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Let’s jump in…
Last week we spoke about the good, the bad, and the future of PE.
If you missed out on that newsletter do not worry just make sure to visit the Mid Market Insider homepage and catch up!
This week I want to change it up and identify the three biggest mistakes that cause over 50% of businesses to fail.
Now if you prefer to watch a video you can find it here:
Why Over 50% Of Businesses Fail (3 BIGGEST MISTAKES)
1. Coasting
The average age of business owners I have worked with ranges from 50 - 80’s.
At that age, ambitious business growth is not as interesting as when the company was originally started.
I mean who can blame them?
If you’ve spent so long grinding towards a goal eventually you get tired.
Both the ambition and desire diminish after a long period of time.
But remember the age-old adage…
If you aren’t growing you’re dying.
Growth is the key to the health and vitality of your business. When business owners make the conscious or subconscious decision to no longer improve, forgo purchasing that new equipment, or simply just be content, that usually spells the beginning of the end.
2. Being Too Involved in the Business
We've all met them – leaders who proudly declare their "hands-off" management style while checking every spreadsheet cell and questioning, or at least being involved in, every decision.
This isn't just about micromanagement; it's about understanding when your leadership style has reached the height of its effectiveness.
Now being too involved is not a bad thing. If you’re president or CEO it makes sense.
However, a lot of times I see business owners overstaying their welcome.
What I mean by that is you did a great job getting the business to where it is now but are you the right person to take it to that next level?
Eventually, I can guarantee that the answer will be no.
You have to have a certain level of introspection to appreciate the limit of your skills.
The business owners who don’t have this sense of self-realization don’t realize they are holding back their business and that it would be far better for them to take a step back.
Here's a hard truth: The skills that got your company to $10 million in revenues aren't necessarily the same ones needed to reach $30 million. Each growth stage requires different leadership capabilities.
It’s important to lean into your strengths and limitations.
The most successful business owners aren't necessarily those who hold on longest, but those who know when and how to evolve their role.
If you aren’t able to advance your skills, perhaps it is time for your curtain call, hard as that might be to accept.
3. Endowment Effect
The endowment effect causes us to place a higher value on possessions simply because we own them.
While this emotional attachment might be harmless when it comes to personal belongings, it can create dangerous blind spots in business decision-making.
As a seller, you will value your business more than a buyer due to the endowment effect.
One of the most concerning manifestations of this effect appears in how business owners evaluate their customer relationships.
Sometimes I talk to business owners who have 50-60% customer concentration and they believe due to the great relationships the customer won’t go anywhere.
With a customer concentration that high it only spells catastrophe.
While strong relationships are valuable, they don't protect against:
- Quality issues
- Production delays
- Competitive pressures
- Supply chain disruptions
- Internal changes in customer organizations
Even with healthy customer concentration, some business owners will still over-value the stickiness of their customers.
The endowment effect is something that will impact every part of your business.
As we've explored the triple threat of:
1. Coasting
2. Being too involved in your business
3. The endowment effect
One truth becomes crystal clear: the greatest risk to your business isn't your competition – it's the comfort zone you've built around yourself.
The first step toward change is acknowledgement.
🧑🎓 The Lessons:
1. Are you still driving growth or maintaining the status quo?
The moment you choose comfort over progress you're not just pausing growth, you're initiating a gradual decline.
2. Have you become the bottleneck?
Leadership isn't about being irreplaceable – it's about building a team that functions better without you.
3. Are you seeing your business through rose-tinted glasses?
While it’s natural to overvalue what we own—from customer relationships to our capabilities—this emotional attachment creates dangerous blind spots that can threaten your business.
📅 Next Week:
Next week join us as we separate fact from fiction and pull back the curtain on these "overnight success" stories.
Keep building,
Nick
P.S.
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