For many small business owners, especially those who are owners for the first time, much of their experience comes down to trial and error. No one can prepare you for what awaits once you start an SMB and you have to learn most of it by making mistakes. That being said, some mistakes are more serious and potentially hazardous than others. The following five are particularly dangerous and you should try and avoid them if you can.
1. Hiring the Wrong People
There is an entire science to hiring the right people, making sure they stick with you and give you their best. Unfortunately, not many SMB owners understand the science and there is not enough time to learn it.
Various experts have weighed in on how much the wrong hires cost a company and this is even a bigger problem for smaller companies. Namely, they cannot afford to take on an employee only to find out they aren't working out two months later. It costs a lot to onboard an employee and it costs even more to replace them.
Another reason why the wrong hires are even worse for smaller companies is that, in SMBs, employees are often tasked with more than just the expected responsibilities. The money is tight and SMB owners often have to rely on their existing people taking on extra load. As a result, employees become more skilled and more irreplaceable. When you make a wrong hire, you lose out on more than your average mega-corporation whose employees are, for the lack of a more subtle word, expendable.
Because of this, SMB owners should go out of their way to learn more about hiring and retaining the right employees. Also, it might not be a bad idea to reach out to an outside recruitment agency and see what kind of advice they have or whether they can help with their services.
2. Mishandling the Paperwork
It takes a lot of paperwork to start a business. Even in countries that are considered very business-friendly, there is a whole lot of red tape to go through before you even start your business. Once you start hiring people, purchasing equipment and tools and amassing customers, it all develops into this paperwork beast which is extremely difficult to handle. Slap on some taxes onto that beast and it turns into a behemoth from hell.
One way to handle this is to become an attorney and accountant all rolled into one in a matter of weeks. You might get a hang of the basics and you might actually swim for a while, but sooner or later, you will sink. In short, there is a reason why accountants and lawyers spend years in school and honing their skills.
Another way to get a handle on your paperwork is to talk to experts. The vast majority of businesses have their own accounting departments or work with an accountancy agency of some kind. If you have only started your business and simply want to learn the basics and find out where you stand, you can get some consultations with a tax accountant and they will gladly give you the information you need.
3. Wasting the Marketing Budget
Small enterprises operate on a very tight budget. In such situations, everything that is not absolutely essential gets a very tiny piece of the budget pie and this often includes marketing. This is especially true for traditional small businesses as opposed to startups whose bread and butter is marketing.
In short, SMBs have very little marketing money to throw around and they often throw it around carelessly.
It is not uncommon for SMB owners to fall for online hype or to get swayed by various articles and advice from people who know very little about marketing that actually yields results. This is especially true for digital marketing which has become muddled by various gurus and influencers.
The only marketing that should matter to an SMB is marketing which brings in new revenue. The strategies and tactics used to achieve the goals set by those strategies all have to be aligned to a single, ultimate goal – making more money. Subsequently, that new money can be spent on marketing that may be more big picture-oriented.
Talk to an agency that has been around for a while and that has experience in your industry. Book a consultation. Tell them you goals and ask them to clearly and factually show you how they would go about meeting those goals.
4. Using the Wrong Tools
The saying that you need the right tools to get a job done is one of the truer sayings for business owners. Unfortunately, many SMB owners seem to forget it the moment they start setting up their new company.
There are many reasons as to why SMB owners use the wrong tools (equipment, software, etc.). Some of them don't think it matters and they just go for the first thing they stumble across. Others always go for the cheapest solutions, soon finding out there are good reasons it was so cheap. Some are too busy or do not know how to compare different tools.
When setting up your small business, you have to make sure you have done due diligence when it comes to purchasing the right equipment, software and anything else you will be using. It may take some time and legwork, but it will pay off.
5. Focusing on the Competition too much
Every company has competition. Some companies have more competitors while others have to worry only about one or two. Sometimes the competition is outright terrifying. That is just the way the world of business works.
It is therefore quite understandable that many SMBs worry about what their competition is doing. In fact, this is a good thing. It becomes a problem when competition becomes an obsession, when every move is planned and executed with one eye on the competitors; when the business owner becomes almost paralyzed with analyses of how a decision might affect their standing in comparison to their competitors.
This approach is very limiting and turns a business into a reactive entity which never takes chances and tries anything original. It can also result in very awkward situations where a company seems to exist only as an antithesis to another company.
Competitor research is a good thing and a smart business tactic.
Just don't make it your only one.
Published by Michael Deane