The Top Five Small-Business Blunders
By Paul Rivett | February 1, 2011
In my work with entrepreneurs I've seen many small-business successes — from companies achieving rapid growth and securing much-needed financing to firms entering into partnerships that bring their businesses to a new level. I've also seen small businesses commit a number of mistakes.
Fortunately, we can learn from others' mistakes. Here, then, are the top five blunders small businesses make — and how to avoid them.
Lack of long-term goals and plans
Building a business requires ongoing decisions, actions and results. Take time to clarify your short- and long-term goals, then break them down into both one-year and three-to-five-year plans. If you aim to double sales in one year, for example, your plan should specify the number of prospecting calls that need to be made each day.
Failure to carefully manage cash
You need sufficient cash to grow a business and take advantage of opportunities. Without careful planning and a cash reserve, it's easy to get caught short, resulting in lost time and resources on cancelled projects. Small businesses usually can't risk buying inventory before a customer purchase order is in hand or accepting a large order before the costs of production and shipping are financed.
Making assumptions about customers
Buyers and other individuals who purchase key goods and services for companies are under tremendous pressure to reduce costs and secure competitive bids. Perceived value and reliability are major factors in their decisions. If you are not monitoring your customers, market patterns and competitors' innovations, you risk losing market share. Dialog with customers regularly – not just about sales – and learn what your competitors are telling them.
Hesitancy to reach out for help
Many small businesses have dreams to grow but don't know how to move forward. The majority of businesses fail because of issues that are under their control. It's therefore critical to seek advice from people who have "been there." Build a team of advisors to help assess the potential of your business, secure the right financing plan and partners, and keep your growth objectives on track.
Neglecting opportunities to network
While many entrepreneurs find themselves too busy to attend events, networking is well worth the time and effort. Business owners frequently say, "If only I had known about that opportunity sooner!" The goal of networking is to share and learn from others' experiences. Join a local business association. Learn about other companies, government programs, potential suppliers and partners. Get connected and leverage your connections.