Small businesses have many obstacles to overcome. They have less resources to function with and not a lot of money to fall back on if they hit a rough patch.
While we cannot predict every mistake a company may make, there are some mistakes we can avoid. Tad Hill, writer for Birmingham Business Journal, provides us with 4 of them in his article “Four mistakes that can hurt small biz owners in the long run”.
Below I have provided the 4 mistakes Hill mentioned, but to check out the whole article, click here.
Mistake No. 1: Not tracking income and expense sources.
Knowing where each dollar is coming from and going to is a huge factor for small businesses. This knowledge helps to control the cash flow and can help with marketing decisions when it comes to bringing in more profit.
Mistake No. 2: Not reinvesting enough in your business.
Investing in the rigt staff members and in marketing are two key sources your investments should go. Both are big players when it comes to profit, both now and in the future. So when investing, make sure you are putting enough back in to your company.
Mistake No. 3: Not keeping a big enough cash cushion.
A good rule of thumb is to keep a year's worth of operating capital in cash. You never know when you will need that cushion.
Mistake No. 4: Taking too much risk with your new investments once it is time to put some of your cash to work.
You have worked hard for this money. As Hill says, "why take our hard-earned cash and put it in the types of investments that also have a high degree of risk but with far less control over them on our end?" You can't afford to lose a big investment if the market takes a dive and you are a small business.
No company is perfect. Each one will face its own challenges and quite possibly make mistakes. Hill recommends really being careful of your cash flow and keeping it under control. Since money is a big factor for any business to stay afloat, small businesses must work extra hard to ensure they keep it steady. By not repeating these mistakes, small businesses are just securing their status and staying successful that much longer.