SMALL BUSINESS TIP: AVOID BOOBY TRAPS

According to the Office of Advocacy, in 2008, as much as 99.9 percent of the 29.6 million businesses in the US are owned by small business entrepreneurs. In that same year however, while there were an estimated 627,200 new business enterprises that opened, some 595,600 business establishments closed shop. Data from the US Department of Commerce Business Dynamics Statistics show that 7 out of 10 new business firms last for only 2 years and only about 51 percent of these business start-ups will survive beyond 5 years.

Knowing that almost half of small business start-ups will fail within 2 to 5 years, it would be vital to the survival of the small business guerrilla to recognize and avoid these most common small business booby traps :


Lack of BUSINESS PLANNING :
setting up daily goals let's you know if you are on target.

Borrowing too much SMALL BUSINESS LOANS :
avoid ending up using much of the income from your small business to pay off your loan

Inability to APPLY FOR A SMALL BUSINESS LOAN:
on the other hand, not having enough capital to run your small business can also spell start-up trouble. You need to have at least 6-months worth of operational capital at your disposal.

Too much OVERHEAD COST :
if you are working within a very limited capital, you need to initially keep your overhead cost at the bare minimum. You might even consider a Small Office / Home Office set up at the onset and instead invest more on promoting your small business.

Poor PRICING STRATEGY :
in a price-sensitive market, you run the risk of pricing yourself out of the market if your prices are too high. On the other hand, pricing too low just to attract business can also backfire as you may have to cut corners just to make up for the price-cuts and risk poor quality and sloppy customer support.

Failure to get professional legal and FINANCIAL ADVISERS :
it would be wise to get professional opinion on matters such as taxes, contracts, and legal issues as making a mistake on these areas of your business, whether deliberately or not, can ruin your small business.

Putting all your eggs in ONE BASKET :
do not risk the future your small business on just a handful of "loyal" customers or on just a couple of product lines. Loyal customers will always check out new players on the block. Products get phased out, leaving you without a product to sell. Diversify your products and services and explore other possible niche markets you can serve.

Failure to utilize INTERNET TECHNOLOGY:
if you haven't gone on-line yet with your small business, chances are, you're missing a large chunk of your market. And what if your competition is already on-line? Build a small business website.

Failure in MARKETING :
so what do you do after you make that sale? Say "thank you, come back soon" ? You could do better. True marketing starts as soon as you make that sale. Spend a few seconds chitchat with your customers to know more about them and listen for needs. Right away, you can actually suggest products or services your customers may have not thought about.

Failure to interpret DATA and NUMBERS :
any business, big or small, rely on numbers in making business decisions. Read the numbers wrong and you're likely to make wrong decisions.

Failure in DELEGATING :
operating your small business almost entirely by yourself makes your small business look really small. Not too many customers would want to deal with a really small business.

Premature BUSINESS EXPANSION :
whether on the battlefield or in business, expanding too soon and spreading your limited resources thin can spell defeat. It is so easy to feel optimistic and cocky when your small business seems to be doing well. It would be wise to curb your enthusiasm and check the numbers first before making a decision to expand your small business.

Bad BUSINESS LOCATION:
just recently, a newcomer to our community opened a small pharmacy within our village. That would have been great except that just outside our village, no more than half a kilometer away from this start-up pharmacy there are three other large drugstores operated by a well-established giant drugstore chain. Really bad idea.

Poor CUSTOMER SERVICE SUPPORT :
after you make a sale, it is vital that you continue the sales process even after the customer has walked out the door. Keep in constant touch with your customers through newsletters, small business website, discount cards, or even just a simple phone call to say "Hi !".

Poor EMPLOYEE TRAINING :
it takes just one little mistake by one of your employees to drive a customer away. And bad publicity can spread around really fast, ruining your small business.

Underestimating BUSINESS COMPETITION:
in the Art of War, Sun-Tzu says: "Know yourself but not the enemy and you will lose in half your battles. Know yourself and your enemies and you will win every battle."

Excessive LINE OF CREDIT offered to customers:
while offering credit line to customers can keep your customers "loyal" to your small business, too many credit lines or too long payment terms will eventually hurt your operating fund. It gets even worse when some of these receivables eventually go unpaid and some "loyal" customers "disappear".

There are so many booby traps that can lead your small business to ruin. Knowing how to avoid these booby traps can significantly improve the survivability of your small business.

1 comment:

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