Many businesses fail for many different reasons but mostly because they fail to properly consider the crucial challenges at the very outset. The following is part I of VII of my assessment of critical business failures.
Startups fail to spend money on viable human resources.
It is an unfortunate truth that many business owners try to cut costs wherever possible. However, as the saying goes, sometimes spending money is the only way to make money and break past the financial plateaus that most businesses face. So, the question is, where should you spend money?
The answer is simple: you spend money on viable human resources. If you want to grow, you need to at least consider investing in the right human capital. You invest in human capital because you want to become more efficient at the number of repetitive tasks your business employs so that you can focus on developing the human relationships that feed your business.
I would argue that one of the smartest decisions you’ll ever make as a business owner, if done right, is letting go of control. I’m referring to no longer micro-managing every aspect of your business, no longer wearing every single hat and instead engaging in high leverage activities such as delegating tasks to others. By others I mean employees, independent contractors, or outside service providers.
The key however is effective delegation. i.e. giving your employees the tools and motivations and a clear picture of the desired result. In other words, giving your employees the education, resources and know how to achieve a result — not micromanaging their personal process.
People that can perform the services that otherwise take away from your time engaging in more important tasks — the personal aspects of your business such as business development, networking, and client management– are the wisest investment you can make for yourself and for your business. You can systematize repetitive tasks. You can outsource tasks that are more complex to the right professional service provider (think accounting, contract management, project management, bookkeeping, etc.). You cannot systematize human relationships. Human relationships follow a different principle: slow is fast and fast is slow.
To this end, I have created for my own business: templates, answers to questions most frequently asked by clients, answers to questions most frequently asked by new hires, template terms and conditions for each client engagement, educational guides, and preferred protocols for anyone who is performing services on behalf of my company for my clients.
In doing so, (1) I provide people who work for me with the tools and resources to accomplish the given task, (2) I identify minimal parameters for executing the methods for each task, (3) I create efficiencies with the things they do for my company without micromanaging, (3) I set forth a clear upfront mutual understanding and commitment to specific expectations and results, and (4) I set forth a quality statement of what the results will look like. I create efficiencies where efficiencies make sense.
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