2020 was a difficult year for everyone, especially the small business owner. A survey from the Federal Reserve Bank suggests that 30% of small businesses in the United States will not survive 2021. As a result, this has been the most trying time for small business owners since the Great Depression.
Knowing this, small businesses cannot afford to make simple mistakes. Owners must truly look at their business from a holistic perspective. Evaluating your business resources and goals will help to eliminate the mistakes that are most common by business owners. Here are 5 mistakes that many business owners are making in 2021.
Not having a plan
Every business needs to have an idea of where they are going. Small businesses are no exception. According to Fundera, 17% of small businesses failed because they lacked a business model. A business plan will help in starting and managing a small business in each phase of operation. How are you going to gain capital? How are you going to keep costs low? What types of equipment/space do you need to run your business? These questions should be addressed in your business plan.
It should be noted that the plan can change based on the environment (take the year 2020 for example). Being adaptable, while maintaining a overall business plan, takes work. Delivery channels, advertising, and even products you offer may change to fit the environment, but the plan to reach your goal should stay constant.
One of the biggest mistakes small businesses make is to avoid marketing. Whether it is the cost or lack of creativity, small business owners do not seem to want to dedicate time and resources to marketing. The good news is as a small business owner, you can keep costs low in this department. According to the common mind, The U.S Small Business Administration recommends that small businesses allocate 7-8% of revenues to marketing efforts. You do not need to break the bank to have effective marketing. Social media is free, providing a smaller barrier to entry than what would have been 25 years ago. Don’t be afraid to starting marketing and advertising your product/service. The right customers will find your company and want to do business with you.
Not paying attention to the cash flow
Money is one of the hardest things to talk about, both in our professional and personal lives. There is a general fear of judgement when we begin talking about money. As a small business owner, you need to be honest about your finances and where your money is going. This is not always an easy conversation, but a necessary one to ensure your business is remaining solvent. Where is money being spent? Where is money coming in from? Do you have investors in your business that provide capital? Can you reduce internal costs? Having a business plan will help in answering these questions, improving daily business operations.
There are several ways to increase cash flow to improve your business. Using electronic payments, sending out paperless invoices, and even refinancing debt can all contribute to increasing the cash flow of your business. In a world that is fast paced, you cannot afford to wait for your money.
Doing it all on their own
This is arguably the mistake every small business owner is making, and it is costing you. Do not try to do everything on your own. A business has many pieces. Marketing, billing, supply chain, and sales all have roles in your small business. There are only so many hours in the day. You cannot do it all on your own. Inc. says that small business owners work at least 50 hours a week in the United States. Small business owners cannot afford to do it all. They must make the most of their time. It is important to automate or outsource routine tasks, so that your time can be spent focusing on taking care of your business. You never have to do it all alone.
Choosing the wrong business partners
Choosing the wrong partners for business can be a disaster. Too often, companies select the wrong partners, resulting in a loss of time, money, and ruined relationships. A big reason these relationships fail is that there are no clear expectations set, or the services being offered do not align with the strategic goals of the company.
Remember that business partners also include investors. While it is very easy to see the money from an investor to grow your business, investors often have expectations that need to be met to keep them happy. Having to keep an investor satisfied may result in a shift in your strategic goals, resulting in a business you are not happy with in the end. It is important that both parties agree on the direction the business is heading prior to receiving any investment in the business.
Choosing a partner is hard, and not something that should be decided on in a snap decision. Belco provides a variety of business tools to help you succeed in your small business. If you are looking for a commercial mortgage, or even a simple business checking account, Belco can assist you. Therefore, choose the right partner for your small business growth, and you will certainly be on the path to success.
BONUS: Not being adaptable
This tip is too important to overlook. 2020 was a year that was unlike any other in the last century. Things changed at a rapid pace. Day by day, minute by minute, new information emerged and business owners had to adapt to survive. Restaurant shifted to takeout and non-contact delivery, companies sold off office spaces and moved workers to a permanent work from home structure. As a small business, it may be difficult to adapt to the environment, but your customers will demand it. Customer experience has been the driving force behind all changes in business. Being able to change delivery methods, shifting to products that are higher in demand, or expanding the services you offer will help in keeping demanding consumers happy. Being more adaptable will result in a higher level of happiness, more equipped to handle obstacles, and improve your leadership.
No business is guaranteed success, and many factors contribute to the failing of small businesses every year. Demand shift, inflation and competition in saturated markets are just a few examples of how outside factors can impact your business. Small business owners work hard to grow their business into something to be proud of every day. Avoiding these mistakes will help your business succeed and not only increase your bottom line, but your overall happiness as a small business owner.