Chapter 7: 20 BAD HABITS/PRACTICES IN SMALL BUSINESSES

During a recent TV programme I was asked to give my views on bad habits/practices in small businesses. I gave the matter careful consideration and keeping to my concept of keeping it simple and practical and after discussing the issue with some entrepreneurs whom I had coached in the past- I came up with the following points, accepting that there are obviously many more.

It was noted that many of the practices were in fact breaking the law, but regrettably in business when you are cash strapped you are in a catch 22 situation-you take chances, at your risk, be careful.

 

 

1.    Letting someone else prepare your business plan (at an unrealistic fee), which you do not understand. It may convince the bank but you must have a plan, which you understand, for your future which you yourself understand.


2.    On the topic of business plans-don’t exaggerate, accepting where possible that you want to prove that you will make a profit so you can get a loan. Be honest but realistic and keep the plan simple and practical, especially the executive summary. If you are forecasting a loss in the first year-which is often the case, will the bank help you?


3.    Thinking you can beat the Receiver of Revenue, and even worse not answering his letters. Not answering lawyer’s letters doesn’t help either.


4.    Not having a good relationship with the bank manager, keep in with him, he can put you out of business.


5.    Poor communications, not answering phone calls, emails, letters etc.even if you are having problems with the sender. Answer, if not you will soon be losing business, especially if not answering your customer’s enquiries. Not switching off your cell phone at meetings-nothing else to be said here.


6.    When short of cash, over charging on your invoicing, hours spent being exaggerated. This sector would also, includes overcharging expenses. This is fraud.


7.    Using your company credit card for personal matters. This would include using the company motor car. Also overseas trips on the company’s account is against the law unless genuinely on company business. Taking too much leave and leaving people in charge who do not understand the business. Conversely not taking any leave-which causes stress and family problems.


8.    Always being late for meetings, thinking the other side believes you are very busy and making a lot of money-unfortunately it soon becomes clear that it is bad time management.


9.    In respect of habits, stress can result in heavy smoking, drinking and gambling which can have major problems with your health-get advice.


10.    Thinking product not profit. In the same arena-watch “entrepreneurial excitement”-rushing into products without testing the market. Thinking you have a niche market and finding out too late that there are hundreds of competitors.


11.    Signing legal documents and financial statements, not understanding the content, and not having got advice.


12.    Poor presentation skills, proposals too long-bad spelling and grammar.

13.    Procrastination-The Oxford dictionary sets out the following definitions-indecisive-delay-dither-drag your feet-put things off etc-We all do it-but it is not the way to run a business.


14.    Pushing debtors to pay but delaying payments to creditors. It can help when you have a cash flow problem, but if you overplay-creditors can cause you major problems.


15.    A dangerous practice is that when you have a cash flow problem, you are inclined to neglect advertising and marketing-and even security, which today must under no circumstances be neglected.


16.    Overcapitalisation-leasing premises, hiring staff and buying equipment when you are not ready for them.


17.    Not understanding people-a bad habit is to continually threaten employees with losing their jobs, loyalty disappears.


18.    Turning your mistakes into the customer’s problems-the customer is always right?


19.    Confusing turnover with profit.


20.    Perhaps a little contentious but raised by entrepreneurs whom assisted me with these comments-in that the word “Entrepreneur” is being overplayed. They have found that a better practice is to say they are small business owners, there is more chance of obtaining finances, because it is often stated that entrepreneurs take too many risks and that a small business owner is more conservative- Interesting point for debate. I believe, however, that the entrepreneur takes calculated risks. 

How do we stop these habits/practices? Much depends on two factors, not having the right mentality to own a business and lack of finances. With the first one the answer must be that if you cannot take the pace of business, and stress increases it may be better to go back into employment. If your health is suffering so will your business With regard to lack of finances, initial training in how to own and sustain a business, understanding business and people are perquisites.

The major concern is that the worse habit of all is that even if you have conquered the factors above, you still continue with some of the others, thinking that the 11th commandment will apply-“Thou shall not be found out”. “Penny wise-pound foolish”

Even worse is expanding your small business substantially organically or by acquisition, but continuing with your bad habits.


Bob Power, through his business Power Corporate Consultants has been actively involved in training, lecturing and mentoring for many years for those wishing to enter or expand their business, He works on the theme “keep it simple without the use of jargon on legalese”.


He is a lawyer by profession and as a consequence, he has in addition to training. lecturing and mentoring,-formed a business on “Business Advisory Services” which includes services usually required by small business owners/ entrepreneurs-such as legal matters but also financial issues, negotiations, consultancy, due diligence and human resources-in effect collective services which the small business owner/entrepreneur will encountered on his  climbing the ladder of success.


He is also a writer of many books, press cuttings, training material on the same topic of “Assisting those to wish to enter and succeed in business”






Login to post comments