Recently, while attending a Wine Industry Symposium, I had the good fortune to sit next to a fellow consultant, James J. Downes of BBK, an international business advisory firm. Over lunch, the conversation quickly got down to what we each thought were the biggest mistakes growing businesses make today. Jim’s list sounded strangely familiar because my own company had been guilty of several!

Jim says according to Dun and Bradstreet, a US corporation fails every 3 minutes, and Business Finance Magazine says 96% of all companies fail within 10 years. I felt somehow relieved since my company lasted for 19 and was successfully acquired. Even so, his list was so compelling, I wanted to share it with you. I’ve included my suggestions for ways that may help:

1) “Spending money on marketing that isn’t working.
Money spent on marketing is typically not linked to results……big mistake.”

Suggestion: Avoid blind advertising as much as possible. Invest rather in promotions that can be measured. Also, consider worthy-cause marketing. Go direct to your consumer with samples, and where-to-buys.

2) “Not defining a proper sales process/system.
Individual sales people not taking advantage of company and industry best practices.”

Suggestion: Hire veterans from your industry. Ask your buyers, who know who they are.  Document what works and what doesn’t. Don’t reinvent the wheel. Sell everyone between you and your ultimate consumer.

3) “Not focusing on becoming a lean organization.
You must measure and manage productivity in all departments of your business.”

Suggestion: Create two divisions: Sales, and Sales Support. Compensate everyone based on sales and profitability. Avoid silo-ing and the attendant job preservationists view of information as currency.

4) “Focusing too much on sales growth and not enough on profit growth.
Fast growing companies sometimes focus too much on the top line rather than the bottom line.”

Suggestion: Create incentives and bonuses based on quarterly profitability. Include the whole team in the quarterly numbers, the development of budgets, and what’s in it for them.

5) Incentive plan incents the wrong things.
Incentive plans not tied to generating margin or profit.”

Suggestion: see #4

6) “Continuing to fund a business with an antiquated business model.
Doing things the way we always have and ignoring industry trends can lead to expensive mistakes.”

Suggestion: Review the viability of your business model annually. Reorganize the business regularly to address the changing environment.

7) “Not measuring the customer experience.
Not asking your customers how you are doing can be deadly.”

Suggestion: Put 800 numbers on everything. Consider your customer service department as critical to product improvement. Beyond satisfying customer complaints, they can provide production and marketing with vital information that will save everyone’s job.

8) “Poor financial management, i.e., budget/ forecasting/inventory/receivables.
Not managing the money side of your business can cause you to run out of it.”

Suggestion: Make your suppliers strategic partners. Call your soon-to-be-overdue payables with a payment plan way before the due date. Know the significant questions to ask of the data beyond conventional accounting.

9) “Launching new products/services without doing adequate financial diligence.
Losing money on new investments because there was not a proper business plan at the start.”

Suggestion: Avoid the tendency to proliferate products. Respect the limited bandwidth of your own people and the entire distribution system. Get strong with a few products and make a name for yourself.

10) “Putting up with mediocre performers.
Not outsourcing people when appropriate can be costly.”

Suggestion: Recognize when the company has outgrown former key staff who were critical to the start-up but did not expand their skill set to keep up with customer demands. Pay for performance. Outsource everything you can except quality.

Thanks Jim, for summarizing the ten biggest operational mistakes companies make, and why we should focus on eliminating waste and inefficiency. For more information about BBK, go to their website.

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Who We Are

Michael Houlihan and Bonnie Harvey Barefoot Wine Founders

Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse to the board room of E&J Gallo, who ultimately acquired their brand and engaged them as brand consultants. Barefoot is now the world’s largest wine brand.

Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They built an internationally bestselling brand and received their industry’s “Hot Brand” award for several consecutive years.

They offer their Guiding Principles for Success (GPS) to help entrepreneurs become successful. Their book, The Entrepreneurial Culture: 23 Ways To Engage and Empower Your People, helps corporations maximize the value of their human resources.

Currently they travel the world leading workshops, trainings, & keynoting at business schools, corporations, conferences. They are regular media guests and contributors to international publications and professional journals. They are C-Suite Network Advisors & Contributing Editors. Visit their popular brand building site at

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