Being an SME means having to take decisions and make the right choices all the time. Every decision that you take (or don’t take) impacts your business in one way or another.
There are a few common pitfalls that many SMEs make while growing their business. Why don’t you go through this list of 5 mistakes and check whether you are accidentally going the same way?
- Not registering your company
If your business isn’t registered, how can you legally claim to have a business? Sorry, that’s harsh.
Yes, you have a business, a product or a service, and a host of loyal customers. You might even be in the same business for years, but if it’s not registered, it does not exist. Without registration, you are on the back foot if there is any name, product or technology infringement. If the company that copied you is registered, guess who has the upper-hand?
Registration gives your business a unique identity. It protects you from personal liability in case of a lawsuit or unpaid debt. Customers will take you more seriously. And even investors will look at you favourably when you apply for an SME loan.
- Relying on verbal agreements only
‘I give you my word’, as heart-warming as it sounds, unfortunately will not hold up in the court of law.
Any agreement between your business and a vendor, partner or client has to be on paper, signed by both sides. Not only will this diminish the possibility of legal disputes, but it also reduces the risks of ambiguous expectations from all involved parties.
The contract should be well-drafted. Take the help of an expert when crafting the terms of the contract. The expense might seem significant now, but it pales when you consider the financial risk you and your business could face in case of disputes.
- Not taking the right financial decisions at the right time
Are you hesitating to apply for business funding because you want to be debt-free? Would you rather take it from a friend or family, but not a lender? Have you considered the tax benefits that you get from an SME loan?
These and many other financial decisions are critical to the smooth operation of your business. Take the help of a financial expert and take the right decisions at the right time.
- Not delegating work
Yes, it is your business and no one knows it better than you. However, this should not stop you from hiring the right people and delegating part of the tasks and responsibilities to them. The fear of delegating means you spread yourself too thin, and this will not allow your business or your skills to grow.
- Not reviewing strategies frequently
Every business needs a strategy to get started. But a cardinal mistake many businesses make is not reviewing or modifying the strategy regularly. Strategies are based on forecasts. And not everything goes as envisaged. Perhaps there’s new competition, or a perceivable shift in the market. Maybe your business has developed a new product or service, or you need to consider business funding.
Whatever the reason, it helps to stop regularly, as frequently as every quarter or ever more often, to check if the plan is in line with reality. These short-term reviews can help make quick course corrections of things aren’t what they seem to be.
Whether it’s learning to delegate or reworking and revisiting the strategy, or tackling financial issues, an SME must learn to ask itself these tough questions.