Running a small business requires ingenuity and discipline to make sure that you get the most from your limited resources. Each product your make, each service that you offer and every hire that you make needs to improve your prospects for running a profitable company. What mistakes might you be making that may stop your company from being as successful as it could be?
You Don’t Have a Business Plan
One of the biggest mistakes you can make as a business owner is to not have a business plan. Your plan will tell you how to deal with competitors, disruptions to your business model and how to overcome objections to pricing and other aspects of your company. Without a plan, you are making random decisions that may or may not be in the company’s best interest. Worse yet, you could have a business plan but simply choose not to follow it. Either way, failure to have foresight is an easy way to run a company into the ground.
Your Idea Doesn’t Solve a Big Enough Problem
The product or service that your company offers should offer a solution to a problem. Even if that problem is one that nobody knew that they had before you came along, it should offer something important to your customers. The best way to know if your product or service is truly in demand is to ask people to pay for it. If no one is willing to pay for it, the idea should be scrapped or modified until enough people are willing to pay for it that you can generate a consistent profit.
Where Does the Business Get Its Capital From?
Cash flow and liquidity are two major issues that small businesses suffer from. Unless you have a line of credit or some other funding source that you can access on demand, it could be difficult to fulfill orders in a timely manner or buy new equipment to service customers in an efficient manner. Companies like AFN can help businesses stay liquid and have access to the capital that is needed to take on new clients and grow their operations.
What Happens if Someone Leaves?
One issue that should be resolved before a company ever gets started is how to handle the sudden departure of a business partner. All parties should know ahead of time how much their portion of the company will be worth upon their departure and how that person’s portion of the company is to be distributed to other shareholders. It may also be a good idea to determine how to handle additional investors coming onboard to avoid fights between founders and people who may be good friends in their personal lives.
A small business cannot survive unless there is a clear vision for its growth. While issues may come up along the way, having a good business plan and a steady source of capital will help a newer company get past those problems and remain on a path to profitability for many years to come.