Starting your own business can be an exciting challenge. You’ll be on your own to learn what to do and what not to do in your own business. You’ll also be fully in control about the direction your business will take and whether you will continue it or not. However, calling all the shots can also mean a lot of responsibilities in your hands. If you make a small mistake, it could cost you dearly. Have too many mistakes and you could run your business into the ground.
On the other side of the spectrum, if you’ve already set up your business then you should focus more on growth and maintaining your current success. It can be difficult and time-consuming especially with a large company to handle. Whether you’re operating a small business or a large company, here are some things you should consider to keep your business afloat.
Selling Products Dirt Cheap
A lot of small businesses never make it big because they’re stuck at the bottom of the barrel no matter how many customers they are able to get. It might sound strange, since more customers would mean more revenue and thus, more room for growth. However in this unhealthy scenario, the more customers and the more revenue these small businesses get, their expenses almost always catch up. This leaves very little left for income and thus expansion is out of the question.
A deeper reason for this factor is because these owners didn’t know the value of their product. Yes, their product was sold very well and it drew in a lot of customers. But they still sold their product at a lower value than its market worth. This is why it has difficulty generating income enough for growth even if it is sold well.
To avoid this trap, know your product’s value before you even open your shop. This will allow you to sell it at a reasonable price while covering production costs. Once your customers start pouring in, you can slowly expand while increasing your price. Customers will be able to see your expansion and therefore understand your price increase. Sooner or later, the income your product generates will be enough to cover production and expansion costs.
Focusing on One Thing Only
When planning your business, it’s always a good idea to focus on only one area where you’re good at and start from there. As soon as you open shop and meet regular customers or sponsors though, you need to manage a lot of responsibilities. It’s not enough to simply provide what they need and then end your relationship there. You need to maintain their interest and keep them coming back for better products or upgrades. You can do this by keeping your past and potential customers updated through your newsletters, social network profiles, or other means.
If you do provide them with updates, don’t make your newsletter come off as a giant advertisement. Make it worth reading. You could add useful information or facts about your industry. This way you’ll establish yourself as an authority in this field and when customers will indeed buy, it’ll be from your shop. In short, learn to juggle marketing and sales.
Forgetting Customer Care
Decades ago, people looked up to big companies with respect. If a company had a big office and multiple branches, it seemed very reliable and thus drew in customers. With the change in times, people are now looking at businesses that think and act like small businesses. What this means is that customers are not only looking at the sale, but they’re also looking at after care.
This is because big companies are too focused on their sales or products that they don’t bother taking care of customers’ opinions or complaints. On the other hand, small businesses do their tasks on a personal level. If customers complain, it reaches to the top tier quickly and can be acted upon as soon as possible. Since there are lots of portals for communicating with your customers, it’s not that hard. Just get in touch with customers on a personal level even if you’re already a big company.
Not Learning Basic Accounting
Another thing that makes life difficult for small business owners is not knowing when they’re about to lose money or if they’re already losing money. They simply focus on making enough to pay off employees, rent, utilities and supplies. Though these are important, you should focus also on income and savings for the future. You can do this by teaching yourself how to read a cash flow statement. In simple terms, knowing how much you make and where it’s going will help you protect your business from going under.
Putting off Tax Planning
Taxes can be very confusing to almost everyone out there. Even for workers who only have their salaries to worry about, they have a hard time computing how much they need to pay. In the case of business owners, this can become expensive and risky. A lot of small business owners think about taxes only after a tax year. By this time receipts will be difficult to trace, ledgers are cluttered with figures, and savings are lost in the process.
Planning for tax regulations is an important part of the planning process. However, it can also be done during or even before the tax year. This will ensure a smoother process when paying your taxes and you might even save when it comes to your tax payments. Keep in mind that there are multiple ways out there to minimize the taxes you need to pay. If you’re unfamiliar with this topic, consulting an accountant will be in your favor.
Underestimating Employee Importance
For business owners, ensuring if a business runs smoothly can take a lot of energy. This is why a lot of them don’t think that taking care of employees is that important. After all, a lot of people are looking for jobs out there. Once your current employees are dissatisfied and quit, it’s easy to replace them, right?
This is a very wrong and potentially fatal mistake for every business out there (big or small). Employees are the lifeblood of the business since their work brings money into your account and allows you to enjoy your current privileges. Sure, there are a lot of people who can replace your current employees, but it will cost you. This means that these new employees have to learn about the process again and their skills are not that efficient compared to a seasoned veteran in the business.
If you don’t know where to start in keeping employees happy and satisfied in their job, you can start by creating a rewards system. It can be based on your company’s metrics. If an employee passes his/her metrics consistently, then be sure to reward them or give recognition. Not only will it keep your employees happy, it will also motivate them to work harder.
Now that you’re aware about the common mistakes businesses make, it’s time to reflect on your own business or company. Try to check if you’re doing any of these without realizing it. Oftentimes these mistakes are part of our bad habits and can be difficult to detect or change. However recognizing it will be the first step to change and improving your business.