Despite a modest-to-invisible economic rebound in the U.S., conditions remain precarious for millions of small business owners in all areas and industries. With economic headlines shouting one big problem after another, we’re conditioned to think about economic dangers in grandiose terms – the calamity that cripples and possibly sinks a business, whether it’s a giant oil company, or a local restaurant.
But the path to ruin is more often paved with small missteps, rather than a single cataclysmic event. Here are 13 mistakes that individually might not be life threatening to your business, but together can be terminal:
1. Hoarding Information. Keeping employees, partners, vendors and others on your team including your accountant informed of news both good and bad is important to staying on track. Encourage employees to look for trouble “hot spots” and ask for their help as an early warning system to identify and solve problems before they catch fire.
2. Overreacting to Bad Reviews. Customer complaints are valuable indicators that can tell you when somethings amiss. Make sure feedback reaches you quickly, and take it seriously. These days, complaints are far more likely to appear as bad reviews online. Make sure you know what’s being said about you, but understand it’s part of how the world now works. Respond to negative reviews with positive steps or information.
3. Creating a Conflict Cauldron. Internal conflicts with partners, investors, clients or employees are highly toxic to a business already in survival mode. If they spiral into litigation, the end won’t be far away. Successful businesses learn early that there are greater profits in peacemaking. Take steps to resolve conflicts early. Try arbitration or mediation.
4. Procrastinating on Technology. Business owners faced with declining sales, tight deadlines or dwindling resources sometimes delay updates to financial and IT systems. But putting off key projects can result in lost time, money and productivity. If you’re still doing finances manually, start using simple accounting software and web-based billing and invoicing services.
5. Allowing Process Chaos. Even in a very small business, confusion over what to do and who’s in charge when there’s a problem can magnify mistakes. Establish rules and hold people accountable for following them. Put standards and expectations in writing. Being entrepreneurial is great, but people still need to know how you want things done, and will appreciate detailed instructions.
6. Discouraging Dissent. Everyone should be encouraged to speak up if they believe the business is making a mistake. Help each employee feel responsible for the overall success of the enterprise.
7. Wearing Competitive Blinders. Failing to stay informed of what your competition is doing can be lethal to your business. Stay abreast of news and developments from similar firms in your industry or area. You’ll avoid being blindsided by major moves. Ask clients and business associates how they feel your business measures up to the competition.
8. Taking Good Employees for Granted. High turnover and the departure of valued employees can accelerate troubles. Rewards and recognition – even small gestures – go a long way to keeping your best people around. Treat new hires with care. Provide a mentor, if possible.
9. Failing to Fight Fraud. Employee theft is a serious and growing problem for small business. According to the National Federation of Independent Business (NFIB), an employee is 15 times more likely than a non-employee to steal from an employer, and employees account for 44 percent of theft losses at stores – more than shoplifting and vendor fraud combined.
10. Letting your Website go Dormant. No matter what type or size business you have, your website grows more important by the day. Customers expect websites to be well-designed, informative and up to date. If yours isn’t any of those things, you’re playing with fire.
11. Ignoring Social Media. Even if you don’t have time to take a deep dive into the world of Facebook, Twitter, LinkedIn and other social media, pretending they don’t exist puts you at a competitive disadvantage. Allocate time to learn the basics; or delegate the task to somebody else.
12. Denying the Data. It’s not enough to merely gather data about how your business is performing. You have to look at and interpret the information and heed what it’s telling you. Many business failures could have been avoided if the owners had pinpointed the trouble earlier and taken corrective action.
13. Refusing to Raise Prices. When small businesses struggle to grow – or even survive – the role of pricing is often misunderstood. Many entrepreneurs assume that price increases put them at an automatic disadvantage. But that’s not necessary so, if you have a clear pricing blueprint for your business. Small, strategically targeted price increases can actually give you a competitive edge.
About The Guest Author: Daniel Kehrer writes the What Works for Business blog at Business.com where millions of small business owners find the products, services and solutions they need for their businesses every day.
I’d suggest the “not investing in technology” should be “over or under investing in technology”. I have run into multiple situations where companies spent as much as 5 figures on technology which was never used or was used for 10% of the functionality it was intended. Many organizations could use some guidance on direction and large purchases!
That said, underspending is certainly the most common situation where organizations wait until something breaks or their growth exceeds their capacity from a technology standpoint. As you point out, focusing on efficiency, while difficult if your business is struggling, can reap big rewards as business picks up again.
These are all great points. It’s definitely important to stay on top of competition in today’s society. You should never ignore customer complaints because it’s important- and economical!- to keep your old faithful customers. Social media and keeping your website up to date is definitely important to as consumers are relying more and more on the internet.
#6 is huge. All companies, large and small, must have a culture where the employees all take responsibility for the success of the company. Being able to have your voice heard when a bad thing is happening should be encouraged and addressed.
I have another one. What about “Networking too much.” Some small business owners tend to go to too many networking events. You need to have time to manage the work and do some your self! I myself love networking, but have learned to say “no” at times.
Very good tips Daniel!
I could’ve used this list a few years ago :p