Running Your Business on a Spreadsheet and Other Mistakes Small Businesses Make
Running a modern-day business may seem like a straightforward process, but it's a careful balancing act. All too often, it's hard to maintain that delicate balance, especially in today's fast-changing and unpredictable markets.
Thankfully, with a little planning and foresight, you can save your enterprise from stumbling and falling into traps. Here are the most common mistakes small business owners make, plus a variety of expert hints, tips and advice on how to avoid them. Heed these insights, and no matter what the future brings, you'll be better prepared to steer your enterprise toward success.
Forgetting to Make the Numbers Add Up
Always be conservative with financial planning and live by the rule of threes: Expect that any given venture will take three times as long and be three times as difficult to execute as initially anticipated. (Hey, you can always be pleasantly surprised.)
Don't forget to build in a healthy financial cushion as well. A good rule of thumb is to keep a 30% buffer on hand in case projects go over time and over budget. Recognize that initial cost estimates may not tell the entire story when it comes to financial planning. All you can expect is that the unexpected will occur.
So, when budgeting, account for multiple layers of fail-safes. Always have at least three possible solutions or vendors you can call upon to perform any task available as well as the cost of these backup solutions. That way, you can quickly pivot if unanticipated variables, such as server downtime, loss of personnel or the sudden arrival of unexpected competitors, threaten to derail the bottom line.
Failing to Account for Opportunity Costs
Every choice a business owner makes comes with two costs: financial and opportunity. When weighing a decision, factor both variables in. You may find that an option that seems more lucrative in the immediate—like selling more of an existing product vs. pioneering newer, more innovative solutions to meet fast-changing customer needs—may prove costlier in the end. To mitigate potential losses, always look for ways to benefit from your choices besides pure financial gains.
Case in point: Repositioning your services or solutions to speak to new industries or customer segments might not produce huge profit windfalls in the short term. But in the long run, it could help you gain invaluable insights into fast-growing markets, demonstrate your abilities to new audiences and help you recognize significant productivity gains or cost savings in other business areas.
Putting the Virtual Cart Before the Horse
Many businesses are doubling down on social media, video and inbound marketing programs. But before spending a cent creating amazing content—often considered the silver bullet for driving advertising success—invest heavily in planning an effective brand strategy.
When plotting an online marketing campaign, it's important to start with tangible business objectives, like increasing sales figures, generating more leads and converting more prospects into paying customers. Once specific business goals are defined, work backward to create marketing plans and strategies that support them. Figure out which online activities should simply be supporting parts of a larger overarching messaging effort and outreach campaign.
The same idea applies to your content strategy. Rather than obsessing over misleading online measurements, like the number of tweets, shares or likes your content receives, focus on how your content strategy can support your efforts to engage in measurably beneficial activities. Then, build a strategic framework that can help you achieve these goals. Know who you're targeting, how to best engage the audience and how to inspire prospective customers to take the types of action you desire. Only then should you begin spending money on building fancy creative assets and marketing en masse through targeted outreach channels that can help you get the message across.
Assessing Tomorrow's Leaders by Yesterday's Standards
Recruiting and hiring top performers is one of the single most important tasks small businesses and startups must undertake. But the measuring sticks HR pros used to use—years of experience, academic pedigree, technical skills, etc.—are becoming unreliable predictors of success in a fast-changing, highly disruptive business world that increasingly prizes new and novel solutions.
In fact, according to recent research by the Corporate Executive Board, a new working world demands new skills from leading candidates, including the ability to communicate well, multitask, dynamically solve problems, be proactive, enjoy significant self-awareness and learn fast on their feet. And with technical skills becoming increasingly commoditized, it's clear the future belongs to those who are more adaptable and agile—not necessarily more intelligent or naturally gifted.
So when hiring, don't just consider how applicants' qualifications look on paper. Instead, search for hires who can consistently solve problems in clever ways, think fast on their feet, and point to innovative new projects, products, or solutions and say "I made that."
Overspending on New Technologies and Tools
When weighing whether or not to invest in new high-tech options, remember that technology is just a tool and that newer or more feature-laden choices don't necessarily equal better options. It all boils down to picking the right tools for the job. As a small business owner, before you invest in new technologies or high-tech services, ask yourself which features you're most likely to use, how and to what extent. Next, only purchase what you can leverage on a frequent and meaningful basis, and only buy in quantities you need. Remember, many pay-on-demand and plug-and-play discount solutions are now available.
Finally, factor in support and services costs when choosing new technologies. It may be worth paying more up front to secure the services of an IT partner that can provide more reliable service and more uptime.