A business mishap can have costly consequences. Ordering too much inventory could leave your company in the red for months to come. Hiring too many employees at once and expanding too quickly will also hurt your bottom line. Offering too many sales and discounts to your customers can eat into your margins. Such decisions might have been made with the best intentions, but they can still wind up being mistakes.
Running a business isn’t an easy task. While there is no right way to be a business owner, there are practices you generally want to avoid. While you may feel inclined to trust your gut, this in itself can be an error. Rather, it’s better to evaluate all of your options and get second opinions than make an overly hasty decision.
Whether your business is newly hatched or a well-honed machine, it can be beneficial to take a step back and evaluate where you are. Having a sound business plan in place will lead to fewer missteps. Looking for other ways to help your business avoid costly errors? Keep reading to discover four other ways to embrace the important principle of measuring twice and cutting once.
1. Establish Checks and Balances
No, this isn’t referring to the U.S. government’s separation of powers, but it is a similar concept. Checks and balances in the business world means ensuring one person doesn’t have complete control or power. You never want the CEO to have the one and only say in a decision. This is how mistakes — oftentimes costly ones — are made. When setting up a business, you want to ensure a team is evaluating each major decision that can have a significant impact.
In addition to your business’s internal team, it can also be advantageous to pull in outside help. If you’re juggling various vendors and contractors, using effective contract management software can lessen risk and ensure relationships proceed on a solid legal footing. When selecting a platform, make sure it meets your standards and current needs. Some platforms offer more rigorous contract review processes, which can help eliminate potential errors down the road.
2. Rely on Data
As noted, going with your gut isn’t generally the best strategy. Even if you have prior experience in the business world, your “best guess” is unlikely to be the best for the company overall. This is where data comes into play. First-party data (e.g., customer purchasing history, demographic details) can be combined with third-party data (e.g., market research) to more accurately guide decisions.
Let’s reconsider the trio of business mistakes portrayed above. Unsold inventory is less likely when inventory decisions are driven by figures from your warehouse management system, customer purchasing information, and market trends data. You can avoid premature hiring by examining current employee capacity numbers against recent results from your sales department. And you’ll be less apt to shave margins too thin if you have a good fix on your cost of goods sold. In all these cases, the right data can make the difference between smart business decisions and expensive mistakes.
3. Good Communication
Effective communication is the key to success in many areas of life. From friendships to business partners to significant others, relationships rely on a solid foundation of good communication. In today’s tech-driven world, there’s an optimal communication mode for any need. The key is choosing the right ones and using them thoughtfully. Communication is essential in business no matter whether you have three employees or three thousand.
Without effective communication using the right methods, teams can make mistakes. If a change in company strategy isn’t adequately disseminated, employees will continue working on the wrong things. A company-wide email or all-hands meeting can help prevent that. When landing a client contract requires quick approval from a superior, an instant message can save the day in a way an email can’t. The latter could languish for hours or days, while the former will likely produce the needed answer in minutes, if not seconds.
4. Test It Out
Especially in today’s unstable economic landscape, testing is essential. No business leader or executive knows what tomorrow will bring. So while you may already have product launches planned and marketing campaigns lined up, approach these plans with a spirit of experimentation. From product focus groups to A/B testing of email subject lines, you can test your hypotheses to determine the best way forward.
Testing can make the difference between a marketing campaign that goes viral and one that gets ignored. It can also change the way products are developed and sold. When launching a new product line, don’t go all in all at once. Instead, tease new offerings to loyal customers and ask for feedback along the way. You may find that simple tweaks to various products can make a big impact in how they are marketed and sold. You never want to be left with a warehouse full of stagnant inventory!
Takeaways
Business mistakes happen all the time. However, the key is rebounding after a mistake and ensuring it won’t impact your bottom line too significantly. Every good business leader knows the importance of understanding the mistake, handling it, and moving on. Adopting this mindset — as well as these four tips — will assist you in all your future business decisions.