Nine Simple Mistakes of Small Business Owners that Reduce Profits and Lifestyle

Nine Simple Mistakes of Small Business Owners that Reduce Profits and Lifestyle

Before you start thinking I believe I’m a guru, nothing could be further from the truth. I’ve run my own small business either in a partnership or by myself since 1999, I’ve talked to literally thousands of small business owners over that time and here’s a collection of things I have learned.

A Couple of Assumptions

  1. You have or want to have a small business
  2. You’d like to maximise the profitability of that business to create a great lifestyle

Now maximising profitability and lifestyle are different things to different people. Some are looking for $30,000 – $50,000 so they don’t have to use their retirement savings, others want a $1,000,000 plus business.

Strangely the starting point is the same because you don’t want to have to work 40 plus hours a week for $30,000 annually, that not a lifestyle!!! You could get a job and do it in less time, with less stress… So I’ll assume that you’d prefer to do something like that as efficiently as possible. If that’s not true, this may not be for you.

The Myths

1. 90% of small business fail in the first year… First three years or even the first five years

a. NOT TRUE: AN ABS report from 2012 (Sorry but that’s the most recent, and included GFC Statistics). Showed that 35% ceased operating within the first year

b. It then discussed nascent (less than 3 years) business and found there to be 15% decline across the board annually. That leaves the number in 3 years between 49% and 45% depending on how you read the statistics.

c. Longer term survival was stronger from that point on.

d. ANYONE telling you the above is just trying to get you scared!!! Question everything they say and verify the source and age of their statistics.

2. You have to live your business, it’s a 24/7 proposition or you’ll fail

a.In fact, I’ve found this to be a sure way for business owners to resent the business they’ve established so passionately.

b. Passion is the key: You’ll have to be passionate about your business but not be the business, remember it’s a life you’re after. There’s nothing wrong with putting in the hours from time to time, but remember there’s a lot more to life; family, friends, health, both physical and emotional… it’s a lifestyle you ultimately wish to create.

3. Professionalism = Seriousness

a. This is a personal favourite. Being serious has nothing whatsoever to do with being professional.

b. Being professional is simply delivering whatever you promise. Doing so with good humor, a smile and gratitude is far more personal than doing so with a surly demeanour, and will get you more customers in the long run.

OK… That’s my top three gripes out the way.

The Mistakes:

Some of these are born out of the myths mentioned, others have just become urban legends over time.

1. Having a dream you’re not really committed to

For a long time, I’ve heard constantly… “Dream the biggest dream you can think of”… yet I’ve met many owners who feel like failures because they can’t then see how to make this a reality. Dreams are fine but like the proverbial elephant, make sure you tackle them one bite at a time. Success breeds success, so set small goals to achieve regularly.

2. Freedom is doing whatever I want

If your business isn’t about delivering an excellent service for your customers, you may find you won’t have any. If it’s only about you, you may find you have more time on your hands than you desired, without the funds to do what you wanted to do.

3. Small business always delivers better customer service

This should have been under the myths too. It’s simply not true, you don’t deliver excellent customer service or experience just because you’re a small business. That comes from delivering consistently more than your customers expect by design.

4. It’s my business so everyone is my customer

This one is just exhausting. It’s a personal favourite as I’ve been there. SO WRONG. STOP IT! Identify the customers you serve excellently and search for more of them. Delight them. The more you let go the better you get at serving just the ones who love what you do.

5. Diversifying will reduce risk – I can do everything

It’s kind of related to the above. It’s the irony of choice. The more choices we have the less likely we are to make a purchase. It seems that the thought of giving up something from all those options makes us not choose at all. When people can’t see what you specialise in, they may go for someone who is a specialist, even if that costs them more.

6. A belief that ‘I am the business’

Sure the business may die without you, but if you’d die without the business, then it’s running you. Get back in control (or find a way to get control) of the business.

7. Constantly working excessive hours to impress everybody by how hard you work

It’s like the employee putting in the hours to impress the boss. Often the boss sees them as inefficient and hence they miss out on the promotion. Just n business, it could be that prospects feel you wouldn’t have time to serve them properly. If it’s about ego and how hard you’re working, you’ve still just got a job.

8. My customers don’t understand

I heard myself say this in the past. Guess what… I was wrong… The one thing customers know is what they want. If they’re not getting it from you, they can always find another supplier who appreciates them. So if you’re starting to feel like this, start listening to why they have the view they do. If you still don’t agree, start seeking different customers.

9. Only unsuccessful businesses need a coach or mentor

Watching the Australian Open Tennis, I noticed that almost every top 100 players had a coach. Top 100 in the world… AND they had a coach. Fortune 500 businesses get coaching and mentoring for their promising staff and executives and continue to do so right through to the CEO. Yet they’re not failing, far from it. They’re prospering, learning from mistakes whether it’s their own and those of their coaches and mentors.

The fastest track to success is to learn from others mistakes. If you need to get your ducks in a row, the only place I’ve seen that before they started moving was a shooting gallery.

If you’re searching for help, don’t just trust google and the myriad of unverified information there. Seek a trusted source that you can interact with, who can call you on your stuff, help you avoid the mistakes you’re about to, and help you and your business grow. Someone who’s been there before.

Having accountability is half the game, having someone who’ll call you on the stuff you’re doing that you shouldn’t or the stuff you’re avoiding, that’s when you’ll really see results… Hold them to that. Ask for a return on investment and shy away from anyone who suggests that coaching or mentoring is like marketing, you really can’t measure the results so directly.

Challenge yourself to create the best business for YOU!

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