10 biggest mistakes sme’s make
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10 biggest mistakes sme’s make

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Having started, and run many SME businesses in the last 20 years and more recently two IT companies, I have learnt a lot of lessons and wanted to share them with you. Growing a business and making it ...

Having started, and run many SME businesses in the last 20 years and more recently two IT companies, I have learnt a lot of lessons and wanted to share them with you. Growing a business and making it a success is what is most important for small businesses in such a competitive market. Regardless of whether you are running your business with a team or on your own the same rules apply. You don’t have to be the next Google to be successful, you just need to know what works and what doesn’t.

It is important to not be afraid to make mistakes when it comes to business as taking risks are part of the game yet there are so many traps that small businesses seem to always fall into.

There are 100’s of mistakes businesses make every second worldwide however there are some which are more costly than others and also very easy to avoid. After extensive research, here are the 10 biggest mistakes SME’s make.

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10 biggest mistakes sme’s make Document Transcript

  • 1. 10 Biggest Mistakes SME’s Make 1
  • 2. CONTENTS Introduction - What is an SME? 3 Mistake 1 : Not Researching The Market 4 Mistake 2: Target Miscalculation 4-5 Mistake 3: Legalities 5 Mistake 4: Budgeting, Know Your Numbers 5-6 Mistake 5: Lack of Strategy 6 Mistake 6: Failure to Analyse Data 6-7 Mistake 7: Ignoring Customer Feedback 7 Mistake 8: Derivative Idea 8 Mistake 9: Launching Too Early 8 Mistake 10: Lack of Effort 9 Who is the Author? 10 Contact Details 10 2
  • 3. An SME (small and medium Enterprise) or SMB (small and medium-sized business) are companies who fall within a certain bracket when it comes to number of employees, turnover and % of the business owned by each person involved. A Small business in the UK would be considered as the following; ● Less than 10 employees ● Turning over no more than £1M yearly ● Each person involved owning no more than 25% of the business. Small enterprises outnumber large companies by a huge margin with 99% of UK businesses being classed as an SME. When it comes to driving innovation and competition in many economic sectors, SME’s are considered to be responsible for this. Having started, and run many SME businesses in the last 20 years and more recently two IT companies, I have learnt a lot of lessons and wanted to share them with you. Growing a business and making it a success is what is most important for small businesses in such a competitive market. Regardless of whether you are running your business with a team or on your own the same rules apply. You don’t have to be the next Google to be successful, you just need to know what works and what doesn’t. It is important to not be afraid to make mistakes when it comes to business as taking risks are part of the game yet there are so many traps that small businesses seem to always fall into. There are 100’s of mistakes businesses make every second worldwide however there are some which are more costly than others and also very easy to avoid. After extensive research, here are the 10 biggest mistakes SME’s make. 3
  • 4. 1. Not Researching the Market As a small business, one of the most crucial parts of building a business is researching the market. Doing this will enable you to identify your target consumer, find out what they think about your products and overall brand identity and most importantly, gather insight to make sure you are targeting the right market. As the Product Life Cycle shows, a business starts as just an idea, turns into a concept that has to be developed which then, through research, if proven as a successful concept can be launched into the market. Market research is not something you can do only once, it should be part of your business strategy. As consumer’s behaviour changes, so should your approach. Remember that with how social media has taken over online marketing, it is easy to find out what your consumers want and you must listen to this. 2. Target Miscalculation Setting business goals is very simple yet a task which a lot of small businesses struggle to do. The important factor in setting a target is actually knowing the balance between too high and too low. When it comes to setting goals, you need to be S.M.A.R.T; ● Specific - What do you want to achieve for your business? Also ask yourself why you want to achieve it, who is going to achieve it, when your going to achieve it and where. It is important to be as specific as possible when it comes to setting business goals. ● Measurable - If you can’t measure your goal, how do you know if you can reach it? You need to be able to track progress and measure the final outcome. ● Action Orientated - What are you going to do to achieve your goal? You need to be able to action your goal to make sure you can reach it. ● Realistic & Relevant - Your target must be challenging but also realistic otherwise you won’t have any chance of reaching it. Your objective must also be relevant to your business. 4
  • 5. ● Time Based - Any objective or goal you set for your business should be given a time restriction. Make sure that you spend some time seriously considering how much your business can make. Your targets must be realistic but also hard to reach. You will know in the first few months of the working year whether you have miscalculated your target and for over half of the UK’s small businesses, this is the case. It’s OK to get this wrong first time but make sure that you know where you went wrong and don’t let it deflate your enthusiasm. 3. Legalities Just because it’s cheaper, don’t be tempted to draft your own contracts that are legally binding. It may seem like you are saving money and cutting corners but you could end up in a lot of trouble just because you didn’t want to pay a business lawyer to legally draft contracts. Paying for this service is a business must. You will end up saving time and money down the line. There are around 230,000 businesses in the UK with no insurance or legal documentation which makes them vulnerable to liable claims and prosecution. Make sure you have covered yourself so that you stay on the right side of the law. Saying this, as a small business, there are a lot of issues that you may thing a business lawyer will need to deal with but this isn’t the case. Anything that could make you liable is definitely worth covering by paying a lawyer to take care of it however, working on a retainer is also a great way to make sure you’re legalities are covered. 4. Budgeting, know your numbers Budgeting. You don’t need to hire an expensive accountant to look after your finances all year round, you can do your finances yourself. Incoming and outgoing expenses should be documented on an excel spreadsheet, allowing you to know where you stand with how much money your business is making. What should your budget include? ● Funds needed for materials and/or labor ● Start-up costs for a new business ● Operational costs ● Revenue necessary to support the business ● Realistic estimate of expected profits. In most cases, small businesses miscalculate how much they are spending over how much they are earning which is the biggest reason why small businesses end up losing money. If you are struggling financially, make sure you only pay for what you need to. There are so many service 5
  • 6. providers out there offering unnecessary packages for different business services. Be careful that you don’t buy into something you really, don’t need. Making your budget work is one of the hardest components that small businesses face and this is where the mistake is made. To avoid making this mistake make sure you watch your cash flow, document every business expense, even if its a small amount and most importantly understand that mistakes will be made but take these as a learning curve and don’t let them fail your business. 5. Lack of Strategy While most small businesses believe that they have a strategy going into 2014, this isn’t the case. A strategy isn’t just an A4 page document with what you want to achieve for your business. A strategy is a month by month or even a week by week strategy to help you stay on the right track. 42% of small business owners said they are worried about finding new customers, 33% of small business owners said that keeping their current customers is a concern and 21% of owners cited their competition as something they worry about. So many small businesses are worried about these concerns because their strategy is not strong enough to overcome such problems. Your strategy should include the following; ● Marketing - 1 in 4 businesses spending NOTHING on their marketing. With the way marketing changed over 2013 and moving into 2014, paid online advertising is proving a success for small businesses which is something you need to include in your strategy. ● Building a Website - Without a website as part of your business strategy, you will be missing out on potential customers. If you don’t already have a website or have one which isn’t performing you need to make sure having a transactional and effective website is part of your strategy for 2014. ● Successfully manage negativity - Something which I will touch on later on is dealing with negative feedback. This needs to be an important part of how you manage your online reputation. What most businesses struggle with is staying consistent and concentrated. Once you lose sight of what’s important, it's difficult to get it back so having an air tight strategy in place for your business, you will definitely know where you stand. 6. Failure to Analyse Data The only way to find out if the strategy you have in place for your business actually works, is to analyse data. Analysing your data is just as important as the he initial market research that I mentioned in an earlier point. This is a huge mistake businesses make because they don’t see the value in it. As a SME founder, I understand the importance of analysing online data to see what website pages are receiving the most hits and what aren’t. Using Google Analytics will allow you to not only see 6
  • 7. which pages have received the most views or what country visitors are from but also consumer behaviour. Make sure you use all of the tools available to you, especially as most are free. 7. Ignoring Customer Feedback Regardless of whether the customer feedback is negative or positive it should not be ignored. 70% of businesses actually ignore negative customer feedback on Twitter in the hope that it will go away. I have seen businesses not only ignore negative feedback, but also delete it especially on social media. This is the worst thing you could possibly do. It isn’t going to go away and the likelihood is that you will always get complaints so deal with them openly so that not only that customer but future customers can see that you are there to not only accept praise but deal with criticism. 83% of customers feel a lot happier once a business has contacted them regarding their complaint. This means that they might actually purchase from you again, regardless of their past experience. Why do businesses ignore customer feedback? ● Fear - Most companies believe that acknowledging negative feedback opens them up for more negative comments. This isn’t the case so don’t be afraid to tackle criticism head on. ● They don’t know what to say - This is one of the biggest reasons why businesses don’t respond to criticism. You need to have a plan in place for answering negative feedback and make sure you stick to it. When it comes to social media, answer them openly then get their email address and take it off social media. ● Short of Time - We can’t be working on our business 24/7 everyday and sometimes, negative feedback does end up in the black hole of “things to do”. Don’t let this happen. 7
  • 8. 8. Derivative Idea Basing your business of the back of one of your biggest competitors is not the way forward. You need to make sure that your business idea has a USP (unique selling point) without this you are just stuck with a derivative idea. Look at Apple. What they do as a business is no different to Blackberry or Samsung. Yes, they do have different products but their end goal is the same however, we can all tell the difference between them and your business needs to have the same definity. This is not only showing a lack of innovative development but you could also find yourself in real trouble if you imitate an already booming product in the SME market. Having the same end goal as someone is not plagiarising. Most things we buy will having a competitor with exactly the same end goal, its everything in between that defines a businesses uniqueness. 9. Launching Too Early Hundreds, actually no, tens of thousands of small businesses have gone out of business because they launched too early. Have you read the book Boo Hoo: A Dot Com Story? If you haven’t I suggest you do. One of their biggest problems was yes, they didn’t research their market properly and yes they got carried away but they launched their online store too early and look what happened. The last thing you want to do for your business is ruin your reputation. Recognise that it is OK to not be perfect or always stick to a strict timeline when launching your business. Sometimes things do take longer to do and you just have to be patient and not rush the process too much. 8
  • 9. 10. Lack of Effort You are supposed to be your biggest brand advocate and if you won’t be hands on in your business it will suffer. The best problem solvers in business are the ones who believe in their product. Take Google’s Larry and Sergey, they couldn’t find what they wanted online so they created a search engine to fill their needs. Steve Wozniak wanted a computer so he built Apple. You need to know that running a business is hard work and you will always have ups and downs. Sometimes, things just don’t work out and I know first hand exactly how that feels. Why should YOU and your colleagues be your biggest Brand Advocate? ● Cost effective - Consider how easy it would be to tap into a large community base through those who are already being paid by your company and already actively using social media especially. Utilise the tools you have available but make sure your employees are guided in what to say when promoting your business. ● The best advocates are those that understand the business - It is true that the best people to talk positively about a business are those that are heavily involved in it. You, as the business owner and those closest to you are most equipped to make the business a success. ● YOU put in the hard work - You and those around you are the ones who are driving the business forward and you need to be able to talk highly of your business, not matter when. 9
  • 10. Who is the Author? For the last seven years I've specialised in helping business owners, marketing managers and entrepreneurs sell more products and services, through the convergence of Social Media, Digital Marketing and eCommerce. Delivering dynamic and engaging webinars, workshops and seminars on Digital Marketing & eCommerce and Business Growth through Investment and funding. My entrepreneurial skills started after receiving a grant from the Prince's Trust at 22 for a music and clothing European Distribution Company. Focusing on business growth I became the director of a global stationary and accessory business working with Disney and Nickelodeon, growing a licensee from $5Million to $30Million selling to over 40 countries in a 5-year period achieving $1 Million sales in 1 month. Winning various industry awards and co-founding two IT companies since 2010. The first being an eCommerce platform, getting £150,000 Seed Investment via "SEIS", valuing the business at £1M in less than two years. The second with a “Start Up Loan”, we've built an online learning platform, teaching people how to setup and use Social Networks for their business. I have over 20 years' experience in marketing and selling products and services globally and seven years in social media and ecommerce. I’m a member of the Professional Speaking Association, a renowned international keynote speaker, trainer and coach, helping 1,000’s of Start Ups and SME's grow using Social Media, Digital Marketing and eCommerce. As a 1-1 business coach and mentor, I help SME’s build their digital footprint and increase sales by up to 500%, I have a passion for upskilling entrepreneurs and regularly write from various digital marketing and business magazines reaching 100,000's of readers. I've also written three eBooks on Sales, International Growth and Social Media for Business, all of which can be found on Amazon. Contact Warren on 020 8123 3730 or alternatively via email at warren@warrenknight.co.uk. 10