespeople.

To most small companies I see in trouble, I often give the exact same advice: hire five new salespeople right now. Front-load their commissions so they make a lot of money on the first sale to a new customer or client, even if that means you pay them a 100% commission on that first sale.

I always get the same set of excuses. We can't afford it. We're too busy to train them. Salespeople suck and we'll have to fire them.

You're absolutely right. Hiring five new salespeople will be a huge, huge hassle. You'll have to interview, hire, and deal with all the paperwork. You'll have to train them and point them in the right direction. Two or three of them will end up being morons who waste your time.

But...after 60 to 90 days, at least one of them, likely two of them, will make the company more money than the costs or hassle involved. Then you fire the two or three bad producers, replace them, and repeat. Within 6 to 12 months you'll be flowing with new business and your company will be on fire. In addition to the new business, having five excited new people hustling for the company will be a great morale booster. The hassle during those first few months, which I agree will be considerable, will be more than worth it.

3. They spend too much money on stupid stuff and not enough money on important stuff.

I once worked for a company that was in dire need of a new file server for their corporate network. The president refused to get it because it was going to cost $15,000. This server was a legitimate need that would have improved operations company-wide and would have paid for itself very quickly in terms of increased productivity and reduced problems. The company had plenty of money in the budget for $15,000. The president refused.

However, that same company had just recently purchased a fancy $45,000 company pickup truck that sat idle 80% of the time. Hm.

A truck was cool-looking and fun. A file server was not. Even though the server would have made the company far more money at a fraction of the cost.

I worked with another company whose headquarters was located in a bad spot on the power grid and had very old electrical wiring in the building. Major power surges and outages were very common, literally once or twice a quarter. Each time it happened, it screwed up all the equipment back in the warehouse and all the computers in the front offices. This resulted in huge expenses, lost productivity, and repairing all the usual problems.

Installing battery backups and/or a backup generator could have been done for minimal cost and would have completely paid for itself within 90 days. The general manager wouldn't have it. He didn't want to spend the money. However, he had no problem spending $75,000 on a custom piece of database software that only two employees in the company used, and barely used at that.

They took none of my advice, and went out of business less than two years later.

If your business is guilty of any of the above, it might be time to re-evaluate a few things.

This article was originally published on June 3, 2014
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