Some of the biggest mistakes new business owners make could easily have been avoided. These 9 pitfalls that bring down small businesses can be easily avoided if you know to look for them.
They are usually a result of shoddy research, poor organization or simply not hiring the right people. Make sure they don’t happen to you.
Top 9 Pitfalls Of New Businesses You Can Easily Avoid
Why do so small businesses fail?
This list isn’t all inclusive but it should get you thinking.
- Not Enough Money
- Accounting System
- Hired Help
- Market Research
- Material Handling
- Not Charging Enough
- Not Enough Advertising
Not enough Money for Day-to-Day Operations
Seems like a no-brainer doesn’t it? Yet that $5,000 you saved up might not be enough. You need to ensure you have as much money as possible. Learn from Oscar on “The Office” as he said that most new business go five years without a profit. So can you go five years without an income? Also you need to prepare for other instance that might creep up, like getting your property up to code or hiring more people.
Poorly Organized Accounting System
Seems common sense doesn’t it? Yet you’d be surprised how easy it is for something like this to go from a mole hill to a mountain. You think QuickBooks will serve our needs. Then eureka! Business explodes and QuickBooks is too much for you to handle. You need an accountant. But what if taxes are screwed up? What if you forget to file them? What if you add an extra zero somewhere? These tiny mistakes can cost you not only a fortune but possibly your business. Be extra careful to dot all of your I’s and cross you T’s. Start with a quality accountant and system.
Bad Business Location
You finally got the shop on the corner. It is your favorite location. Close to home, not too small, not intimidating. You just had to wait for it to become vacant. Did I just hear tires come to a screeching halt? No maybe it was a record being scratched. Either way, it is a clue that you need to rethink this “investment”. Why did this location just become vacant? If a particular store rotates business to business, it might not be a curse but it can’t be good for business. Really consider your location. Can it reach your demographics easily? Is it easily located? Is it in a well lit area? The good side of town? If you were a customer, would you come to that location?
Ineffective Hired Help
Well now how can they bring you down? They’re your help! Exactly. You might think they are just selling your product or mopping the floor or stocking the shelves, what harm can they do? Yet if they don’t have the charm or grace to show off your company, they could put a bitter taste in someone’s mouth about your entire business. Word of mouth travels fast. If your floors aren’t clean, the shelves not properly stalked and price tagged etc, it can really affect business.
Little Market Research
You think everyone wants your cheese shoes? You might be overestimating just a bit. Focus your business on a smaller target, about one or two demographics. Maybe children are your audience. Perhaps also teenagers.
Poor Material Handling
That’s right. You need the right material handling system to ensure your product is well taken care of. Material handling solutions don’t have to be complicated. A simple pallet, forklift or conveyer belt can make the difference between one loss and twenty in a month. Ensure you properly care for your product. Because product equals money.
Unorganized Files or Systems
Seriously? Files! Yes files! All it takes is one visit form the IRS to flush your business down the drain. You need to keep accurate, organized records of expenses and payouts. File EVERYTHING, regardless of how unimportant it seems. The more diligent records you keep, the less likely something is to happen. That’s just the way of the dice. Ever notice how it rains on the day you don’t have your umbrella?
Not Charging Enough
Yes you want to compete with the best of them, but a new business simply can’t afford to slash prices as their longstanding competitors. Price reasonably. Make customers/clients visit your for different reasons. Offset cost with other incentives, like coupons, punch cards, or free gifts.
Not Doing Enough Advertising
Now this doesn’t mean you need to launch a huge advertising campaign and slather your town with billboards. It means that your name isn’t out there. So investing 100 dollars or less in business cards, car stickers and flyers might be worth it, at least in the beginning. If no one knows about your business, how can you get customers/clients?
You can do it! If you can last more than 6 months, you make it longer than most. Use this list to avoid the common pitfalls and go the distance. Good luck!
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