Did you know 40 per cent of small businesses will fail in the first three years? It’s hardly surprising, considering the countless challenges faced by small business owners daily.
So, how can small business owners increase their chances of survival? As a small business owner, you’re probably time poor. So, we spoke to Mike Williams, a business valuation expert specialising in small business, to share his expertise on the most common small business mistakes and how to avoid them.
- Lack of consistent and regular management and business reporting such as profit and loss report, balance sheet, debtors list and weekly or monthly breakdown of sales and enquiries.
- This is a mistake that creeps up on people – they don’t think there is an issue until there is no cash in the bank to pay bills or a debt has built up with the Australian Taxation Office.
- Regular reporting may be a proverbial “pain in the butt”, but it helps alert you to issues as they develop.
- Even if you are a sole operator, issuing reports to yourself and setting time aside to review them without interruption (it can be as simple as 30 minutes per week or one hour per month) is worth the effort to avoid financial shortfalls.
- Set up your accounting software (whether Xero, QuickBooks or MYOB) to automatically pick up the business bank feed and reconcile every week. This means you can issue or print off reports regularly.
- Alternatively, arrange for a bookkeeper to regularly reconcile your accounts and print off the reports for you.
- Make sure the sales reports are not just a single line – show a breakdown by product or service category or preferably by a customer/client segment. That way, you can pick trends as they develop and put in place corrective actions.
- Failing to incorporate and leverage technology effectively to streamline operations, reduce labour requirements and automate sales functions.
- Find ways to automate the sales enquiry process, allow online ordering and payments or make bookings online.
- Transmit key job details (for tradespeople going to jobs, such as an address, customer contact details, job requirements).
- Automatically enter invoice and receipt details into accounting software.
- Automate collection of customer feedback.
- Heavy reliance on key persons within the business.
- Document the operations of the business in a manner that enables someone else to fill your role.
- List out the key processes and procedures under the categories Sales, Marketing (different to Sales), Operations, Financial Management, Human Resource Management, Administration.
- Then for each key process, write a procedure or set of instructions. Where the Operations are highly technical, refer to any Operations Manual or other documents.
- Train others in the documented procedures so that when others are away, the role can still be completed.
- Make sure there is a structure to the roles in the business – who is expected to do what and by when. Even for small two or three person businesses, this can mean when one person is down others can take their place.
- Failing to bring on new products or services or diversify into new market segments, relying on the same customers delivering the same products or services.
- Always survey your customers or make notes of what your competitors are doing differently and explore if new products or services could fulfil unmet needs.
- Map out the different markets that you service and consider if there are markets in related areas that you can service.
- Can you service new geographical markets or add an “online” service?
- Have a documented business plan that looks at the market trends over the next two to three years and document ideas and ways that you can add new products or services or enter new markets.
- Regularly measure customer satisfaction and make sure the process is linked to any customer complaint handling procedure. Record customer ideas in a central register and use this to develop new products or services or new markets.
- Develop a culture of learning, involvement and growth with employees to help drive a continuous growth mindset.
- Have a training plan in place for staff and encourage development.
- Regularly measure staff satisfaction. This can be as simple as getting staff to fill in a weekly or monthly ranking from one to 10 – how satisfied are they as an employee in the last week or month?
- Add a comments section for ideas then include the ideas into any improvement plans for your business.
- Regularly involve your staff in improvement projects and business planning.
- Implement improvement ideas by involving key staff – if suited.
- Regularly hold staff functions or just simple lunchtime BBQs or coffee sessions.
Small business ownership is equal parts challenging and rewarding, so make sure you face the challenges head-on by being informed on how to manage your small business effectively. The rewards will follow.
If your business is experiencing any skills gaps, consider a professional development course for yourself or your staff to safeguard the continued success of your small business.
Australian Online Courses offer many small business professional development courses that can help you to stay relevant in a highly competitive business climate.
When you study with Australian Online Courses, you have access to an eLearning platform that allows you to study where and when you choose. This self-paced learning environment will enable you to plan your study around work, life and family commitments.