Small business owners are an assiduous bunch. Often wearing many hats at any given time, there’s always something to be juggled. Between managing marketing efforts, accounting, onboarding staff and keeping an eye on everything else, something is bound to slip through the cracks. Don’t let a small business mistake turn into a bigger (and oftentimes costlier) disaster. See also, How to Start a Small Business from the AmVenture Blog. Use these 5 mistakes as a guide so you don’t make them yourself.
1) Letting insurance lapse. If you do one thing for your business this year, make sure your insurance policy is current. What happens if your policy lapses? Tim Logan, Director of Product for AmVenture Insurance Agency, Inc. advises of the following risks from letting insurance lapse:
- You could be in violation of state statutes for workers’ compensation and possibly subjected to fines or imprisonment.
- You could be responsible to pay 100% of damages arising from a loss.
- Any financing terms you may have in place could be in violation if your insurance lapses.
2) Not having a strategic plan. According to the Small Business Association, approximately 1 in 12 businesses fail. While each case is different, the lack of planning can be is a large player in the failure rate. Unlike a business or marketing plan, a strategic plan acts like a goal for your company, and you are always working towards it. Here are some components of a strategic plan:
- Mission statement, or vision for the company
- Goals-where do you want to take your business?
- How will you achieve your goals? What’s it going to take to get there?
- Measure. How are your strategies working? What can you do to improve?
- Plan. Through checks and balances, manage your plan. Maintain benchmarks, and have goals to exceed them.
3) Failure to hire the right staff. Hiring the right (or wrong) person at a small business can have a huge impact on both the culture and the bottom line. Xero has some great tips to consider when hiring people for your small business:
- Prioritize what you or your team actually need. Make lists of the tasks you want each new employee to take on.
- Be clear about what you can afford. Look into market rates and offer a suitably competitive salary within your budget.
- Do you want to hire someone who will fit into your company culture? If your team is running smoothly you might want someone who will fit in perfectly.
- How will you define your culture in words when you're recruiting? It can be difficult to explain your culture to someone new, so take the time to prepare.
4) Wearing all the hats, all the time. We get it, your small business means everything to you - but trying to do everything all the time is a recipe for burnout. Hiring new staff is expensive, but building the right team is critical to your success. Plus, you can’t possibly be an expert in IT, marketing, accounting, landscaping, etc. What could happen if you take on too much:
- Your personal relationships may suffer
- You could get sick from all the stress – then your business could be compromised.
- Feeling overwhelmed. Trying to manage everything at once can get out of hand quickly, and before you know it, you could be in over your head and looking for an escape route. Practicing self-care is critical as an entrepreneur.
5) Managing cash flow. When it comes to all businesses, cash flow is important – for small businesses, it’s critical. Securing financing for your business can be difficult, and emptying out your personal savings to float your business is a gamble. Check out our budgeting blog post here. Score, a non-profit association dedicated to helping small business get off the ground has these helpful tools for you as well.
- Cash flow template
- Bank loan request template
- Personal financial statement
Here at AmVenture Insurance Agency, Inc., we try to take the stress out of small business ownership. From starting a new business to growing an existing one, AmVenture is here to protect you along the way. Click for a quote today.
AmVenture Insurance Agency, Inc. (“AmVenture”) is a licensed insurance producer affiliate of AmTrust Financial Services, Inc. This material is for informational purposes only and is not legal or business advice. Neither AmVenture nor any of its subsidiaries or affiliates represents or warrants that the information contained herein is appropriate or suitable for any specific business or legal purpose. Readers seeking resolution of specific questions should consult their business and/or legal advisors. Individual coverage may vary and may not be available in all states. In the event of a conflict with the material herein, the terms and conditions of any issued policy will control. Any claim examples are general, may or may not be based on actual claims, and are for illustrative purposes only. Any available coverage for a claim will be determined based on the facts and circumstances of the claim as well as the terms and conditions of the policy, including any applicable exclusions or deductibles.