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It’s Good Strategy To Avoid Bad Calls

November 26, 2009

It’s fourth down and a long way to go for a first down. The score is tied, you’re deep in your own territory, and there is still plenty of time remaining in the game. Well coach, I may not be able to tell you the exact right thing to do, but I can sure tell you what not to do.

An important part of a successful game plan is to avoid making the “bad calls”. Sometimes it’s not so easy to know what to do in a difficult situation. But if you are sure what not to do, you have improved your chances for success. Here are a few common strategies that have resulted in bad calls over the years. They be tempting from time to time, but avoid them like you would a fake punt deep in your own territory in a tie game.

“We can do it cheaper.” A frequent assumption that rarely proves to be a successful strategy. If a large company is serious about a market and has accurately allocated its costs, it is difficult for a small business to charge less than its larger competitor. Lower volumes in production and purchasing will generally result in higher unit costs. While overhead expenses may be lower, they will be spread over a smaller range of products.

If you really can do it cheaper, the chances are pretty good that somebody else can also. With low barriers to entry, you will need to be prepared to meet new competition at anytime.

While you might think you can “do it cheaper”, you probably can “do it better”. Small business has consistently been successful in targeting a small market niche and providing superior products and services. Although larger companies have economies of scale, the smaller enterprise remains closer to the customer and can be more responsive to changing needs. “Doing it better” is a strategy that is difficult to compete against.

“We are too busy to take the time to plan.” Planning requires taking time away from today’s problems and investing it in tomorrow’s. The time spent on today’s problems has an immediate payback. Time spent on the challenges that lie ahead has a less immediate and less certain payback. This results in the power of planning rarely being used effectively.

The reason there isn’t enough time to plan today is that the planning that should have been done last month or last year wasn’t. That cycle has to be broken for an organization to get control of its future.

The real shortage of management time and the lack of planning experience makes planning difficult in small and growing businesses. Managers tend to stay busy on those parts of their job that they know best. They tend to avoid those responsibilities with which they are less familiar and which provide feedback that appears less tangible. Because it is infrequently done well, or done at all, effective planning can be a significant competitive advantage to a growing business.

“An investment in a computer system will reduce our accounting expense.” Personnel and cost reductions are frequently sighted as justifications for computerization of manual accounting systems. The savings rarely ever materialize. Computer systems always cost more than anticipated. Usually there is a good reason, you are looking for the system to do more than you had originally planned.

Computers don’t replace people in most businesses. What they can do is to assist your people to do a better job. Computerization of manual systems can be justified to provide more timely, more accurate, and more specific information. Computers are practically a requirement to effectively process information in today’s world. However, they create more expenses than they reduce. They can be justified not by cost savings, but rather by providing information that enables better decision making.

“Real entrepreneurs are doers, not thinkers.” Some entrepreneurs are “intuition driven” and have been extremely successful. They are often quite vocal about their triumphs and receive substantial publicity. However, there are many others who have experienced painful failures because they “leaped before they looked” when starting their first entrepreneurial venture. This group, understandably, is not quite so vocal about their experience.

While the mythology surrounding entrepreneurship encourages the “go for it” gambler image, the facts are quite different. Successful entrepreneurial ventures are the result of careful thinking. Thought and analysis combine to accurately assess an opportunity which then positions the entrepreneur to act. What then separates the entrepreneur from the rest of the pack, is that the entrepreneur moves ahead to action and exploits the opportunity.

While the world might only see the action, it is the thought that preceded the action that enabled the success. The often untold entrepreneurial story involves the failures that were avoided because somebody decided not to act after thoughtful investigation.

Well coach, because it’s your business, don’t make any dumb calls that might cost your team the game.

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