Some businesses could have vetted their original concept more thoroughly. Others run into external factors such as a down economy. However, one of the biggest factors in the ultimate success of any small business is the quality of decision making on the part of the owner.
Here are some common pitfalls that you should try to avoid.
Not anticipating startup issues
Starting a business is difficult, time consuming and expensive. You'll have literally hundreds of decisions to make and actions to take. Everything, including choosing a name, establishing a web presence, handling all the paperwork, setting up a location, getting supplies and staffing, takes time and effort—probably much more than you'd think. And everything costs money. So be prepared to work hard, make decisions and spend money.
Inadequate consideration of financial issues
There's always a certain period of time—often many months—between the decision to start a business and the time revenues start rolling in. During that interim, you must have the funds to pay all your startup costs and cover your normal living expenses. It can be tempting to just run up your credit cards, but ultimately those balances must be paid—and interest costs can add up. Be sure to have the funds to see you through those startup months.
Financial issues don't disappear once your business gets off the ground. If you have a retail business, initial sales may spike quickly, but building and keeping an inventory can be costly. Many vendors are reluctant to extend credit to startups and may require payment in advance or upon delivery. Try to negotiate favorable terms with your vendors early on. If you have a service business, remember to build in time for your customers to pay after you invoice them. A 30- to 60-day window is not uncommon, and until you get a flow of incoming payments, the prospect of waiting for your money can be stressful.
You must continuously balance competing needs to pay yourself, maintain operating cash and accumulate funds for growth and expansion. That last one's important because, as a small-business owner, your entrepreneurial nature may enable you to identify new opportunities. It's important to have the funds available to take advantage of those opportunities when you see them.
Most people who start businesses have a passion about their products or services. Don't let your passion blind you to the possibility that others may not feel the same way. You must have a marketing plan that identifies potential customers, makes the benefits of your product visible to those prospects and motivates them to make purchasing decisions. It's crucial to create a formal marketing plan early, constantly adapt that plan based on what you learn in the marketplace and execute your plan accordingly.
It should go without saying that if you have a retail business, customers should be able to find your location and visit it easily. And while it may be tempting to commit to a long-term lease, traffic patterns can change, competitors may move close by and your needs may change. Be sure to consider these factors before you sign that initial lease and every time it comes up for renewal. If your business is more service oriented, the location may not be so important, but parking and access to amenities may be significant factors in recruiting the right employees.
The same goes for your online presence. Whether your business is brick-and-mortar or exclusively online, customers must be able to find it easily. Optimize your content for search engines, pay attention to analytics and continuously tweak your content with the ongoing goal of raising your site's search-engine ranking.
Not listening to good advice
The self-confidence it takes to start a business can also hinder your efforts if you're not careful. One of the most enlightening aspects of being in business is realizing that you don't have all the answers. Professionals, such as attorneys and accountants, can help you deal with some of the technical aspects of your business. Other individuals, such as customers, employees and even competitors, can also provide valuable insight into the operation of your business and the marketplace in general.
If you're able to truly listen to your customers, they'll tell you what they want from your products and how they want to interact with your business. You'll be able to glean important information for making improvements which, in turn, will help you better serve your current and future customers.
Remember that your employees' observations can be an invaluable source of information—they'll often know more about certain aspects of your business than you do! Additionally, your business colleagues—especially other small-business owners—may already have faced issues similar to yours and would be happy to offer advice. You might be surprised to find how often a casual conversation can lead to useful ideas and maybe even ways to work together in the marketplace.
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The information provided is not intended to be legal, tax, or financial advice. BB&T hopes you find this information useful but we cannot guarantee that it is accurate, up to date, or appropriate for your situation. You should consult with a qualified attorney or financial advisor to understand how the law applies to your particular circumstances or for financial information specific to your personal or business situation.
Branch Banking and Trust Company, Member FDIC.