Common Mistakes Made By Small Business Entrepreneurs, How to Avoid Them

Do not rush to become “Limited”: Many freshman in business are attracted by the words “Limited Liability”. In Nigeria the words have become synonymous with success but it is not so. Choose the best business medium that is suitable to your dream business. Watch who you choose as partner in business: Good friends and close relatives do not necessarily make good business partners. If you find a good partner among them, it’s quite alright. But do not insist that your partner must be your friend or relations. Locate at a suitable place: Right location may not be all that you need for success. But certainly helps. Look before you leap: Make sure that personnel, materials, equipment etc. are in place before opening your doors for business. Remember that first impression could uplift or ruin your business. Do not be a jack of all trades: To succeed in a highly competitive business environment of today, you need to be directed in some ways. E.g. efficient personal service, low prices, quality products etc. above all, you may need to concentrate on doing what you know how to do best. Do not count your chickens before they are hatched: Do not be carried away by stories of other people’s success In a type of business and thereby you begin to work the mathematics of your millions even before you have opened your door for business. Seek professional/ financial advice: some business starters avoid using the service of accountants, lawyers, consultants and other experts under the pretext that they are too expensive to hire. This could be a case of Kobo wise naira foolish. The area of business finance is so complicated that without professional advice, you will be lost. Do not shy away borrowing: Borrowing money is not a sign of weakness. Borrowing is a crucial vehicle for business growth. For small business, borrowing is both catalysts for expansion as well as a cushion for financial setback. Patronise a reliable and friendly bank. Watch your cash reserve: Most small businesses fail in part, because there is too little money invested up front. The firm undercapitalised because in the rush to start making big money, inexperienced entrepreneurs commence business without adequate funds to see them through teething problems. Don’t be soft on credit: Avoid bad debts, Building a successful small business means understanding that extending business credit is a crucial, yet delicate service. Handle it right as the business grows. Treat it casually or it damages the business. Beware of cheques: Many small businesses have been ruined accepting cheques. Unless you are absolutely sure, insist on cash or bank drafts for payment for your goods and services. If you accept ordinary cheques, ensure that you cash them before the goods are taken away. Strive to be Liquid: Liquidity is the ability to pay your debts as they fall due. Liquidity answers the question. “Does the firm have enough cash plus assets that can easily turn to settle as they fall due?” Be the boss, remember you are the employees’ boss and no matter how well the people working for you are and regardless of their talents and abilities, you remain the boss. Every load is on your head.

(Source: Vanguard)