7 Blind Spots That Hinder Your Business
In the world of the independent retail, the role of the owner is pivotal. The common phrase is “the owner wears many hats”, thus making even the most astute founders susceptible to certain blind spots that can hinder their business growth and success.
Here, we discuss the seven critical blind spots that owners often overlook, their implications, and how addressing these can lead to a more prosperous future for their business.
The following is an adaptation of a blog written by Greg Alexander, CEO of Collective 54, a peer to peer organization he founded for Professional Service firms. Greg is one of the most successful, brightest, and best entrepreneurs I have met. He is also just a great guy. With his permission I have adapted his blog for indie retailers to address 7 must-know blind spots…
#1 Filtering: The Distorted Lens
Filtering refers to how founders process information when making decisions. For Indie retailers, there’s a tendency to distort facts, often unconsciously. This selective absorption of information leads to decisions based on partial data, overlooking crucial aspects that might be critical for the business well being. For example, looking at gross margin instead of cash margin, or the true effective value of your current inventory.
#2 Relying on Hunches: The Trap of Self-Fulfilling Prophecies
Many indie retailers fill gaps in information with their own assumptions or hunches. While intuition can be a powerful tool, over-reliance on it can lead founders into the trap of self-fulfilling prophecies. These hunches, unchecked by factual data, can steer the business in a direction based more on belief than reality. I wrote about this in a recent blog about data is our friend and gave examples on how decision are made based on rules of thumb. An example of the trap of fulfilling self- fulfilling prophecies is markdown tactics. Always follow the same strategy because you think it worked once. Every season is different and different options can be deployed based on changing circumstances.
#3 Soothsaying: The Arrogance of Prediction
Soothsaying involves attempting to predict the future with little concrete evidence. This blind spot is particularly dangerous as it can lead founders to commit resources to strategies based on shaky forecasts, often fueled by arrogance rather than practical analysis. For example, buying based on last year and not on current trends. Business is fluid and changing and what worked in the past may not have the same results in the next season or next year.
#4 Retrospection: The Fictionalized Past
Owners often use selective memory to guide future decisions, converting the actual past into a more palatable, often fictionalized version. This retrospection can lead to repeated mistakes or missed opportunities, as the true lessons from the past are obscured. For example, keeping a vendor even after they are no longer profitable because you think your customers still want it. You remember the “good old days” and expect them to return.
#5 Categorizing: The Shortcut to Decision Making
In the time-starved world of boutique service firms, founders often resort to categorizing – labeling and judging situations quickly to save time. While this can be efficient, it often leads to poor snap judgments and oversimplifications of complex situations. For example, not taking the time to do a proper analysis before you buy and make a decision on a hunch that you equivocate as the art of the buy, rather than a mitigated risk.
#6 Emotions: The Clouding of Judgement
Emotions play a significant role in decision-making, but they can also cloud judgment, blocking out logic. Owners, driven by passion, can sometimes let their emotions over-ride rational decision-making, leading to choices that aren’t in the best interest of their store. For example, adding children’s to a contemporary fashion store, not knowing the industry, but now you have a child and use it as a reason to grow the business.
#7 Magnifications: The Extremes of Perception
Magnification involves blowing things out of proportion, making the highs too high and the lows too low. This distortion can lead to over-reactions, either overly optimistic or pessimistic, which can destabilize the entire strategic direction. For example, when your business hits a rough patch, and you cut compensation on the people who drive the business, or fire the resources that can pull you out of the fire.
Overcoming Blind Spots for Success
For indie retailers to grow, they require leadership from the owner. A owner suffering from these seven blind spots is not operating at full capacity. Recognizing and addressing these blind spots is essential. Owners who identify with one or more of these pitfalls should invest in personal development, focus on these with your M1 Retail Expert, if you are a client, and work to mitigate their effects. This is not just about individual improvement but about ensuring the health and future success of the firm. Remember, overcoming these blind spots is not just a personal victory; it’s a triumph for the entire business.
Onwards and Upwards,
Marc Weiss
Co-Founder - Management One
