Grant Cardone has often said that businesses fail because they take too little action which results in too little cash flow up front. If you are in the beginning stages of your business a smart move would be to pay attention to any areas here that might flag you to a potential blind spot that could set the course for you to go out of business.
No one wants to think about failing especially when the excitement of your new business is fresh, and optimism is high, but without being wise to the pitfalls that may come, you may be doing you, your family, your staff, and your community a disservice.
See if you identify any of these in your own business and then plot some action steps to remedy the issue.
1. Underestimating the effort and time it will take to be successful. If you have enough grit, you may be able to muscle through this one, but many people become disillusioned and discouraged by the growing mountain of stuff they need to accomplish for their business. It’s a lot like getting married! From licensing to insurance to generating promotional materials, signs, logos, Websites, social media and other ads, scripts, training, HR documents, and so much more, you will either need to be super-human and an expert in everything or be able to find tools and resources to leverage your time and energy.
Make sure you have a solid business plan
Talk to others who have started businesses and get a REAL feel for what they went through
Check out online resources and tools. There are many online options for just about every aspect of running a small business. If you need some ideas about how to do something specific, message me and I’m happy to offer suggestions on what I and other business professionals use.
2. Picking a business that isn't extremely productive. Despite the fact that you create heaps of action, the benefits never appear to the degree important to maintain an on-going organization.
Examine WHY you chose this niche. Perhaps your WHY can overcome the effort it will take to generate enough business but remember, just because you are passionate about something doesn’t necessarily mean others will share that to the extent you can be profitable.
The market research aspect of your business plan will help you greatly to determine how feasibly your idea is.
3. Insufficient money reserves. If you don't have enough money to bring you through the initial year and a half or so before the business begins profiting, the likelihood for success is low.
4. This is a big one. Who is your ideal customer? What problem can you solve for them? The ability to characterize and comprehend your market, your clients, and your clients' purchasing patterns is critical to your success. Who are your clients? How are you going to contact them? Is your item or administration regular? What will you do in the off-season? How loyal are your potential clients to their present provider? Do clients continue returning or do they simply buy from you one time? Does it require a long investment to bring a deal to a close or are your clients more motivated to buy because of a ‘new’ thing, impulse, or seasonal reason?
Make sure you answer all these questions. Write it down. Think about it. Then you will make better decisions for advertising and growth.
Write out a plan for how you will engage your ideal customer. The plan may change from season to season, event to event, year to year, or maybe month to month but having a plan will help you see what works and what doesn’t. Learn from that.
Make sure you are utilizing SEO, your Website, internet marketing, and taking advantage of PPC (pay per click) and Social Media advertising!
5. Not accurately valuing your product or service and what it costs to provide it to your customer. If you price according to what competitors in your sector charge you may not be covering your administrative costs. Pricing your product or service requires a great deal of study and will ultimately need to be specific to you and your business.
Business analysis skills will really come in handy here. If you don’t have these skills or don’t have the time to do it, you can hire one independently or find a service.
Click here for FREE resources.
6. Not sufficiently estimating income. In the beginning, your vendors may require payment up front or COD (Collect on Delivery). If, for example, you sell vehicles and your customer is using a loan to fund their purchase with you, you will not receive the full amount for potentially months. This could impact you in two ways, paying for new inventory to come in but not getting full payment right away for inventory sold
7. Not taking into account how you will respond to business rivalry, innovation, or different changes in your commercial sector. It is risky to expect that what you have done in the past will dependably work in the future. Test the variables that prompted any successes you’ve had and see if they still hold up in new markets evolving times. Many industry disruptive businesses have changed traditional models such as Uber, LegalShield, and the internet in general. I see local, small businesses that have been around for years who are dying a slow death because of failure to innovate!!
Pay attention to what your competition is doing
Plug into business podcasts, publications, and groups so that you can know about upcoming trends as soon as possible.
Try new strategies, tools, processes, products, and see if they can either help you reduce cost or make a new or better product or service for your customer.
With new technology, we all have new problems. Be the problem solver and you will always have customers!
8. Overgeneralization. Jack of all trades, master of none. We know the saying! Trying to do everything for everybody will not truly serve anyone. You already know that spreading yourself too thin reduces quality. Most of us have experience that in our relationships. The market rewards quality. I especially see this in business owners who think they can save money by doing something themselves instead of hiring a professional. Or they will spend hours googling information instead of paying for and asking an expert. I see people do this with Websites all the time. There are many things the average person doesn’t understand about marketing online and the important of engagement, SEO, and your online presence. It’s worth it to pay the professional for MANY reasons.
9. Overdependence on a solitary client or account is a common mistake. To win that big contract is really amazing! That one contract or account could be all your business needs to do really well, however, this is a very precarious position. Your connections with this client could change, government regulations could affect things, and all of a sudden you have no business. I’ve seen it happen.
Just as with investments and multiple streams of income, your business needs to have many avenues of income. Think about value added services or products you can offer. For example a landscaping company could offer equipment maintenance/repair services, be a dealer for equipment they use, and perhaps even offer online Webinars or videos on landscaping do’s and don’ts for those who like to do their own gardening.
10. Uncontrolled business development. On occasion you need to grab an idea and run with it but 98% of the time the winner is one who develops a plan, creates a strategy, accounts for the cost both energetically and financially, and builds a quality brand, service, or product. You want to be able to re-balance in the event the economy falters. Once you are stabilized then you can scale your existing business or entertain new avenues for revenue such as in the landscaping example in the previous point.
When you get ready to grow your business, re-visit your business plan again putting in the new venture. Make sure you are good to go before dedicating precious resources to the idea.
Test your new idea out on your existing customer base perhaps through a survey, sampling day, or free trial
11. Trusting you can do everything yourself is a fallacy. One of the greatest difficulties for business visionaries is to give up control of some aspects of the business. Maintaining the idea that you should have hands-on control of all parts of your business will wear you out and keep you from building a team. This is also known as micro-managing. I’ve seen this happen so many times. Micro-managing effectively let’s you pay people to do a job YOU are already doing and won’t let go of! Micro-managing is an entire topic on it’s own and one that should be thoroughly addressed because it can on it’s own, undermine the entire morale of your business.
Best thing you can do for your business is to do several personality assessment tests and really understand what your strengths and weaknesses are. Hire competent people to fill your weakest areas.
Learn to trust others to do their job
Have a plan in place to monitor checks and balances and how to handle staff if they don’t do their job or are not trustworthy.
12. Maintaining current job roles. A typical issue over-looked by successful organizations is holding on to the past administration’s assets or aptitudes. As the organization develops, you may outperform certain people's capacity to oversee and design. As your business grows you may find job roles need to change or even be eliminated. Be careful not to just put people in positions they are not really equipped to do.
Much of the ability to achieve success with these twelve pitfalls has to do first with the business owner’s attitude/adaptability and ability to commit. Without a mind-set that is positive, focused, and willing to learn, successes will be hard to come by.
Many new businesses tragically fall in love with their product or the way they’ve figured out to do things. Of course, you need to be careful whose advice you take but adapting and changing will be the only ways you can grow and scale in ever changing markets. These failings are most often the result of the administration of the business and the decision maker’s inability to act, respond, or be creative.
RESOURCES & TOOLS
Success Factor Consultants (SFC) offers online marketing services as well as LegalShield legal plans for businesses that are very affordable. Being able to get top attorneys, business consultants and technical expertise can be a very worthwhile investment in the foundational aspects of your business. When you contact us, mention this blog and you will receive a FREE online and legal analysis.
Small Business Development Centers (SBDCs)
operate in each state, the District of Columbia, Puerto Rico, and the Virgin Islands. They provide consulting and education services to small business owners on topics ranging from management practices to technical skills. For example, you can receive training on conflict management and Oracle databases at the same center.
Service Corps of Retired Executives (SCORE) , A nonprofit organization, is made up of retired business owners and executives with decades of experience starting and operating businesses of all types. SCORE provides free and confidential counseling and low-cost workshop services, which can help you learn to write a business plan, apply for a loan, hone your management skills, and become a more confident small business owner.
WomenBiz offers contract Assistance to Women Business Owners (CAWBO) and the National Women's Business Council, in cooperation with other federal agencies, developed this website. It provides over 100 links to federal procurement and subcontracting information, opportunities and registration sites for bidders' lists.
Women's Business Center
If you are a female veteran, the Women’s Business Center can provide additional assistance, such as counseling and training, and a variety of need-based funding and financing opportunities.
Native American Affairs
Within the Office of Entrepreneurial Development, the Office of Native American Affairs concentrates on outreach and support for Native American small business owners. If you are Native American, this office can help you find specific business resources and other Native American businesses. In addition, the office will assist you in attending national economic development conferences.
Small Business Training Network (SBTN)
Through the SBTN, you can take online courses in a variety of business and management areas, receive online counseling, access the full SBA library of resources, and view connections to other educational and training opportunities
(This information was researched in part from several sources within the Small Business Administration, 2018)