There’s nothing easy about being a
small business owner. With fewer resources and less capital to spare, even a
small mistake can have a big impact on your company. Even though not every
mistake is going to put you out of business, they could still set you back in
your finances or business development goals.
Here are 5 mistakes that small
business owners commonly make, and how you can avoid making them.
1- Expanding Too Quickly
When business gets booming, it’s
tempting to quickly expand your business—you hire more employees, you move to a
larger office, you buy more equipment and assets, etc. Expansion isn’t
necessarily a bad thing, and if your business is doing extremely well then you
probably will need to expand some to accommodate the demand.
But remember that in business, the
most stable kind of growth is slow and steady. If you expand too quickly,
you’ll be in a bad place if demand suddenly drops. You may have to lay off
employees, or if you upsized to a large office you might not be able to afford
the rent if revenue dipped.
Expand your business very slowly
so you won’t be upended by fluctuations in the marketplace, and always be on
the lookout for scalable business solutions. For example, if
you’re not sure what size office you want to rent, you might want to rent out a
scalable office
space that you can easily upsize or downsize.
2- Bad Bookkeeping
Bookkeeping is one of the most
tedious business tasks, but it’s also the one that could come back to bite you
if improperly handled. If you’re not keeping accurate records of all your
business transactions, you might get audited by the IRS and you won’t be able
to accurately track the financial health of your business.
One of the best ways to keep
accurate records is to use digital bookkeeping software. There are a huge
variety of software programs on the market that will automatically track and
organize your business transactions, and some programs can automatically
generate balance sheets and a statement of cash flows.
Don’t panic if you’re already
behind on your business bookkeeping. You can always enlist a catch-up bookkeeping service to quickly get your business
records up to date.
3- Not Understanding Your Market
You’d be amazed by how many small
business owners neglect to do a market analysis. For those of you who are
launching a startup, market analysis is when you carefully study the market of
consumers that you’re going to be selling to. You need to clearly identify what
your product or service is, and who your ideal customers are. Most startups
fail because of poor market analysis.
There are lots of different ways
you can go about doing a market analysis. First, you should carefully study
businesses that are in the same market as you. Ask yourself these questions:
- How
much money are those businesses making? - What
customers do those businesses sell to? - Do
those businesses have a slow season?
Go online and read business reviews
of your competitors. Figure out what those customers are looking for, what they
like about your competitors, and what they dislike about your competitors. Make
sure your business offers a better or more unique product than your competitors
do.
4- Building a Poor Website
In this day and age, it’s
critically important that your business has a great website. A good website
indicates to customers that your business is legitimate. Your website should be
easy-to-navigate, with clear navigation tools and a pyramid structure. It
should also be visually pleasing and should provide potential customers with
plenty of information about your product or service.
Furthermore, your website should
incorporate search engine optimization so it becomes more visible on web
searches. If your business is regionally-based, you should incorporate local SEO to make it more visible to potential
customers in your area.
It won’t cost you thousands of
dollars to develop a great site. Nowadays you can use a simple web building
app to create a strong and effective website with eCommerce
capabilities.
5- Hiring Inefficient Employees
Bad employees can cause the most
damage to a small business. The biggest problem that small businesses have when
it comes to employees is that they hire employees who are lazy, unmotivated,
frequently call out sick, or are rude to customers. In worst case scenarios,
they hire employees who steal from the company.
Make sure you hire the best
possible employees by:
- Running
background checks before you hire - Using
online job boards - Interviewing
job candidates at job fairs (these
candidates are more likely to be motivated)
Great employees can be the
difference between your business thriving or struggling to survive.
Every business owner is bound to
make mistakes, but heed our advice and avoid these 5 big ones that small
businesses make all-too-often.
