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.
Join Our Small Business Community
Get the latest news, resources and tips to help you and your small business succeed.
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.