by Roxanne Lane
In 2004, the Office of Advocacy reported that there were 24.7 million businesses within the US. According to the Small Business Administration, 66% of new businesses make it past the two year mark. Only 44% are still open after four years. Don’t make the errors that more than half of these entrepreneurs have made.
Not Enough Cash
Especially when starting a new business, cash flow is important. A business without adequate cash flow can easily drown. Oftentimes, owners will see the money in the bank account and take an owner’s draw from the business. This can be detrimental to the business.
Inability To Obtain Investors or Loans
While trying to grow a business, owners usually need to get loans or investors. You must be prepared because banks and potential investors will want to see all of your books. They will also make sure that bills have been paid on time. It will also be important to prove taxes are paid regularly as well as that you are not taking too much money out of the business.
Trying To Do It All Alone
A common problem that business owners have is that they don’t want to hire qualified help. This is a big mistake. Owners need to understand that they can’t do it all by themselves. They need to surround themselves with quality employees that are dedicated to making the business succeed.
Poor Customer Service
Customers are essential to any business but for a new company, building a regular clientele is of the utmost importance. Not doing everything that you possibly can to keep your customers happy could be fatal to your business.
Not Protecting Personal Assets
Most business owners know what a Limited Liability Company is and how it can protect their personal assets. Having said that, some business owners do not bother forming a LLC. This opens them up personally if the business fails or if they are sued. Several companies go under because of this oversight.
Failure To Maintain A Website
Nowadays, people want to turn on the computer and find the company’s website with whom they plan to do business. If they can’t find your business, you’ve probably lost out on the sale. Another important thing that can cost your business is failing to keep the site up to date. It really looks bad when businesses don’t maintain their online presence.
Unscrupulous Employment Practices
A lot of business owners get caught up because they pay people “under the table”. This is illegal as I am sure you know but there are consequences to doing this. Not only will both you and your employee have to repay the government for taxes that should have been paid; you will also be fined and in some cases, your business will be shut down. Hire only legal employees and be sure to pay the taxes.
Failure to Advertise
Business owners are often so gung ho when getting their business going that they fail to advertise appropriately. Many think that their products or services are so unique that people will flock to them. Unfortunately, that is rarely what happens. Local news stations will often do a small three minute spot about new and exciting businesses that are opening in the area for free. You can also obtain radio commercials and have the truck broadcast from your establishment. Again, a website will prove to be a wonderful asset to your business.
Accounts Receivable Problems
Many businesses allow customers too much leeway when it comes to paying their bills. Customers that are on a 30 day billing period, should definitely pay the bill promptly. If they don’t pay the bill, you need to get after them. You have creditors to pay and need that money. Should they not pay, you need to suspend their ability to put charges on credit with you and have them pay when purchases are made or services are rendered. This will help keep your head above water, so to speak.
Too High Expectations
All too often, business owners think they’re going to make millions in a few years. This rarely happens and unrealistic expectations can kill your business. Set realistic goals and time frames to achieve them and you should do just fine.
Roxanne Lane, contributing writer from CreditDonkey, shares her experience and lessons she learn while starting her own business. Roxanne recommends you compare financing options including small business credit cards before you run into some of her past mistakes. She says, “remember, customer service is king”, they are your small business advocate.