Five Big Mistakes that Could Ruin Your Small Business and How to Avoid Them

Many small businesses are stuck in limbo. Sales are sluggish or stagnant, and many small business owners have worn themselves out trying to be all things to their businesses. There are five big mistakes that small businesses often make that hamper growth and hinder business success. But, by taking some time to develop your small business, you can avoid these common mistakes. Even if you have made some of them, you can rebound and get your business back on track.

  1. Focusing on getting the big customer. According author Rhonda Abrams who penned the book “The Successful Business Plan: Secrets & Strategies”, small businesses focus on getting that one big client instead of many little ones. But, what happens if you don’t get the big customer? Are you taking care of your smaller ones? They can make or break your business. It could be worse if your neglected smaller customers left you than if the one big customer left. Together, your small clients pack a powerful punch.
  2. Not diversifying products and services. Today’s customers look for products and services that offer them more value – both in the wallet and in the product or service offered. If you don’t diversify, your competitors will. They will entice your customers away with sweet deals and aggressive sales. Consider repackaging products and offering incentives like coupons and discounts. Bundle services to create a more comprehensive, packaged service offering.
  3. Poor pricing models. Your pricing must be competitive with the market you are serving. Price your products and services too low and customers won’t buy because the perceived value is low. Price them too high and you could knock yourself out of the market.
  4. Not creating a unique selling proposition. Web accessibility has fueled a shop around mentality in consumers. Every competitor out there is touting service and price. And, that’s okay. But, you can’t jump in there with the same thing. You’ve got to give prospective customers a compelling reason to choose your products or services over the competition’s.
  5. Trying to go it alone. Big businesses aren’t created from one person handling everything in the business. They are created by partnering, hiring and relying on the expertise of others. You can’t be successful trying to be all things to your business. There is just too much to do and not enough time for one person to do it. Get help by adding staff or outsourcing.

So how do you overcome these obstacles to your businesses success or fix mistakes you’ve made? Take stock in your business and focus on business development.

Business development is not just for large businesses. Small business owners can benefit from business development, too. Whether your business issue is ineffective pricing, inefficient processes or poor marketing strategy, business development can put your business on the fast track to success by helping you get organized, fill your pipeline with customers, increase profits and avoid or rebound from mistakes.

Every decision about your business rests squarely on your shoulders. One wrong move could put you out of business. Are you willing to make the move necessary to make yours succeed? Have you considered hiring a business development consultant? To learn more about business development, contact GM Consulting, http://www.gmglobalconsulting.com, and request our free white paper, “Position Your Business for Success with Sound Business Development”.

Important – Low Cost No Cost Business Start Ups – What to Look For and Why

Just what is a “Low” cost business any way. For our purposes here we consider it a business that does not require a huge capital investment lets say under 50k. Most business acquisition will cost hundreds of thousands of dollars.

Traditional brick and mortar opportunities will usually come with the expense of real estate, inventory, a customer base, ongoing advertising, taxes, and the profit that the owner wishes to get out of his investment.

Buying a franchise almost always comes with a cash deposit. I know GNC a health supplement store asks for around 60,000 dollars. This is one of the cheaper franchises. Then you also usually have a lease with a franchise and then there are ongoing royalty fees.

One of the most important factors to look at when determining the cost of a business is the amount of money it will take to operate. Ask yourself, will there be employees, what will the taxes be, how much time will I have to invest. Will in be difficult to liquidate this business if it should fail.

Also, begin with the end in mind. Yes I know, we have all heard that before. Listen though, If what you truly desire is to make a six figure income and have time freedom to spend with your family, or say you want to work 20 hours per week and earn 130k so you can sail 2-3 days a week or coach a sport at your local school. It would be an unwise though common mistake to settle for a business that is a slight improvement over your current circumstance. What you will end up with though is the same discontentment but with a whole lot more responsibility.

A very practical solution to the person who wants to work for themselves today is a home based business. These are by far the lowest cost businesses to operate and are many times, much more profitable, and take less time. Also, many times you can structure your business tasks around your life instead of the other way around.

Many times companies can develop a product, put in place customer service, engineer magnificent low cost systems, and have an excellent marketing plan only to realize they don’t really want to build a big company. These are great opportunities for the average person looking to make a financial change in there life with out all the risk and expense. Its a clear win-win. Always know what the other person has to gain and ask yourself “whats in it for this guy?”. Make sure it makes sense.

This is the precise reason all these affiliate programs are all over the Internet today. This is the case of The Win-Win. On one hand you have these entrepreneurs who build the systems and have a great product and vision. While on the other you have individuals who can earn executive level incomes by marketing and selling their product or service around the world without investing a ton of money.

Both parties make more money and enjoy more lifestyle than they otherwise would going in separate directions. Always look for the win-win opportunity. There are many out there today that are truly remarkable and don’t cost an arm and a leg.

Know your main motivations for finding a business of your own. If its time freedom, a huge income, and firing your boss, then find a business that fulfills all three points. Many franchises require the owner to also be at the business at least 50 hours. YUK! Also there are sometimes monthly audits and a thick stack of rules.

When looking to buy a low or no cost business, first and foremost have an open mind. Make sure that you are truly passionate about the product or service that you will be providing. If a business is a solid opportunity then you will be able to find examples of other people making a great income and enjoying growth.

Doing your homework before buying a business will always be worth the time, effort, and costs that you will incur by doing so. One of the top reasons for business failure is that they were under capitalized. Many people set themselves up for failure by not going into the decision with their eyes wide open. Buying a business is not the time to be optimistic, be analytical, be thorough.

I have been an entrepreneur for over 10 years and have seen in that time, many, many, people start and fail in businesses they never should have gotten into in the first place. I currently operate my businesses from my home office and enjoy the many benefits that it brings.

Last year I contacted a couple in New York about a home based business in the personal development field. I did some research and soul searching and decided to get started in this business. I have always been a student of personal development and really do enjoy helping others. I never thought I could actually make money doing something I loved so much. The costs were reasonable an the income is absolutely tremendous.

About six months before I located this business I was going to start a mail order business. The essence of that idea was to find people who were good at a certain trade and show them how to transition that skill into a business. Truth be told though I had done that and wasn’t at all happy with my results. I didn’t feel good about leveraging this information to make an income when I no longer believed in that path. This is a pesonal example of the point being made here.

Do’s and Dont’s when Selling Your Business

DO’S

1. Focus on running your business! Many business owners sell because they are burnt out. Therefore many essentially stop working and wait for a buyer to come along. This can really hurt your chances of selling your business. Remember, the selling process can take 6-18 months. Keep doing what made your business great.

2. Keep advertising. When selling, many business owners cut their expenses. You want to try to maximize profits during this time but advertising is not an area to cut back on. Buyers do not like to see that you eliminated all advertising when you listed the business – it casts doubt on whether or not the sales will remain at their current levels.

3. Keep your inventory stocked. Many business owners whittle their inventory down to nothing. Generally, inventory is negotiated and sold, in addition to the business. There will be time, after the business is sold, to agree on a price for your inventory and, if necessary, sell it down. You need to keep the business operating normally.

4. Focus on sales. The best time to sell is when you are having your best year ever.

5. Keep an open mind about who, how and why someone will buy your business. Buyers buy businesses for a variety of reasons. Try to keep an open mind about the deal structure. Often times being creative can make deals happen.

6. Deal with any problems. Employee, customer and vendor disputes should be dealt with before a buyer is in the picture. You do not want a viable buyer to back out because of a unresolved problem that reared it’ s head during the due diligence period.

7. Pay your taxes. This applies even if you have an extension. Buyers need financing. Lenders, many times, will need to see the last year’s tax returns before they can lend. You cannot sell your business until the buyer gets financing.

8. Pay your bills. You want your vendors happy so they want to do business with the new owner.

9. Educate yourself. I have devoted a good deal of time to my website. Use this resource and others to learn about the process of selling a business.

10. Work with a professional business intermediary. Selling a business is different then selling real estate or investments or the practice of law. Selling businesses is our business. It is a full time job and can be challenging. You and your business deserves a professional who has taken the time to learn this profession and the experience of past transactions.

11. Talk with your tax advisor about the tax implications of the sale of your business.

DONT’S

1. Do not commit your business to any long term obligations. This certainly applies to leases. This will make the transaction more complicated than it needs to be. A new owner may have a different vision of where he or she wants to take the business.

2. Do not invest in any new equipment. The only reason to buy a new piece of equipment, when you are selling, is if it is mandated by law or you will go out of business without it. If you buy a new item, especially an expensive one, it is highly unlikely that you will recoup your investment when your business sells.

3. Do not switch any services. If it is not broken do not fix it applies when you are selling your business.

4. Do not tell anyone that you are selling. As I have mentioned before, on http://www.california-business-broker.com, generally, it is best to keep the sale of your business quiet. There will be ample time to tell your employees, customers, vendors, landlords, etc when the deal is done.

5. Do not hide anything. It will be discovered eventually. Surprises are a big reason deals fall apart.

6. Do not cut hours, employees or production. Try to have your best year ever.

7. Do not wait too long to sell. Many business owners put off selling their business. Timing when to sell your business is difficult. If you are feeling that your business “owns” you then it may be a good time to consider selling. Remember, on average it take 6-18 months to sell a privately owned small or medium sized business. It is not a fast process. Additionally, the price a buyer is willing to pay is based, mainly, on your business’s earnings. If you are burnt out and allow sales and profits to decrease – it could be more costly to wait than to sell now.