Dear Dan: We’ve cut costs, lowered prices and
accelerated our marketing. But there still seem to be so many things
that can run off track. What are some common small business mistakes we
should look out for? — Worried
Dear Worried: From blockbuster bankruptcies to
broken banks and blows to business bottom lines, today’s economic news
is like a bad dream. The National Federation of Independent Business
(NFIB) says the current recession has already been harder on small
business profits than any other time in the past 35 years.
Record numbers of small businesses surveyed for the latest NFIB
Optimism Index reported a decline in earnings. Most (60 percent) say
that’s a result of slower sales, while others blame lower selling
prices. About 31 percent of small business owners say they are cutting
prices, while only 13 percent have raised them. The cuts in average
selling prices by small companies are happening at a record pace.
Conditions remain precarious for millions of business owners.
Despite the impression that most businesses buckle under the weight of
a single calamity, however, the path to ruin is often paved by a series
of small missteps. We become blind to chains of mistakes that
ultimately lead to disaster. Here are some moves that can help you
avoid the kinds of missteps that by themselves aren’t life threatening,
but taken together can sink a struggling business:
1. Lack of information sharing. Keeping employees,
partners, vendors and others on your team including your accountant
informed of news both good and bad is important to staying on track.
Encourage employees to look for trouble “hot spots” and ask for help
early to solve problems.
2. Data denial. It’s not enough to merely track
metrics and gather financial information about how your business is
performing. You have to look at and interpret the information and heed
what it’s telling you. Many business failures could have been avoided
if the owners had pinpointed the trouble earlier and taken correction
action.
3. Blowing off customer complaints. Customer
complaints are sometimes hard to take — especially when you face other
pressing issues — and may not even be justified. But don’t merely blow
them off. They are a valuable early warning system that tells you when
something’s amiss. Make sure customer feedback reaches you quickly, and
that you take it seriously.
4. Letting conflicts simmer. Conflicts with
partners, investors, clients or employees are toxic to a business
already in survival mode. If they spiral into litigation, the end may
be near. Successful businesses learn early that there are greater
profits in peacemaking. Take steps to resolve conflicts early.
5. Outdated financial systems and technology. Business
owners faced with declining sales, tight deadlines or dwindling
resources sometimes delay updates to financial and IT systems. But
putting off key projects can result in lost time, money and
productivity. If you’re still doing finances manually, get them into a
software program such as QuickBooks. And online billing solutions such
as FreshBooks.com can help keep your invoicing in order.
6. Process free-for-all. Even in a very small
business, confusion over who’s in charge and what to do when there’s a
problem can magnify mistakes. Establish rules and hold people
accountable for following them. Being entrepreneurial is great, but
people still need to know how you want things done.
7. Discouraging dissent. Everyone should be
encouraged to speak up if they believe the business is making a
mistake. Help each employee feel responsible for the overall success of
the enterprise.
8. Wearing competitive blinders. Failing to stay
informed of what your competition is doing can be lethal to your
business. Stay abreast of news and developments from similar firms in
your industry or area. You’ll avoid being blindsided by major moves.
Ask clients and business associates how they feel your business
measures up to the competition.
9. Taking good employees for granted. High turnover
and the departure of valued employees can accelerate troubles. Rewards
and recognition - even small gestures - go a long way to keeping your
best people around. Treat new hires with care. Provide a mentor, if
possible.
10. Failing to guard against fraud. Thieves in the
hen house sink many small firms. While small businesses aren’t required
to perform internal audits, many bring in outside financial experts for
occasional checks and balances.
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