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!

CFO Money Mastery – 8 Week Jumpstart Course

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CFO Money Mastery – 8 Week Jumpstart Course

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You, yes, YOU are CFO (Chief Financial Officer) of your business (unless you’ve actually hired one, but that is the exception with a small/micro- business).

You, as CFO (not your bookkeeper or accountant), are ultimately responsible for all financial aspects of the business, including costing and pricing, testing and validating business assumptions, and all reporting and compliance matters. As CFO, it is your role to ensure that your business funds are being managed appropriately and that there is adequate cash flow and capital for the business, that spending is under control, and that you (as CEO) are not driving your company forward recklessly.

Would you like to:

  • Make more money and better manage your cash flow? 

  • Understand your business finances and make them work for you? 

  • Have a system for creating more ease and flow in your business? 

  • Get out of the “not enough” cycle and into the “abundance” cycle?

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This program was designed just for you – a micro-business entrepreneur who doesn’t have a degree in Finance, and is feeling overwhelmed and struggling with making your money and finances work for you.  You may have a bookkeeper and or accountant to compile your numbers and do your taxes, and although you should be working closely with them, they may not be helping you to understand what your numbers are telling you or how to use them to grow your business.  As the CFO of your business, you need to be empowered to make smart business decisions based on your financial results on a regular basis (and I don’t mean just once or twice a year).

This program will help get you started.
Over the course of 8 weeks, you will:

  1. Clarify your business vision and learn how to operate from where you’d like to be;
  2. Get a clear picture of your current finances and what the numbers are telling you;
  3. Discover insights into how you do money and your money gaps.
  4. Create your business profits model to for more flow and flexibility, and stop spinning your wheels when it comes to creating new offers.
  5. Learn how to price for value and set empowered money boundaries to get paid more and on time;
  6. Acquire tools and strategies to create a never-ending cycle of growing cash flows;
  7. Learn how to more easily make smart financial decision for your business; and
  8. Empower yourself with systems and strategies that will get you unstuck and out of overwhelm.

You will also be added to a private Facebook group exclusively for participants of this program, where you can post questions and insights, and call on me and each other for support (or you can email me directly with your questions).

The program starts Monday, May 9th, and will run for 8 consecutive weeks, consisting of 90-minute sessions (via webcast or telecast), on Monday afternoons from 2pm-3:30pm EDT.  The links will be posted on the private Facebook group, as well as emailed to you each week.  There will also be a program pre-call scheduled for the week before May 9th (date and time yet to be determined).

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I want you to be set up for success!  As an added bonus, you are invited to receive a private 60-90 minute strategy session for $200 off the price I normally charge ($300 instead of $500) to get you into inspired action in one or two areas that are causing you the most stress with your business finances.

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Areas that I have worked on with clients include:

  • overall business strategy
  • profit models
  • pricing for value
  • getting paid
  • overall cash flow strategies
  • creating packages that sell
  • systems and business process improvement
  • networking and marketing strategy
  • attracting the right clients
  • team support and management

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KNOWLEDGE is the key to EMPOWERMENT and INSPIRED ACTION is the key to getting the results you desire!

So, won’t you join me on this 8-week journey to jumpstart your CFO Money Mastery.

YES!  SIGN ME UP!  (Complete the attached registration form and send it back to me via email at Linda@visionspire.ca)

For this inaugural 8-week experiential CFO Money Mastery Jumpstart tele-class program, you pay only $298.

BUT – this is a one-time only offer…when I launch this program again in the Fall, the price will be over $1000.  My private consulting & mentoring clients pay $4000 or more for what I’m offering in this course.  I certainly don’t want you to miss out on this amazing opportunity for creating a more healthy relationship with your business finances.

SIGN ME UP NOW! (Complete the attached registration form and send it back to me via email at Linda@visionspire.ca)

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Have questions?

Send me an email or give me a call!


FAQ’s

Is this for you?

I want to work with entrepreneurs who are motivated and committed to creating impactful results in and with their business.

This program is for you if:

– you are ready, motivated and committed to creating a healthy relationship with your business finances
– you are willing to be brutally honest with yourself and your money situation, and you really want to know more about your business finances and how to use your numbers to grow your business and your cash flow
– you are tired of the time and cash struggle
– you want to stop spinning your wheels when it comes to creating new offers (without spreading yourself too thin) and how to price them for value

This program is NOT for you if:

– you already have a great relationship with your finances and you know how to use your numbers to make smart business decisions
– you are not ready, motivated and committed to create change
– you think this program will magically fix your money problems (no, it won’t – you need to make changes and take INSPIRED action for that to happen).
– you tend to enrol in programs but not do the work to create impactful results (don’t waste our time then – I only have 8 spots available and there are other entrepreneurs who are ready, willing and committed to doing the work)

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What is the time commitment?

There will be live calls/meeting for 8 Mondays starting May 9th from 2pm – 3/3:30pm.  The calls will be recorded and made available within 24 hours, so if you can’t make the live call, no worries.  You will be given exercises and action challenges each week as part of the program.  This is your business, and it is up to you to how you want to participate…you get out what you put in. 

What if I can’t make it to the live call?

No problem – all sessions will be recorded and available within 24 hours to replay at your convenience

Will there be handouts or a workbook?

Yes, I will send the materials need for a particular call the day before the call so you can print them and have them ready to participate. 

What if I have questions during the program?

Once registration is confirmed, you will be added to the program’s private Facebook group.  You can post your questions there, where I will answer them same day.  Alternatively, you can send me an email or private Facebook message and I’ll respond within 24 hours. 

I’m interested, but I don’t think I can fit it in my schedule?

I hear you – As a single mom with 2 school-aged boys and running my own business to support them, I’m faced with the same dilemma whenever a growth opportunity arises for me.  But, personal and professional development is really important to me, and I tend to be enrolled in at least 2 programs at any given time…the point is, you find time for what’s important to you.  Money is a relationship – should it be any less important than any other relationship you have?  And let me ask you this as well – what is not having a healthy relationship with your business finances costing you?  Can you afford NOT to take charge and invest in yourself and your business right away?  This program is a very small investment for thousands of dollars worth of business consulting and mentoring.   

Why is the investment so low?  It sounds too good to be true…

This is the first time I’m offering this particular program…it’s in Beta format.  Because of the small class size, you get my full attention and expertise, and you get to contribute to making this program great with your honest feedback and participation before I launch it in the Fall on a much larger scale, for a much higher investment.   

How do I register and make payment?

All you have to do is complete the attached registration form and email it back to me (Linda@visionspire.ca).  Once registration is confirmed, I will send you the program agreement and invoice for payment that you can pay by credit card, e-transfer for cheque according to the payment instructions listed on the invoice. 

Why would I choose you?

I’m not your typical tax accountant…just 3 years ago, I was married and had a dream job managing the North American tax function of a large multi-national corporation.  But I knew even more was possible for me…three years ago I asked for a divorce and claimed my freedom.  What happened next was beyond my imagination:  I got divorced, found love that was beyond anything I had experienced before, put myself out of a job (an orchestrated exit), traveled three continents, found soul family all over the world, started a business and published a story all in the span of 24 months.  Beyond my 20 years training and experience as a CPA and tax specialist, I have had the privilege of being trained and certified as a business coach, with particular emphasis on business and marketing strategies to streamline business processes and attain greater profits and cash flow more quickly (they don’t teach you this in accounting degree programs!).  I combine these tools with my intuitive abilities to not only see what’s possible, but to create the action steps to make it a reality more quickly.  Not only do I teach this to my clients, but I use all these tools and practices in my own business, and WOW!  has it ever made a huge impact in my results, and in my way of being.  I am definitely NOT the same person I was 3 years ago, thanks to some great coaching along the way…and I am so appreciative to be able to share these tools and gifts with my clients.

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Weath Creation

Small Business Model for Success – Make Your Profits Flow

wealth-creationAs a small business owner, you wear many hats – one being that of Chief Financial Officer (CFO).  Being the CFO of your business does not necessarily mean being your accountant – in fact, I highly recommend hiring someone to do your bookkeeping and financial reporting for you (i.e., the collecting and reporting of results).  As the CFO of your business, you are instead focused on strategy, planning and operating your business to maximize your profits and cash flow, and your financial value.  You have a big picture vision, so you look at your financial plan, forecasts, budgets and results from 30,000 feet, and analyze those results in context of your overall business objectives and strategies, asking “what if…”  You determine what your results are telling you, and make strategic, financial and operational decisions accordingly.

So, how do you do build a business model that will allow you to maximize your cash flow?

This is step 5 of my 8 Steps to Building Your Road Map to Success – create your strategic operating and financial plan (if you missed the previous steps, click HERE to go to see previous posts).  As a small business owner myself, I like to keep it simple – first by building a profit model that allows you to create fluid and sustainable profits and has these key characteristics:

  • is intuitive, flexible and has flow
  • allows for creativity and innovation
  • is scalable and has multiple layers that allows you to easily and fluidly up-sell, cross-sell and down-sell between the layers of services and packages
  • focuses on 2-3 things that you do really well, and
  • allows you to continuously dip into your well of opportunity, to connect with the people entered your world at various levels and give them the “what’s next”.

Always with your core business purpose and ideal client in mind, the key is to set up your business model and services/packages in a way that allows you to maximize every opportunity to its full potential.  Start with your platinum service level that will bring you top dollar and platinum client, then your entry level service that will allow people to connect with you for little investment, and then fill in the middle with a couple of gold and silver level offers that will engage and create momentum with your clients.

Ultimately, you want to maximize your profits, so when you create your business profits model with the different layers of packages/offers, you’ll need to run the numbers.  This is what gets scary for a lot of people, especially creative types in my experience (as a creative myself – I write poetry and design jewellery for the everyday occasion – I can empathize.  But I also have a very analytical mind that allows me to help bridge the gap for other creatives in building their business models for success.).  But without knowing your numbers –  the cost of inputs (including what your time is worth and overheads), capital requirements, desired profit margins, projected unit sales and break-even points – you may find yourself struggling to make ends meet.

When clients come to me for assistance with their pricing and what to charge, I have found that every one of them has undervalued what their time is worth and how much time the spend developing, marketing and delivering their products and services, leading them to charge to low a price.  This results in lower profits and having to work even harder for the revenues they do collect, leaving them cash and time poor.  With my easy pricing model, I then show them how to quickly determine what their time is worth and how to price each of their packages and services to create maximum value.

This is just one of the things that I will be showing participants at my upcoming workshop on February 29th in Milton.  If you want to know how to easily charge what you’re worth and price your packages and services for maximum value, then you MUST come to the workshop!  Click HERE to secure your spot and get all the details.

 

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[author] [author_image timthumb=’on’]http://54.82.103.175/wp-content/uploads/2015/10/linda-contact-e1447279259479.jpg[/author_image] [author_info]Linda Spencer is a Creator, Visionary, Business Coach and Savvy Canadian Tax Specialist. Linda believes that NO ONE should have to struggle to create the life of their dreams. This drives her to empower business owners with the knowledge and tools they need to gain insight and clarity into their business strategy and to take inspired action to streamline their processes, improve their cash flows and reduce their stress levels, such that they can more easily create the life of their dreams. With 20 years experience helping businesses with their financial, tax and business plans, managing tax risk and advising on Canadian corporate, personal income tax and sales tax matters, Linda combines her expertise and knowledge with her intuition and creative abilities to arrive at sound tax and business solutions. She is also known for successfully leveraging cross-functional teams and creating efficient processes that translate into tangible business results. Discover how you can create more ease and flow in your business at www.VisionSpire.ca (formerly www.LindaSpencerTaxConsulting.com)[/author_info] [/author]

Do You Know Where You Are?

“She turned to the sunlight And shook her yellow head,And whispered to her neighbor- -Winter is dead.”So many entrepreneurs just don’t know where they’re starting from, and end up taking inefficient and ineffective action to get to where they want to go.  For many, the first glimpse of their past year results is when they have their taxes done, which I have found in my 20 years of preparing tax returns for small businesses to be 4+ months after their year-end and into their current fiscal year.  But how can you get a good handle on your strategic action plan for a successful year if you don’t even know where you’re starting from?

That’s why I feel Step 2 – Knowing where you are now, financially, systematically and operationally, is an essential step in the process of creating your strategic action plan for success. This means you’re going to have to get organized with your financials and conduct a little internal assessment of where your are now in your business.

Once you have a good picture of your current financial situation, skills and resources, internal controls and risk management practices, you can figure out what you’re missing and need to put in place (Step 3 – Analyze the gaps between where you want to go and where you are now) in order to effectively build your action plan for how you will achieve the goals you set for your business in Step 1 of the 8 steps to create your road map to success.  (By the way, If you missed my 8 Steps to Building your Road Map to Success post, or last week’s post on Step 1 – Start with the end in mind, you can get them HERE.)

Statistics show that 85% of business failures are a result of improper organization and planning.  So why is it that so many entrepreneurs don’t have their records organized and up to date?  Some of the reasons I hear are: not enough time (and no one to help), not knowing how, and outright fear of money and finances (YIKES!).

On of my clients, Susan, recently shared with me that 2015 was her best year in a long time, that she had a lot of growth in the fall, and that a big part of that success had to do with me helping her to change her mindset about finances and understand her financial numbers in a strategy session we had back in the summer.  She had long been tracking, monitoring and using her marketing and social media metrics to gain more traffic and clients, but had fallen short of using her financial metrics effectively to grow her profits and cash flow.   As she put it, finances scared her, so she ignored them.  I helped her see that they weren’t scary at all (and in fact, they could be her best friend) and showed her how she could use her financial metrics to make more effective business decisions based on what her numbers were telling her.  So kudos to Susan for using her new knowledge and mindset to create a great year!

If you find yourself resisting the task of getting your finances up to date and organized, or if you just struggle with tracking and understanding your financial numbers, I can help.  Contact me to set up your complimentary Business Clarity Breakthrough session to discuss a strategy for success with this essential step in creating business success, and ask for my Business Management Assessment Questionnaire.

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