Starting a business is daunting work and it can be an emotional rollercoaster for even the savviest businessperson. There’s a tipping point when the excitement of starting a business gives way to self-doubt and simple decisions suddenly carry more weight than ever before. As a small business owner, you have the ability to make or break your business. According to statistics published by the Small Business Administration, only half of small businesses survive for more than three years. Here are five common mistakes all small businesses make which inevitably lead to their downfall.
They fail to plan for the future
When running a business, it can be easy to get caught up in the here and now and fail to adequately plan for the future. While it might be easier to control immediate expenses, turning off the lights to lower your energy bills isn’t going to provide you with the increased revenue needed to move your business forward. Having a long-term plan alongside short-term objectives will help your business to grow and prosper. The most important thing to remember is to keep an eye on the long term plan without sacrificing the short term demands of running a business. Too often starters fail to see that even though they might be doing well and selling a lot in the early days, this doesn’t always last. Trends change and so does the market so you have to have a plan to keep things fresh and offer something new to your customers, otherwise you’ll hit a road block and a decline in sales.
The don’t keep accurate records
Accurate record keeping isn’t just for the tax man, it can also deliver interesting insight into your business and help you to identify areas of growth and opportunity. Many people make the mistake of only recording key figures such as income, expenses and revenue, but this often isn’t enough. Hiring an accountant or investing in accounting software will help you to identify what records you need to keep. Using specialist software will also protect you against data loss provided you back everything up – the same can’t be said for paper files in a filing cabinet.
They don’t understand the market
Small business owners often make the mistake of thinking they are operating in a vacuum and ignore outside factors. You can’t start a business without creating a solid business plan, and you can’t have a business plan without having a solid understanding of your market. Failing to understand basic things such as whether your market is seasonal, trend-based or year-round can damage the growth of your business. Likewise, failing to understand who your key competitors are will leave you focusing your attention in the right direction. Its all well and good aiming to be ‘niceynicey’ but the problem is business is brutal. You need to be aware of what your rivals are doing and make sure you’re doing your best to be better, otherwise you’ll be left behind and you’ll lose business. Without a solid understanding of your market, businesses will struggle to grow at a sustainable rate and as you’re a small business, this is less than ideal.
They get distracted by the details
It’s a common problem that business owners spend too much time working in their business rather than on their business. Being a business owner means you have to take a step out of the business and focus on the bigger picture. It is easy to become side-tracked and lose endless hours by getting caught up in everyday admin tasks. The easiest way to avoid this pitfall is to dedicate a certain amount of time at the start of the day to admin tasks, and then stick to it. Getting caught up in business admin is a huge drain on resources, so consider using bookkeeping software to minimize the amount of manual paperwork. You could also look to outsource your more mundane duties to freelancers or professionals to take that weight off of your shoulders and get you doing what you do best!
They focus on their customers instead of their employees
There’s a popular question amongst business owners. Which of the following is worse: you spend money on developing your employees and then they leave, or you don’t spend money on developing your employees and they stay? It’s better to risk investing money in your employees and having them take their expertise elsewhere than to ignore your employees and have unhappy people represent your company. Ultimately, keeping your workforce motivated and happy will help your business to grow. In customer-facing businesses, your employees will be the face of your company, so if they treat work like a chore this will reflect badly on you. Give your employees responsibility, feedback and reward their good performance to keep them happy.