- Being aware of some of the key risks that small businesses typically face can help you come up with a plan that can secure your businesses success.
Starting your own business is an exciting step. Your early enthusiasm and motivation can go a long way towards building future success. However, the unfortunate reality is that many small businesses don’t make it past their first year, no matter how driven they may be.
Common risks – from poor financial planning to failing to protect their business – can spell doom for a lot of small business owners. Here are six hazards and ways you can better prepare your business to face them.
1. Lack of financial support
Poor financial planning is a common reason why countless small businesses fail. Many business owners lack a strong understanding of bookkeeping and budgeting, and others don’t start with enough money to get their business off the ground. However, with a bit of care and attention, your business can thrive in the early days and beyond.
Things to consider when it comes to your business finances:
- An accountant, tax agent, or business coach could provide valuable advice and recommend financial strategies to help you get started and manage future growth.
- If you are using your own savings to launch your business, make sure that you aren’t taking on too much debt and leaving yourself worse off than when you started.
- Business loans are a common choice for small business owners to fund their new business venture.
- You may be entitled to government grants that could help you launch your small business.
2. Not researching the competition
Every business has competition, regardless of the industry you’re in. Standing out from the crowd is essential if you hope to build a successful small business – but you need to understand your competitors to do this! Researching who your competition is, what products and services they offer, how they market themselves, and their pricing can help you create your own business strategy.
Consider these tips to help you stay ahead of the competition:
- Cater to a niche market by providing a product or service that no one else does.
- Make customer service a priority to help build a loyal customer base.
- Don’t be afraid to do things differently if it works for your business model!
3. Doing it all alone
Small business owners often need to wear many hats, especially when they are first starting out. This can be stressful, particularly when you need to become an “expert” in areas you’re not well-versed in, like accounting or marketing. While you may not be able to afford a full team from day one, there may be ways to take some items off your plate.
Consider ways to make your workload more manageable, such as:
- Hiring a virtual assistant to take care of some admin tasks
- If possible, outsource work to freelance professionals, like an accountant, marketing specialist, or IT pro
- Ask your mentor or business coach for advice and guidance on your business journey
4. Poor work-life balance
Many small business owners find it hard to accept help from others, even when they can afford to hire help. Your business is like a child, and it’s sometimes tough to trust others to run it. But sacrificing your overall well-being and mental health for your business can backfire.
Try these tips for managing the work-life balance seesaw:
- Create clear boundaries between your work life and your home life from the start to form healthy habits.
- Start your day with something that isn’t related to your business, such as exercise or reading, so your mind and body can wake up properly without added stress.
- Get organised by using calendars, scheduling systems, and to-do lists, so you can make the most of your work time and help avoid unnecessary overtime hours.
- Take a holiday (even if it’s short!) so you can rest and recharge your body and mind.
5. Waiting for customers to find you
Your doors are open, but the tills aren’t flowing… Why? Sitting back and waiting for customers to discover your business is usually not the best strategy. You probably need to be more aggressive, shouting from the rooftops who you are and why you’re the best at what you do!
Ways to drive customers to your shop or website include:
- Advertise and promote your business in different ways, such as through social media channels, email marketing campaigns, and Google ads.
- Offer discounts and special offers to help drive traffic to your shop or website and hook new customers.
- Get out in the community, such as setting up a booth at a local market or event, volunteering, or joining a professional association.
6. Not having business insurance
You’ve invested your time and money into starting your business. You might want to protect it for the long haul. Business insurance may seem like just another expense—until you’re hit with costly repairs or a lawsuit. In a worst-case scenario, not having business insurance can spell disaster for a small business.
Here are some things to keep in mind if you’re considering business insurance:
- Identify the potential risks your business might face to help you choose appropriate coverage that suits your needs.
- Review policy wordings to ensure that all your business activities will be covered and to understand when you will and won’t be covered.
Your small business may face many risks during its first year and beyond. But with planning, strategy, and little luck, you may be able to avoid some of the most common ones.
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