MBA1614 3 Big Mistakes to Avoid When Growing Your Business

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Hey. Oh. Welcome to the $100 MBA show. No fluff, just the good stuff. Every single day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher, Omar Zenholm. I'm also the co founder of the hundred dollar MBA, a complete business training and community online over at 100mba.net and in today's lesson you will learn what three big mistakes to avoid when growing your business. When it's time to scale your business, you're past the idea validation phase. You're making money. You're profitable. You have momentum. Now it's time to take things to the next level. A lot of us in our enthusiasm, in our excitement, in our positivity, we make some major mistakes. Mistakes that you'll pay for for months and maybe even years to come. But I want to save you all that trouble. And in today's episode, I'm going to share with you the three big mistakes that most entrepreneurs make when they scale their business and how to avoid them. Growth is an exciting time, but if you go in blind, you're asking for trouble. So let's get into it. Let's get down to business. The thing about when you're growing your business, when you're scaling, it's a busy time. It's a Hectic time, and sometimes we don't have enough time to sit down and plan and make sure we don't make mistakes along the way. It's easy to make mistakes when you're busy, when you're rushing. So if you're in that state where you are growing your business, you're trying to scale, you want to avoid these three big mistakes like the plague, okay? You want to make sure you steer clear of them. And I'm going to show you how. And let's start with the deadliest mistake, and that's overspending. A lot of us, in our eagerness to grow our business, we will overspend. We will spend too much money, more money than we're making, which will not allow us to be profitable. Or sometimes you play the tightrope where we're just profitable. And it's really, really stressful financially. We do this in the hunger of, hey, we need to hire more people, we need more supplies, we need more this, more that, so we can grow. When you forget the whole point of a business is to be profitable. So anytime you're not profitable, a healthy profitability, then you're not successful. So you leave success in the hopes for growth, and you're already successful when you're profitable. Often you're profitable, and then you want to scale, and then you basically waste profits by overspending, by having too much on the expense side of the sheet, by being overzealous and really just overexcited about the potential of growth. Now, I'm not saying that you should not reinvest in your business. You should definitely do that. But you have to pace yourself and make sure you're only reinvesting in a comfortable financial manner, meaning that you're not dumping every dime you have back into the business, because that is the danger zone. Because there are things that happen outside your control. There's emergencies, there's surprise expenses that come out of nowhere. Things break, things need repairing, people quit. You're going to need to spend money and you need an emergency fund. So just because you have some cash reserves doesn't mean let's spend it all. Make sure you have some for, yep, a rainy day. And often in that scaling process, we push ourselves to the limit where there is no breathing room. Do not overspend and get out of profitability. So how do you avoid this? Well, set a target of how profitable you always want to be and make it a percentage. So, like, say, for example, you say, I want to be 20% profitable at all times, meaning every Single month, I am making 20% profit. 20% of what? Well, 20% of your revenue. So say, for example, you make $10,000, then $2,500 should be profit, meaning after all your expenses. And that should be your threshold, should be like, okay, that's how much profit I want to make all the time, at all times. Anytime I'm below that threshold, I'm not happy. So make sure you set your number. And that could be 30%, that could be 50%. Some businesses it's 100%. But you need to make that choice and do not move from there. Make sure that anything above that profitability, you reinvest anything below it. No, we do not spend even for the sake of growth, because profitability is the goal here. We want to make sure we're making money as a business at all times. The second big mistake you want to avoid is hiring too hastily. They say haste makes waste. Well, you'll waste a lot of time and money if you hire in a rush too quickly without really taking the time to find the best candidates and evaluate them beforehand. A lot of people, when they're trying to scale and trying to grow, they're making so many hires at the same time, and they kind of just put this arbitrary deadline on themselves. I need to hire these five positions by this date. Well, why? What if it takes longer than that to find the right candidate? You should try to find the right candidate. That is the most important thing. The person that really is going to make sure you get a in tremendous ROI on the investment that you're making. Yes, the payroll you're paying is an investment and not just this idea of I got to fill these spots so I can grow. I need a marketing person and I need this kind of person so I could be able to grow you. Yes, maybe you do, but you need the right marketing person or you need the right hire to grow. Not just anybody. A bad hire can lose you. Money can dwindle your profits. So make sure you don't make the mistake of hiring too quickly. So how do you do that? Personally, I believe when you're still a small business, when you're, you know, 30 people or less, you should only make one hire at a time. Now, the only exception to this is if you're hiring for two positions of the same position. So say, for example, you're hiring two new developers, you're putting up the same job post and you're trying to fill two spots, and you can kind of do that at the same time. You can vet CVs and go through interviews and make a decision and try to find the two best candidates that's perfect for your positions as well as your company and culture. But other than that, you should hire one at a time. Take the time to find the right person. Ask yourself, if I hire this person, will they do the things that will get me a profit of the investment I'm making for that salary? And meaning if that salary, let's say, is $6,000 a month, will this person make you more than $6,000 a month with that hire? You got to be that frugal, you got to be that specific when you're starting to scale, when you're small. Now, of course things will change as you grow. Once you get to a 50 to 100 people on your team, you're going to be able to hire more than one person at a time. But regardless, you should always have a hiring process, a step by step process that you do not waver from. Everybody's got to go through the process. That process may be they submit their application, they get screened in their CV or their application gets screened in. They start with a phone interview and then a video call interview and then a technical interview and then a cultural interview. Maybe you have two phone calls and a video call or three video calls. The point is that you gotta find the right process for your company and stick to it to make sure you're doing your due diligence and make sure you're making the right hire. I know that hiring people takes a lot of time and requires a lot of patience, but it's an investment. You want to make the right hire because you're going to invest time and money into training them, getting up to speed. And you want to make sure that that investment pays off all right. The third big mistake you want to avoid when building your business, when you're scaling your business, is not understanding that you have to change, that you have to grow. This is a big one. As your team grows, as your business grows, it's changing. What it is is not what it was yesterday. It's growing, it's becoming a different thing, and that's a good thing. But who you were and what you did with a small company is not the same thing that is required and was needed with a little bit larger company. Even if that larger company is just a couple new employees, it's going to require different leadership, different management, a different perspective. You might have been really micromanaging things in the beginning because it's you and maybe a couple other people. But as you grow your team, that's just not going to flow anymore. You can't do that. You got to learn to empower people so they can work autonomously and have ownership. You can't expect your team to grow and your company to grow if you don't grow as a leader. You have to evolve and change. This is why I find it very important to read biographies and this is the how? How do you actually change? Well, it's good to look at other people that had to go through the similar journey that had to, you know, their business scale and they had to grow and change. This is why biographies are so important. Some of my favorite biographies are Shoe Dog by Phil Knight, the founder of Nike's biography. His memoir the Hard Thing About Hard Things by Ben Horowitz Steve Jobs by Walter Isaacson Steve Jobs was a totally different person when he was the head of Apple when he founded it versus when he came back after he was fired and did a stint at Next in Pixar. He was a totally different manager, different boss, different entrepreneur who he was evolved. He changed because he had to change in order to serve a different kind of company.

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To wrap up today's lesson, the three big mistakes you want to avoid when scaling when growing your business is overspending, hiring too quickly and not realizing. As your business grows, you have to grow. You got to reinvest in yourself. You got to reinvent yourself. You got to change. This is the hardest one of all for me to be quite honest. It's painful. It's a very painful process of realizing you're not good enough. You have to change if you want your business to grow. You are a reflection of of what your business can be. So you gotta reinvest in yourself and your education, who you are and how you manage people, how you lead. If you want to become a great company, you have to be a great leader. And there's levels to this. You know, what makes a great leader at some stage in your business doesn't make a great leader at the next stage. Thank you so much for listening to the 100 MBA show. Don't forget to hit subscribe on whatever you use to listen to podcasts. By hitting subscribe, you get our next episode automatically right on your device. It's absolutely free to subscribe and it's the only way to have access to all our archive episodes, over 1600 episodes. So go ahead and hit subscribe right now. Before I go, I want to leave you with this when your business is growing, it's exciting, it's fun. It's almost a little scary, too. And sometimes along the way, when we're growing, we're really hard on ourselves because like, we got to get there, we got to make it. We're not there yet and we forget to look backwards. We forget to say, wow, how long we've come, how many things we've accomplished. So don't forget to recognize how far you've come to give you a boost of confidence. Thank you so much for listening and I'll check you in tomorrow's episode Q and A Wednesday. I'll see you then. Take care.

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