6 Mistakes often made by small businesses
Money, or more importantly the lack of it, is often the reason that small businesses fail – which is why special attention should always be paid to avoiding mistakes in six key areas, from planning to marketing and from expense management to ignoring customers. Any business that steers clear of these traps has a better chance not only of surviving, but of prospering, too.
1. You didn’t employ experts. If you are in business to make widgets, then make widgets. Don’t spend time building your own web site, or doing your own accounts. These are not your core skills, and will not earn you any revenue. Devote your time to making widgets, and pay experts to do the other stuff. And while we’re on the subject, if you’re a professional widget maker, you’re probably an amateur web designer. Why would you want an amateur helping to build you business? Remember, if your business makes no money, it’s a hobby rather than a business, and they’re two very different things. Always focus on the revenue-earning opportunities!
2. You picked the wrong customer segment. Efforts to sell skateboards in residential care homes are doomed to failure, even if that’s where the richest potential clients are to be found. Make sure you’re talking to the right market segment, so as not to misdirect marketing effort and miss sales as a result.
3. You spent too much time planning. Planning’s important, of course it is. But be alive to the danger that should you spend too long doing it, then your planning will tip over into procrastination, which you need to avoid at all costs. Spending too much time on planning is, in effect, a decision; a decision to do nothing, and it’s going to be expensive in the end. Don’t be seduced by the prospect of having everything perfect before you do something new; firstly, that’s a sure way of never getting round to starting, and secondly, if you wait for the right time, you’ll find yourself waiting for ever.
4. You spent too freely. A short-term view of available funds could well lead to long-term problems. Prudence with spending will make your company cash rich, and more able to ride out the difficult times when work may be lean, or big customers slow to pay. A combination of low income and a thin bank balance can create a perfect financial storm that sinks a business. Maybe you can have it all, but perhaps not just yet.
5. You didn’t listen to customers. These are the people who make paydays possible. They’ll tell you how good your product is, if you ask them, or how bad it is, whether you ask them or not. . Their feedback is the best market research you can get, and any company that fails to heed it is putting its future at risk. Here’s a quick example: You’re very proud of the widgets you supply, in part because of the care and effort that goes into making them – but the customer perceives them as a mere commodity, and they’re available more cheaply from China. If the customer buys on price, the business goes to China, and you’re dead in the water because your potential (or lost) customer rates the quality of your product as less important than the price you’re charging.
6. You didn’t watch the small things. Strategy thinking is fine, but don’t overlook the details. Take a boating analogy. Standing at the helm of your boat with an eye on the horizon is fine, but don’t ignore the small hole that’s letting in water. Similarly, in business, you should sweat the small stuff. Managing the detail of your expenses with the Solo Expenses expense tracker app has a range of benefits. You’ll not only have an excellent record of what’s been spent, but you’ll be able to send all the data to your accountant, and use it for money management, working out if you’re spending excessively in any one area, and therefore able to change your spending patterns, if necessary, as a result. Because of the versatility built into Solo Expenses, we guarantee we have expense management software that’s a perfect fit for your business, no matter if you’re a sole trader (and our expense manager app was the first of its kind created for you), a small firm employing a handful of people, or a corporate client employing thousands. Visit this link to find out which of our four options is best for your business.
Picture: Ljupco | Dreamstime