Want a scary fact?
Small businesses fail all the time.
Want a scarier fact?
You might be making mistakes that are leading your business to its demise right now.
Lucky for you, we have a lot of experience helping small business owners succeed. We’ve done some research, and came up with this list of seven common mistakes which could be killing your small business. So you can avoid them. Obviously.
Sticking To Outdated Marketing Strategies
Marketing using just small handwritten signs and the trusty old desk phone just doesn’t cut it anymore. Ten years ago, I would see phonebooks everywhere I went and today, I hardly see them anymore. That’s how fast technology changes. Make no mistake, the telephone is still a valuable business tool, but forgetting the many other forms of communication when trying to reach out to your market is a huge mistake.
Phone calls can be annoying because they require immediate attention, which limits effective phone call times to a fraction of the day. People annoyed by phone marketing blitzes are more likely to take the time to read an SMS broadcast, chat, and email they can read or reply to at their leisure; the same people also respond better to advertising campaigns launched through social media. The best part is, online advertising and social media engagements cost much less and are much more effective than phone call campaigns.
Failing To Understand Their Clients
Serving your customers is the only reason your business exists; the day they decide you no longer have what they need is the start of the end. Knowing your customers is essential to your survival.
Businesses assume they know all there is to know about their clients. There are at least two reasons why that assumption is wrong. First you never know enough about your clients; their tastes change quickly and often. Second, your competition is always looking for ways to win your clients over to their side; if you don’t constantly engage with your customers you’ll never know how many of them have left until it is too late.
The usual problem that small business owners face at the outset is dealing with a lot of things things outside of their core activities. While starting out on a shoestring budget, they have to man the tills, stock the shelves, market the products, keep the books, prepare the payroll, and even do janitorial work; all these on top of having to manage the business.
It is perfectly understandable for a small business owner starting out to be hesitant about hiring people. But these days there are cost-effective alternatives to hiring full time employees, so you can focus on managing your business. You can get temps from labor supply agencies when the load becomes too much to handle. There are also lots of online contractors who can design marketing websites, do your books, and a lot of other things you really should not be distracted by.
Not Getting Funding At The Right Time
A lot of small businesses make the same mistake when it comes to finding a small business loan. When times are good, they sit around and rest on their laurels, thinking they finally made it. Then, something happens. A major client leaves, a competitor releases a superior product, etc. and suddenly, the business that was doing great is in desperate need of cash. They then go to their bank, and the bank comes back and says no, because what bank would lend to a business in shambles?
Get your funding for your business when times are good. Get a line of credit, get something that can protect your business against those down times.
Spending Too Much Time Planning
Almost everything in business needs to be planned. Forethought can save you a lot of expense as well as give you better chance of success. That being said, you cannot and should not expect to create a perfect plan. If you spend too much time planning, your client’s needs and preferences may have evolved significantly before you decide to implement it; your hard work can be overtaken by events while you’re still sitting in the back office planning.
Trying to chase perfection can lead to lost opportunities. Try to launch your business, new product or marketing strategy fully prepared to receive client feedback. Then you can refine your plan as you go along based on real customer’s responses.
Failing To Properly Document Transactions
It has been said that a verbal agreement isn’t worth the paper it’s written on. That is so true in all circumstances which involve some form of financial considerations or remuneration; it doesn’t matter if you are dealing with a friend, a close relative or a stranger.
This is especially true of the way business startups work and get funding; all the terms and conditions of the funding should be on paper. It should be clear whether the funds are to be considered as a loan or as equity, and more importantly, whether the fund source is given the option to be actively involved in the management and administration of the business – something you should normally avoid.
Leases of office space and equipment, employment contracts, supplier contracts, etc. have to be covered by legally binding documents which clearly define scope and responsibilities.
Failing To Monitor Employees
As a business grows, so does its list of employees. You can use all the screening and pre-qualification techniques in the world and yet some bad recruits will manage to get in. Failure to correct or get rid of problem employees has a negative impact on your good employees and productivity.
On the other hand, you should also take steps to keep employee morale levels high. If you do not address legitimate employee concerns, you can be missing out on ways to improve efficiency and you may even lose your best people.
Failing To Monitor Expenses
Many operational expenses are variable and in this day and age, competition is so fierce that every dollar counts. Utilities usage, office supplies, and cleaning supplies are only a few examples of things you can save a few dollars here and there on. The only caveat is that you have to know just how much to cut without adversely affecting performance.
When it comes time to refill the office supplies and raw material stocks, always try to haggle for a better price or better payment terms. Every small saving adds up to help give you a bit of edge over your competition.
It’s not hard to avoid these seven deadly business mistakes, you just need to do is keep focus and pay attention. When these problems show up in your organization, you need to act quickly to get back on track to profitability, efficiency and competitiveness.
What other mistakes have you seen small business owners make?