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Common Business Mistakes

Whether you are starting in business, or have been in business for a while, here are some of the more common mistakes made, which can lead to business headaches or even failure. Although the list is by no means comprehensive, it gives food for thought.

1. Lack of Planning: If you fail to plan, you plan to fail. Planning at the initial stages will require the discipline of market research and the drawing up of a formal business plan. Ongoing planning and budgeting will help focus on the performance of the business with ever changing circumstances.
2. Undercapitalisation: If the business is not properly funded at the outset, or fails to manage its cashflow properly, it will be plagued by the problems of Cash Crisis. An ever increasing amount of time will be spent trying to make ends meet, taking the focus off developing the business.
3. Busy Fool Syndrome: This can occur when discounts are offered, or work undertaken just to fill time and appear to be busy. The result of this type of activity can lead to poor quality of workmanship and service, and ultimately a poor reputation with inevitable results.
4. Delegation/Outsourcing: Sometimes we need to let go. As we cannot possibly do all the work ourselves, we need to outsource or delegate that work , for which we are not qualified An example would be the book-keeping function in a small business, outsourced to a part-time book-keeper.
5. Lack of Training: If we fail to keep up to date with changes in our own business, or fail to properly train those working for us, we run the risk of lagging behind the competition.
6. Information Systems: Many businesses fail to keep the "finger on the pulse" by having a poor or non-existant information system. It is no longer enough to have the accountant prepare figures six months after the financial year end,.
7. Incurring Unnecessary Overheads: All businesses need to examine costs from time to time. There may be a cheaper solution to the way something has always been done, for example, when was the last time you looked at the phone bill, or energy bills, and looked at the alternatives. Shopping around at insurance renewal time can also save money. Even daily or weekly "petty cash" expenses can mount up if not controlled. This needs to be an ongoing exercise, and should be part of the business planning process.
8. Cash Management: In any business, Cash availability is of paramount importance. It is critical to manage the Working Capital of a business properly. This means minimising the amount of cash tied up in stocks and debtors, and maximising the use of trade credit. This will result in lower overdraft costs and keep cash availability healthy. Good cash management is particularly important when a business is growing, as many businesses have found out to their cost.
9. Protection: Many businesses fail to provide adequate protection in the event of a disaster. Ensure that the business is properly insured for fire and perils, loss of earnings, etc., and also that adequate steps are taken to protect data contained on computers, by taking frequent backups, and storing them off-site.
10. Taxation: One of the two certainties in life, ensure that the business is up to date with all taxes, and that it is in compliance with all taxation legislation. Revenue offer many solutions to ease the burden of compliance, but can and will penalise businesses heavily for non-compliance. Arrears can attract penalties and interest charges, and can restrict the ability to raise borrowings from financial institutions.

Solving Business Problems

Financial Director Services will help you and your team with the necessary financial and managerial expertise needed to either avoid these common business mistakes, or tackle any existing business problems.