Top 7 Pitfalls of Small Business
Step back and re-evaluate, often!
It must of happened to us all at some point when running a business, you get caught up in what is going on right now and you forget to relax and think about the big picture. Looking down the road allows us to react properly when danger is near.
Here is a list of the most common mistakes that have caused small business failure.
1. Inadequate planning. Start with realistic but precise goals for your firm (a business plan), including deadlines. For example, don't just say that you want to increase sales; instead, decide that you want sales to reach $100,000 by next holiday season. Then write down the steps you can take to meet those goals on time (an action plan), and set deadlines for completing those steps. Goals without plans are dreams! Don’t be afraid to state all the risks to your business, even if the list gets very long. Being aware of the problem and understanding its nature is 90% of the answer.
2. Ignoring the competition. Consumer loyalty has declined sharply in recent years. Today, customers go where they can find the best products and services, even if that means breaking off long-term business relationships. Monitor your competitors, and don't be ashamed to copy their best ideas (assuming that doesn't mean violating patent law). Better yet, devote some time each week or month to devising new methods, products, or services for your firm.
3. Ineffective marketing. Contrary to the popular cliche, few products or services "sell themselves". If you don't have time to market your product effectively, hire an experienced person to do it for you. Marketing keeps your products selling and money flowing into your business. It's crucial that you do it well.
4. Ignoring customers' needs. Once you attract customers, you'll have to work hard to keep them. Customer service should be a key aspect of your business. If you don't follow through with your customers, they'll find someone who will.
5. Poor location. Even the best restaurant or retail store will fail if it's in the wrong place. When you're scouting a location for your business, consider factors such as traffic (how many potential customers pass your business during the course of an afternoon or evening?) and convenience (how hard is it for your regular customers to get to your location on a regular basis?). This category also includes market location, the position of your product or services within the market. Know your market, an entry level product has to priced accordingly and then sold to that buyer. You cannot overprice a product and sell it to the high end buyer. This is called pricing and positioning your product out of the market.
6. Cash flow problems. You need to know how to track the money coming into and out of your business — even a profitable venture will flounder if it runs short of cash. In addition, you must learn to make cash flow projections that will help you decide how much money you can afford to spend and warn you of impending trouble.
7. A closed mind. Everyone goes into business with some preconceptions — don't be surprised if you find that many of yours are wrong. Look for mentors who can give you advice, and run your ideas by them before you make important financial commitments. Read books and magazines about small business, visit business-related Web sites, and network with your peers in the business community.