Even when the economy is functioning well, there are several things that need to be avoided when running a small business. When the economy is down, these things should be avoided more than ever. Running a small business in our current economy is difficult at best, yet making a profit is even more difficult.
There are, however, many mistakes that small business owners make that can mean the difference between profitability and losing your business altogether. Avoid making these three simple mistakes in order to increase the chance of having a successful business. To have a successful business, don't neglect your business expenditures, don't waste your money on advertisements that don't produce new business, and don't refuse to change if your business isn't working.
It may cost money to make money, but spending too much money will kill any business. Many businesses barely break even, but the point of a business is to make a profit. The best way to make a profit is to make sure that you aren't spending more money than you have coming in. The first, and often neglected, rule to making a profit is to know all of your expenditures. You need to know, down to the very cent, how much everything costs to run your business. This includes electricity, employee wages, water, supplies, and even plant food for your office plant.
Don't pay more attention to the big things like rent, electricity, and water. The little things, e.g., cleaning supplies, employees working an extra hour a day, or small, ineffective advertisements, can cost your business more money than they are worth. Something as small as closing an hour or two early, per day, could save you hundreds in the long run. Although it is only a couple of hours, it is time you are paying employee and electricity costs when you might not have a single customer.
Advertising is one of the most important aspects to running a business. You have to let people know who you are, where you are, and what your business offers. Usually the first place people want to run an ad is in the local paper. At first, it seems like a good idea, but it may not be. Today, there are so many channels that can be used for advertising. Advertising isn't the challenge. The real challenge is making a choice about which type of advertising is best for your business. Think about who you are trying to advertise to and consider them in your advertising choices.
If you are a tanning salon, older people are more likely to read the paper, but less likely to tan. Young people are likely to tan, but are unlikely to look in the paper. One advertising tip is to make sure you have a large, catchy sign that can be seen from the road. That is a big advertisement that is unlikely to cost you a lot of money. Instead of using the paper right away, advertise by flyer, signs, and the Internet.
Refusing to Change
If you are keeping track of your expenditures, you have placed your advertisements wisely, and you still are losing money or not making a profit, then you might need to change. It isn't logical to continue running your business the same way you always have if it isn't working. If something isn't working the way you want it to, don't keep doing it the same way. Look at all the different things you do to run your business, and then think of ways you could be doing them differently.
This is a great exercise to think of innovative ideas. Get a piece of paper and write down everything you can think of, even the silly, stupid, or impossible ideas. This will give you a lot of ideas to filter through, and you might just think of something really great! Paying attention to these three things will give you a great way to change up your business and hopefully start making a profit.