Every small business owner makes a mistake every now and again. Unfortunately, some mistakes can seriously damage your business, so it’s important to know what to look out for.

1. Underestimating the importance of cash flow
You may be making plenty of money, but if payments aren’t arriving in time to meet payroll and buy stock when it’s needed, your finances can quickly spiral out of control. You may even start losing jobs if you don’t have the resources or team to manage them. Consider placing strict payment terms on all invoices and set up a system in your diary to follow up payments as soon as they become overdue.

2. Getting sloppy with record-keeping
Good records are a key decision-making tool. If you're not keeping tabs on your business, it will become difficult to make good business decisions. For example, if the owner of a printing business had kept better records, he may discover that one of his oldest and best 8 colour printers is unlikely to last the year without a major overhaul.  With good records, he could plan to service his machines accordingly, rather than losing clients when the printing machine breaks down unexpectedly.

3. Ignoring inventory
If you end up with stale inventory, discount it and sell it off. Otherwise all you’re doing is taking up storage space and losing cash that you could be using in another area of your business.

4. Neglecting collections
It’s sometimes difficult to call and follow up outstanding payments, but unless you’re happy to work for free, it’s also necessary. Try setting up a system with pre-drafted scripts or emails that you can use to tailor to each client. This may release some of the pressure and make it clear to the client that you are calling on behalf of the business.

5. Disregarding employee concerns
Well-placed, skilled and an engaged team are at the heart of business success. If you find it difficult to hire or retain good employees, your business will suffer. And if you find yourself the target of an employment-related lawsuit, your expenses will skyrocket. Get expert advice on human resource issues and invest in your team so they are motivated to help your business grow.

6. Failing to delegate
You can’t do everything. And why would you want to? Your job is to hire a team that you trust, so you can work on building your business. It’s better to train up an employee and help them learn from their mistakes, than close your business if there’s an emergency and you can’t turn up to work one day.

7. Offering something the customer doesn't want
You could offer all the ice-cream flavours in the world, but if all your clients are purchasing is chocolate, strawberry and vanilla, then you’re letting your profits melt away. Market research is vital. Talk to current and potential customers and adjust your business to make sure you are offering exactly what they need.

8. Letting costs get out of control
You may be having a great year, but that doesn’t mean you should buy equipment that isn’t in your budget, or hire an employee that you don’t really need. Even if revenue is increasing, keep track of your costs throughout the year, so you don’t end up spending the profits.

9. Not spending marketing dollars wisely
A marketing plan is an important element of your business—it’s how you’ll find customers to help your business grow. Make sure you consider every marketing investment carefully and ensure it’s part of a wider, integrated plan that will give you the best bang for your buck. Purchasing advertisements on an ad hoc basis or promoting your business in a magazine that your customers don’t read only ends up costing you time and money.

10. Not planning for emergencies
No matter how well your business is running, occasionally disaster does strike, so you need to be prepared. What would you do if your website crashed? If your store suddenly became a construction zone and you had to close for a month? If you, or your team became ill and couldn’t work? Have a plan for emergencies and ensure your finances are strong enough to withstand difficult times.

Want to avoid these mistakes in your business?

Contact Terry Dewing or Jeni Wilcock on 02 9526 1211.