The main mistakes of small businesses

Do you understand that there are mistakes you may make at various phases of your company's growth that might slowly destroy it for months or even years if you don't look out for them?

These blunders really exist, and they aren't limited to inexperienced businesses. Many operating firms, especially ones you would consider to be “successful” because they've been there for more than ten years, are continuously producing them... You are potentially losing a lot of money and/or wasting a lot of time.

Although several of these major and stealthy blunders appear to be geared at service organizations, they may be applied to practically any business. I've done my best to demonstrate this using the lists below.

The main mistakes of small businesses

🅐 Underestimating Project/Service Time- This is a significant one, and it applies to both service and product-based businesses. This is the bread and butter of a service firm. You will get burnt if you do not estimate your time to do each and every service in your repertoire. There is nothing you can do about it but bite the bullet and learn from it. The simplest approach to estimate time is to perform it yourself or have your best employee do it once, then add a fudge factor on top of that. Time becomes a concern with logistics for product firms, so be cautious!

🅑 Not knowing your company's numbers/setting prices incorrectly- I made a point of emphasizing the term "your." It's a typical blunder to use a competitor's pricing as a benchmark without first understanding why they use those figures. Consider the horror that would ensue if you take a competitor's pricing, reduce it by 10%, and then begin selling. What if the rival has a poor pricing strategy and is barely profitable, if not losing money?!?! What if your expenses exceed theirs?!?! You can utilize competition as a starting point, but not as the only focus of your approach.

🅒 Different sectors have their unique cost factors, which you should be aware of when pricing your project or product. When you're pricing things, keep in mind that the price you paid for a thing isn't the only cost to consider. The cost of your labor and supplies for service is simply a small part of your hourly fee. Employees are more expensive than their salaries, and not every employee is included in your labor costs. Every business must pay for insurance. Several overhead expenses must be factored into your price. Oh, and the quality factor is a key one that many people overlook when calculating their pricing. What you include in your price as "standard services" or "standard product features," as well as job site etiquette, in-store service, and warranties, are all important considerations. In the following section, I'll explain why.

🅓 Not Charging for All of Your Time & Costs- While this may appear to be a silly remark to some, I'm sure most company owners would admit to giving away a bit too much of the farm at times. There's nothing wrong with showing you care by providing a little more now and again. But, in any case, that's not what I'm talking about. What bothers me is when people put a lot of effort into their work, products, or shops yet don't pay for it. Let's imagine you run a service business and your competitors don't provide a particular standard service that you do. To steal a project, you can't simply lower their pricing; you must include that expense in your rate and promote that it is included in the price upfront. When stores, for example, put extra personnel on the floor for customer service but don't charge for it, they are undermining themselves. These things cost you money, and they cost your rivals less money when they don't do them. Put out superior service and then undercut your competitors' prices, and your competitors will just have to wait a few moments for you to fall flat on your face before swooping back in.

🅔 As a business owner, you must think that you are giving valuable goods to your customers that are worth paying for. If you have the opportunity to explain why your pricing is higher, make use of it. They are most likely price shoppers if they don't appreciate the fact that you include stuff that others charge extra for afterward or that you treat them better. In any case, you don't want them as frequent clients. Have faith in me.

The main mistakes of small businesses

🅕 Not Getting Paid Quickly Enough- Ah, yes, the dreaded cash flow problem. This problem can be fixed, averted, or at the very least made to be not as awful as it may be as long as you are actually producing enough money to pay your expenses. Here's how it works:

🅖 First and foremost, bill clients as soon as possible. It is quite typical for a small firm to lack the procedures or systems necessary to produce and send invoices on time (see the next segment for more). Again, this seems improbable, given that we are completing the labor to get compensated. However, it is quite possible for the persons in charge of delivering this information to the billing people to be too busy or not have the organization to deliver it to them on time.

🅗 Making the quickest payment arrangements with consumers and the slowest payment arrangements with vendors and workers is the second phase of reducing or preventing a recurring cash flow problem. You should try to avoid paying staff more than twice a month if at all possible. This is always a problem for contractors. If you have to pay weekly, notify them before they start that the first week will be kept back, thereby buying you a week. It will be beneficial, I assure you.

🅘 The third section is about credit. If your firm is eligible for a credit card, apply for one. This enables you to purchase necessary items (that you can afford) that may arise amid a cash flow crisis. Better still, if you have no alternative but to cope with 45-day or longer client payments, try to obtain a corporate line of credit. If you plan on selling to the government or providing commercial services, this is necessary. The wait times for these individuals are typically 60 to 90 days.

🅙 Failure to Implement Sound Systems and Procedures- Many people establish their own business because there are too many processes (often known as "red tape"). Having no processes or processes in place is, unfortunately, not an option. Business owners must find a happy balance, depending on the sort of industry, or chaos and the unknown will result. Billing, collections, payroll, human resources (interviewing, hiring, vacations, benefits, job duties, and so on), manufacturing, operating equipment, maintaining equipment, inventory, sales calls/visits, and logistics are just a few instances of where processes or systems are required.

🅚 Even a one-person concert requires certain administrative processes. This will make it easy for you to hire temps and subcontractors and keep track of their work. You will be responsible for generating many huge issues as your company expands if you don't have at least a watered-down version of a system or procedure in place to accomplish everyday tasks. I cannot overstate how critical this is when hiring new personnel. I'm sure you've heard it before, but I'm a strong believer in having an employee handbook, even if it's only for one person. It's astonishing how many problems people can cause for company owners simply because you pay them.

🅛  Investing in Advertising It's Enough to Say You Advertise- I'd rather my clients didn't advertise than spend money without measuring the effects. There's no use in running a marketing campaign if you don't have a system in place to track how effectively it's performing. Another squandering aspect of marketing that many individuals make is failing to track their prior successful initiatives. I'm not sure why some individuals believe that simply because a $400 monthly ad worked successfully for one busy season, it will automatically work every year after that.

🅜 Spreading Yourself Too Thin- This is a common blunder committed by all business owners. The goal is to recognize when you've reached the stage of "wearing too many hats" and seek assistance. The key is to be aware of your capabilities and to be able to recognize when you are not undertaking tasks that need these abilities. You can't get caught up in day-to-day operations if you're the top salesperson in the organization. If you do, your sales will suffer, and you will finally have no operations to worry about. Consider the following to see whether you're overworked: Did you truly go into business for yourself to work 80+ hours a week?

🅝 Not Getting Help Quickly Enough- Set targets for when you should hire someone to fill in for you where you are lacking in expertise. A corporation can die if it does not receive assistance or if it waits too long. The majority of people who start a business do so because they have a strong technical or sales background. If you know how to create a widget in the best manner possible, your strength is in manufacturing, and that is where you should focus your efforts. Hire an outside business or a consultant to handle sales and marketing until you can afford to hire someone full-time. Don't pretend to be someone you're not in your organization. It will simply stifle your progress.

🅞 Legal concerns, accounting/bookkeeping concerns, and everyday operations concerns are the three major concerns that individuals desire to face themselves but are generally least knowledgeable about. These three areas are likely to be your weakest link, so if you don't have a spouse who is knowledgeable in these areas, be prepared to seek assistance as soon as possible. It's best if you do this before starting a business.

🅞 Although it is a good idea to search for these issues at any time, the end of the year or season is a fantastic business period to ensure you are not making these mistakes. Take the time to remedy these issues, or create the time to do so. If you're not sure how to fix the problem, get assistance. If you don't have enough time to figure out if you have these difficulties or if you do and can't get away long enough to address them properly, get help.