8 Ways To Kill Your Small Business

 Small business owners lead a precarious life.

Most of them manage from crisis to crisis and it seems sometimes that luck must be on their side for it to succeed.

It isn't so!

If it were so then you would be better off spending the time at the racetrack because punters there seem to get better odds.

Good luck will help smooth the way, but your business plan will succeed without it.

On the other hand there are well documented ways to kill your business. Here are the 8 most common:

No. 1 Forget your inexperience you will learn on the job.

If you think it will not matter that you have never been in business before, and you will learn things as you go - Think again!

Being in business requires a completely different mind-set to that of being an employee. The business may have gone down the toilet before you even realize that.

So you were the Executive Chef at the Greek Club and you can cook up a storm and do everything a Chef is able to do. Can you manage and supervise front-of-house staff? Do you have the accounting skills, selling skills and the marketing skills required of a restaurant owner?

One solution is to get some training in operating a small business before you start; Colleges now have good programs for the intending new purchaser.

The owner should review her own weak points. The gaps can then be closed by a crash self-development program, getting some knowing partners or staff, or by hiring outside consultants.

No. 2 Forget the bookkeeping you are far too busy

The books are not important. The important things have to be done first.

Wrong!

A poor record keeping system leads to serious problems in every aspect of the business from advertising to sales, from stock control to taxes.

The appropriate records will tell you a lot of things about your business that you need to know!

Few new business owners will have the necessary experience to keep their own books. That's okay, just so long as you realize that and hire a competent accountant to do it for you.

No. 3 Spend, Spend, Spend

Thinking that you can spend your way out of trouble will kill your business. Spending more than you receive is the road to ruin.

That does not mean that the saying about "spending other people's money" is wrong? No! Appropriate loans that you can handle from normal cash flow will be necessary through every stage of your firm's development but if the business will not be able to support those loans from profit your business will fail.

If your advertising is not working there is no point in doubling your spending on advertising.

Throwing money at a problem is bad policy and ultimately will kill your business.

Often a shortage of cash is a symptom of other problems with the business, so your first move should be to your accountant.

No. 4 I do not need a business plan

Failing to plan is the single most common cause of business failure. Planning is very important for ‘Big Business’, but it is vital for the small firm because it hasn’t the resources to cope with any mistakes, as does the large organization.

Developing plans for your business isn’t easy - only necessary! We often hear the plea, ‘But it is impossible to accurately predict the sales in this business!’ And often they are right too!

But it isn’t necessary to be accurate in predictions and estimations if you monitor and adjust as you go. Nor are figures as important as the trends. So absolute accuracy isn’t necessary. A poorly prepared plan well maintained and adjusted as you go is a thousand times better than no plan.

No. 4 Stop mucking about

The typical small business owner has too much to do.

Most small business owners work in excess of sixty hours a week.  So busy are they that they haven’t time for trivial matters and all time is spent on matters vital to the survival of their business.

Wrong!

A trap for the unwary is to allow the business to run the proprietor instead of the proprietor running the business. Sometimes this is a symptom of poor planning, but often owners fritter away their time on trivial matters doing insignificant tasks which staff should do while vital jobs are left undone.

A safeguard against this is to ask yourself several times a day ‘Is this the most productive thing I could be doing right now?’ And do the most productive task right now.

If the task is one that you feel uncomfortable doing then delegate.

No. 6 Trap 6 - Word of mouth is the best marketing

You are right it is!

But if word of mouth is not producing all the customers you need to survive you need to do something else.

‘The best advertising is word-of-mouth’ is a maxim that has harmed more businesses than any other truism. It’s not because it’s untrue, word-of-mouth is probably the best advertising. After all, it is free, it is believable and it works. But too often it is used as an excuse for having no marketing at all.

The first priority of every business is to get and keep customers. No matter how good the service; no matter how excellent the product; nothing happens unless you have customers.

Every business must have a well documented marketing plan. No ifs no buts!

No. 7 - Poor employee management

Despite their good reputation for employer/employee relationships, small businesses often mishandle staff. Small business proprietors continually complain of the poor staff on offer. Owners complain of employees not taking direction, being unenthusiastic at work, taking sickies and long lunch and tea breaks.

Disgruntled workers are poor performers who chase customers away. Yet it has been proven that the cause of most of these problems is not the poor quality of the staff offering themselves for jobs, but inept staff management.

Very few small business proprietors have formalized training programs for their staff. Nor is the typical small business owner particularly skilled in hiring the right staff. If the employee who is hired does not have the necessary skills when hired, then lack of suitable on-the-job training ensures that she will never acquire it.

Another problem for the small business owner is that because the closeness with which he works with his staff he becomes so friendly with them that he lacks the necessary assertiveness to create a happy, co-operate environment in which quality service is given.

In most cases of failing firms there is a low or complete lack of morale.

So check the morale of your staff. If you think poorly of them, it’s odds on that they think poorly of you. Do something about it because low morale is another sign of a failing business.

No. 8 Not knowing your role

Why is it that one restaurant succeeds and grows while another with similar service, location and capital just doesn’t get off first base? Usually the difference is in the skills of the owner.

The skills required change as the business changes. We all know about the chef who prospered while she spent most of her time in the kitchen doing what she did best. Her troubles started only when the business grew to the extent that she needed to be out of the kitchen so much that she needed to employ other chefs and kitchen staff.

While she was doing everything, she could easily keep all the things she needed to know in her head. Now she can’t, and the records have not been put in place so that she knows what’s going on.

She forever lurches from one crisis to another, from one angry supplier to another, from one dissatisfied customer to another, from one angry employee to another. Her business is doomed if she doesn’t realize that her role has changed.

The beginning business needs an operator. Someone who can get his hands dirty and perform any of the functions that are required. As the business grows the owner can be a chef no longer but needs to assume the role of manager. Paperwork has multiplied, staff and equipment have increased and the role of the top man has been made more complicated. Failure at this stage to grasp the new role may mean the failure of the business, too! The owner can be a chef no longer!

It is difficult for the small business owner to know when each stage of his business has been reached and the business may never reach the transition stage because he fails to allow it.

The role of a small business entrepreneur is a lonely one. Without a mentor such as a good CPA she will be lonely indeed!

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