Success in small business has much to do with avoiding operational mistakes. Okechukwu Nnodim writes on common errors committed by entrepreneurs in the small and medium business category.
Nigeria’s harsh economy has posed business planning challenges to many small and medium scale entrepreneurs. In a bid to thrive, some of these business entrepreneurs often commit errors. Below are some common mistakes made by small businesses.
Lack of focus
This mistake is common among small business entrepreneurs. Owners of businesses in this category often lack the resources to go after multiple markets at the same time. When they try to run businesses simultaneously, their marketing message gets muddled up most times. Experts say specialisation simplifies your life and maximises your profits. It is therefore important that you focus on a particular business for some time, as this helps you define your customer and minimise opportunities.
Owners of small businesses often fail to monitor their key business indicators. Experts say it is vital to routinely monitor activities that make your business grow. They note that this helps the entrepreneur to identify problems in the making, adding that he can also track his lead generation activities as well as his production or service processes.
Some entrepreneurs lack adequate time to sell their products or services to customers. This is another mistake in business. The Managing Consultant, Simply Exponential Consult Limited, Mrs. ‘Fayo Williams, says sole practitioners without dedicated sales employees often make this mistake. She notes that adequate time should be given to selling in order to make expected returns. It is important for entrepreneurs to understand that businesses do not grow without new customers. Though this is tough, you must make the effort to contact new prospects each week.
This has been addressed in our previous articles on mistakes entrepreneurs make. However, it is worthy of note again. This is because without a plan you cannot know where your business is heading. You normally wouldn’t take a vacation without a plan, so why try to run something as important or complex as a business without a plan?
Experts say the plan should be where you document the reasons for your major decisions.
The entrepreneur has to monitor the plan to understand deviations in his business. The business plan helps you in getting loan from a bank and those who plan are generally more successful. In planning, you should also consider the budget you draw for your business. Many small businesses do not create a budget to set goals or plan key expenses, experts say. The key is to plan for profit and make sure your revenues and expenses are aligned to support that goal.
Too much discounting
Some entrepreneurs use this to compete, but the truth is that too much discounting may ruin a small business. Pricing is key in business and giving discounts at the detriment of ones business is dangerous. Why sell at a price lower than you have to? Experts say you should charge for your product or service based upon value to the customer rather than what you think they are willing to pay. Entrepreneurs must target the customers who can pay for the value of the produce or service which they offer. Understand your competition’s pricing put do not get into a pricing war. Ensure that you deliver a quality product and service at a reasonable and affordable price, not at a discounted amount that may kill your business.
Misunderstanding your customers
The inability to understand what your customers want is another common mistake small business entrepreneurs make. Without a clear definition of your customer, you cannot be focused, and with a clear definition of your customer, you are much more likely to be focused, experts say. As a matter of fact, you should describe your ideal customer profile in specific words that match their status.
Neglecting customer feedback
According to Williams, another mistake is not getting adequate customer feedback. Experts say the best customer is the repeat customer, and many studies show the repeat customer is the most profitable customer. They note that attracting new customers is expensive and can be time consuming. The entrepreneur should maintain a database of his client’s likes and dislikes and figure out how to sell more products and services to them. He should thank them and follow up in a non-sales mode.
Failure to delegate duties
As a business grows, it is important for the owner to employ more hands and delegate duties. Experts say the first employee mistake is not hiring employees to free you up to do what you do best. This is because your greatest constraint is time, and the best way to leverage your time is to hire employees and delegate work that can be performed by others.
Aside employees, the next productivity boost will come from maximising technology in running your business. If you are weak in the areas of word processing, spreadsheets, bookkeeping, and utilising social media tools, you should take classes, experts say. They note that you can outsource these tasks, as computer skills are becoming basic requirements for today’s successful business owners.
Lack of funds
Not having enough capital to support your business is another common mistake to avoid. It is therefore important to get the right funds that will drive the business till it starts making enough returns. Once operational, sufficient working capital is needed when customers are slow to pay, experts say. Working capital becomes even more important to support growth. So the entrepreneur must not outgrow his working capital capacity at any time.