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This article was updated 16th September 2016
Many people dream of running their own business, but there are downsides to being the boss. We look at some of the most common mistakes business owners make, and how to avoid them.
Small and early stage businesses often don’t have the cash to hire admin staff, and you may resent taking a step back from what you love. However, ignoring the admin in the short term can mean more headaches in future. Whilst you may not have gotten into business to manage cash flow and tax returns, by keeping on top of these areas you can ensure that your company continues to function at its best.
One of the biggest headaches for companies is chasing invoices. If you have a lot of contracts with large businesses, you may be frustrated by long payment terms – sometimes up to 120 days. Joe Friedlein, founder and managing director of digital marketing agency Browser Media, says big companies’ payment terms can leave SMEs hanging. “Bigger companies often have longer payment terms and no flexibility – if you’re waiting 120 days for payment as an SME it can be pretty challenging to manage cash flow.”
Curb late payments by working with a mixture of small and big companies, and always keep an eye open for new business opportunities to keep the pay dates rolling in.
It stands to reason that the larger your network, the more business opportunities will come your way. If you’re lucky enough to secure a few big contacts in the early days, it may be tempting to rely on them, and stop looking for new business. However, that puts you in the precarious position of being dependent on just a couple of clients. Keep pushing the word out and building your network, even if you have to turn away clients. That way, if the worst happens and a client leaves, you can quickly fill the void.
GoLocalise, which provides translation, voiceover and recording services, learned the hard way not to neglect marketing. “We put all our eggs in one basket and when two years later we lost two big clients because they in turn had lost contracts; it was very stressful,” says managing director David García González.
Making time to diversify your client/customer base is always a sensible business insurance policy. Ensure that you have a website, social media presence and advertising plan.
Alex Grace, marketing director at personalised clothing company Banana Moon, says letting staff choose images for a blogging scheme led to a brush with copyright law. “A few years later an image rights company found the image in a tiny square on one of our old blogs and billed us for its use. While we were perhaps naive, it’s difficult for an SME to keep up with all the latest developments in fields such as this.”
Using unlicensed images or copying text can seem like a low-risk, cheap way to boost marketing. But today’s technology means ‘crawlers’ can find even the tiniest infringement. The big corporates that tend to own the rights are often extremely inflexible about even innocent mistakes. Fines tend to be hundreds of pounds per use, or more.
Lofty goals are something shared by many entrepreneurs, and having high expectations is not automatically a bad thing. But make sure that your belief in your business doesn’t blind you to cold hard facts. Be sure you walk before you can run – yes you may see your business as having global potential, but it needs to become a national success first. It’s about managing your own expectations as much as anything else. If you’re realistic about the market, you’re less likely to get frustrated when you hit a roadblock, and more likely to be prepared for hard times.
Competitor analysis should be a pivotal part of every business plan, but you’re missing out if you stop at your main competitors. Keep an eye out for up and coming businesses in your space, particularly if they have a new way of doing things. Likewise, is there a business in a different sector who’s talking to your target market? Taking inspiration from outside your niche will help to boost your creativity, and allow you to set yourself apart from the crowd.
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