How often have we heard that small businesses are the lifeblood of the UK economy? According to Inuit research, they account for 99.2 per cent of the UK’s total stock of companies. But one in three SMEs still fail in their first year.
You can avoid many mistakes by merely being aware of the pitfalls.
Here is a list of seven common errors to avoid:
1. Starting in an area unfamiliar to you
Focus on what you know! It’s great to think big, but remember what your limits are. If you don’t have the finance to get a good location for your business and have yet to introduce your product or service, then throwing yourself in unfamiliar terrain could be detrimental. The key factor about starting a local business is that people already know you. An already extensive network and potential hub of consumers, friends and family, will provide you with one of the best forms of marketing: word of mouth.
2. Not marketing your business
While having friends and family can help start marketing your business through word of mouth, it’s a mistake to think you’ll succeed without using the social media goldmine. After all, it’s free, easy to use and will get your company name global in a matter of minutes. But it doesn’t stop there! Going old-school will get the attention of those not glued to their mobile device screens.
3. Not focussing on customer service
Good customer service is essential to business success! With so many competitors in a number of industries, it’s time to focus on the one thing that matters most: how you treat your customers. Do it in the right way and you will not only gain more loyal customers, but increase your credibility and reputation as well.
4. Expanding too rapidly
Don’t get too excited when you experience success early on. By expanding too quickly, you could create cash flow issues, staffing concerns and a decline in customer service – none too good when you’ve only just started your business! Take a measured approach and when all else fails, call in a business coach or mentor to help get you back on track.
5. Undercharging what you sell
Most new business owners tend to undercharge what they sell because they don’t know how to correctly set an effective price. Small businesses are also under the impression that having the lowest price will get you more business. While it certainly helps to bat competitors out of the ball park, is it truly something you can afford in this economy? By not receiving the maximum reward for your efforts, it could lead to low profits and poor cash flow.
6. Extending credit too easily
This will only ensure that your good nature be taken advantage of. Be sure to perform credit checks on all your customers and make sure they completely understand and agree to your payment terms before doing business with them.
7. Only thinking about taxes after the year is over
Never leave paying off your taxes until the last minute. This will only lead to you loosing even more money in the form of paying more tax than is required. Make sure you’re up to date with tax policies and seek professional advice before engaging in any activity that has a taxable effect.
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