When we look at business challenges, we tend to focus on external factors beyond our control like taxation, government regulations and investment incentives. However, a favorable business environment isn’t the sole determinant of business success; businesses can thrive in bad economies, and the definition of ‘bad economy’ can vary with each individual investor. When it comes to internal business practices however, there are 10 signs that you might be on the wrong path:
1. Negligence in Ground Research and Consultancy
Unfortunately, small to mid-sized businesses are the biggest culprits when it comes to the execution of poor ground research and consultancy, if they do any at all; although it works for some people, opening a business based on blind faith and market trend assumptions tends to cause problems in the long run when the markets change and potentially put them out of business.
2. Deficiencies in Capital Investment
The business plan may be thoroughly researched but capital investment is lacking. This may simply be because the investors are cautious or you’re worried about the substantial collateral involved, but if this is you, then you should familiarize yourself with your local financial institutions to see what they offer investors, and see what favourable products and services they are willing to offer you.
3. Inconsistencies and Loopholes in the Financial Accounts
Money is a delicate resource that needs to be handled with care, whether it’s you in charge of the finances or your accountant. Here are three things to do to avoid issues and their consequences:
- If you’re handling investment, make sure your decisions are based on the long term benefits to the company rather than what you want personally.
- Choose your accountant carefully and keep a close eye on your finances; if they see a loophole that you don’t, they might fleece you.
- If you don’t have the time or the ability to supervise your accountant, the best way to gain financial security is to hire an auditor who will regularly check for any emerging discrepancies.
4. Incompetence in Public Relations
Remember, it’s the customer that brings the money to the business. Therefore, if cash is king, then the customer deserves to be treated like cash by treating them with common courtesty and professionalism – especially those who contribute a large chunk of your profit.
Consider drawing up a public relations policy. This policy will classify prospective clients and detail how to handle them, thereby ensuring the stability of business profits by keeping everyone happy.
5. Negligence in the Execution of Ripe Ideas
Businesses should seek to expand and grow; a new competitor pushing you out because you haven’t changed can be just as bad as a failed idea. Just because the fragile economy means there’s high risk, or it’s difficult to find funding doesn’t mean you shouldn’t work to improve your business; you simply need to pick your risks wisely.
6. Constant Quality Discrepancies in Product and Service Delivery
Of course no business is perfect and quality discrepancies happen all the time, but if they become habit, then it’s something more and likely to lose you customers unless you happen to have no competition. In most cases, your customers are spoilt for choice and they aren’t going to tolerate consistent disappointment.
7. Excessive Conformity in Market Trends
Having great ideas and not enacting them is the same as simply conforming to what everyone else is doing. Conformity might be inevitable to a point, but you need to go back to your business plan and think about how to beat the competition in the long term. If you want to get ahead, you need to be the one setting the pace for everyone else with your innovative ideas.
8. Hasty Execution of Business Growth Phases
We’ve mentioned that you should always execute your (sensible) ripe ideas, but at the same time you need to beware of getting too excited and executing them too hastily. Create a solid framework and timeline for your growth that ensures all your resources are being used and takes into account the finances you have to work with.
9. Poor Understanding of Consumer Behavior
When ego takes over business practice, then products and services are developed without considering the customers and can lead to your financial doom; it doesn’t matter how brilliant your product is if no one wants it and you can’t make it appeal to them. Learn to put your ego aside and focus on the most important people: your consumers.
10. Ill-Equipped and Underqualified Staff
Every business needs well equipped, competent staff in order to reap the maximum benefits. That requires several things from you:
- Know what you need from prospective employees, beyond their education.
- Clear descriptions of employee roles.
- A fair remuneration system.
- A deal that they can’t refuse. If the income is too low, even the best qualified staff might work less hard.
- A good standard of equipment. It doesn’t matter how good your staff is or how much you’re paying them if it’s impossible to do their work.
See also: 23 Bad Business Moves
Prevention is always better than cure, as they say. Are you guilty of any of these sins? Have you ever had these problems and fixed them? Let us know in the comments section below.