Here where I live, we seem to be in the middle of a “mattress war!” There have to be at least six different bed companies in the region duking it out, vying for our collective attention and dollars. Apparently we, as a community, are incredibly sleep deprived.
But one company in particular appeared to be ahead of the pack. These folks seemed to open a new store every six months or so and were constantly bombarding us, on both radio and television, with ads. So imagine my surprise when I open the paper a few days ago to read that they have filed Chapter 7.
It turns out that the company failed to collect, and pay, sales taxes due the state. The bill? A few million dollars. That would drive most anyone out of business.
This sad story reminded me that all too often, small businesses make mistakes that are fairly easily avoidable. Of course you are going to make mistakes in your business, that’s inevitable. And while most mistakes usually to turn out to be a good, albeit possibly expensive, lesson, some mistakes can cripple your business.
Here are the ones I see that most easily be avoided:
1. Not paying for the help you need: Clearly this is what happened to the mattress store above. Rather than hire a lawyer or CPA to help them with something as basic as handling their taxes, it looks like the company probably decided to cut corners and wing it. Many entrepreneurs do the same, with far less damning results – but you just never know.
Small businesses are run on a tight budget; we all know that. That said, “penny wise and pound foolish” is a saying for a reason. There is a time to skimp and a time to spend. Whether it’s the advice of a professional or the need for an assistant or what have you, make sure you get the help your business requires.
2. Blowing your dough: The opposite of spending too little is, of course, spending too much. And that is pretty easy to do, especially when a large chunk of change comes in the door, say from a new contract or a loan that got funded. But not budgeting your money wisely, not keeping your overhead low, is a prescription for disaster. Let’s not forget about Pets.com – that once high-flying Internet startup that received more than $80 million with its IPO during the dotcom era…and was out of business less than a year later.
3. Not adapting: This is an incredibly exciting time to be in business because things happen so fast and change so quickly. But that same speed means that you have to adapt or die. Whether it’s getting up to speed on apps that can make a difference for your business, implementing a new product line, letting a big bad customer go, designing a new product line, or whatever, the fact is, you have to stay ahead of the curve to succeed in this day and age.