Small business owners are innovative, hardworking and brave. They launch businesses and despite the odds, many of them succeed. However, a rather scary percentage fail. After almost twenty years of looking after small business accounts, we have identified five mistakes common to most small business owners, mistakes that if rectified can have a huge impact on your business’s success:
- They don’t manage their cashflow
Most small business owners are focused on survival. They grab the income they can and they pay the expenses that are urgent. A lot of businesses can survive a long time this way if all you are aiming to do is to work for yourself and cover your expenses, but if you are aiming to build a self-sustainable successful business then healthy cashflow is vital. Good cashflow management is imperative in order to keep your business going, even when the unexpected happens.
Solution: Make sure you have a good bookkeeping system. If you can afford it, invest in a cashflow management app like Float – it will integrate with your cloud accounting program and is easy and intuitive to use. If you can’t afford extra apps, then create a cashflow forecast in Excel. It doesn’t have to be fancy but be sure to cover three items: When your money is coming in? When is it going out? (Including items like VAT and income tax!) and make sure that you have some form of savings to cover the unexpected.
- They don’t plan
The general consensus these days is the traditional business plan is a waste of time and energy unless you are desperately trying to raise funding. While it is true that the traditional business plan probably is not necessary for the small business owner, having no plan at all is business suicide. If you do not know where you are going, or how you are getting there, then you will just flounder along in the middle of nowhere. If you want your little business to be successful and have an impact on the world then you need a plan. It can be one page or 100 pages, and it will change constantly, but you need a clear picture of what you want and how you are going to achieve it.
Solution: Time is precious, but so is planning. Allocate at least ten minutes a day to business planning. If you don’t have the time, knowledge or resources to do an exhaustive plan, then at the very least take the time to write down where you want to the business to go. Then identify what would need to happen to make it a reality and turn those identified challenges into achievable tasks. Use your ten minutes a day to keep tracking those tasks, making sure that you stay on track to achieving your business end-goal.
- They hire cheap
Every business reaches a difficult growth point where the work exceeds what the owner is capable of, but the income hasn’t quite reached the point of covering additional staff. So many business owners react by hiring as cheaply as possible but this could possibly be the biggest mistake on this list. You get what you pay for and if you do not hire good staff your business reputation, sustainability and success will suffer for it. You need to make sure that you have hired the best person for the job – this is not a hypothetical, in nearly twenty years of business we have never seen a case where hiring cheaply worked out well.
Solution: As much as it hurts, it is far better to take a personal hit and reduce your personal salary in the short-term, rather than to let your company pay the price later on. You can also consider outsourcing small menial jobs that are taking your time away from your core business. Outsourcing admin and menial work can cost less than hiring while at the same time giving you more time to grow your business.
- They don’t (or can’t) delegate
Hiring good, reliable staff is part of the success equation. The second part, is trusting them to do the job they were hired for. If you took the hiring process seriously, then you found team members that are qualified, intelligent and eager to do what you need them to do. Your responsibility is to give them an understanding of your company and to provide them with a working knowledge of the policies, procedures and outcomes you expect of them. Then get out of their way. Micro-managing leads to exhausted managers and frustrated, unhappy staff.
Solution: Create comprehensive training manuals for your staff. If they have something to refer to for day-to-day and simple tasks then they will only ask for help when they truly need it. Learn to let go – I know this business is your baby, but every baby has to learn to walk (and run and ride a bike) all on it’s own. You can hover in the background like all loving parents, but give your staff the freedom to learn, grown and do what they do best. If your staff know that you trust them, they will do their best to keep that trust.
- They don’t look after themselves
In the majority of cases, the owner of a small business IS the business. You often are the manager, bookkeeper, marketer, customer care consultant and general administrator all in one. As a result, the small business owner has a tendency to work exceptionally long hours and to work through the weekends. It may feel counter-intuitive, but time off is good for your business. You are not a machine and you cannot work indefinitely without rest, your body will begin to shut down. A decent period of down time helps your body and mind recharge – and you need them both to be running at full capacity in order to deal with the constant challenges of running a business.
Solution: Unless your business relies on it, do not work weekends. Take regular holidays and spend time with loved ones. Schedule days into your calendar for you to go and do something you love. Pay attention to your personal health: get enough sleep, eat well and exercise. Do not fall into the trap of working until you collapse – your business will just collapse with you.
The solutions provided are simple and effective, but if you are unsure how to implement them or you do not have the resources to do so, then do not be shy to reach out to others for help. There is a lot of emphasis on the importance of networking for marketing – but you should network for far more than just making a sale. One of the best things you can do for yourself as a small business owner is to develop a network of mentors and friends. Find people with similar ideals, goals and dreams and be there for each other. You will all be stronger together.