Your Q2 Action Plan: 9 Problems to Fix in Your Small Business

I was speaking with a prospective client to explore whether we could help their business streamline efficiencies and improve their valuation. We quickly identified a few core areas that with strategically placed changes could quickly affect workflows and drive new growth.

It occurred to me that what we do at Business Leaders Growth Group is all about problems – finding and correcting them, preventing them and cleaning them up after they become a significant problem. Sometimes these mistakes can be slowly killing a business for months or even years and they go unnoticed – even in working businesses, including those organizations that outsiders would think are strong because they’ve been around for 10+ years. 

As we start a new quarter in the calendar year, why not take a moment to correct mistakes that may be happening in your business? Here are a few suggestions:

Not Watching Key Metrics

Every business has certain indicators of whether the business is on track for success or running behind where it should be. We encourage our clients and members to choose 3-5 metrics that include financial indicators, sales performance, and operations metrics. When you pay attention to these small indicators, you ensure that you stay ahead of and/or pre-empt challenges in your business.

Pricing

It’s a common mistake to use a competitor’s pricing as your benchmark in setting prices, without doing the deeper analysis of your own numbers to assess whether your pricing is profitable. Often a business will take the competitive pricing, cut it by 10% and start selling. But what if competitive margins are already slim or they are losing money. Use competitor pricing as one indicator, but know your own numbers.

Billing Schedule

It is very common for a small business to not have the procedures, systems or administrative resources in place to get invoices generated and out the door in a timely fashion. Ironically, that’s the reason why we are doing the work: to get paid. Bill customers promptly; that keeps money flowing.

Collections

How quickly a business collects money is critical. Not getting paid fast enough is a killer on cash flow. As long as you are actually making enough money to pay the bills, this challenge can be prevented or at least minimized by tightening up your collections. Part of that is the terms you offer – while every industry has its rhythms, in most businesses there are ways to tighten up those terms at least for the majority of your customers. The other part is making sure your accounts receivable team are assertively following up on outstanding invoices immediately when or shortly ahead of when they are due.  

Inconsistent or Non-Existent Systems and Procedures

At the beginning when a small business starts, the owner and perhaps a couple of staff manage to serve clients or deliver products by reacting in the moment, with each person perhaps developing their own way of completing tasks. And while business owners often leave corporate roles and start their own business in order to eliminate the challenge of too many procedures or “red tape”, unfortunately, having no procedures and systems in place at all is not an alternative. Without some process, chaos will ensue as the business grows. 

Misdirected Marketing

I would almost rather see my clients not do any marketing than to spend without tracking the results. There is no point in a marketing campaign if you do not put things in place that allow you to measure how well the plan is working. 

Spreading Yourself Too Thin

Every entrepreneur does this at some point. The key is to figure out when you are at that “wearing too many hats” point and start getting some help.  The solution here is to know your strengths and to be able to see when you are not performing the duties that demand these skills. If you are the best sales person in the company, you can’t get caught up in day-to-day operations. If you do, sales will slip and eventually you won’t have any operations to worry about.  Did you really go into business for yourself to work 80+ hours a week?

Getting Help on a Timely Basis 

Set goals to know when to hire people to take over where you are; waiting too long can stunt a company’s growth. Most people who start a business do it because they are good at the technical end or the sales end.  Say, for example, you know the best way to make a widget, then your strength is in production and that is where most of your time should be spent; meanwhile, hire an outside company or consultant to take care of the sales and marketing and then hire inside when your business has the financial capacity to hire someone full time.  Maximize growth by leveraging your strengths.

Underestimating Project/Service Time 

For companies in the custom design/production or service sector, estimating the time to perform each and every service in your repertoire is critical. The best way to estimate time is to do it once yourself or watch your best employee do the task and then, once you have the work, track time on the project so you know you quote it accurately the next time.