Day 1: Common Mistakes Small Businesses Make – and Effective Solutions

Starting and growing a successful business is hard. There are many challenges, and making mistakes is inevitable.

However, some mistakes are more significant than others and can have a significant impact on your success. As a business advisor, I’ve seen my share of common mistakes. Over the next few days, I’ll list some of the top ones and some effective solutions.

Mistake: Not Managing Finances Effectively

One of the biggest mistakes small business owners make is not managing their finances effectively. This can lead to cash flow problems and ultimately, the failure of the business.

Many small business owners don’t have a financial background and struggle with managing their finances.

Even worse, many go cheap when it comes to their books. They end up with amateur accoutants who put them at risk – either with the tax man for wrong filings or when they go to sell and the buyer walks away due to the **** show books you provided.

It’s a simple solution. Hire or outsource a Qualified Accountant

Strong accounting can save you time and money in the long run. They can help you keep track of your expenses and revenue, manage your payroll, and provide the KPIs to make effective strategic decisions.

Mistake: Not Focusing on Customer Retention

This is something I’ve mentioned before. Many small businesses focus on acquiring new customers and forget about the ones they already have. Customer retention is not only just as important as customer acquisition – I’d argue it’s much more.

The most difficult and expensive aspect of business is picking up new customers. Why go through all that effort and spill it down the drain by neglecting and / or providing mediocre service.

Best in class companies understand it’s in servicing the existing cusomters where the true profits are made.

In fact, they are often willing to take a loss on the initial transaction so that they can get the customer on the books and then make the money through retention, repeat purchases, and referrals.

So create a value-added onboarding and customer retention process. Follow a strategy to keep existing customers longer and increase their loyalty to you.

Reach out to them. But, and this is big, don’t only reach out to them to ask for payments, new business, etc. Also reach out to ask how things are going, to share valuable information, to let them know they are people and not ATM machines.

Offer personalised experiences, provide loyalty programs, and most important of all, be proactive and if you receive reasonable customer complaints, address them promptly.

Will it pay off?

Well, according to Bain and Co, increasing customer retention rates by 5% can increase profits by up to 95%.