QUESTION: Of all the pitfalls in the marketplace, which do you consider the most common and how can I avoid making these mistakes?
ANSWER: As a small business owner, you can have a solid business plan, a
great concept and a good reputation in the community. Yet a single mistake can be all
it takes to upset your apple cart. Consider these common errors that can doom small
1. Relying too much on one “big” customer – Never, ever have all your eggs in
one basket. In fact, one customer should never account for more than 10% of
your business. While it is great to have a large, well known account to lend
credibility to your business, it is also true that these same accounts may expect
you to be on call 24/7 and, at the same time, cut your margins to the bone. As in
any investment, it is wise to spread your risk.
2. Losing key employees to competitors – Most small businesses have only a few
employees. If your shop consists of three “key” people and you lose one to your
competition, you have lost one third of your workforce. You must now pick up
the slack, while searching for and training a replacement. The former employee
may also take some of your customers. Remember, good people are hard to
find. Shower them with praise when it is warranted. Involve them in the decision-making process. Be aware of what your competition offers their employees and make sure that compensation is not an issue.
3. Trusting a bookkeeper too much – Remember, everyone is honest until
circumstances in their lives dictate desperate measures. You should maintain
control over your company’s money. Do not give a bookkeeper check-signing authority. Periodically check the list of receivables and payables, and scan them for unusual entries. If you have grown to the point you must entrust these duties to others, be sure to assign these tasks among several employees so no one person can steal without the notice of another. Finally, be sure to include a fidelity bond as part of your insurance program.
4. Thinking you will never get sick or become unable to perform your duties – In a small
business, you are the engine that drives the train. If you have a long-term illness
or become disabled it could mean the demise of your business. First, do not
work so hard that it impacts your physical or mental health. Delegate important
jobs to capable employees and mentor their progress in a constructive manner.
Also, consider purchasing disability income insurance.
5. Working with unstable suppliers or distributors – If your operation depends on
other for the goods and services you provide, it is critical that you take great
care in the selection of those with whom you do business. Always ask for
customer references and work with multiple suppliers whenever possible.
Gray Poehler is a volunteer with SCORE Naples. Business counseling on this and other business matters is available, without charge, from the Naples Chapter of SCORE. Call (239) 430-0081 or visit https://naples.score.org/mentors .The SCORE business office is located at 900 Goodlette Road North, in the Fifth Third branch bank building. Office hours are 9 a.m. to noon, Monday through Friday.