Every entrepreneur knows there are risks involved in starting and running a business. From small problems to major obstacles, the road to success is often a bumpy one – which is why many entrepreneurs never take the plunge. However, being aware of the possible pitfalls can help prevent issues from becoming catastrophes. Avoiding these common mistakes will help you maintain momentum and keep your business growing:
Not Having a Clear Vision, Strategy & Goals
Many entrepreneurs venture into business without having a clear idea of what they want to accomplish. This lack of vision can have a domino effect, making it virtually impossible to develop the goals and strategies necessary to achieve success.
Establish your end game from the start, and be honest about your commitment to doing what it will take to deliver results. While it is important to have realistic objectives and strategies that are based on statistics and projections, don’t be afraid to set goals that will challenge and inspire you and your team to take risks, albeit with clear intentions and careful planning. Be sure to communicate your goals to everyone you are working with. This will allow them to understand the role they can play in helping the business grow.
Keep in mind that goals and strategies are not the same thing. A goal is an end result, and a strategy provides the road map for how you will accomplish it. To be successful, small business owners need to make sure they include both goals and strategies in their business plans.
Poor Cash Flow Management
Every business has its ups and downs, and managing cash flow is one of the most difficult challenges small business owners face. In fact, a study by the U.S. Bank reported that 82% of business failures are attributed to poor cash flow management. Knowing when to seek financing is critical to sustaining healthy cash flow and having funds available when you need them. Waiting until the need for financing is critical can put undue pressure on your business, narrow your choices, and result in costly mistakes.
Whether you need working capital to expand your product line, purchase equipment, or add staff, it’s essential to give yourself time to thoroughly investigate your financing options and find the best solution. Summit Financial Resources is a reliable source for the working capital small businesses need to grow. We encourage our clients to take a strategic, proactive approach and put financing in place well in advance of when they need the money. This will make borrowing less stressful, less expensive, and more beneficial in the long run.
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Not Charging the Right Price
Pricing products or services too high or too low is a common pitfall for small business owners. You may be concerned that you will lose sales if you over-charge. While this is always a possibility, there is no way to truly know without doing your research and having the confidence to test the waters to see what the market will bear.
Investigate what your competitors are charging, and consider the value you bring to the equation. It’s possible that increasing the price of your products may also increase their perceived value, which could attract new customers. If your prices are too affordable, potential customers may have a negative perception of your quality relative to your competitors. The key is to find a middle ground that helps boost your cash flow without costing you sales.
Doing it All Yourself
Entrepreneurs often start out with limited resources and a desire to keep costs in check by doing everything themselves. As the business grows and the workload increases, many small business owners fail to adjust and end up stretching themselves too thinly. Others have trouble delegating to their staff or believe they don’t need advice or help.
Many businesses suffer as a result of the owner being unable to let go of certain decisions and responsibilities as the business evolves. The resulting lack of focus and expertise in key areas can hinder growth. Mistakes can multiply and quality can decline, costing you time, money, and customers in the long run.
Knowing when to delegate provides entrepreneurs with the opportunity to focus on their core strengths. Determine the areas where you are wasting time and energy, and consider hiring professional consultants or several key employees to whom you can delegate time-consuming projects. Identify important areas of your business where you lack the expertise to be truly effectively and ask for help. Recruiting people who are more skilled and knowledgeable than you are will be a short-term expense but a wise investment in your company’s future.
Taking Your Team for Granted
Building positive relationships with customers is essential to small business success. However, many business owners forget that it is equally valuable to do the same with their employees. Just as important as hiring the right people is the need to support your staff, make them feel they are contributing in meaningful ways, and let them know you appreciate their efforts.
For employees to excel at their work and be willing to commit to an organization for the long haul, business owners need to give them good reason. A 2017 leadership global study by Dale Carnegie found that 87% of workers said it is important for bosses to show sincere appreciation for who they are and what they do.
Employees who leave their jobs often do so because they sense a lack of gratitude for their hard work. Celebrating small wins and providing praise and meaningful recognition for their achievements is one of the most impactful and effective ways to maintain a happy, productive workforce that is dedicated to your success.
At Summit Financial Resources, we know first-hand that being a small business owner isn’t always easy. Like you, we see every challenge as an opportunity to grow; and we know that the passion and competitive spirit that drove you to start your business provides the motivation to meet obstacles head-on.
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Summit Financial Resources specializes in working capital financing for small to medium-sized businesses that need increased cash flow. We provide working capital financing through invoice factoring, asset-based lending, inventory lending, and equipment financing.