Complacency is one of the most significant growth killers of small businesses. Why then do so many business owners fall into its malicious embrace? After all, if they had been complacent to start with, one would imagine they wouldn't have started a business at all.
The truth is that even mild success can make any business owner complacent. It is easy to rest on your laurels after all your hard work finally starts to pay off. However, we're here to tell you this is the exact opposite of what you need to be doing!
Join us today as we go over the dangers of complacency and how to keep up without burning out. We'll offer some useful tips to stay competitive and use any extra time or funding in meaningful ways, rather than just sitting idle (as far too many businesses wind up doing).
How Complacency Hurts Small Businesses
A quick review of any solid guide on common small business mistakes will show you how much can quickly go sideways if you decide to just "go with the flow" rather than remain active within your business decisions.
Every business, large or small, must be proactively ready to adapt to the market. Failure to adapt puts you in league with famous failures such as Blockbuster, Kodak, and Polaroid; Not the best companies to be associated with to be sure. Instead, you need to be doing research on markets, monitoring employee performance, and keeping an Eye of Sauron upon your competition at the very least.
Any variation of ‘That’s the way we have always done it’ is THE quintessential comment of a business owner on the pathway to failure. That sentence never fails to make me cringe when I’m with a client. There's ALWAYS something that can be improved. - Ryan, Out of the Box Advisors
Worse still, many entrepreneurs have a tendency to grow complacent early, when an enterprise is only starting to become profitable. That first taste of success can often cloud a small business owner’s judgement. In truth, if you’re doing it right your business never truly ‘makes it’. Again, we can’t stress this enough, you should always be improving. Complacency at this stage is, and this is being gentle, highly volatile as it's at a point when even tiny mistakes can still send your business in to ruin… By now the seriousness of complacency should be well set within your mind.
There are three main ways in which complacency damages businesses:
It causes you to ignore risks and pitfalls that being attentive would have otherwise caught
It causes you to ignore opportunities that would have allowed for growth
It causes you to leave money on the table through things like a lack of capacity or maybe arrogance
These scenarios mean, at best, you're not going to remain competitive. At worst, these mistakes could literally destroy your business.
1. Complacency: Tips for Avoiding Risks and Pitfalls
When you first started your business, it was likely because you witnessed some market opportunity. Even if you entered into a packed marketplace, pest control as an example, you probably had a thought similar to ‘I can do this far better than them.’ Otherwise you would not have invested so much blood, sweat, and tears to get this far.
Regardless of the actual reasoning, what you were actively doing was assessing the marketplace and filling a perceived need. The key here is to remember that whatever that need was that motivated you was, at the same time, a need that your competition either ignored or missed out of their own complacency. This cost them in the form of your business’ creation and a new competitor working against them.
Don’t make the same mistake they did!
Tip 1: Research Your Competition
Just about any source of expert entrepreneurial advice will tell you to research your competition, and for good reason. When they succeed, you can copy their tactics. When they fail, you can learn in order to avoid their mistakes. When they fail to adapt, you can capitalize on their sluggish choices.
Watch what the competition does. As a general rule, they'll keep doing what works and stop doing what doesn't. If they experience booming growth or especially if they go under, try to figure out why.
Emulate: As long as you’re not hijacking intellectual property or crossing any other obvious ethical lines, there is no reason to not copy your competition. Don’t reinvent the wheel.
Autopsy: If one of your competitors fails or pulls out of your local market then autopsy their choice. Did they see something that you might have missed? What choices led to their failure that you can learn from?
Adapt: Did a competitor innovate your industry in some way? Blockbuster with Netflix comes to mind. There was no ‘real’ reason Blockbuster could not have adapted to Netflix’s business model.
Tip 2: Avoid Overreaching
One of the risks, when a business is trying to grow, is overreaching. Entrepreneurs have a habit of spending too much or diving into too many projects all at once. While it's true you need to invest back into your company, you also need to do so with some wisdom.
In fact, we have a feeling that some of our own clients who are reading this will wince a bit with the following example. When you start dipping your toes in the marketing waters, you’ll soon find yourself swarmed with sharks promising you the world for a slice of your marketing budget.
One of the best examples of this, is print advertising. Some magazine or local discounts publication who waltzes in practically guaranteeing you leads if you only commit to a year of ads at $1,000+ per month. Be honest, how many of you reading this just nodded your head?
This is such a common and indicative problem for small businesses that we have made looking for clients in these publications a portion of our own sales strategy. Generally speaking, if you’re spending money here, you’re likely doing as much good as throwing it out the window.
To state the obvious, the less you can afford to lose, the more care you need in choosing where your money and time is going.
Tip 3: Consider Business Coaching
One of the best ways to avoid complacency is hiring a business coach. This is when an outside expert consultant is brought on board to look at your business to figure out where it could best improve. Having an impartial pair of eyes on your operations can be a serious help in finding ways in which to grow.
At Out of the Box Advisors, our experts are trained to examine a business and help owners identify strengths and weaknesses. They can greatly reduce the stress of managing your business, combatting both complacency and burnout. They'll help give actionable advice on how your business can best achieve its goals.
In terms of avoiding pitfalls or risks associated with complacency, they have extensive experience among all stages of a small business. What this means for you as a small business owner is that their eyes are already trained to see the best path forward through the woods.
2. Complacency: Tips for Avoiding Missed Opportunities
We started off this article alluding to the very creation of your business. To reiterate for sake of relevance, every small business that is created is born out of a missed opportunity. We would be willing to wager that 9 out of 10 times it was complacency of your competitors that allowed you to capitalize on their missed opportunity. If you become like them, then you very well may not remain viable for much longer.
Luckily, we've got some actionable tips to help you dodge the worst tendencies, even if you've indeed stumbled a bit along your path to success.
Tip 1: Admit Your Mistakes Early
To paraphrase a unique Snitch in Harry Potter, we are going to open at the close.
Many business owners fall for the Sunk Cost Fallacy, where we think just because we've started down a path means we must continue down it. The truth is that admitting you've made a mistake early and stopping any wasteful allocation of resources is a key skill every business owner needs. If something isn't working, stop. While there is a real difference between "not working" and "taking time to become profitable", you should at least be stopping once you're aware which option is more likely.
How does this apply to avoiding missed opportunities? That’s simple, one of those mistakes is just that, missing the opportunity.
Being able to admit defeat when your competitor seizes upon an opportunity empowers you to move on to the activity of catching up. The longer you delay on a missed opportunity, the more likely you’ll both miss the next one or allow your competitor to soak up too much market share.
Tip 2: Reinvest Profits
If your business has started to bring home the bacon, great! There’s a critical, and unfortunately, common pitfall hiding in waiting for you. It is imperative that you avoid that sudden urge to reward yourself for your hard work. Instead, make a conscious effort to reinvest in to your business’ future. Banking that money can mean a better marketing budget, more diverse product lines, or more employees (capacity for growth).
We are phrasing that as if this only applies to that first foray in to ‘the black’ but this is equally important for long standing businesses. As a general rule, we always recommend that you craft a formal policy for how much or what percentage of profits will always be dedicated to future growth.
To determine this value, look at your business and try to see where your profits would be best spent. Perhaps you need more space or could use a better website. How you change depends on your business; just make sure you don't sit still and continue business exactly as usual.
Tip 3: Conduct Surveys
The reinvesting of profits gives you the resources to pounce upon any opportunity. It may be elementary but identifying where to apply those funds is equally important. While surveys are but a singular way to suss out the next big thing, they are absolutely one of the most powerful. Typically, you will be surveying your actual customer base. This not only lets you hear directly what your customers desire, but it also has the additional benefit of identifying weaknesses (but we will tackle that another day!).
Let’s try to utilize a simple example to represent the power of the surveyed opportunity.
You deploy a survey to your customers and 100 or so respond. During your analysis you discover that 80% of the respondents mention some variation of their desire to have online scheduling. Your business has never offered such a service before and through your competitive research you discover that neither do any of your competitors.
This is where the temptation to remain complacent becomes critical. Developing an online scheduling portal requires time and resources. The complacent business owner will think something like this: “No one in my industry does it this way, so we aren’t going to bother doing it either. I mean, why should we?”
Be the leader in innovation, not the follower.
3. Complacency: Tips for Not Leaving Cash on the Table
To be completely blunt, we struggle with the fact that we even have to include this section. It is absolutely maddening that one of the most common coaching tips we give clients is to avoid turning down sales.
The common denominator for these clients is that they are within a period of success and growth. They generally feel that their business is doing so well that it can afford to slack off on the sales channel.
A common refrain in response to our recommendation sounds something like this: “We grew 15% last month! Why are you criticizing our sales approach when it’s clearly working so well!”
… well… respectfully, because 30% growth is better than 15%... so, heed these tips well.
Tip 1: Monitor Your Capacity
If you find yourself turning down sales because of capacity, there is a strong chance that you’ve lost confidence in your team’s potential. Realistically, any small business can operate up to 130% capacity, within reason. Trust in them, trust in yourself, and find the solution.
Offer overtime, outsource where you can, or create a waitlist to close that sale in the short term.
We can almost guarantee that you have short term capacity hiding within your business in some variation. CLOSE. THAT. SALE.
Long term, this is your wake-up call that you need to activate your hiring process. While we are harping on closing the sale with that +30% capacity, it is ultimately unsustainable. At the very least, you should be proactively monitoring your capacity and expanding (or contracting) as needed.
Tip 2: Never Settle
As we mentioned above, never assume that your 15% growth was the best that you could do. It is entirely possible that you did literally everything in your power and that’s where you ended up. Even under those circumstances you should still assume that you missed something that would have enabled it to be even higher.
It is the mere mindset of not settling that is a fervent guard against complacency.
To be clear, we are not recommending that you do not celebrate your success. You should absolutely be proud of your accomplishments! Just be mindful of resting on your laurels.
Tip 3: Close. That. Sale.
No excuses: Sell to every lead you receive.
Stagnation Kills: Keep Your Small Business Adaptable
Complacency means stagnation. A stagnant small business, at best, gets left behind by the competition. You shouldn't spend your time as an entrepreneur only playing catchup. Even if you’re top-dog for now, if you don’t follow some of these basic rules you won’t stay there long.
At Out of the Box Advisors, we've made it our mission to help keep businesses competitive. If you're looking for an edge in this modern, competitive world, we hope you'll consider talking with us.
Our business will not only help you avoid complacency but can give you the advice you need to start getting ahead of the pack. Whether you're a tiny operation or a big booming business, our experts are certain to have some advice you'll find helpful.