The Top 6 Mistakes made by Small Business Owners

(Newswire.net — August 14, 2014) Adelaide, SOUTH AUSTRALIA — With typical failure rates of around 30 percent in their first year, 43 percent in their second year and 53 percent in their third year, Australian small business ventures can face a tough road to success.

 

Inexperience, lack of capital, accounting concerns, growth problems and staffing issues are just some of the problems that small business owners have to face and, hopefully, overcome in order to be successful and profitable. So, what are the top 6 mistakes that many small businesses make?

 

According to Rick Nash CEO of YourGM, one of the main reasons for the high rate of small business failure is that new owners don’t have a clear business plan. “A business plan must be realistic and practical, based on accurate information, offering targeted objectives,” said Rick. Many small businesses fail because they simple don’t understand the importance of planning. A business plan covers all aspects of a business, including short and long term goals, a clearly defined target market, marketing strategies, finance requirements and projections, analysis of the competition as well as potential problems and their solutions.

 

Another common mistake made by many small businesses within their first few years is poor accounting advice. “A new or small business may have enough money coming in but many inexperienced business owners often fail to manage cash flow well, meaning many otherwise profitable businesses fail” said Rick. Accurate up to date accounting is vital for keeping control of any small business. In order to make any intelligent business decisions, one must know where the business stands financially. Unfortunately most businesses accountants deal with retrospective data from businesses, meaning it’s often too late to respond to cash flow issues by the time they become critical to the businesses survival.

 

A particular mistake (oddly enough) a small business owner can make is to grow too quickly. Over-expansion too early or too fast can be counterproductive for a small business. Fast growth may look promising, exciting and financially rewarding, but it brings with it many challenges that inexperienced business owners simply don’t see coming. Successful businesses grow steadily, planning for and embracing growth without allowing it to drown them. Over-expansion can include over extending on borrowing, moving into new markets and an inability to deal with scalability issues such as staffing.

 

Lack of cash reserves is another all too common small business mistake. Startup costs, operational costs and unrealistic incoming revenue expectations require a financial buffer for a business to succeed. The introduction of a new competitor to the market, the loss of an important employee or even having to face a lawsuit are other situations that can cripple a small business if there are insufficient cash reserves.

 

“The need for good ongoing advice is probably the most common issue we see in those businesses that YourGM helps,” said Rick. “Many business owners lack the knowledge and experience to successfully wear all the hats required to maintain and grow a small business.” Staff management and hiring, accounting, marketing and advertising, production, networking, customer management and selling and purchasing all require dedicated and constant management to ensure the business stays on track. “Combine this with strategic growth and future planning and the whole idea of business management can become completely overwhelming for many.”

 

Unsurprisingly, one of the (literally) costliest mistakes to a small business is ineffective marketing. Marketing requirements of today are vastly different from those a decade ago. The Internet, social media, video marketing and great customer management are all vital for a business to be seen and stand out in the crowd of competitors.

 

A business will simply not succeed if potential clients don’t know it exists. “One of the great misconceptions among small business owners is thinking that effective marketing is dependent on how big the budget is. This is simply not true,” said Rick. “Marketing must be strategically set out, with emphasis on tried and true techniques that are suitable and relevant for your specific business model.”

 

YourGM is a unique business management and growth service providing small and medium businesses with access to a dozen or more business experts-all dedicated to help manage and grow your business at a cost significantly less than that of just one new employee.

The experienced team at YourGM work alongside you, offering practical support for every aspect of your business, no matter what industry you are in. Whether it is short term consultancy periods or long term management, YourGM can take the assist in the managing of your business to allow you the freedom to grow and develop your business.

 

For more information and a free consultation from YourGM, contact jason@newsworthyvideo.com