Your business plan is complete, the legal work is done and your business set-up seems to be running smoothly. But the failure rate for new businesses in their first year is high so it’s important to avoid the simple mistakes that may jeapardise your future success.
Take these tips to heart; they could make or break your future success…
1. Develop your business expertise
Being successful does not only depend on delivering quality goods and services but also on sound business sense. Many people who start their own business do so because they are especially talented at something or have come up with a clever idea but while they are so busy focusing on perfecting the product, they forgot about the day-to-day business admin. Effective use of financial statements, understanding tax implications, project management, delegation, accounting knowledge, hiring employees and motivating workers are just some examples of the vital components that make up a healthy business.
Neglecting business skills is one of the most fundamental mistakes – why do you think that most successful business owners continue to enroll on business courses?
2. Play debt collector
One of the most common mistakes is failure to send out invoices and to collect debts on time. You just need fifteen minutes each day to make time for this. Alternatively make someone responsible for basic cash flow management and make sure they focus on sending out invoices and chasing debtors. Either way, a centralised accounting system will help keep track of money going in and out of the business.
3. Reach for the skies
The only way to become a successful business owner is to be able to delegate tasks so that you are free for business oversight. Whether it is book keeping, accounting or customer relationship management (CRM), each system needs trained employees to take over so that you are free to build the business and direct the overall direction of it.
4. Don't over indulge
Don’t relax once your revenues are up and break-even point has been reached. When you’re not monitoring your cash flow, over-indulgence can run the company into debt. Even though the financial situation might not be so tight, suddenly purchasing new machines, hiring new employees or renting another building can supersede the newly made profits. Always watch your cash flow carefully on a day-to-day basis. Again professional book keeping and accounting programs can be a big help with this.
5. Have tea with your accountant
It's amazing how many business owners do not even know what a balance sheet is. Get your accountant to sit down with you once a month and explain all the relevant details. Business owners tend to follow the old adage that book keeping should be outsourced so that they can focus on the core functions of the business, however this sound advice does not excuse the owner from understanding what is going on. You need to be able to interpret the numbers and how they impact the business.
6. Do not mix business and pleasure
Need a new laptop? Your kid wants a pony for Christmas? So many business owners dip their fingers into the till to pay for household expenses and it ends up being one chaotic mess. Keep your business finance and your personal and home finance apart! Even if your accountant can wash it over, it’s not setting a good example for other employees. This also makes it more difficult to keep accurate track of revenues and expenses.
7. Looming labour laws
Many entrepreneurs are put off by our stringent labour laws. This leads to bizarre methods of hiring and firing often involving expensive lawyer's fees. Contrary to belief, you need not tolerate unsavory behavior by employees. Get to grips with the labour laws and it will save you a lot of hassle. Having access to cost effective legal advice probably is a good idea and you should consider something like LegalWrite; your lawyer in a box from Pastel Acccounting.
8. Trust your staff
Big corporates can afford the luxury of employing highly skilled and experienced workers. This is something that many business owners cannot do and consequently have to train their workers. Trusting your workers enough to delegate tasks is vital to the growth of your business as taking on all responsibility yourself will be impossible. Prepare to let them make a few mistakes and be patient in teaching them the ropes, it will benefit you in the end.
9. But not too much trust
Remember that none of your workers will have as much vested interest as you. Business owners have invested their life, security, savings and pride in their new venture but for workers – no matter how committed - it’s still just a job. Sound management consists of giving workers enough space to do their jobs well and also restricting their opportunities to cut corners. If an employee is hired because he is a specialist in something, make sure you familiarise yourself with his skill so that you can still be the manager and boss.
10. Price competition
You will never be able to compete with larger businesses on price; they operate with economies of scale. Trying to win over new customers with lower prices will be difficult and can severely decrease revenues. It is advised to charge at least the same as other enterprises in your league but never less and to rather gain new business with superior service.
Pastel’s business owner do's and don'ts
| Do |
Don’t |
Take a business course |
Forget to send out invoices |
Implement a daily cash flow system |
Relax after you break even |
Set cash flow goals |
Mix business and home finance |
Trust your workers |
Fear the labour laws |
Delegate |
Expect too much from employees |
Familiarise yourself with workers' skills |
Charge lower than competitors |