Mistakes are a given in the small business sector. Since SMBs are typically more agile and dynamic than their larger counterparts, they tend to be more ready to experiment, and sometimes hit the ground running. While this is normal, there are a few common small business mistakes that are much more costly than a simple failed experiment. Below is a list of the ones that you should be mindful to avoid.
1. Ignoring cash flow
What do you think causes most small companies to go under? Lack of profits? Inability to sell? Obviously these are issues, but it is actually poor cash flow that is the downfall for most. Failure to monitor cash flow is among the most common small company mistakes – without the ability to meet financial obligations or keep itself afloat during long sales cycles or tough times, small businesses ultimately find themselves unable to generate more sales or increase profits. Thus, learning to monitor this metric is important.
2. Sloppy records
Another common small company mistake is poor record keeping. Failure to properly manage records, contracts, vital documents and more contributes to decreased productivity, poor customer service, and the inability of employees to do their jobs. Equally as concerning is that the mismanagement of records can results in legal repercussions, as adequate record retention is required by law. Having a system in place to ensure accurate record keeping is absolutely essential.
3. Not investing in (or investing in the wrong) technology
As a small company, it is important to invest wisely with the goal of growing your business. For many, the single greatest mistake involves a failure to invest in technology that will help achieve this, or equally as bad, investing in the wrong technology that fails to produce ROI.
The former is an issue because there are many things adversely affected when you fail to invest in technology: productivity, security, ability to serve customers, competitiveness in the market, etc.
The latter is problematic because technology that doesn’t ultimately help your business by servicing particular goals not only impedes your ability to grow, it can also cost a significant amount of money. For this reason, it is wise to first identify your needs, and only invest in technology that can meet them.
4. Lack of user training
Similar to investing in the wrong technology, investing in products that could benefit your business, but are never properly implemented, can be very harmful to business growth. The most common SMB mistake in this regard is the forgoing of user training, and consequently, adoption. If you don’t have a training system in place to help your employees adopt new technologies, they won’t be effectively used.
5. Poor workforce management
Employees are typically the single highest cost to a business – this is true across the board, from small business to goliath enterprises. However, many SMB's struggle to keep the cost of their workforce at an acceptable level that balances both business and employee needs. This can become pervasive in many different areas, from compensation to overtime, talent acquisition to vacation time and beyond. For those small businesses that really struggle with this issue, revisiting their workforce management processes can help them achieve a better balance between operational productivity and employee satisfaction.
