Yes, your business is not going to fail; but is good to equip yourself with these common mistakes. Research has shown that at least 80% of new businesses fail within their ﬁrst year of being open. There are many reasons why businesses tend to fail, and it is best to list them here so that you can try to avoid making these common mistakes when you start your own business.
- Improper Book-keeping
It doesn’t matter what you do to keep your business running at its best. If you do not keep proper track of your money’s coming in and going out, you will eventually be left with none.
If it is at all possible, do your own bookkeeping so that you know exactly where your money is going. If you do not know much about it, you should hire someone that does, but also someone that you can trust. If you must, hire someone just to watch the bookkeeper so that you don’t get ripped off.
As the business owner, you need to know exactly how much money that your business has. You should know exactly how much proﬁt that you are gaining each month so that you can use your money wisely. It is not always easy to keep track of all of your money, especially if you are generating a lot of money, but it doesn’t have to be impossible.
Even with a good bookkeeper, you should look into popular accounting software like Quark Express and Microsoft Money because they do most of the work for you. All you really have to do yourself is add the right numbers and let the software add and subtract for you.
Every year many businesses go under due to bad bookkeeping. They spend money they don’t have or they make errors processing payroll deposits. Don’t let that happen to you.
2. Credit Problems
The worst thing that a business owner can do is to run it on too much credit. Each day it gets easier and easier for new businesses to gain credit accounts and credit cards from various companies. All too often, these companies run up more credit than they can repay.
It just goes to say that you have to live and run your business within your means.
Once a business spends too much money on credit, they learn all too late that the interest rates can force hundreds of extra cash in expenses. New and small retail businesses just can’t afford to pay them. There is also the fact that over buying supplies and merchandise can be a far bigger problem than businesses expect.
3. Poor Money Management Skills
This is simply the case when you rob your business of its hard earn money. How many times do we need to tell business people that business money is different from personal money? Money management can be as small as that; if you can’t manage small money, how do you expect to manage a large amount of money?
All too often business owner’s ﬁnd themselves buying things that the business simply doesn’t need. They also buy things for themselves on company credit. This is a big no-no in the business world.
4. Poor Power Supply
Congratulations if your business does not use electricity because the situation of electricity in Nigeria at the moment is enough to kill the birth of Facebook if it were to be in Nigeria. This is not a joke; there are so many businesses feeding on generator 365 days a year. How do you expect such a business to survive with there counterpart in developing country?
Though, the governments are doing there best; just that their best is not enough at the time of this piece. However, if you must use electricity, I will suggest you find other means to sustain your expenses on running the generator.
5. Inappropriate Staff Remuneration
Overpaying employees can run any business into the ground if they are not keeping up with their regular expenses properly. Any successfully run business owner knows that you start off small, and hopefully build your way up. That is impossible if you are living and running your business above your means.
6. Over Charging Your Customers
It is really common sense, but many companies have a tendency to over-charge their customers. It sounds like an easy thing to avoid, but sometimes, a business owner might have to charge more money for their wares because of ﬁnancial difficulty or tax problem.
Many business owners take advantage of adverse economic situations and overcharge as a means of capitalizing off of the consumers’ desperate needs. This can be devastating to any business if others aren’t doing this or if the demand just doesn’t meet the standard that the owner might have predicted.
Many new businesses fail to advertise properly. It wouldn’t occur to most business owners that insufﬁcient advertising might cause a problem with keeping their business aﬂoat, but during tough times, advertising might be your best weapon.
When the economy is running badly, you should have enough money put aside to advertise special promotions and sales to your customers. When you do advertise, you should try to be everywhere. You want people to see your businesses name no matter where they turn. Here are some of the ways that you can advertise to ensure that you cannot be forgotten.
- Newspaper and magazine ads
- Newspaper, and direct mailbox inserts
- Flyers and posts
- Commercial and media ads
- Google Ad-sense
- Social media advert
You should know that these do not have to cost you an arm and a leg. Commercials can be costly; you just need someone that can keep track of orders for you.
Improper advertising can leave the community not knowing that your business exists; especially during hard times. You want to stay available to all of your customers because if you disappear from view, so will your customers.
8. Poor Customers Service
Have you ever be a victim of poor customer service representative? If you have, you will never wish for such an experience again. There is nothing that annoys your customers like someone who does not care or respect them. If your customer service section is poor it is a bad business signal. Am sorry, you may have to leave the business sooner or later if care is not taken.
9. Tax Problem
You would be surprised at how often a business owner fails to properly deal with the taxes on their goods and property. It would seem to be an easily dealt with the issue, but the unseasoned proprietor can easily fall prey to the IRS.
The poor calculation can be a costly problem, but failing to properly ﬁll out your tax forms, and missing valuable monies can be a problem as well. Sometimes it is simply an issue of ﬁling your taxes late. Keeping up with your ﬁscal year’s end can be frightfully easy to forget. A good accountant is a need to avoid common tax problems like these and others.
10. Poor Location
It is very easy to fall into the common problem of choosing a poor location for your business, but it happens every day. Businesses that open in a hard to get area often ﬁnd themselves without customers, but this is not the only problem with location. Sometimes, it is better if you have your office on the ground floor because customers are lazy; they often don’t have the time or patience to climb the staircase. Thereby leaving you out of the option.
Sometimes a business can be greatly situated but be poorly accommodated.
Basically, this is when a proprietor buys or leases a damaged piece of property. Sometimes a person can be in such in a hurry to garner the property that they fail to see its ﬂaws. This can run up a lot of debt in trying to salvage it.
You should always try to ask why the business that was there before you, went under. Whoever the Realtor is sure to know the details. If they don’t I wouldn’t trust that Realtor. A failure to keep any piece of real estate is a common problem of the inexperienced proprietor.
Before you agree to take on any property, you should have knowledge of the property’s background. You should have someone with you that knows the basics of plumbing and all of the other property damage that the average person cannot see. Oh, you think it does not matter? Try and see for yourself.
However, I know there are more to this list; feel free to add your suggestions in the comment box.