Having coached many small business owners for over a decade while also starting up a couple of small businesses ourselves, here is what we have learned — running a small business can be fun! However, we have observed that there are three pitfalls many business owners tend to fall into that really takes the joy out of running a business…and the numbers from Statistics Canada back this up:
One in three small businesses will fail* and most small businesses fail because of:*
- Weak financial management
- Weak planning and accountability
- Weak marketing capabilities
In this post, we’ll discuss how to avoid making the business management mistakes that can hold you back from small business success:
BUSINESS MANAGEMENT PITFALLS
Do you know what you are doing?
There are three areas of business management that business owners tend to be weak in:
- Systems and accountability
- Investment – in themselves and in the business
1. Do you have a business plan? Do you have a strategic plan?
Do you visit these each week to ensure you are on track, on schedule and that the marketplace is still the same place your planning’s assumptions are based on?
2. Your systems and your accountability are biggies! If you want to grow, you will need to have the key business building activities mapped out and systematized in some way to support you in achieving your goals.
Some examples of what should be systematized:
- When you collect the money and how
- When you market, to whom, where, how often and how
- Who is responsible for what
- The policies
- When and how you analyze the key business indicators of your business
Are you doing what you told yourself you would do? Do you have a system for mapping your goals and setting your actions – yearly, quarterly, monthly and weekly? Are these goals based on your strategic plan? Are you focusing on the activities that will have the biggest positive impact on your business (e.g.. not on email, Instagram, Facebook, doing the laundry…)?
Inquiry: Where do you know you are not following through and being accountable to what your business needs most from you? What are you going to do about it?
3. Investment: Running a business is fun, but you can sure take the fun out of it quickly if you fail to invest.
Investing in yourself:
A successful business needs vision and planning, but most small business owners find themselves mired in the details and just never find the time or mental energy to bring focus to the big picture, to think and create, to ensure they are on plan or even have a plan….and then they burn out.
The alternative is to be intentional and engage in the most important aspects of your business – the planning and execution – and invest in the support you will need to manage the little things. If you are too busy doing your own bookkeeping, who will be bringing in the customers? Who will be anticipating a change in the market and ensuring your business is ready for that? So, look at the cost/benefit of hiring contractors or staff so you can focus on what is most important and still have time for a life. You may also wish to consider engaging a business coach who can help keep you focused on your goals, intentional and productive.
Investment in the business:
The big names in business may have started small, but many of them started with enough cash to start right and ensure they could grow.
- What is really needed to make your business grow?
- Do you need to spend on nationwide marketing?
- What size of a line of credit do you need to cover the ups and downs and the lag time between paying for your expenses to do the business and getting the revenue?
Take some time to plan, to project, to outline how and why you will be successful and then go out and seek the investment you need. It may be a personal line of credit if you are unable to provide an asset to secure other financing, or maybe your business idea can attract some angel or venture capital. Sometimes you need a bit of extra cash to get your business off to a good start, or to grow into the next stage, so invest time in some planning so you can convince others to invest in you.
*Key Small Business Statistics – January 2009, Industry Canada
*Failing Concerns: Business Bankruptcy in Canada, 1997 Statistics Canada