5 Common Mistakes for Small Businesses
Mistakes for Small Businesses
1. Avoid the “double-helix” marketing structure. This structure refers to the pattern of companies that are negligent of their marketing and public relation sectors while they are busy and prosperous. But after those assignments and projects are completed, there are no more customers or business to attend to and you have to begin playing catch up. And while you are trying to drum up new business, customers have already moved onto another product or service because you were too busy to keep your name in the game. Do not fall into this trap. Find a marketing strategy that is flexible enough for you to keep up with and if you cannot do that then looking into outside help is beneficial. Finding a social media manager for your company may seem superfluous if you are a small business starting out, but ignoring the need for social media means that you are also ignoring your online reviews, comments and reputation. And for small businesses, that is your bread and butter.
2. Pay attention to cash flow reports. A cash flow report is basically the analysis of of the cash flow in and out of the business. Cash flow reports are based on operating, investing and financing activities of a company. Most businesses, especially in the beginning, focus too much on sales and profit information and not enough on the cash flow. Cash flow reports are the essential money that is being made and spent in your business. Companies that ignore or are not proficient at reading cash flow reports fail all too often.
3. Improper Staffing
The American Dream dictates that if one works hard and pull themselves up by their bootstraps then they can be a captain of industry. But normally for small business, the budget for payroll is small and finding any way to pay less without going past poverty level is the usual logic. But the type of employees you staff your business with is crucial to the success of your business. You can go the family route. You can fill your business with family members and friends who you know and have strong relationships. The advantage is that you have a group of people to rely on who will be there for you when you are struggling. The disadvantage is that some people will not appreciate their easygoing friend becoming their tough boss. Some people may think that because of the amicable nature of your relationship that they can take advantage of you and do what they want, rather than what you need. If this sounds too risky, then perhaps your route will be staffing through online or print ads. This can be helpful if you are a good judge of character. Often people will be one way at an interview and then slowly but surely the true version appears. To offset this effect, perhaps keeping people on a two-week training basis so you can decide if they have the skill sets you desire in an employee.
Your employees are the people that the customers interact with, who they give their complaints and compliments to, they are the hired representation of your company, so be careful about who you allow in that position. For smaller businesses with small budgets, perhaps motivated teenagers could be useful. Or offering benefits like free lunch, parking, unlimited beverages, class credit, something that doesn’t cost you too much but entices more serious prospects to apply to your business. Look for qualified, motivated individuals who will bring their own personality and drive to your business. They can help you grow if they are the right person.
4. Undercharging
This is a mistake that small businesses make constantly and can spell certain death if unrestrained. On one hand, burgeoning businesses sometimes do not know how to effectively price their product or merchandise, for example, cable protectors. Secondly, they think that having the lowest price will give them the most business. Both of these assumption can be potentially fatal to a small business. It is crucial that the business owner realize that paying themselves back for their time and efforts and covering expenses is the key for being able to stay alive in businesses. Even customers can feel the negative effects of underpricing. Low prices can be appreciated when things are sold in bulk or have an updated version, but some customers recognize lower-than-usual prices as a sign of a substandard product or cheap materials. So instead, they choose a slightly more expensive product that they perceive will have a more longevity. The trick with pricing your product or services is to be fair but competitive, but most importantly to cover your the expense. You need to understand at what price would you be able to break even. Further than that, consider what you target revenue is and what percentage you would like to reach in terms of profits. If you want 10%, then that is what you figure into your pricing. Be sure to know your market and customers and don’t sell yourself short.
