9 Traps Every Business Owner Should Avoid

When was the last time you were driving down the highway and someone in the opposite lane flashed their headlights? A flash of the headlights can be a warning of a problem up ahead. And quite often, it is a friendly warning of the infamous speed trap. Since I am a law-abiding citizen, such warnings have little benefit to me (untrue) since I have never had a speeding ticket (also untrue). Speed traps are common, and the consequences can be expensive – not only because of the ticket and insurance but because excessive speed can also result in devastating accidents.

Business owners also face traps that would be far less painful and costly to avoid than to correct. However, unlike a driver on the highway, some business owners don’t pay attention to the flashing lights. Here are 8 traps that every business owner should strive to avoid.

1. Thinking that ownership will give you complete freedom.

I once read a quote that said, “The grass is greener on the other side, but it still needs to be mowed.” It is a common belief that ownership will give you freedom. And for some people, it does – but only after years of hard work and long hours. To avoid this first trap, anyone thinking of starting or buying a business needs to understand that almost no one has complete freedom. Of all the very successful business owners I have met, I have never heard one of them say that they get to do whatever they want, whenever they want. Successful ownership requires more work than even most non-owners will experience.

2. Indulging family that feels entitled.

Some of the most impressive business owners I have ever met have a few things in common – one of them being that they do not overly indulge their children or other family members. They want to bless their children with opportunities that others may not have, but they do not want to ruin their need to work and have purpose. There is good reason the Bible is full of reminders of the poisonous dangers of entitlement, complacency, and becoming spoiled. When an owner over-indulges their family financially, materially, or with unearned positions in the business, the outcome can be destructive to the family member and demoralizing to other employees.

3. Failing to delegate and develop others

Often, when someone launches a new business, there is a shortage of cash and an overabundance of work to be done. This results in the founder being the head of finance, sales, bookkeeping, customer service, human resources, and deliveries. In other words – EVERYTHING. While this can be overwhelming, it is a normal part of the start-up experience. But over time, some founders continue to have their hands in every aspect of the business, even after it has grown and added professional staff. This failure to delegate and develop others can limit the growth of the company, result in the loss of good employees, and wreak havoc on an owner’s health, marriage, and family.

4. Neglecting to look beyond family.

In the hit TV series Yellowstone, ranch owner and patriarch John Dutton (Kevin Costner) demotes his loyal ranch manager Rip and gives the position to his son. Why? Because his son was family, not because he was the most proven person for the position. There is nothing wrong with an owner who wants their children to eventually take over – except when they are not experienced enough or talented enough to do so. Wise owners avoid this trap by seeking the best talent rather than just following the family bloodline. When owners fall into the trap of only focusing on family, the likelihood of the business thriving in the future is very low.

5. Failing to plan for emergencies.

75% of Americans do not have a will, and some do not even have a power of attorney to make major decisions for them if they are incapacitated. And this includes some business owners. When an owner fails to plan for emergencies, their business may not have anyone equipped or designated to step in and make decisions. This can cause banks to be hesitant to lend money, customers to become uncertain and start looking for a new provider, and employees to become anxious. Fortunately, all of this can be alleviated with some professional business and legal guidance.

6. Leaving family relationships unattended.

One of the most well-known business thinkers of our time was Peter Drucker. He once said, “Only three things happen naturally in organizations: friction, confusion, and underperformance. Everything else requires leadership.” This not only applies to businesses but also to families. It is common for an owner of a family business to avoid having hard conversations with adult children because we all like to avoid the discomfort that comes with it. But like a gardener with her plants, when a business owner does not tend to their family by clarifying plans and expectations, weeds begin to spread, and disease takes root.

7. Believing what a buyer promises.

It is encouraging how many of the business owners we have met truly care about their employees. After all, the business only became successful because of their team’s investment of talent and time. So, when it comes time to sell, many owners try to ensure that the buyer will live up to the values and culture that has been nurtured over many years. Unfortunately, many owners have experienced regrets with a new owner not living up to their commitments or at least not doing so in the same way the previous owner would have. So, be aware of the trap that a new owner will care for customers and employees the way you have. Some will. Many won’t. 

8. Failing to seek financial, organizational, and tax planning advice.

Most business owners run enterprises that require expertise. They make and build things or provide expert advice and specialty services. And people hire them for their experience and knowledge. But sometimes an owner forgets to seek expertise from professional advisors who could have helped them save money, reduce risks, and avert a potential crisis. Why? Sometimes, it is because they are so busy and will “get to it later.” Other times, they may feel that they already have the knowledge they need. Or, perhaps they do not want to spend the money on such advice. This trap is enticing because it seems to make sense, but more often than not, regret will soon follow.

9. Missing the emerging economic, technological, and industry trends.

Do you remember Zoltar, the fortune teller who resided behind a glass case in most arcades over the past fifty years? You put in a quarter or two, and Zoltar will tell you the future. If only it were that easy. The future of every business will be influenced by emerging trends that, if missed, can damage or destroy your business. Artificial intelligence, tariffs, consumer shifts, pandemics, and inflation are just a few trends that can rapidly impact your business. In the 1970s, Sony bet that its Betamax video format would win the market over VHS. Yet by the 1980s, the VHS video format had captured about 90% of the home video market. In short, they missed the emerging preferences of consumers and lost a lot of money along the way.

Every one of these traps is avoidable, but only if you see them coming. Contact us to learn how our team can help you prepare for the future sustainability of your business.

Jay Desko is the President & CEO of The Center Consulting Group and brings experience in the areas of organizational assessment, leadership coaching, decision-making, and strategic questioning. Jay’s degrees include an M.Ed. in Instructional Systems Design from Pennsylvania State University and a Ph.D. in Organizational Behavior and Leadership from The Union Institute.

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