Small business advice and pitfalls to avoid
Running a small business can hold all sorts of challenges, from everyday operational issues including staff resource and meeting orders, to ensuring good cash flow and adequate planning for the future. Many businesses learn from mistakes made along the way, but there are some pitfalls that are best avoided where possible. Here is some small business advice to help owners get one step ahead and avoid a potential headache.
Don’t let enthusiasm or desire to please a new customer take over – in the early stages of business, a new customer is an exciting prospect and it is easy to fall into the trap of over-servicing – reducing revenue – or over-promising on goods or services with a risk of under-delivering. Setting the bar for the working relationship at the outset is advisable, and making realistic commitments negates the disappointment that over-promising can cause if not delivered. In the case of services provided, any over-servicing at the beginning of the relationship will set a precedent that can be hard to break and make life difficult if the business becomes too busy to sustain that level of service.
Never underestimate the importance of cash flow – cash flow is the lifeblood of any business. One of the biggest causes of business failure for start-ups and small businesses is lack of it. The best piece of small business advice is to monitor cash flow at regular intervals by keeping track of accounts, invoices and payments and by implementing effective budget and forecasting processes. Getting paid in a timely manner can be a challenge for small businesses – particularly when dealing with large organisations where 30, 60 and 90 day payment terms can be the norm. Getting familiar with payment processes of customers will pay dividends when it comes to getting paid on time. The three-step rule is to establish payment processes (requirements such as PO numbers or correct invoice referencing), confirm invoice receipt and issue a reminder as the payment date draws near. If payment isn’t made within agreed terms, be swift in following up to establish what has happened.
Accept that professional consultancy is sometimes a must – paying out for services, particularly when careful management of budgets is needed, can be a dilemma. Often, usually in business start-up, owners will avoid financial outlay on what might be perceived as unnecessary services or activities which can be carried out in-house. However, getting the right advice can help avoid costly mistakes, so investment in professional services can often bring benefits that outweigh the cost. Whether this be accountancy, small business advice or marketing / sector specific consultancy, it’s worth considering the value it could bring to the business. Similarly, investment in technology and software to help digitise business functions can take care of time consuming tasks more efficiently, freeing up business owners to concentrate on other important business operations and growth. The use of accountancy software, which has evolved significantly in recent times, is growing in popularity as business owners are reaping the benefits of electronic business accounting.