I can’t even count the number of books I’ve seen claiming to be “the only book you’ll need to run a successful business”.
If all you had to do to be a success was read one book, no business owner would ever have to declare bankruptcy.
No business owner would ever have to lay off employees.
No business owner would ever lay in bed at night worrying about how to pay the bills.
Business owners with struggling businesses often make the same mistakes over and over.
As business owners, we take on a lot of risk in the hopes of a great reward. We can end up overwhelmed and stuck focusing on the wrong things. We can be smart business owners if we’re willing to take a hard look at our own strengths and limitations.
Here’s a rundown of the 7 big business mistakes inexperienced owners make.
The 7 Big Mistakes:
1. Takes any customer
Strong businesses are built strategically. While most businesses take whatever work they can get at the beginning, strong businesses are built with great customers. Ask yourself, what do we want to be doing? Who do we want to be doing it for? Focusing on your niche will allow you to work with your best customers, instead of spinning your wheels trying to please the worst.
Ever hear of the 80/20 rule? 80% of your revenue comes from 20% of your customers. Don’t believe me? Dive into your bookkeeping app and put a report showing you revenue by customer. Sort that report in order of $ and you’ll quickly see which customers are bringing in the most money. Draw a line after the top 20 to start.
Next, go through the full customer report and highlight the customers that were the biggest problem. The ones that nitpicked over details. Who constantly pay late. Who call you way too often.
Where are they on the report? If they’re not in the top 20, then you need to ask yourself this question: “How much better could I serve my top customers if I didn’t have to deal with customer_____ “
2. Relies on word of mouth to generate business
Relying on word of mouth to build your business is almost never a successful strategy.
As most businesses grow by taking on any customer (see #1), they often end up with less than ideal customers. What kind of person would a less than ideal customer refer you to? Usually someone just like them.
Do you really want to work for people just like them?
You need to have a clear idea of the kind of customer you’re looking for, and where you can find them. Then you, because you are the one who understands your business the best, need to come up with a clear strategy on how to find them.
3. Competes on price
Chances are those less than ideal customers used you in the beginning based on your price.
There are always going to be people who’s only buying decision is price.
Be very careful when you are differentiating your business. If price is your main differentiator then you must be prepared to word full tilt for a small profit margin.
Are customers, who chose you based on price only, going to stick with you when you need to raise your rates to pay for your sons braces?
4. Fails to act
When you look at your business, how many areas could use improvement?
Do you have staff problems?
Not enough customers?
Poor cashflow?
How long have those areas been a problem? What have you done about them so far?
Sometimes all the problems can seem overwhelming. Instead of choosing one area to work on, many owners put off making changes until things come to a breaking point and they’re forced to act.
5. Does everything themselves
So you have areas that need improvement.
Instead of finding professionals to help you in key areas, you go on google and try and solve every problem yourself.
Does the problem get solved?
If so, how long did it take and what was the cost to your business of having you solve it. Believe me, there was a cost.
How many of your hours were taken away from the running of your business while you tried to implement your solutions? I guarantee there was a financial impact, you just haven’t measured it.
6. Avoids Innovation
There are always going to be technological innovations in your field, no matter what industry you’re in.
If you’re so busy keeping your nose to the grindstone, it’s easy to resist change. Unfortunately, you will be forced to make a change, either because your methods or tech become obsolete or worse because your customers are going elsewhere.
Why does change have to be a scary thing?
What would business look like if you were an early adapter? What if you saw innovation and technology as the tools for growth that they truly are?
7. Ignores their bookkeeping
In my opinion, the biggest mistake you can make in your business is thinking that bookkeeping is only something you have to worry about at tax time.
That couldn’t be further from the truth.
Real time financials, monitoring accounts payable and receivable, knowing your KPI’s are all vital to the success of your business.
How are you supposed to drive your business forward without knowing how you’re doing financially each and every day?
The only way to see what mistakes you’re making in your business is to run your numbers.
Having your bookkeeping up-to-date and at your fingertips gives you the information you need to build a business that will support your family for decades to come.
The Bottom Line:
Without accurate, real-time bookkeeping, you do not have the information you need to build a successful business. Every decision you make should be backed up with YOUR own data. You list of revenues by customer. YOUR revenues and expenses by project.
If you’re still using an excel spreadsheet. If you’re hand writing invoices. If you’re not sure what a bank reconciliation is. If you’re drowning in receipts you have no idea what to do with. Then you need help. Getting your bookkeeping is order should be your priority.
Because without your data, you’re operating your business blindfolded.
The Bookkeeping Antidote is a monthly membership for business owners who want to master their bookkeeping so they can build more profitable businesses. Get the FREE apps (QBO & Dext), training & unlimited support you need to shift from financially frustrated to powerfully profitable.
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