subject: Small Business Mistakes That Are Damaging - Part 2 Of 2 [print this page] In this article we will continue discussing the remaining mistakes that most small business make.
Not Getting Paid Fast Enough - You heard it, we're talking about cash flow. As long as you are actually making enough money to pay the bills, this problem can be solved, prevented or at least made to be not as bad as it could be. Heres the deal:
First off all, bill customers very promptly. it is not uncommon for small business to not have the proper systems in place to insure that their accounts receivable are sent out on time (more about this in the next segment). I know, this wouldn't seem to be the way it is, since that's why we do the job in the first place - to get paid. But, it's not uncommon for the employees responsible for preparing invoices to be too busy or unorganized, which prevents this from happening in a timely manner.
The other factor to stopping an ongoing cash flow problem is to set-up the quickest paying deals with customers and the slowest paying deals with vendors. If you can set it up to not pay your employees more than twice a month, do it. Contractors always have an issue with this. But, if you have no choice but to pay weekly, then let them know when they're hired that their first week's check will be held back, basically giving you an extra week. Trust me, it will help.
Part three involves credit. If you can get a credit card for your business, do so. This allows for certain important things to be bought (that you can afford) that might come up during a cash flow crunch. Even better is a business line of credit, which will help, especially if you have customers with long payment periods. This is especially important if you plan to work with the government or do certain commercial work. Some of these types of customers usually have 60-90 day pay periods.
Not Implenting the Proper Procedures and Systems - Having too many procedures or red tape is the reason why some individuals start their own businesses to begin with. Unfortunately, having no procedures and systems in place at all is not an alternative. Depending on the type of industry, business owners must come to a happy medium or chaos and the unknown will ensue. A few areas where systems and produres are needed include billing, collections, payroll and human resourses (hiring, firing, benefits, etc).
Even a one-man operation requires certain systems and procedures be in place. Having those procedures in place will help when dealing with things such as sub-contractors, etc. and maintaing control of their job for you. As your company grows, not having the appropriate systems in place, to do everyday tasks, will cause many headaches. This is especially important when hiring new workers. You may have heard this before, but it is recommended that you have an employye handbook, even if you only have one employee. It is surprising what kind of trouble individuals can give business owners just because they allow you to pay them.
Spreading Yourself Too Thin- This is a classic mistake made by every entrepreneur. The important thing is to relaize when you're at that point and begin to get someassistance. The thing to do is know what your strengths are and realize when you're not making the most of your skills. If you are the best sales person on the company, you cant get caught up in day-to-day operations. If you do, sales will slip and eventually you wont have any operations to worry about. Think for a minute: Did you really start your own business to work 80+ hours per week?
Not Getting Help Soon Enough- Set goals to know when to hire people to take over where you are light on knowledge. Waiting too long to hiring help can hurt a business. Most people who start a business do it because they are good at the technical end or the sales end. Your time should be spent on the area that you know the best. You should outsource certain responsibilities in your business until you can hire your own in-house employees. You should not try to be something in your business that you are not. It will only hold you back.
Although looking for these problems at any time is a good idea, the end of a year or season is an excellent business interval to make sure you are not making these errors. Take the time, or make the time, to fix these problems. If you dont know how to reverse the problems, then get some help.
by: Steve Teta
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