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| 8 BIG Small Business Mistakes - Part 2 of 2 |
By:
Steve Teta |
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In part 2 we will continue talking about the most common mistakes made by small businesses.
Not Getting Paid Fast Enough- That’s right, the old cash flow issue. As long as you are actually making enough money to pay the bills, this problem can be solved, prevented or at least made to be not as bad as it could be. Let's discuss: it is not uncommon for small business to not have the proper systems in place to insure that their accounts receivable are sent out on time (more about this in the next segment). I know, this wouldn't seem to be the way it is, since that's why we do the work in the first place - to get paid. But, it's not uncommon for the staff responsible for sending invoices to be too busy or unorganized, which prevents this from happening in a timely manner.
The second part to slowing down or stopping a regular cash flow crunch is to make the quickest payment deals possible with customers and the slowest possible with vendors and employees. If there is any way not to pay workers any more than twice a month, you better do it. Contractors always have an issue with this. But, if you have no choice but to pay weekly, then let them know when they're hired that their first week's check will be held back, basically giving you an extra week. It will help, I promise.
The next part involves credit. If you can get a credit card for your business, do so. A credit card will allow you to purchase certain important things (that you can afford) that you may need during a cash flow issue. Even better is a company line of credit, which will help, especially if you have customers with long payment periods. This is a must if you plan on selling to the government or doing commercial service work. These types of entities typically have 60-90 day payment periods.
Failure to Have Solid Systems and Procedures in Place- Too many procedures (known as “red tape”) is the reason why many people start their own business in the first place. Unfortunately, having no procedures and systems in place at all is not an alternative. It is important for business owners to find a happy medium or disaster could set in. A few areas where systems and produres are needed are billing, collections, payroll and human resourses (hiring, firing, benefits, etc).
Even a one-man operation requires certain systems and procedures be in place. Having those procedures in place will help when dealing with things such as sub-contractors, etc. and maintaing control of their job for you. As your company grows, not having the proper systems in place, to do everyday tasks, will cause many headaches. This is especially important when hiring new employees. I’m sure you heard this before, but I am also a big proponent of having an employee handbook even for one employee. It’s amazing the trouble people can cause business owners just because they allow you to pay them.
Spreading Yourself Too Thin - It seems that every entrepreneur makes this mistake. The key is to figure out when you are at that “wearing too many hats” point and start getting some help. The solution here is to know your strengths and to be able see when you are not performing the duties that demand these skills. In your business, if you're the best sales person you can't get caught up in doing evryday tasks. If you do, sales will slip and eventually you won’t have any operations to worry about. Think for a minute: Did you really start your own business to work 80+ hours per week?
Not Getting Help Soon Enough- Set goals to know when to hire people to take over where you are light on knowledge. If yo wait too long before hiring the right help it can hurt your company. Most people who start a business do it because they are good at the technical end or the sales end. Your time should be spent on the area that you know the best. Until you can hire employees to do certain things such as marketing, etc. you can outsource them. Don’t be something to your company that you are not. It will only hold you back.
You should look for these types of problems in your business periodically, but usually at the end of each season, for example, is a great business interval to check and make sure these mistakes aren't being made. Take the time, or make the time, to fix these problems. If you do'nt kow how to resolve a particular problem then you should get some help. |
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