The 7 Deadly Sins of Business every Business Owner should know

27 Mar The 7 Deadly Sins of Business every Business Owner should know

Why do some businesses thrive and some barely survive? I’ve been fortunate enough throughout my accounting career to have worked with many businesses of all different shapes and sizes so to speak! It’s become very clear to me that no matter what industry you operate in, there are some big ‘do’s’ and some big ‘do not’s’. So here’s to the ‘do not’s’….I like to call them the Seven Deadly Sins of Business and I hope sharing them with you might just help you be the business that thrives.

1. Not having a clear business plan: A good business plan acts as a road map for businesses to guide them where they want to go. More often than not businesses don’t have a plan at all or if they do it’s in their head. Take some time and get it down on paper. It ensures that everyone in the business is headed in the same direction. It provides clarity and a clear vision for your business. And it doesn’t have to be a 30 page document, in fact more often than not the best plans are what is termed ‘a plan on a page’, a one page document that is concise and uncomplicated. If you employ staff, involving them in the planning process can really help get buy in and ensure that you are all on the same path. Your business plan should cover both your short and long term goals for your business and importantly it should be regularly reviewed to ensure it is still relevant. Don’t just do the exercise for the sake of it but see it as a valuable tool in your business that you can implement now.
2. Not knowing what your product or service is really worth: There is often a very big difference in what you think your product or service is worth and what your customers (those very important people who are going to buy your product or service) think it’s worth. Do your research. Know your product and as part of that you will need to know your competition. Knowing your competition doesn’t mean you have to price match, far from it. What it does mean is that you will need to know where your product is placed compared to others in your industry so that you can communicate with your customers how or why your product is unique. Under pricing your product can have significant affects on your bottom line, but so too can over pricing, so do your homework. A good accountant should be able to help you with this.
3. Making the mistake of assuming you know what your customers want: This comes down to really knowing your market. Some businesses think they know exactly what their customers need and so they go about pushing certain products or services. Maybe they love a certain product or service so they assume their customers will too. But you know what they say about assuming! Market research is really important when starting out in business but also throughout the life of your business as products or services that may have worked well in the past may now be obsolete. Also, you don’t want to spend all your time and resources introducing a new product or service that your customers really aren’t interested in. Engage your target customers. Ask them what they want. So many businesses fail to do this simple thing. Yet doing so shows you actually value your customers and it is also more likely to ensure you’re promoting the right products and services for your market and ultimately growing your business.
4. Not having a plan for the tax man- falling behind on compliance: For most, keeping on top of your bookwork is one of the least favourite parts of your business and as a result it often gets pushed right to the bottom of the list of things to do. However, falling behind on your tax obligations can have serious consequences for businesses. In fact, it can be the death of an otherwise great business. So if you don’t have the time to keep on top of your books, then you need to look at ways to make time or you need to outsource it to someone to look after it for you and shop around for a good bookkeeper or accountant. I’ve seen businesses come to me who have fallen years behind on their tax compliance. Often by then, the damage has been done and they’ve accumulated large tax debts with the ATO (with interest and penalties on top). It’s a hard mess to wingle out of and one that no business wants to find themselves in. Be prepared and plan for your tax. Sit down with your accountant and work out how much you need to put aside each week to cover your tax obligations so that you’ve got it covered and there are no nasty suprises.
5. Becoming too complacent and not embracing change: ‘But we’ve always done it this way’. What may have served businesses well for many years may simply not work anymore. Mature businesses that have been operating in their industry for a long time are generally the one’s most at risk of this. And by risk, I mean the risk of not embracing change in your industry or even better, being the change. There’s very few industries that have not changed in the last ten years in some way. By being too complacent and not challenging the status quo, you risk another competitor coming in and ‘one upping’ you, to put it simply! And even if you don’t need to be overly concerned about competitors, you may be losing out on some great opportunities to grow your business by expanding, developing or even culling some of the products or services you offer. Always stay relevant to your customers.
6. Being too ‘head down, bum up’ and not seeing the big picture: Are you feeling swamped and so busy working ‘in’ your business you simply don’t have the time you’d like to work ‘on’ it? Or perhaps you’re not really interested in the back end side of things at all; the chasing up debtors, the record keeping, the cashflow management, (all the important things that keep a business going). I see this alot but if you don’t keep focus on the bigger picture and get all those things right there’ll be no business left ‘to do’. If you don’t have the time to manage all areas of business yourself and you can delegate, delegate. But if it’s something you need to be across…. you really must make the time. It may mean turning down a job, it may mean putting on a new employee or apprentice. You need to find a way. I’ve seen some great tradesmen who have brilliant skills and offer an exceptional service, or café’s who make the best coffee’s in town, fail in business. It’s brutal and often such a waste. Getting the little things in business right is important but equally important is remembering that being a business owner requires you to put on a new hat altogether. As a business owner you need to consider all areas of your business if you really want to be successful, not just the ‘doing’ part.
7. Being too emotionally invested: A wise woman once told me ‘do it with passion or don’t do it at all’. Having passion in what you do in business is what separate’s businesses from the pack. It’s what drives them the extra mile and it’s what gets them through challenging times. However, there is a difference between being passionate about what you do and being too emotionally invested. I’ve seen new business owners jump head first into buying a business (and paying good money for it), despite all the evidence and the best advise telling them it might not be the best option. Why? Because it was ‘always a dream of theirs to run a BnB’. Similarly, I’ve seen business owners who continue to work in their business year after year after enduring loss after loss, because their dad’s dad started the business 60 years ago and they don’t want to let it go. I am not unsympathetic to these challenges business owners face. These are often incredibly tough decisions. But being too emotionally invested can cloud your judgment and distract you and everyone involved from moving forward in business. Take a step back, try and look at things objectively, weigh up the pros and cons and make informed choices. Some decisions are hard but necessary.