Many of the same pitfalls that affect large businesses and corporations, also hinder small business success.
The fact is, regardless of size or business type, success entails careful planning, a solid work regimen, and sound businesses practices. Maintaining a firm grasp on these key elements ensures a rewarding and prosperous experience through all phases of your small business’s growth. The following are six common mistakes that may hinder the success of your venture:
Starting and running a business requires up-front investment. Business owners, however, must properly assess how much they will expend every month in overhead, cost of goods and/or services, and payroll. Entrepreneurs should be aware of their business’ burn rate, or depletion rate of their cash investment, in order to assess how much time they have to turn a profit. When it comes to payroll, small businesses should have the money to compensate their staff fairly; satisfied employees are a key component to a successful business.
Bad Supplier Relationships
Building strong and positive relationships with suppliers is vital to the ongoing sustainability and growth of a business endeavor. Interactions should never be regarded as merely transactional. Suppliers and buyers should be regarded as partners; by working together, the two forge a mutually beneficial relationship. To this end, small businesses should carefully gauge the integrity and fortitude of potential suppliers. They should avoid relationships that are one-sided, or that result in long-term vendor or supplier lock-in that hinders the business’ growth. One indicator that a relationship may be detrimental is if freebies come with a catch.
Bad or Insufficient Planning / Lack of a Business Plan
Business plans are not just for lofty endeavors and corporations. Businesses of all sizes should have one, albeit small businesses do not need the depth and detail that large enterprises require. There are countless volumes on what goes into a solid business plan for a small venture. Elements such as a SWOT analysis—an acronym for strengths, weaknesses, opportunities, and threats—allow business owners to properly assess the business landscape, map out their own capabilities and areas for improvement, and identify the makeup of the competition – with the end goal of building better products and/or services to address the shortcomings of current market offerings. Competition is healthy, and drawing attention to formidable opponents can often result in a positive outcome.
The Field of Dreams Syndrome
Unless you’re an Iowa corn farmer driven by the ghostly voices of long-deceased baseball players, merely building a great product or service will not result in customers knocking on your door overnight. Crafting a marketing and advertising strategy is crucial for small businesses launching a new offering. Small businesses should expect to apportion significant resources and expenditures in print and/or online advertising, signage, and other tactics for getting the word out.
Not Listening to Feedback
Feedback from customers, employees, and even competition are critical data points for charting a small business’ potential trajectory. Listening to feedback allows small ventures to be agile and nimble in today’s highly competitive business environment. However, reacting to feedback should only occur when there is enough information (e.g., customer comments or suggestions) to substantiate any conclusions made from the data.