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Weekly I have the opportunity to work with small business owners in a variety of ways. Unfortunately, I often help them overcome a challenge that they really didn’t need at all. One area far too many owners have to deal with, for example, is the inability to get working capital because they’ve never had to deal with their own bad personal credit. Another example is when I help a business owner get out of a loan they took out from a lender.
Both are excellent examples of situations that could easily be avoided if the business owner had done a better job of getting personal credit in order. So, what problems are you facing today that if you had prepared just a little more in the past, just wouldn’t exist?
Here are some ideas to ensure you can mitigate tomorrow’s challenges by taking steps today:
Related: 7 Mistakes That Make or Break Small Businesses
1. Credit/finance
Small business owners mostly look at the bottom line — what they brought in this month, last month, and what’s expected next month. They also think much further into the future like next year, next 3 years, next 5 years, etc. What they don’t always think about is “What can I do now to avoid future mistakes and make sure my business is set up for financial success in the future?”
So, if you need to expand, are you ready? Do you have that money directly in the bank? Do you have a business credit card? How Much Can You Get on a Loan or Line of Credit? Do you have any business credit at all? If you don’t already have a business credit card/line that is open, active and paid on time, you will most likely not get as much as you would like or need when you really need the money. The time to start building business credit is several years ago. The next best time to do this is now. Now for example.
Here are a few ideas on finance to get you started in the right direction:
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Savings account: Put 10-20% of all profits in a savings account as soon as the money is in. This way you don’t have to pay tax with this year’s profit.
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Personal credit: Clean up your personal credit now, because YOU are the personal guarantor of your business credit.
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Business credit: Establish (and use) business lines of credit now and increase each year. This way, when you need to expand, you have the capital ready to use.
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Taxes: Don’t consider writing EVERYTHING off. Your accountant will tell you that the less you pay in taxes, the better, and I agree. However, when an ukbusinessupdates.com writes off almost everything and pays almost nothing in taxes, they make no profit. If that happens, you won’t be able to get financing. After all, if there is no profit, how can you repay the borrowed money?
Related: The 7 Financial Habits of the Most Successful Small Business Owners
2. Staff
Do you ever get a few angry customers calling you because a job wasn’t done correctly? Have you ever had prospects and/or customers write bad reviews about your business on social media? Have you ever gotten heartburn or high blood pressure because you know it could have been prevented if “that damn worker just used his head?” These kinds of unnecessary events happen every day when employees drop the ball.
Small business owners usually fall into two categories here: they hire people who are exactly like themselves, or they hire anyone who breathes. Both are big mistakes. The problem with hiring people just like you is that there will be no new ideas, no new perspective from the outside – it will be the same old, same old. In other words, there will be no growth. If you hire someone who breathes, it’s worse. You will have employees who are not engaged, who don’t care and who don’t see your company as a company to keep up with for the long haul. This is the employee who more often causes problems than offers solutions.
Here are a few tips for hiring and training quality employees:
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resumes: Take the time to go through every resume that crosses your path with a fine-toothed comb. Every six months, see if the person leaves their job to see if they have the ability to remain committed.
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Cover Sheet: Require a cover letter. This will give you an idea of the person’s thought process and how well they can communicate, which is crucial when dealing with customers and/or other departments.
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Education: Have a well-designed training and onboarding program. This goes both ways. It shows the new hire that you are professional and have high expectations, and it also shows that you appreciate them for providing top-notch training. The other is that it allows you to PREVENT customer problems before they happen.
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Reviews: Have work that depends on their 30, 60 and 90 day evaluations.
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Skills: Look for skills other than just industry experience. Many times I have found that employees who have been in an industry for a long time do not cope well with change. People from outside the industry are often easier to train and learn new things more easily.
Related: Asking These 2 Questions Will Improve Your Hiring Process
3. Industry Change
Okay, so you know all about the Blockbuster vs. Netflix story, right? You also know who won that battle, and of course you know why. In fact, almost everyone knows this information, but there are still so many entrepreneurs who refuse to update aspects of their business even when they know they will lose sales and need to make changes.
Here are some areas where you can easily ensure that you deal with change quickly and thoughtfully:
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Send/Receive Money: How do you send and receive money between customers and suppliers? Do you still use checks or a debit card? Maybe cash? There is a lot of fraud around checks and debit cards, and with that you take most of the responsibility. And cash? Once it’s gone, it’s gone. Having and using safer and more effective methods of sending and receiving money will keep your customers happy and your accounts safe.
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Staying on top of industry trends: To keep your business profitable, it needs to stay relevant, so what changes are happening in your industry? Is there new technology? New business methods? What changes are happening to your customer base? Attend at least two industry trade shows each year to keep up with changes. You will learn what is new, what is old and who is taking the lead and getting the best results. Take the time at the trade shows to meet people you can network with to drive your business forward.
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Advertising and Marketing: Do you still do coupon cutters and the local newspaper? Today, if you don’t use Facebook, Google and the rest to market your business, you are probably losing out to your competition on a daily basis. The companies that use Google Reviews and take it seriously win. I can’t tell you how many people refuse to hire companies that score below 4.5. So, join social media and take it seriously. Don’t know how? Just hire someone.
Pro tip: Write down the top 10 biggest challenges you have faced and/or are now facing. In addition, make a list of all the solutions you need to fix it. But now list what caused the problems in the first place and what could have prevented it from happening in the first place. Once you see a pattern, you’ll be in a better position to avoid negative experiences in the future!
