Since the world of entrepreneurship is inherently risky, owning and operating a business is not for the faint of heart. To be “riding on the crest of a wave”, business owners have to possess the ability to mitigate their niche-specific and company-specific risks while simultaneously fine-tuning their market offerings to conceptualize and satisfy customer demand.
Whereas there are a great number of small businesses in a broad range of industries that perform well and are continuously profitable, a larger portion of companies fail within the first-year operation. Actually, many SMB owners do fall into bad management habits which gradually result in ineffective operation and ultimately leave small businesses on a path to failure.
Getting to know these typical detrimental operating habits and practices is a great starting point to avoid them, “keep the ball rolling” and create a viable roadmap to success. So, let’s read on!
#1. Poorly Managing Your Personnel
Beyond any doubt, employees are the lifeblood of every single business, particularly regarding the long-term business operation. Small business owners are likely to understand the value of good employees – after all, they’re hard to find. Nevertheless, keeping those employees around is not just a matter of ascertaining they get paid when they’re supposed to.
Actually, it’s reasonably fair to say that employees’ relationships with their bosses are often the thing that makes or breaks a job. A fairly humdrum job can become much more enjoyable through the efforts of a supportive manager, while a seemingly ideal job can be turned into an exercise in misery when the atrocious boss is involved.
Although the majority of business owners and managers basically get to know these points, many of them – instead of having ways to retain them for the long haul – end up “encouraging” their employees to start hunting for new work:
Not Understanding A Key Metric
Just like a new product line or a newly acquired asset, your employees are the ones who can and should generate revenue – for instance, by direct selling or by taking tasks away from another employee that does sell directly.
This specific figure can be measured by a single tool or a simple metric such as Net Revenue per Full-Time Equivalent. Not only will this give you a clearer view of how much revenue each regular employee generates, but also help to gauge employee effectiveness as well as a business’s efficiency within the peer group. But, what does such metric have to do with employee morale?
Since you’ve already obtained crystal-clear insights into your personnel capacity, it’s high time to map out a proper course of action for HR management – like holding some training courses or planning a program of coaching and mentoring.
Overworking Your Employees
Whilst wishing to get the most out of an excellent staff seems fairly sensible, overloading employees can backfire quite easily due to diminishing productivity and buildup of resentment. Actually, if increases in responsibility or tasks are not accompanied by a promotion or raise, individuals are likely to grow disenchanted.
Failing to Build Out Good Relationships
Naturally, employees would like to believe in and trust their bosses. Thus, it’s more vital that small business owners should find the time to interact with their employees in a meaningful and productive way to get the most loyalty and productivity out of them.
Nonetheless, since they are so fixated on productivity and earning money that many of them fail to get to know their employees. No matter how negligible it may seem to be, this can come across as though you don’t care about your employees as “people”, eventually resulting in disastrous results when it comes to retaining good workers.
Having A Poor Rewarding Mechanic
Whichever profession they are in, employees always want to know if the work they’re doing is valued. Whether it’s a seemingly small reward – like a brief verbal acknowledgment of a project successfully completed or a big one – such as a congratulation party or an attractive job promotion, they love the feeling of being recognized and rewarded for doing great work – and they deserve to be.
“Playing favorites”, failing to recognize and praise hard work or hiring and promoting inferior staff can probably hamper employee morale. This also holds true with your vendor or any third-party relationships. Do not tolerate a vendor relationship that will likely undermine the morale of your employees!
Not Helping Your Employees Grow
Small business owners that are snowed under day-to-day tasks may not stop to consider whether their employees are making strides toward accomplishing their professional and career goals.
Should you be not interested in offering your employees the freedom as well as many opportunities to acquire new skills or take on new responsibilities, you are not only holding them back but also limiting the potential progress of your own business.
#2. Not Frequently Meeting your Accountant
Several small business owners have the instinct or tendency to lean on their ability to succeed “employing” strict self-reliance, which can lead to not only overloaded stress but also serious mistakes – especially when it comes to financial management.
In fact, numerous young entrepreneurs still firmly believe that they can handle their accounting and budgeting tasks with single small business software. Yet, it’s extremely tough to do your business books properly compared to what an accountant can – there are so many accounting rules to be followed, and as your business grows, such rules keep getting more complicated.
Unless you wish to be amongst small business owners who end up failing due to poor operating cash flow management or inability to pay annual income tax, it’s a “must” to keep in close contact with your accountant.
Rather than managing everything on your own, you’d better off sharing your business financial goals with your accountant and have him/her check in and clear problems (if any) on a regular basis. Also, let’s keep him/her well-informed when your business transitions to a new phase and make sure that your accountant stays up to date with the current laws and regulations.
#3. Stubbornly Sticking to Your Failing Business Plan
Undoubtedly, there is no single plan that is completely flawless or perfect. The most successful entrepreneurs will be the ones who always put all the market trends into perspective and wisely fine-tune their plans to yield an optimal return. Ignoring market changes and sticking to your “perfect” plan will be a disastrous thing to do.
Whilst your company is growing, your target customer’s tastes and preferences are changing – and your competitiors are also working hard to gain more market share. To keep your business alive and kicking, your startup plan should be continually reviewed and adjusted to meet current market conditions for success.
More often than not, “plans are made to be broken”. As a smart business owner, you need to implement new plans as time goes by to stay ahead of your competition – and of course, learn how to adapt quickly to your new plans. After all, flexibility remains one of the most decisive keys to succeed in such a tough entrepreneurial world.
#4. Endangering Fragile Company Data
The worst thing a small business owner can do is to be careless with their sensitive company data that is vulnerable to hacking and security breaches – especially such an alarming age of identity theft and hacking mischief.
The dilemma is, nevertheless, that a whole lot of SMB owners usually neglect their data thinking that no one is interested in stealing from them since their business is of a small scale. Should you be amongst those who have this mentality, you need to stop this habit immediately.
“This isn’t just a bad habit — it’s a dangerous one,” Rieva Lesonsky, President and Founder of GrowBiz Media, shared. “All businesses need to regularly back up their data, create policies for employee use of social media and the Internet, and install software to monitor and protect their networks.”
When a hacker gains access to your data and learns how your business is run, they can easily get and sell your customers’ information or use it to steal from you and your customers. And whether you desire it or not, such data carelessness is going to put you out of business lickety-split if your customers realize that you don’t value their privacy and personal identities.
To avoid this happening to you, let’s make robust efforts and form a customized cybersecurity plan to ensure your company’s data is secure and that the employees’ and customers’ information is also well-protected. All business owners need to be adequatelyprepared for the financial loss that comes with sensitive data being compromised. Be 200% sure to backup all your data or use cloud storage services to protect your data automatically. Remember to train your employees and implement strong policies on how to manage company data in the safest way possible so they won’t be held responsible if the unthinkable happens.
Besides, it’s a “must” to use strong passwords to protect your data as well as avoid clicking on suspicious links that are usually embedded in emails sent by scammers. Once in a while, a sneaky employee can harvest your data and who knows what they could do with it; thus, let’s ascertain that only a few trustworthy employees are allowed to access your computer system.
#5. Ignoring Marketing Aspects
There goes without saying that marketing remains one of the most significant parts of business operation. However, business owners often fail to prepare for the marketing needs of a company in terms of capital required, prospect reach, and accurate conversion ratio projections.
When businesses underestimate the total cost of early marketing campaigns, it will be extremely challenging to secure financing or redirect capital from other business departments to make up for the shortfall. Since marketing is a crucial aspect of any early-stage business, it is more than vital to ensure SMB owners have established realistic budgets for current and future marketing needs.
Similarly, having realistic projections when it comes to audience reach and sales conversion ratios is also a hidden key to marketing campaign success. SMB owners who are yet to understand these aspects of sound marketing strategies are more likely to fail than ones that invest the time necessary into defining and implementing cost-effective, successful campaigns.
Ignoring market analysis is also a common bad habit that entrepreneurs typically fall into. Before mapping out a winning growth strategy, SMB owners – particularly during the initial planning stages of getting the business off the ground – have to take the time to understand their market, define who their competitors are, as well as calculate their ability to gain control of additional customers or users given the competitive landscape.
Without that fundamental market understanding, there is little likelihood that your contemplated growth strategy will exactly coincide with what’s best for the long-term value of the company. In fact, there is a myriad of notable high-profile examples of small businesses that chose to expand too rapidly after encountering initial success. Whereas opening more storefronts can be a positive development, it can probably stretch the business and incur burdensome overhead costs. Anyway, growing too fast is a common mistake of small businesses that may destroy the value of your business, and, in worst-case scenarios, can even lead to bankruptcy.
#6. Being Short-Sighted
The pace of a small business’s development can be really frantic, especially in the absence of strong support employees. Owners may find themselves knee-deep in day-to-day details and tasks, being so overwhelmed with routine operations that they lack the time and the drive to plan the company’s future and to anticipate the next steps for growth.
Although it may seem normal, this can result in missed opportunities which will not only negatively affect your business’ trajectory but also keep your employees out of the loop.
With that in mind, let’s set aside time to sit, think and plan for your company’s future. It’s definitely a great idea to schedule some time every week, even if it’s only an hour, to review your business’s progress and your goals. Also, make time, at least, once a quarter to get out of the office for an uninterrupted, in-depth strategy session with your key people.
Furthermore, Short-term is short-sighted. Notwithstanding that it can be tempting to make decisions that will save money in the short run, it’s a “must” to carefully consider the long-term growth of your company. Rather than saving a few dollars today, you should think about how to sustain growth and drive much more value tomorrow.
Other Bad Habits & Practices Behind Ineffective Operation of SMB Owners
#7. Not Putting Things on Paper
Should you go into business with someone else, whether it’s your family member, relatives, fellows, or the person you met at a coffee shop, it’s vital to protect yourself with an enforceable partnership agreement.
However, in the early phase of running a business, when partners are excited and energized, it may seem like drawing up a contract or a partnership agreement is unnecessary. Instead of having written legal document that all parties sign, many SMB owners rely on verbal agreements. Yet, the problems will inevitably arise if the business hits a rocky patch and arguments breaks out about who is entitled to what. Also, there may be some disputes or conflicts of interest even when times are good and business is doing well. To take a simple example, if one of your partners wishes to retire and sell his or her portion of the company, it’s undeniably critical to have a clear agreement outlining how the respective ownership interests will be divided.
#8. Underestimating Financial Obligations
More often than not, SMB owners are yet to realize that the business obligations they have taken on, such as personal guarantees, may leave adverse effects on the value of their company. Actually, the cost of some huge financial obligations – existing contracts or leases of store location or equipment, to name a few – may not only decrease the company value but also impact how much a buyer is willing to pay.
Whereas leases, contracts, and other obligations are indispensable parts of doing business and are not inherently bad, it’s requisite for owners to recognize the impact such commitments can have on a company’s future value.
#9. Badly Delegating
Entrepreneurs’ tendency to have ultimate control, coupled with the lack of faith in their employees, can lead to micromanaging and a lack of efficient delegation. Unfortunately, doing everything yourself just makes you more stressed – and could also create unnecessary resentment from the people who are working so hard for you just because they feel you don’t trust them.
Actually, when a small business owner becomes stressed out, they are likely to create more problems than they solve. For instance, due to your lacking ability to delegate properly, you may indirectly “bottleneck” the decision process. Major decisions may not get made when or how they should, causing the business to experience less-than-desirable outcomes. Additionally, forcing every single decision pass through your office can result in your business operation slowing down, frustrating not only your employees but your customers as well.
#10. Having Faulty Expectations
Whereas harboring an optimistic outlook about the future of the company is healthy, especially for a small business just starting out, don’t overplay your hand and just make sure these thoughts and ideas are realistic.
After all, things take time. Naturally, entrepreneurs would like to be more successful than their competitors, but it will be nothing but foolish to believe your company can be the market leader overnight. The old saying ‘Rome wasn’t built in a day’ certainly applies. Very few companies experience overnight success, and many that do are fads. It’s a wiser decision to plan for sustained growth by offering great value to your customers.
#11. Missing Opportunities of An Online Presence
Taking advantage of forming an online presence isn’t just about having a website – but having one that’s optimized, well-organized, has responsive design as well as divulges valuable information about your business and your products/services.
Entrepreneurs sometimes miss out golden blogging opportunities to promote the business and its industry. No matter how simple this idea may seem to be, blogging can empower small businesses to present themselves in the marketplace as thought leaders, and it can go a long way in bringing in more web traffic that can potentially lead to more business.
It’s a “should” to send out digital newsletters once a month to your loyal subscribers about what they’re missing out on so they’ll click through your site. Also, make sure your site, newsletters, blogs or anything pertaining to your business do include the social media icons for the platforms on which your business’s image appears.
The Bottom Lines
While struggling to form a viable roadmap to success, many business owners have fallen victim to their own bad habits and practices, which lead to nowhere other than ineffective operation. Being aware of what constitutes bad business habits will make it easier for you to avoid and overcome them rather than getting blindsided before it’s too late.
Within such an ever-evolving digital landscape, keeping your business image visible online is undoubtedly crucial to foster the routine operation as well as ignite your long-term profitability. Should you need any help with a dedicated team to get your firm exposed to the digital world, don’t hesitate to get an online presence manager.