5 Biggest Mistakes SME Owners Make In Business
You started your dream business. Now it’s your turn to manage it well. Here are some of the common business mistakes made by SME owners, so that you won’t make or repeat them.
Turning your ideas and passion into a business takes great effort. A larger part of today’s economy depends on SMEs that started on such desires of making the passion into a business. But there are some common business mistakes SMEs make during their business timeline that sometimes block their growth or sometimes completely fail in their business.
Here are the top 5 such business mistakes that you need to avoid to level up in your industry:
1. Not Having A Solid Business Plan
Starting a business itself takes a lot of time and energy. Not making a strong foundation not only can badly affect your workflow but destroy your SME’s image in front of potential investors and customers. A business plan is not just a money matter. It defines your goal and gives out an overall idea of what your business stands for. This helps in a lot of different operations such as marketing your business.
2. Down Valuing Your Services
When you start out with your SME, you might feel the need to get more customers and make it big in the market somehow. With many already established firms and competitors around, you might feel your services are no different. One of the common business mistakes made by SMEs is down valuing your own products and services. Do not put the habit of giving your services for free or at a cheap rate. Make your impressions right from the first sale itself. Give the proper credit to your services or products you provide, no matter how small your business is.
Also, you need to register your business. It’ll give you benefits of tax exemptions and other benefits.
3. Poor Money Management
Making poor money decisions is one of the biggest business mistakes SMEs make when it comes to finances. This includes many bad decisions such as:
- Not having a proper bookkeeping system
- Mixing up personal accounts with business transactions
- Not having a managed money plan
- Not investing in the right place
- Not having a good credit score
- Not having a cash flow management
The list of ways how money is mismanaged can be a long one. But, most important is to have a separate account for business purposes from the start of the business. Mixing it up with personal accounts is a huge mistake most SME owners make in the early days.
Make sure you raise invoices the earliest and follow them up. Having your assets tied up in the accounts receivables and other places for a long time is not good. The cash flow forecast will give you an estimate of your future cash flows and will give an opportunity to prepare for any upcoming cashflow gaps. After all, it is the cash flow which keeps your SME work smooth.
4. Too Much Time Spent On Loyalty
Yes, your customers are important. But, don’t sink all your time and energy on that one customer out of loyalty. Provide the best quality service you had promised and made the boundaries clear. You don’t have to spend all your time on one single customer.
Always remember that just because you are busy does not mean you are being productive or your SME is growing. Make sure you allot your time wisely and resources the correct way. You don’t need to agree to unnecessary deals just to keep a good relation.
If you provide services on the basis of a term-wise plan, make sure you have the next client lined up for the coming term. SMEs sometimes make the mistake of taking a long gap to find the next project. This happens by being too much involved in the delivery process and perfection.
5. Not Using Technology
Technological advancements are meant to make tasks easier. Not taking advantage of them is equal to wasting time and resources. For example, using accounting software can considerably reduce the time spent on bookkeeping. This can also help in other situations where you need to integrate your accounts to any other online services.
Technology can make tasks and services faster for you and your customer. Take the example of food deliveries. You will be missing out on a lot of potential customers if you are not having your business presence online.
That being said, there are many scams that are waiting to trap SMEs too. You need to be aware of them too. Thorough research on your market all the time will keep you updated about the new trends as well as potential scams. Make sure you do your research.
Are You Keeping A Check To Avoid These Business Mistakes?
SMEs hold our economy growing upright. If you are running your SME, you need to know the value of your products and services, manage your business cash flows and treat your customers the right way. Finaxar helps SMEs grow by providing necessary aids when they are in need of working capital. You can check out our three different services – Receivable financing, Finaxar credit line, and growth capital financing to know more about this. Do not hesitate to contact us with any queries you have, we are always happy to help you.