How to avoid the biggest small business pitfalls

To succeed in business today, there are many qualities you need to maintain to achieve success. Many people start a business thinking that they’ll turn on their computers, put an idea to paper and start making money, only to find that making money in a business is much more difficult than they thought.

You can avoid this in your business ventures by taking your time and planning out all the necessary steps you need to achieve success. Here are my eight tips for all the entrepreneur and small business owners out there on how to continue your companies’ success.

1) Understand your roles and responsibilities

However large or small your business, somebody must take responsibility for finance and measurement, leadership, management, marketing, sales, production and service. This may seem daunting but ignoring these responsibilities will not make them go away. And to be really successful you need to be fairly strong in each area. Building your knowledge and expertise and getting the right support you need is vital.

2) Know your Numbers – What Gets Measured Gets Managed

Ideally, you would measure all important areas but above all else, you need to understand your profit and loss (P&L) and cash flow. Additionally, you need to be clear about the margins you make on every product and also measure the return on investment of your marketing. (see below). 

3) Manage your Cash Flow and Costs before they Manage You

Even very profitable businesses may be threatened by cash flow challenges. Monitor your cash flow closely and manage your receivables robustly. Be vigilant on costs and build some reserves of working capital.

4) Inspiring Goals and Simple Plans

We all need goals and direction to succeed. Set your goals and make sure they inspire you. Keep your plans simple, involve your team (if you have one) and review them regularly.

5) Face the Brutal Facts

We all face challenges. What separates the winners from the losers is that winners face them head-on. Face the facts and act fast.

6) Test and Measure your Marketing – Bullets before Canon Balls

New leads are the lifeblood of most businesses and generating leads can be expensive. It is therefore critical to test marketing strategies on a limited basis and measure the results carefully.  Compare what it costs to “buy’ each new customer against their average lifetime value (the average profit a customer generates long-term). When you know what works go ahead and invest, but don’t waste money on what doesn’t.

7) Convert your Leads into Customers – Fix the Leaky Bucket

We cannot afford to spend a fortune on marketing to allow leads to slip away. Despite this, many businesses neglect this area to a large extent. You need to map out the “customer journey” and keep track of each enquiry. Most importantly, get your quotes out and follow-up, follow-up, follow-up.

8) Managing your Time – Be a Master of Delegation

You have limited time available and you can’t do everything yourself. Firstly, delegate what you can. It is better to have something done less well by someone else than not at all. Better still, find someone who does things better than you.

Secondly, work out the return on investment of everything you do so that you can focus on high-value activities and either delegate or stop doing the rest.