Keeping a business afloat is hard work especially in the face of the myriad of challenges small businesses face. Depending on whom you ask, the percentage of new businesses that fail within the first five years ranges from 60 to 85%. Most of them undone by lack of sufficient resources and common mistakes that are prone among new business.
To avoid suffering the same unfortunate fate, you need to know what these mistakes are and how to avoid them. Here are the common mistakes small businesses make and how to avoid them.
Being a one-man army
Many small business owners perhaps due to scarcity of enough operating capital fail to hire enough staff or in a bid to protect their investment attempt to run a business single-handedly. This often backfires and the business winds up sooner rather later, much to their surprise.
While it is expected of employees in small business to go beyond their job, know when you are overstretching your labour resources and you recruit more staff. Don’t micromanage your employee either. If you indeed recruited qualified candidates then you should put your trust in their ability to do their job. Micromanagement is among the top reasons good employees quit.
Some business owners are impatient and want overnight success. This makes them make rash business decisions that lead to the business’ downfall. With a few exceptions, it takes most business years to become profitable and stable. Don’t expect yours to be any different.
Expanding too fast or launching new products at an importune time could deny your business the much-needed cash flow and you might you are unable to meet some of your financial obligations. Your business expansion plans need to base on the company’s performance and the market outlook.
Poor financial management
A number of small business that fail lack sound financial management practices. They have no financial records whatsoever which makes it difficult to monitor and track the financial performance of the business. They only find out that the business is not doing well when it is already on its knees and little can be done to salvage it.
This also includes borrowing to early which can lead to bankruptcy claims against the business. With limited resources, most small businesses don’t have the capacity to handle financial shocks and therefore wind up. You can learn how to manage the financial aspect of your business from online resources like Thesmallbusinesssupportnetwork.Com.
Compromising on quality
Another common mistake among small business owners is make price cuts that compromise on quality. In a bid to attract more customers with lower prices, some businesses make drastic cuts to their operational expenses that if lowers their product/service quality.
While price cuts founded on a sound business model can be a marketing strategy, it doesn’t help your cause if it comes at the cost of the quality. People want value for their money and are much willing shell an extra dollar as long as they get value for their money.