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!

Charge What You’re Worth

Why is it that women especially have a difficult time appreciating and owning the value they bring to the table – both in business and in the workplace?  A lot of it has to do with how society has taught us…we’re making progress, but we still have a long way to go.

And I’m happy to provide workshops and training programs that help women entrepreneurs stand in the truth of their value and charge what they’re worth.  Here’s how you can empower yourself and stand in the power of what you’re worth:

  1. Identify and understand the results your clients get as a result of your work.
  2. Know what your time is worth to you.
  3. Gain clarity on what sets you apart from the rest – what makes you unique.
  4. Shift your mindsets and adopt an empowering pricing paradigm.
  5. Stop charging for your time…instead, charge for the value you deliver.
  6. People NEED you, and you playing small (discounting your value) is a huge disservice to them.
  7. PRACTICE stating your fees and unique value until it becomes as easy as saying “pass the salt”.

 

“Doubts and fears are normal, but they don’t define our value” (Casey Brown)
Here’s a great Ted Talk on defining and communicating what you’re worth.

 

[author] [author_image timthumb=’on’]http://54.82.103.175/wp-content/uploads/2017/06/Linda-Spencer-Visionspire-cropped.jpg[/author_image] [author_info]Linda Spencer is a CPA, CA, Canadian Tax Specialist and Money Mindfulness Coach. Her mission is to eliminate stress and anxiety people experience around money and taxes, by empowering them with the tools, knowledge, strategies and mindsets that will put them in the driver’s seat of their business success and financial wellness, so they can have more harmony, joy and abundance in their 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/