6 Big Mistakes that Small Business Owners Make that Can Lead to Struggle and Failure

In business, ignorance is not bliss. In the last three years of running my own business consulting practice and 20 years of advising small business owners, I’ve seen a trend of “mistakes” or challenges that small business owners face that cause them to struggle, and can lead to financial failure…these are mistakes I’ve made in my business as well. Most business owners are really good at their passion (their reason for starting their business), but very few have business management and finance training – they’ve never learned to run a business…I know I didn’t have that knowledge at first when I started my business, even with my seven years of business finance and accounting education and professional designation. But you don’t have to struggle like I and so many other business owners have…here are some tips to overcome the biggest small business mistakes that contribute to those struggles.

Mistake #1 – Failing to Plan

We all know the saying, if you fail to plan, plan to fail. Yet, strategic planning continues to be one of the greatest struggles for business owners. It certainly was for me when I started out. I knew I had to have a plan (I had the offer, target client and financial forecasts, but had no sales and marketing plan), but trying to work with business plan templates used to make me nauseous…that is, until I found a more intuitive approach to business planning. It starts with having a very clear vision of you business, what you offer, to whom, and WHY (WHY you’re doing your business – your mission, and WHY customers would buy from you)…I use visualization and meditation techniques to get this clarity. This is an iterative process, and while your WHY may not change much, your offers and target clients could change dramatically over the years. My only caution here is to not get caught in the planning paralysis trap…make sure you are taking action while you’re creating and refining your plans (results come from taking action and going through iterations, failing fast and getting back in the game).

Mistake #2 – No Clear Value Proposition and Ideal Client Experience / Process

The more targeted and clear you can be with who you serve and the results you create for them, the easier it will be to communicate that value and attract new high-quality clients. It’s easy to want to serve everyone, and not leave anyone out. While this “jack-of-all-trades” mindset can work for a little while, and while you determine what you’d really like to be doing, it can lead to a huge dilution in energy, focus and profits. It’s difficult to communicate your message to the masses in a way that anyone will actually hear it. It’s better to have a focused approach, targeted to a specific group…try it for 90 days…if it doesn’t produce the results you’re looking for, target a different group with a message designed to reach them. Again, this is an iterative process.

Mistake #3 – Not Tracking and Reviewing Financials on a Regular Basis

Most business owners are not trained and educated on organizing, tracking and understanding their financial numbers. In fact, less than 30% of business owners have a good understanding of what their numbers are telling them (couple this with the fact that 85% of business failures are a result of poor financial organization and know-how, it’s no surprise that so many businesses fail). Yet, the numbers tell the story of how the business is doing and can highlight problem areas that need to be addressed. As a micro or small business owner, at a minimum you’ll want to review sales, gross margins, major expenses that you can control the most, and profit margins. You’ll also want to look at balance sheet items such as accounts receivable (how much, from who and how long have they been outstanding), accounts payable (how much, when are they due), and balances in your bank accounts. Review your numbers on a regular basis (monthly is best), and get help to truly understand what your numbers are telling you.

Mistake #4 – Not Paying Yourself Enough

This is one of my favorite things to work on with clients. The traditional business model has been to pay the owner last, with whatever is left in profits after operating expenses. When you follow this model, you’re likely to get paid a lot less than you’d like (or not at all). While working with one client, he figured he was only paying himself $2 an hour for his efforts…you wouldn’t work for anyone else for less than minimum wage, so why work for yourself for such low pay. I like to take a bottom-up approach to paying yourself first and determining what sales you need to support what you want that pay to be.  Here’s how: determine what you’d like to pay yourself (based on your personal needs and lifestyle), layer in taxes, desired business profits and estimated operating costs, to determine what your revenues and prices should be. This approach works really well for service-based entrepreneurs, and I’ve developed a whole empowered pricing course to teach this method [email me for more info].

Mistake #5 – Trying to do it ALL Yourself

Some business coaches may say that you should turn your greatest weaknesses into your greatest strengths. However, this is not what 7+ figure business owners do…they capitalize on their strengths, recognize their weaknesses, and build a ROCKSTAR team to get done what needs to be done in the most efficient way possible.  Often we feel as entrepreneurs, we need to do it all ourselves/be jack of all trades…this can work if your goal/intent is to be a practitioner for life (i.e., steady contract work), BUT, if you want to grow and scale your business successfully, you need a good team to support you.

Getting help and building a team doesn’t have to mean hiring full-time employees, but it does mean you have to think about all the different functions in your business, what is within your zone of genius, and what makes sense to outsource. Create hiring criteria (whether hiring consultants or employees) and make it a priority to outsource and delegate what is not your genius so you can focus more on what you do best, knowing that the rest will be properly taken care of.

Mistake #6 – Not having a Governance and Risk Management Plan

Most small businesses have no governance/risk management plan, yet it is one of the most important aspects of business success. Governance and risk management may not be sexy, but ignoring this aspect of business could lead to business failure. Just think about what would happen to your business if you had a significant negative tax audit, or legal action from a customer or employee, or experience a major illness or disability. It’s necessary to identify all your risk areas (legal, tax, employee, operations, economic, health, political, social, technology, business interruption, etc.) along with potential costs should the risk materialize, then implement protocols for managing and mitigating those risks within your risk appetite.

The bottom line is, when you have a clear vision for your business, supported with systems, structure, protocols and people to help you achieve your true potential, all the pieces start to fall into place…and you’ll have more ease, confidence, peace and harmony in your business and its possibilities.

These are all areas that I work with my clients to overcome and create a strategic business roadmap for success, while working on shifting their mindsets and relationship with money and the financial side of their business. I invite you to book a discovery call with me to discuss your challenges in business and what actions you could take right away to overcome them. I also welcome you to join the CFO Mentoring community on Facebook to support you in being the CFO of your business and your life!

Creating Business Success with the 6 Pillars of Gratitude

Happy New Year!

Have you reflected on your year and given gratitude for what has come to you?  This is the perfect time to reflect and to give gratitude to those who have contributed to your growth this year.  Don’t forget to include yourself in that list.

I believe, and have experienced greatly, that every facet of our lives is intertwined – there is no separation – and have adopted an attitude of gratitude for every single facet.  Even as I sit with a Christmas cold, I can be grateful for all the remedies and tricks I’ve learned from my light-working friends to stay out of the density of the cold virus.  I can be grateful for having a partner who likes to take care of me, for a quiet space to rest, for fresh water to make soothing herbal tea, for the tea, and so much more.

And what if we could be grateful for everything, not just the “good” stuff?  As you reflect on your year, what are you truly grateful for?  What new things have you learned this year?  What new relationships have you formed?  What or who have you let go of that no longer serve you in the highest (and can you be grateful for what they did give you)?

My gift today is to share with you 6 pillars of gratitude – having an attitude of gratitude will bring you more things to be grateful for.  Think of how you can express your gratitude and appreciation to each of these pillars:

  1. Clients – As a business owner, without clients and customers, you have no revenues. If you’re an employee, you have clients too (the business group you serve).  So how can you show gratitude to your customers?  It can be as simple as a thoughtful thank-you, or a client appreciation gift or special VIP treatment.  And it’s not just what you do to show appreciation, but how often as well (but not too often that it becomes an expectation).  Having regular points of contact will increase the client’s experience with you.  No doubt, as a client, I like to feel appreciated and that I’m getting the best product or service for my investment.  As a client, when I feel appreciated, I’m more likely to do more business with you and contribute to your cash flow.  It’s certainly easier to produce revenues from a few appreciated clients than it is to make cold sales.

  2. Employees (and contractors) – If you want to grow your business or further your career, you will have a team to support you, either a team of employees or a team of contracted support workers. Without them, you wouldn’t be able to do your business effectively, and your client’s experience would then suffer.  It’s a fact that happy employees are more productive and loyal employees.  It’s easy to give feedback when things aren’t going right, but what’s necessary is to give gratitude and appreciation to your team when thing ARE going right.  When employees feel appreciated, they will be even more committed to producing better results for you.  How are you expressing gratitude to your employees?


  3. Suppliers – We know that client and employee appreciation are key to driving your revenues, but what about your suppliers? I find that when I’m engaged with my suppliers, and show my gratitude for them with thank you’s and referrals, I’m more likely to get even better service from them.  It instills greater trust in the relationship with them and reduces my stress levels because I can trust that I’m going to get great results.  Showing supplier appreciation can help get things done right the first time, and they may give you even more than what you paid for.


  4. Referral Network – I have to say that most of my clients have come from referrals. Without my referral network to support me when I started my business, I would have struggled and worked a lot harder to have those clients enter my world.  It goes without saying that I feel a world of gratitude to my referral network, but I could do a lot more to show that appreciation.  It doesn’t have to be big, but I think showing your gratitude to referrals goes a long way in growing your business and improving your business success.


  5. Family and Friends – Where would you be without the support of family and friends? When you’re so busy in your business, it’s easy to take family and friends for granted.  However, this group is likely your biggest fan base, and wants to see you succeed and celebrate in your success.  It’s important to stay connected and spend quality time building and maintaining your personal relationships and showing your appreciation.  Speaking first hand, I know this is an area I struggle with – sometimes it’s easier to appreciate strangers than it is to show your family and friends how much you love and appreciate them.  However, without support at home, the stress in your home relationships will spill over to create more stress in your business, and both will suffer.


  6. You – YOU are your business…As a small business owner or solo-preneur, chances are, without you, your business would not operate. Therefore, it’s important to the success of your business that you appreciate you – take care of your body, mind and soul.   When you value and appreciate yourself, you are more likely to attract the types of clients, team, and suppliers who will also value and appreciate you, and you will be more likely to value and appreciate your support network (family, friends, referrals, etc).  And THAT is great for business success!

To sum it all up, when you truly appreciate all of these pillars and give no one more importance over the other, true success happens.  The trick is finding and giving balance to create harmony amongst them.  Take the time to reflect on each of your 6 pillars and decide where you will take inspired action to improve those relationships.

Having an attitude of gratitude is a key to success…and I am eternally grateful to you.  So, THANK YOU…without you, I have no reason to share these gifts!

 

[author] [author_image timthumb=’on’]http://54.82.103.175/wp-content/uploads/2017/12/IMG_0012-resize-square.jpg[/author_image] [author_info]Linda Spencer is a CPA, CA, Canadian Tax Specialist and Money Mindfulness Coach. Her mission is to eliminate the stress and anxiety you experience around money and taxes, by empowering you with the know-how and mindsets to improve your business success and financial wellness, so you can have more harmony, joy and abundance in your life.[/author_info] [/author]

Are You Playing Small?

Over the last 6 months or so, I’ve heard a lot of women (and some men) in my circle lacking confidence in their fees and the value they give to their clients. This results in “chasing” revenues and profits (or chasing revenues for little to no profits), attracting clients who may not value or respect your time or gifts and likely leading to stress/burnout or giving up on your dreams. You may take what you offer for granted because it comes so easy to you (and therefore you don’t think you should charge much for it).

I find that most of these women (and men) have these things in common:
– they are most often light/energy workers, holistic practitioners, and creatives.
– they have a deep desire to be of service and help others improve their well-being (be it financial, spiritual, physical or emotional).
– they have been judged in the past for shining they’re light, being told they’re “too much” and should tone it down.
– they want people to like them (and therefore “conform” to what other people like/expect).
– they fear that if they raise their prices, people will judge them as greedy or that people won’t be able to afford them and they’ll lose clients or won’t get new clients (and therefore they won’t be able to be of service).
– they have their own insecurities and limiting beliefs about money.
– they think, “who am I to be so bold?”

If you’re one of these people (and you’re not alone, I am one too!), I have this to share with you from Marianne Williamson: (paraphrasing) Your playing small does not serve the world…who are you not to shine, be brilliant, talented, gorgeous, fabulous?

So how DO YOU shine, be brilliant, raise your prices and stand confidently in your fees and the value you provide to others? I’ve created a system for standing in the truth of your value and getting paid what you’re worth (with ease and grace), and would love to share it with you at my workshop on Nov 1st –Confidently Charge What You’re Worth (and Increase Profits) workshop. Time to stop playing small and SHINE!

Register online before Oct 15 and save $73 (my birth year :)).
http://54.82.103.175/event/charge-what-youre-worth-workshop/
road over water

8 Things You Need to Know as CFO of Your Small Business

Let’s face it, as a small business owner, you wear many hats – one being that of Chief Financial Officer (CFO).  And as the CFO of your business, you are focused on strategy, planning and operating your business in a way that optimizes your profits and cash flow, and ultimately your financial value.  As CEO (Chief Executive/Operating Officer), you have the big picture vision, the dream.  But as CFO, you are the gate-keeper, the one that ensures the investment in the big picture vision is sound.

This is why I am sharing with you 8 key things that top CFO’s are concerned with to help you make better business decisions and avoid the top small business money mistakes.

  1. Revenue / Sales

The key to any business success is SALES!  No sales, no cash, no business.  So as CFO, you need to understand your sales numbers, as well as your products and target customers, so that you can recommend and take courses of action to ensure that you are going to hit/exceed your sales targets…things like return on marketing, cost of client acquisition and retention, pricing strategies and policies.  The key here is knowing your market and having a good sales and marketing system, as well as having good customer service…after all, it’s easier to get repeat business and referrals than it is new business from strangers.

  1. Vision for the Future

So many entrepreneurs operate by the seat of their pants, looking at short term gains with no real vision for the future.  While this might work in the short run, it is not a sustainable model for the long term.  The cornerstone of what I coach my clients is always to start with the end in mind, and have that end in mind when making your business decisions.  This includes having a written business plan (operational, financial and marketing/sales)…it doesn’t have to be elaborate (unless it’s required by investors/lenders), but it does need to be written down somewhere, vetted and shared with your team, and re-visited regularly.

  1. Talent Acquisition and Management

At one conference I attended, the common message I heard from all the women entrepreneurs who shared their success stories is that the key to their success was building good relationships and having a good team.  This is consistent with my research and with what big business CFO’s have shared with me personally.  You need to have the right people doing the right things with the right tools…and you need to have a system for evaluating their performance, rewarding them and retaining them.  You want a team that will challenge your ideas and strategies, to ensure that you are making the best choices for your business and your clients (and you’ll want to encourage them to do so).

  1. Risk Management

Risk management has been one of my main focus areas for over 10 years.  It is an area that is top of mind for big business CFO’s, but it is one of the most neglected areas in small and micro business.  Yet, risk is an area that can sink a small business in a heartbeat if not managed properly.  Do you know what your risks are?  They could be legal, operational, reputational, financial and credit, compliance, technology, privacy, economic or market risk.  What if something went wrong in providing a service to your client and they sued you?  What if you made a big order with a supplier and they didn’t deliver?  What if an employee was committing fraud?  Or someone was stealing your intellectual property? Or if you didn’t pay your taxes? Or if your technology failed, or someone hacked in and stole your data?  Some effective ways to manage these risks include first identifying your risks, then ensuring you have adequate and appropriate insurance, legal contracts, effective policies and procedures, and internal controls.  How does your business measure up to its risks?

  1. Governance

Along with risk management, comes governance.  Corporate governance is the system by which companies are directed and controlled. It provides the structure through which businesses set and pursue their objectives, while reflecting the context of the social, regulatory and market environments they play in.  For many small business owners, corporate governance and reporting is an afterthought…the reason being may be that many small business are not held accountable by any particular governing body, so governance and reporting takes a back seat to everything else in the business.  Why does this matter?  For one, good corporate governance strengthens a company’s reputation and risk management practices.

Not having good governance structure and practices could lead to things such as the following practices that could cause harm to others and ultimately cripple a business:

  • taking risks which have serious consequences, neglect of duty of care
  • dishonesty, withholding information, distortion of facts
  • misleading communications or advertising
  • avoiding blame or penalty or payment of compensation for wrong-doing
  • secrecy and lack of transparency and resistance to reasonable investigation
  • harming the environment or planet, people or animals
  • unnecessary waste or consumption
  • invasion of privacy or anything causing privacy to be compromised
  • conflict of interest, betrayal of trust or breaking confidentiality

As CFO of your business, the gate-keeper, you need to ensure you have good governance and reporting practices to reduce your risks.

  1. Operating Productivity

Often, cost control is a function of operational productivity.  This includes measuring how well you, your team and your assets are working for you.  What is your return on time and investments? You can look at revenues and costs as a function of time, or people (by function of sales, marketing, operations, technology, admin), or assets (particularly if you’re a capital intensive business).

  1. Profits and Cash Flow

No entrepreneur gets into business with a view of incurring losses…and it sucks when that happens.  Profits are often the driving force for creating financial value and obtaining financing.  But it’s not just revenue minus expenses…you have to also take into account depreciation and other costs indirect costs that you might not be thinking of on a regular basis, such as interest, taxes, and what you pay yourself (and YES – you should be paying yourself, just as you would for any other employee).

Even more important than profits, I think, is cash flow…you need to know what cash is coming in (receivables and collections) and going out (payables, payroll and taxes), and when, so that you can manage it effectively and ensure that you are still paying yourself, your employees  AND all the other bills.  That’s why it’s important to track, reconcile your accounts and review your cash flow at least on a monthly basis (or weekly is better) so you can make quick decisions to bring in more cash, especially if you’re facing a shortfall.  Doing so can also help identify problem areas in your business that need further investigation.

  1. Tax Planning and Optimization

As a small business owner, you have options as to how you structure your business, and what makes the most sense for you from a tax perspective…you don’t want to be paying too much tax, but also need to ensure you’re not under-reporting your income or over-deducting expenses.  Unexpected tax audit adjustments can be costly, and come with significant interest and penalties.  I’ve seen businesses go out of business because of unforeseen tax assessments.  This not only goes for income taxes, but for sales taxes and payroll taxes as well.

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How do you track and report all this?  Where do you start?  Start by working with your professional advisors… Ask your accountant questions so they can help you understand what your numbers are telling you.  Hire a business consultant – they’re trained to see and understand the big picture, analyze the situation and identify areas for improvement, as well as the solutions to implement for greater success.  If your concern is sales, hire a sales consultant or coach. Talk to your lawyer about hedging your legal risks, and to your business insurance agent to ensure you’re adequately covered.

Still not sure?  Send me an email…I’d be happy to discuss your situation to see how I can help directly or refer you to someone in my vast network of business experts (accountants, lawyers, marketing strategists, sales coaches, social media experts, web and graphic designers, content writers, technology solutions, insurance specialists, financial analysts and advisors, HR specialists, recruiters, and more!).  And check out upcoming workshops and programs than may assist you www.visionspire.ca/events

Contact Linda@visionspire.ca .

 

[author] [author_image timthumb=’on’][/author_image] [author_info]Linda Spencer is a CPA, CA, Canadian Tax Specialist and Money, Marketing & Soul business coach. Her mission is to eliminate stress and anxiety around money and taxes, by empowering heart-centered small business owners with the tools, knowledge, strategies and mindsets to put them in the driver seat of their financial success and wellness.[/author_info] [/author]

For Whom Are You Creating?

Think of your business as a road trip (and not the scenic kind – you’re on a mission!).  You identify where you want to go, where you are starting from, who you’re going with, who you’re going to see (or pick up along the way), the fastest route, alternate routes, what you need for your trip, and you start navigating your way to where you want to go, in the most efficient way possible.   In this 8-week series, I help you get clarity with the different steps of creating and navigating your road map to business success.  This is the fourth installment- Understand and clarify your market.

ForWhomAreYouCreating

What would your business be without your clients?  But are your really clear about who your target clients are?  Why is this important?

This is what step 4 of my 8-step blueprint for creating success in your business is all about – getting clear about your market.  You need to identify your target market, understand them (get inside their head) and your competitors. Do your homework and get really crystal clear here – it will drive your marketing plan and almost everything else in your business plan, including how you’re going to fill some of those gaps you identified in Step 3 (if you missed last week’s installment on Gap Analysis or any of the last 3 weeks posts in this series, you can find them HERE [add link]).

Why is niche clarity important?  Well, imagine you’re developing your service offering or product…how much easier do you think it is to develop and market that product/service when you have a clear vision of who you’re developing it for?  Is it easier to speak to and attract the world…or a specific group of people? In honing in on your specific target market, or niche, you’ll want clear answers to these 5 questions:

  • Who are they?
  • Where are they located?
  • What is their biggest challenge that they want solved right away?
  • How does your offering solve that challenge, and what would it mean for your client to have that challenge solved? and
  • Why would they choose your offer over someone else’s? What is your unique selling proposition?

You don’t want a target a niche that is so small that it won’t give you the sales you’re looking for, but at the same time, you don’t want target one that’s so diverse that you get lost in the ocean.

At this point, you’ll also want to know about the arena you’re playing in – information on your competitors, your market potential, and the overall environment that your business is playing in.  These factors could have a significant impact on where and when you decide to play, and the specific business, finance and marketing strategies that you will play with to win the game of business success in that arena.

This is not a quick and easy step to get through, and should be given considerable focus and attention.  Get assistance and feedback from experts, peers and focus groups to help you get clear with your market, market environment and competition.  The best input and feedback I’ve ever received is from not only my business coaches, but the mastermind and business support groups that I participate in.

 

If you would like assistance with clarifying your target market or building your business road map to success, contact me to set up your complimentary Business Clarity Breakthrough Session.

 

PS – Speaking of niche…with my target customer in mind, I’ve been working on a great new line up of workshops and programs for passionate small business owners, to help them master their business cash flows more effectively and efficiently.  Watch for our Events Calendar and MARK YOUR CALENDAR for the next workshop coming up on February 29th (registration opening soon)!

Want exclusive offers and bonuses not available to the general public?  Get on the VIP Invitation List (in fact, the only way to get these special offers IS to be on the VIP Invitation List).  CLICK the image below to JOIN NOW!
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