You have launched your business and strongly believe your product or service fulfills a real need in the marketplace. As you focus on growth, be mindful of potential missteps that can snowball into bigger problems and threaten your success. According to a recent report by the U.S. Small Business Administration, only about 50 percent of businesses survive the first five years and only about one-third keep the lights on for 10 or more years. Keep reading to find out if you are inadvertently getting in the way of your success by making these six common business mistakes:
1) Lack of a business plan
Your business plan does not need to be hundreds of pages but you must have one. There are great online templates and in-depth information from trusted resources that can help you pull together everything you need in three to five pages.
A good business plan should clearly define your business, identify your goals and account for financial, operational and staffing needs. A clear and scalable plan will help you secure funding and boost the confidence of possible investors. It enables you to set tangible goals and implement a company-wide strategy to pursue them. Without one, you increase your chances of going down a road to nowhere.
2) Cutting corners and over-expansion
Meeting and exceeding your customers’ expectations is one of the most sure-fire ways your business will cross the five-year mark. Don’t put out products or services in a rush and don’t chip away at quality just to save a buck. Customers notice and it will cost you a lot more in the long run.
Likewise, trying to grow too fast without setting a solid foundation can cause your business to crash and burn. Thoroughly evaluate your financial and operational capabilities before launching new product lines or services, expanding into a new field or acquiring expensive facilities.
3) Inefficient financial management
Create and review financial statements on a regular basis; not just at the end of the year. Set up an early warning system to see if your business is in financial jeopardy. For example, you may notice a cash flow problem or see that you have difficulty meeting regular payroll requirements. The earlier you find out that you’re headed in the wrong direction, the sooner you can minimize the damage.
4) Not hiring for success
People are your most important asset. Always hire the right people and don’t compromise on quality staff in order to make a quick hire. Make sure a potential employee not only has the necessary skill-set but is also a good fit for your company culture. People can always learn skills but you cannot teach someone to work successfully with your team.
Once you have hired the right candidate, provide solid onboarding. Ineffectual employee integration will negatively impact your retention of other important employees, your efficiency and, inevitably, your bottom line. This is truly one of the biggest challenges businesses face.
5) Not following the law
Another major challenge businesses face is staying compliant with complex business regulations when you just want to focus on growing your business. Always remember, nothing will hurt your business more than being slammed with a fine or, worse, being forced to shut down because you have been found in violation of federal, state or local regulations. Whether you are dealing with the federal tax code, the Affordable Care Act or overtime rules, take the time and resources to make sure you are following the law. You don’t want to end up on the wrong side of a government audit.
6) Lack of passion
Last but not least, one common denominator for successful businesses is passion. Are you burning to bring out a product to solve a problem that nobody else has solved? Are you eager to learn, push the limits and take calculated risks? These values are contagious and your drive will motivate the whole team to strive toward collective organizational goals. Lack of passion, on the other hand, will easily be spotted by your employees, customers and investors. It is one of the quickest ways to drive away all those you depend on.
Providing products and services that people need is only half the recipe for success. You also have to cultivate the leadership and business skills to run your company.
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