Top 10 common SME mistakes - part one

Running an SME can often be a challenging task that forces you to make serious decisions that can drastically affect the successful operation of your business. Sometimes your decisions will be valuable and will contribute to a growth period of a business, other times they could be detrimental and may contribute to an avoidable mistake.

The following are the first five of 10 common mistakes that can easily be preventedand help support your future decision making as a SME owner.

1. Trying to do everything yourself

This is a trap many SME owners fall into out of fear of mistakes being made. Often owners will take too much work on and increase their stress levels when they have resources readily available to them to assist.

By focusing on your own strengths and whatyou can best contribute to the business, smaller tasks can then be delegated to internal employees or external consultants who will most likely be better informed and positioned to deal with the issue in the first place.

You may even find you don't have enough staff, in which case it might be a good idea to add a new recruit.

2. Mixing personal and business finances

This is another common mistake you may fall into if you find finances getting tight. Understandably it may be difficult to watch your business suffer in a tough time and sometimes the temptation will get the better of you. However, dipping into your personal finances just to resolve cash flow issues isn't going to provide an accurate reflection on your business performance nor will it help with your lifestyle.

3. Failing to develop an appropriate risk mitigation strategy

An appropriate risk mitigation strategy will protect you from gaining bad customers who aren't capable of paying their invoices. The most important thing to remember when employing a risk mitigation strategy is to find something that works for you.

Even the most basic level of risk mitigation where you conduct a credit check before taking on new customers could be vital in saving you money down the track. Or alternatively you could employ the experts at Dun and Bradstreet to provide the risk report for you.

4. Not chasing payment of invoices promptly

Allocating the time and resources into chasing overdue debt  can place a significant strain on your business. Therefore, it's essential that you have processes in place that follow up the payment of invoices immediately after they fall due. If it becomes a consistent problem with a delinquent payer don't be afraid to withdraw their credit facility and ask for money up front.

Due to the timing constraints for many SME owners it may be worthwhile employing a debt collection agency to help follow up any debt owed.

5. Relying on a small customer base

This is a common mistake but also a difficult one for SME owners to improve on. By spreading your business across a large number of clients you can effectively spread the risk of your investment.

If you don't spread the risk you are essentially relying on those few clients, no matter how big they are, to keep your business running and maintain the risk of falling into serious trouble should one of those clients stop ordering from you.

Stay tuned for part two on this topic.

More information: Customer situations to watch out for

 

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