The Dos and Don’ts of a Small Business
Small businesses are like snow flakes. No two are exactly the same. Even when businesses have the same business model or product, there are other components of each business that make it unique. While no business is exactly the same as another, there are quite a few ideals that can be applied across the board to different businesses.
Keeping the small business owners do’s and do not’s list to a top few may be difficult, these ideals can help you before making a mistake or remind you what you are doing right, when you feel you are failing. The most important thing for you, and particularly as a new small business owner, is to realize these rules of thumb are the underlining reason as for which businesses succeed, or fail. Before you ask yourself should I choose GetCapital or Prospa, read the following.
The Don’ts for Small Businesses:
1. Do not assume
Don’t assume that because you are paying for a professional service that it is being done correctly. Especially in accounting mistakes happen whether they are do to misunderstandings or neglect, either way those mistakes can have an impact on your business. You should always know your numbers, and if your accountant is reporting different numbers than what you expect them to be, this needs to be reviewed immediately. Accounting mistakes can have grave financial impacts when they are done incorrectly. Same goes for any other service provider that you use. Double and triple check all crucial aspects of your business and remember no one cares about your business more than you.
2. Do not get personal!
Keep your business and personal life separate. While you may be a likable person, posting your personal beliefs and opinions can always impact your business for the positive or the negative. It is best to just avoid it all together. This is especially important when considering social media. Do not post personal things on your business page and realize that your personal page, may and could still affect your business. People know you and know you have a business and this could cause unwanted anguish for you and your business.
Do not expand too quickly
When your business is doing well, you may consider expanding, but since more than 80% of small businesses fail within the first five years, you do not want to dig yourself into a deep financial hole because the first year or two have been good. If 100 business start up this year, only 20 of those business will be here after 18 months and only 10 more will survive past five years. Consider the statistics when moving forward with leases and other business debt.
3. Do not hire friends
Hiring friends or family can cause a lot of unnecessary drama in your business and personal life. Employees that are not friends or family will automatically feel that you will choose family or friends should a conflict arise. Friends or family may start to see you as your employees do, which may not be the best thing for your relationship. Where there are some instances where the employee/boss friend or family/boss relationship works out, it is a rarity. Also keep your business relationships as business relationships, do not fraternize with employees even though you like them, becoming too chummy with an employee can lead to issues as well.
4. Do not believe
Don’t believe that your best employee isn’t the one stealing from you. Too many instances have proven that the one employee that would always go the extra mile for the company, isn’t the guilty party when it comes to workplace theft. While this does not mean you can’t or shouldn’t trust your employees, just know that all of them are human and are capable of making mistakes and these mistakes could cost your business.
5. Do not stick to conceptions
The more groundbreaking and innovative your business be and your approach would be as a small business owner, the better. There are a lot of axioms that small business owners stick to for no good reason which is causing more harm than good. For instance, open space offices – are those really improving productivity? For the past 10 years this has a set-in-stone fact but now opposing voices are arising against it. Same goes with bank loans vs online lenders – no reason to stick to the old and established loan facilitators just because you recognize them.
Moving on to a lighter note…
The Top Dos for Small Business Owners:
1. DO be involved
Being involved in your community will offer many opportunities for you to talk about your business with other business owners in the community and can lead to good partnerships and other great ideas. Getting out of your office can lead to conversations and business leads just by being outside. Being a moving talking billboard can only benefit your business!
2. DO act accordingly
Becoming the face of your business can be a great thing! But remember you are the FACE of your business so you need to act accordingly. I drive a vehicle with my business wrapped all around it, and every time I think about cutting someone off I have to remember, do I want my business remembered by this potential customer as the business who is an inconsiderate driver.
3. DO manage your inventory properly
You should only stock what you need and know you will turnover quickly. Stocking inventory that collects dust can cause financial hardship on the company. If you have thousands of dollars wrapped up in something that isn’t selling you can try and return it to vendors, some vendors will buy back inventory if it is within 30 days. Learning your inventory needs is an important step in your business. Too much sitting in inventory can kill your bank account.
4. DO set invoicing terms you can handle
When beginning to manage accounts receivable set terms you can handle, while some people think net 30 is standard it doesn’t have to be. Net 30 is for businesses that can carry the bankroll of inventory and payroll on their own for their business without being paid for at least 30 days. If your business checking account won’t handle waiting 30 days for payment you need to adjust your payment terms. Set these terms with your customers ahead of time. With slow payers it might be good to offer an incentive to get them to pay sooner, like a percentage off if they pay within 10 days versus waiting to get paid 100% in 30+ days. You can set terms differently for each customer.
5. DO know when to cut your losses
A lot of small businesses won’t be in the green for months or even a year after opening for business. It is important to realize before starting a small business that as the owner, you are the last person to get paid and that your debts and your employees come first. It is important to know where you stand on a personal financial level and whether or not your life can sustain itself if you do not get paid. That is a true reality for a lot of small business owners when they first start up. If you are still running in the red and your personal financial situation isn’t sustainable, it may be time to ‘call it’ and cut your losses and close. Most businesses will not last forever, so knowing when to hang it up is important for all business owners, whether it be to close or sell your business.
Final Thoughts on the Dos and Don’ts List
While every business is different these top do’s and do not’s can help you avoid drama or focus on the positive of what you are doing with your business. Hiring great people doesn’t mean hiring your best friends; some great employees are out there that you do not know yet. Don’t rush to expand your business, ride the wave and see how the business cycle works for a few years before jumping the gun and opening more locations. Many things influence entrepreneurial success and some simply are not in your power.
Knowing when to leave your business is a tough one, but one almost all business owners will face. Ending your relationship with your business doesn’t mean failure; it just means its time for your next great idea to come to life.