As a small business owner, you have to wear many hats. However, it can be easy to get caught up in the minutiae of your business -- should you opt for the blue uniforms or the green ones -- and miss the major problems that can cause catastrophic damage.
Here are two fatal errors that can sink even the best businesses, along with tips on how to correct mistakes you may have already made.
1. Lying to Customers and Employees
There are lies -- the big Bernie-Madoff lies we all know are wrong -- and the little white lies we use to smooth over immediate problems. We say we'll talk to the problematic employee; we say we'll mail the paperwork tomorrow; we say the deliverable will be ready next week. But we don't follow through. We lie.
A lie doesn't have to be intentional to inflict major damage on a business relationship. Creating a pattern of failing to follow-through erodes your customer's trust and damages your employees' respect for you. Maintain your integrity and keep your word if you want your business to thrive.
Repairing an Integrity Breach
Let's say you fail to follow up on a promised action. What now? Don't pretend it didn’t happen and hope that your clients or employees won't notice. They will. Instead, address the issue head on.
As soon as you know you can't meet an obligation, contact the affected party. Say you made a mistake, apologize for doing so, and avoid making any excuses. Then explain, in detail, how you will correct the problem.
2. Failing to Understand Your Finances
This might seem like a no-brainer. After all, what small business can survive if its owner doesn't pay attention to the money? Still, a surprising number of small business owners tend to stick their heads in the sand when it comes to managing the finances.
Yes, it's a drag to have to always worry about your bottom line when all you really want to be is creative and innovative in your approach to business management. When you are making as much money as Apple or Google, you can afford to gamble on experimental projects and "fun" initiatives.
But you're not Apple or Google and, until you hit the big time, you need to have a tight grip on your finances. Know where your money is going and determine what departments might be sucking away enormous resources without providing an acceptable return. Keep a tidy amount socked away for emergencies, too. If you have an accountant, ask him or her to help determine what that amount should be. If you don’t, then read on.
Time for Fiscal Fitness
If your finance department is a shoebox stuffed with receipts, the first order of business is to find a professional who can manage the books. Have financial forecasts created for best-case, worst-case and most-likely sales scenarios. Then work with a trusted advisor to determine how best to adapt your business plan under each set of conditions.
Sloppy bookkeeping and lousy follow-through may not seem like your biggest problems, but don't be fooled. Failure to have a financial plan means money disappears down the rabbit hole, and if you consistently fail your clients with little lies, you may find you don't have any revenue to manage anyway.
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