So what can you do to avoid becoming part of those depressing statistics? Adoption of good management practices like change agility is key to sustainable business growth. But it’s as important to keep in mind what not to do and have strategies in place for avoiding management mistakes. Bizmanualz provides a few words of advice.
Getting a business off the ground can be exciting, and if you’re a go-getter you’re probably inclined to plunge right in. But if you rush your launch, you won’t have time to prepare a solid business plan. And your business plan is crucial. Not only does it give you a checklist for methodically building your company, it also will be necessary to have on hand if you need to demonstrate viability to potential lenders or investors. So, take time and consult with professionals in finance and marketing, to compose a business plan that will cover all your bases.
Lack of funding is a common reason for small business failure. But that lack of funding is often due to poor budgeting. General financial mismanagement, and insufficient understanding of cash flow, can also be culprits, but these also may be caused by a failure to budget. As Driven Insights explains, your budget lets you know exactly what you have to work with, so you know your spending limits in each department. It can also help spur you to be more productive. It’s important not only to create a budget, however: you also need to stick to it.
Even if your business is quite small, it is probably wise to register it as a legal entity. Most small business owners in their first entrepreneurial project find the limited liability company (LLC) to be a good choice for a business structure, because it makes tax filing easier and can even save money. But most importantly, as an LLC, your personal assets are protected in the case of loss, accidents, or legal problems. Be sure to check your state’s rules for LLCs as they vary from state to state.
Having funds for marketing is only a tiny part of marketing success. You need to start by knowing your market, who your target demographic is, and how to reach them. But it doesn’t stop there. Once you have attracted clients, you need to earn their loyalty, so they keep coming back. Additionally, a good marketer tracks performance.
Your marketing plan must have built-in flexibility, too, so it can change as the market shifts. If you have no training in marketing yourself, First Round Review notes that it might be smart to hire or outsource to make sure this crucial function is performed well.
There are many areas where you can get away with economizing, especially when your business is new. Hiring your team is not one of those areas. Yes, some business owners manage to get away with hiring less experienced staff at lower wages, but this can be risky, since poor performance will reflect badly on your company. And poorly compensated team members will likely move on as quickly as possible.
Another hiring mistake to avoid is hiring your own friends and family. For one thing, your hires should be based on ability, not on nepotism. For another, it’s risky to hire anyone you can’t safely fire.
Growth is important, but growth without sustainability leads to a short-lived success at best. If your business growth outpaces the ability of your teams to keep up, this leads to stress, poor performance, and loss of morale. Growing too quickly can also mean compromising on quality of goods or services. It may even lead to cash shortages. So have a plan for growth but keep it steady and sustainable.
Typically, a business owner wants to focus on the positive. But keeping an eye on the negative can be useful too when it comes to sustainable business growth. Knowing the common pitfalls that a good business owner avoids will go a long way toward helping you keep your business healthy for the long term, which is the how one makes a successful entrepreneur.