The road to business success can be filled with many hazards. Potholes, construction delays, erratic drivers, dangerous curves, and road rage, metaphorically speaking, can contribute to a bumpy ride from your journey’s inception to reaching your destination.
Here are some common road hazards small businesses often face, along with some proven suggestions from the Driver’s Training Manual for Business Success to overcome them. This list can help you navigate around these roadblocks and steer towards a clear horizon as you reach your destination: SUCCESS!
1. Beware the Potholes: Accounting and Bookkeeping are for Wusses
Small business owners wear many hats, and the hat that many find doesn’t fit them so well is the Financial Management one. Many business owners either ignore the financial management side of the business or treat it as a necessary evil. “Cash Flow is King” for all businesses, whether they are large or small; what many small business owners don’t realize is that they have to stay on top of their financial situation in order to grow their business. Your business exists to make money. You need to have a basic understanding of financial management concepts to secure financing, to position your product or service against the competition, to plan for the implications of taxes, to understand your Return on Investment for employees, marketing programs, asset choices, etc. Just because your bank statement reflects a positive number doesn’t mean you are successful. Arm yourself with an education in basic financial management concepts to invest in your business, prepare for growth and sustained profitability, and help navigate through the inevitable downturns.
Sound bookkeeping practices is an area of financial management that often receives little attention. Setting up your books correctly at the outset of your business and maintaining the integrity of the information can save you in the long run. Decisions for your business need to be based on sound financial information. If your books are not accurate, you run the risk of making a bad decision or of deferring or delaying a good, strategic one. There is no substitute. Save yourself the time, expense and anxiety of unraveling months or even years of poor accounting and bookkeeping practices. Take the time to set up your books in the beginning of your business and maintain your recordkeeping on a regularly scheduled basis; put this facet of your business on cruise control.
2. Slow, Dangerous Curve Ahead: My Product or Service is the NEXT BIG THING
Wouldn’t it be wonderful to enter into a business and be immediately successful? Wonderful, yes; Realistic, no. Businesses take time to grow from launch through to sustained profitability. The growth curve is not constant and many businesses experience seasonal fluctuations. When you develop your business plan, account for the length of time of the sales cycles and familiarize yourself with the seasonal peaks and valleys for your revenue. When you are in an upswing, put some of that money back into the business for the inevitable slowdowns. Have funds accessible to cover ongoing expenses or have a pre-negotiated line of credit to carry you through those downtimes.
3. Stop!: Ignoring the Tax Man
The IRS is the Uber Creditor. Armed with complicated tax codes and with the federal government backing, the IRS is hunting for the unsuspecting business owner who thinks it is okay to use funds earmarked for tax payments to pay for day to day business expenses. You should make the IRS your first obligation. Late or unpaid Payroll taxes can have significant negative consequences. Penalties, interest, unforgiven liabilities (even in bankruptcy) can be devastating to your business. It may be tempting to defer or ignore payroll taxes to acquire inventory, assets or pay other creditors, but DO NOT DO IT. The Tax Man always cometh and he carries the ultimate stick – the ability to shut down your business and sell your assets in order to get his money. Your reputation – and more importantly, your business — can’t afford it.
4. Construction Zone: Yugo vs. Porsche
One of the challenges that new businesses have at start-up is setting prices for their products or services. In order to set prices appropriately, you need to understand multiple factors: Who are your customers? Who are your competitors? Who are the suppliers? What are your suppliers’ terms? What are the economic conditions in which you operate? You have to have a thorough understanding of your true monthly fixed overhead costs to understand the economics of your business. If your approach to pricing is to simply undercut your competition, be the ‘cheapest’ game in town, you run the risk of leaving the impression that you are delivering products and services of a lesser value and/or quality. While we are on a driving theme, you don’t buy a subcompact rated at 50 miles per gallon and expect it to survive on the Autobahn. Seriously, stop marketing your business on price. You don’t want to be the “best deal.” You want to offer the “best value.” When you are producing results for your clients, cost is not their concern; quality is. (Okay, they care about money, but they aren’t focused on that point alone). You don’t want to be a bargain. You want to provide excellent products or services at a mutually beneficial price for you and your customers.
When your clients give you referrals do you want them saying, “She’s so cheap!”? Or would you rather they say something like, “He’s efficient, organized and returns amazing results!” And “They have the best products that return value consistently for me!” There will always be someone who is cheaper than you. Don’t let that be your focus. Charge what you know you are worth. Set your rates at a competitive level and provide room for growth for you and your company.
When it comes to marketing your company, promote yourself based on merit and quality of work. Prove to your clients that you DO get what you pay for. If someone can’t afford you, be okay with that. Besides, do you really want to work with clients who are satisfied with $.99 store work?
If your clients are experiencing challenges and opportunities that you are in a position to address, meeting those needs at a fair price will set you apart from the competition and support your business viability.
5. Right Turn Only: Being the Jack of All Trades
Each of us has specific strengths and weaknesses. Many small business people convince themselves that they have to do everything in their business themselves. Fear of a loss of control, an inability to delegate, or an unwillingness to acknowledge that outside resources may be able to perform tasks more efficiently, all contribute to the “I have to do it myself” syndrome. This, unfortunately, is a syndrome that often plagues many small business owners, solopreneurs and professionals. As a result, many suffer quality of life issues by trying to do it all on their own. In the long run, delegating tasks to other resources, whether they be full time or on demand, can free you up to grow your business. And, after all, bringing new business in the door should be what you do best.
6. Park at Your Own Risk: I Don’t Need Professional Help
This one is a corollary to being the Jack of All Trades – believing you don’t need the advice and counsel of a group of trusted advisors. When you are setting up your business is the right time to invest in finding and using good advisors from the accounting, legal, insurance and banking arenas. In many cases, they can assist you in getting your business properly structured at the outset, avoiding mistakes that will likely be more costly to fix down the line. When your business is at stake, don’t pinch pennies.
7. No Turn on Red: I Built It, Why Haven’t They Come?
Marketing, advertising and promotion are not unnecessary expenses. Once you start a business, you need to let people know what you have to offer and to clearly articulate how to find you. You don’t need a budget the size of the federal government’s to effectively market your business. There are many low and even no-cost options, including attending networking groups, blogging, writing articles for your local paper, community magazine or Chamber of Commerce publication, bartering, sending out press releases, using Social Media – even volunteering. One of the keys is developing your USP – your Unique Selling Proposition. In developing your USP, you are creating an effective message that articulates what you bring to the market. Combining your USP with a marketing program that delivers your message at an appropriate frequency level (weekly, biweekly) are important elements of the repetition for your marketing program that will get your company noticed and bring business in the door.
8. Detour: Being the Proverbial Ostrich
Sticking your head in the sand or ignoring signals that you may be in trouble doesn’t help any situation. To be the boss means having to make the tough decisions. To help arm yourself in the best possible way, find and rely on the advice and counsel of the cadre of trusted advisors (see #6) that helped you get into business. By being open to input from others, you can sift through all of the data and make an informed decision. Take action and take ownership – that’s why you are the boss, after all.
9. Proceed with Caution: Square Peg; Round Hole
Many small business owners, because they are used to wearing all of the hats themselves, don’t always think through decisions on either the square peg or the round hole. They project their own thoughts and wishes on the peg (i.e., potential employee) without thoroughly assessing whether or not that person is really a fit for the round hole. On the flip side, many small business owners have a difficult time understanding what work needs to be carved out and drawing the appropriate boundaries that would support the right person in the right job. Not clearly defining the specific jobs for which you are hiring nor defining the skills that the ideal employee would need to be successful, could result in a poor hiring decision. A poor hiring decision is costly on many levels. Take the time on both sides of the hiring equation to get the right fit – for the job, your business culture, the employee and you.
Employees represent a huge investment for your company. As an investment, they need to be treated with respect in order to optimize your return on that investment. Employees are often the public face of a company; if you don’t treat them fairly and with respect, that message can filter through them, even inadvertently, to your customers. The last thing you need is for an unhappy employee to negatively impact the perception of your company in the market place.
Hire the right person for a clearly defined set of work parameters, treat them fairly and with respect, and you will have a team that helps you achieve your dream – business success.
Awareness of the common obstacles on the road to success by the observant driver (business owner) can help you plan your trip and arrive at your destination safely and successfully. Enjoy the journey!
