If you’ve read the business press for some time, you’ll know all about the risks that involve start-ups. For every multi-billion dollar one, umpteen others fall on their knees.
It’s a tough job – but one that can unlock terrific rewards. Today’s post aims to show how to avoid some of the most common risks that blight small businesses and pave the way for your success.
Keep a steady eye on cash flow
This is the number one killer of small businesses. It is so easy to get caught up in the day-to-day running of your business and forget to keep an eye on the all-important cash flow.
Make sure you have a system in place to track all your incomings and outgoings, so you can see at a glance whether you are in the black or the red. It’s all too easy to “think” you’re performing well because the contracts are rolling in left, right and centre. However, with more immediate costs such as rent, insurance obligations and even tax, depending on the time of the year, it can all come crashing down if actual cash isn’t rolling into the business at the same rate.
Don’t put all your eggs in one basket
A common mistake made by small businesses is to have all their eggs in one proverbial basket. This might manifest in over-relying on one key customer or client or having all your products or services focused on one particular market.
The problem with this approach is that it makes your business very vulnerable to changes in that market or to the whims of that customer. If they decide to take their business elsewhere, or the need for your product or service dries up, you could be left high and dry.
The solution is to diversify your customer base and your products or services. This way, if one area of your business starts to suffer, you have others to fall back on.
Don’t be afraid to ask for help
Another common mistake made by small businesses is doing it alone. The thinking behind this is that you will be more profitable by keeping overheads low.
However, this can often lead business owners to bite off more than they can chew and become overwhelmed. This can lead to mistakes being made and important tasks being neglected.
The solution is to outsource or delegate some of the tasks taking up your time. This will free up time to focus on the important things and bring in some much-needed expertise.
Plan for the worst
No one likes to think about the worst-case scenario, but it’s essential to have a contingency plan in place in case things do go wrong.
This might involve having insurance to cover you for any potential liabilities or putting money aside in a contingency fund to tide you over if you run into financial difficulties.
It’s also crucial to have a plan B if your business doesn’t take off as you had hoped. This might involve having another job to fall back on or having the financial cushion to tide you over for a few months until you’re back on your feet.
