Let’s face it – who wants to see the dentist? For most people, dental visits conjure up both physical and financial pain. Early childhood memories stick. My earliest recollections of our family dentist were of a tall, austere looking man in a white dental coat, who had little to no personality and could never pronounce my name even after 15 years of visits. I lived in a small town with a total of two dentists, and he was the more personable. His receptionist, however, was a sweetheart, she always remembered our conversations and took a genuine interest in me.
Misapplication of Economic Value Added Concept
Many companies have embraced the notion that the economic-value-added concept is superior to the traditional performance assessment measures based on traditional accounting.
Economic value added, known by the acronym EVA, is a financial measurement metric that considers the relationship between the enterprise’s profitability and the cost of the capital employed to achieve that profitability. The idea behind EVA is that managers should be evaluated in terms of how effectively, productively and profitably they employ capital in the business. To evaluate profit alone without considering the cost of the capital employed to achieve that profit can be very misleading. But if the relevant content and timing factors are not appropriately considered, EVA calculations can be as distorting and misleading as traditional profitability measures.
Ignoring the Stock Price
Companies that ignore their stock price do so at their peril.
While it is crucially important to concentrate on the basic business of the company, if a company is not mindful of what happens to its stock price, it may find it is in for a rude shock. If the stock price falls too low, investors may lose confidence in management, and critical investors may sell out. If the stock price falls too low, a takeover may happen. A company needs to pay attention both to its basic business and it its stock price.
Ignoring the company’s stock price is a mistake.
Success Needs Sufficient Capital Resources
To succeed in business, you need sufficient capital resources. In fact, it is said that the number one source of failure for small business is running out of money.
If you do not have a realistic assessment of the money that is needed to implement your business plan, you run the risk of running out of money. If you run out of money, your business may likely fail. Failure to have a realistic understanding of the amount of money that is required for the business overall and to implement certain new ventures, particularly, can lead to ruin.
Failing to have adequate money for the business can be a mistake.
30 Retaining the Wrong Professional Advisor
From time to time companies and senior executives inevitably are involved in circumstances that are not familiar to them. In those circumstances, it is a good idea to retain a professional advisor. But it can be disastrous if the wrong advisor is retained.
Often the decision about the advisor who is retained is much more controlling in determining the outcome that is achieved than are the merits of the strategy pursued, the potential of the new business opportunity, what diligence is employed, or how much resources are expended. If you retain the wrong advisor, you may end up with an unfortunate outcome.
Retaining the wrong advisor is a mistake.
20 Exploit the Employee
Some companies operate with an exploit the employee approach.
Some companies reason that employees are out to take advantage of them, so the company should get everything it can from the employee. A company may figure that it is paying the employee good money and that therefore nothing more is due or expected. If the employee doesn’t like it, the employee can go somewhere else. After all, there are many other people the company could hire. But will an exploit the employee approach attract and keep the best employees?
Exploiting the employee can be a mistake.
11 Promoting Traffic at the Expense of Profitability
Seeking to establish themselves in a new market, some companies may emphasize customer traffic—to the exclusion of whether they make any money on those so-called customers.
As Peter Drucker has observed, it is a fundamental business truth that the purpose of business is to create and retain a customer. But if you do not make any money on your customers, you do not have a business. Generating traffic without revenue and profitable customer transactions is a sure way to financial ruin. This lesson was relearned by many dot-com technology companies in the 1990s, who promoted traffic to their websites but failed to establish a viable business model. Numerous dot-com companies that failed did not sufficiently understand that, at the end of the day, maximizing hits is much less important than generating revenues in amounts more than the expenses incurred in
achieving those revenues, so that the business can make a profit and sustain itself.
Promoting customer traffic at the expense of good business is a mistake.
1 Failing to Employ a Structured Decision Process
Decisions made without a structured, systematic process may be less than optimal.
Business school courses, academic textbooks, and training programs concerning decision making provide structured approaches, decision models, and tips to make better decisions. The classic approach involves defining the problem, identifying alternatives, undertaking quantitative analyses and qualitative assessments, exploring the risks, and then choosing the best course of action. While a structured decision making process is central to management, too often that approach is ignored.
Failing to employ a structured decision process can be a mistake.
All too many companies are plagued by indecisiveness.
Indecisiveness actually reflects the decision not to make a decision. Not making a decision means embracing the status quo and rejecting the choices of what could be available, were a decision to be made. The advantages of making a decision, even if it is the wrong decision, is that one can gain feedback from the consequences of the decision and make adjustments as appropriate. But if you never make a decision you never have a chance to see what might happen and to incorporate that information into a future choice.
Indecisiveness is a mistake.
1 Lack of Vision
Some enterprises operate without a vision.
Lack of vision may reflect a nose-to-the-grindstone approach to business. The
involvement in the here and now is so intense, so all-consuming, that larger possibilities
are given little thought. The company figuratively keeps putting one step in front of
another, without consideration of what might be possible or desirable. Without a vision,
what might be accomplished with a vision is unlikely to be accomplished.
Lack of a vision is mistake.