10 Business Traps to Avoid
About the Author:
Paul Wilton (editor)
CA with degrees in commerce, accounting and information technology. Paul worked overseas in the “Big 4” accounting firms and served as a director at Audit New Zealand before setting up his own consultancy. Author of A-Z of New Zealand Business Law, Paul has over 20 years of experience as a business owner and consultant. He joined FBA in 2004 and is totally committed to providing excellence in quality and value to our subscribers.
These traps and mistakes are common to many entrepreneurs and small business owners:
1 Getting wedded to an idea and sticking with it too long
Don't marry a single idea. Remember that ideas are the currency of entrepreneurs. Play with many ideas and see which ones bring money and success.
2 No Marketing Plan
A marketing plan creates the kind of attention you need from potential customers. It is what attracts people to you! There may be as many as 25 ways to market your business at no or low cost. A good marketing plan implemented effectively, efficiently, elegantly and consistently, will be aimed at reaching the right people with compelling messages. The effectiveness of the plan will be evident from the results. It is a living document and doesn't just stop. It should be reviewed every 6 months or as required, based on progress checks you put in place.
3 Not Knowing Your Customers
Changes in your customers' preferences and your competitors' products and services can leave you in the dust unless you get to know your customers well, what they want now and will likely want in the future, what their buying patterns are, and how you can be a resource for them even if you don't have the right products or services for them now! Customer surveys, speaking to customers, internet and 0800 feedback are all tools to help with this.
4 Ignoring Your Cash Position
The world of your customers probably won’t respond to even superior products and great deals in the time frame that you would like. You'll need plenty of working capital (cash) to sustain yourself in the meantime and more! Growth can consume cash at an alarming rate. If available cash is dropping from one month to the next and you are unable to reverse the trend, get help fast.
5 Ignoring Employees
Motivating, coaching and managing your staff is probably one of your toughest challenges as an entrepreneur/business owner today! Without your patience, persistence and "people skills," your problems can multiply quickly. Morale, productivity AND PROFITS can easily be destroyed! Staff are your biggest asset for without a good team you are dead in the water.
6 Confusing Likelihood With Reality
The successful entrepreneur lives in a world of likelihood but spends money in the world of reality. A common downfall of many businesses is failure to bring in a reality check BEFORE it’s too late. It is good to remain positive, but so easy for optimism to over-exaggerate likely returns rather than to critically appraise them. Enthusiasm is great but remember to keep it in check!
7 No Sales Plan
Marketing plans (see 2 above) are all about identifying your target market and creating strategies for reaching those customers. Sales plans detail the strategies the business will use to sell products and services to increase revenue. The sales plan therefore often forms part of the larger marketing strategy.
Without a sales plan, it is difficult to gauge the progress and financial growth of your business. You will need a realistic map showing where the sales will come from, how and from whom. This forms part of your overall business plan to help manage volumes. It’s all very well getting the sales, but if you can't supply once you receive the orders then you’ll lose sales and possibly customers and reputation, harming your business.
8 Being a Lone Ranger
You might be the key to everything BUT you cannot DO everything and grow at the same time. Even modest success can overwhelm you unless you hire the right staff and delegate responsibility.
9 No Mastermind
If you don’t have an active board of directors, get an advisory board or a mentor! Sounds crazy for a small operation? It's not! The board can be family members that you trust, or friends. Ask them to attend monthly or bi-monthly meetings and review your business plans and results with them. Once trialed, consider inviting some or all to form a board of directors. Having someone to bounce ideas off and get an objective opinion is critical. Some medium size businesses (the wiser ones) employ professional directors to help guide them in the right direction. Think about this seriously as it makes good sense. Contacts can be made through the Institute of Directors.
10 Giving Up
Some of the most successful entrepreneurs failed several times before doing extremely well. So, if your business must fail, then fail and fail fast! And learn. And try again, with this new wisdom. Do NOT give up. Don't forget. Business is competitive, so for most folks it’s hard work. Getting the formulae right and smart thinking rather than slogging it out all the time, will improve profits for effort
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