Opening a small business is incredibly demanding. From developing a product/service to formulating a high-quality business plan to incorporating, the list of tasks can feel insurmountable. It stands to reason that many small business owners make mistakes along the way. Today, we will be reviewing some of the most common mistakes small businesses make and a few tips on how to avoid them.
1. Insufficient Funds Kills Small Businesses
There is little question that the lack of capital funding is the biggest concern for most small businesses. Operating capital must include overhead expenses, working funds, and everything in between. What many small businesses fail to realize is that profits often take time to develop. Mature, established companies have the foot up on new companies by default. When funding a business, always err on the side of overestimating the capital you will need.
2. Opening Your Doors Without a Well Fleshed Out Business Plan
The urge to open your doors is a strong one. Your products and/or services are ready to go, startup capital is in hand, and your employees have been hired. What is missing from this equation? Failure to establish a detailed and accurate business plan is a close second to a llack of funding when it comes to killing small businesses early in their lifecycle. Simple “money in, money out” business plans won’t cut it. As we will discuss in the next section, market analytics and industry performance must also be included (at a minimum).
3. Failure to Perform Market Analysis and Brand Positioning
In a perfect world, the best products at the best prices would always rise to the top. As many of you may have learned to this point in your lives, we do not live in a perfect world. Market research should be a top priority when starting a new business or considering a shift in business tactics. This will give small businesses an accurate representation of the health of the market, the viewpoints and behaviors of their potential customers, and even direct feedback on public perception of their brand.
As a note, many small business owners feel that this step is not necessary because their business size is so small. This is not the case. Just because you cannot afford to run detailed consumer behavior metrics like a tech giant does not mean that understanding the economic climate of your industry is unimportant. Instead, tailor your market research to meet your individual needs.
4. Errors with Small Business Paperwork, Incorporating, Tax Considerations, and More
Establishing a small business can be deceptively complex. What may be a quick and painless process for some can become a quagmire of paperwork for others. The primary reason being that your business must declare itself as an LLC, LLP, C Corporation, S-Corporation, or other forms of business entities. This decision has long-reaching ramifications from a logistical and tax standpoint. Unfortunately, many business owners pull one of these out of a hat without understanding what that truly means. Consider working with a tax or other financial professional to help with these all-important steps.
5. Businesses Fail Because They Fail to Grow
All small business owners love to save money. As the saying goes, “you have to spend money to make money”. Somewhere in the middle lies a pragmatic reality. Yet so many business owners opt to pinch pennies rather than invest capital where their business needs it most. This all ties in with business plans, market analytics, and other brass tacks figures. If the opportunity exists to invest, treat that like opening a brand new business. Is the market ripe for expansion? Is now a good time to invest in real estate? If you are saying “yes” more than “no”, this might be a lucrative opportunity!
6. Business Owners Work with Inferior Merchant Service Providers
If you intend on accepting electronic transactions such as credit card payments, your small business is going to need a relationship with a merchant service provider. This is often looked at as a necessity rather than an opportunity to start a working relationship with a high-quality business partner. High-quality merchant service providers actually offer a number of different services including payment processing, securing payments, setting up recurring payments, and even small business loans and/or merchant cash advances.
True Merchant Helps Small Businesses Grow by Providing Merchant Service Solutions
The merchant services professionals at True Merchant believe that businesses of all sizes deserve tailor-made merchant service solutions. We take the time to work with our clients to develop, grow, and strengthen their businesses by helping with payment processing, payment security, and business funding. No matter the size or nature of your small business, our experienced sales professionals are here to help!
To learn more about how we can help your small business grow, please call or email a member of our qualified merchant services team today!