Uncertainty continues to surround the UK economy, and it’s easy to see why. At the end of 2016, with post-leave jitters in full swing, the UK witnessed an overall decline in business start-ups and a rise in business mistakes and failures.
The figures, from Creditsafe’s Year in Review 2016 report, show that 136,333 companies were started whilst 6,954 companies closed in Q4 of 2016; a decline from the 140,841 start-ups and clear increase from the 4,949 closures recorded in Q4 of 2015.
Ahead of the triggering of Article 50 and the inevitable greater uncertainty that will come with it, it is now more important than ever to keep your business healthy and buoyant.
Many often jump to the conclusion that small or start-up businesses are the most likely to go under, but contrary to popular belief this is not the case. In reality, every company is at risk of failing, especially if they become complacent.
There are several common and easy business mistakes made by complacent SMEs. Luckily, these are very easy to avoid once identified and dealt with correctly. By taking the time to reverse and steer clear of these mistakes, SMEs can increase their chances of growth and success. Below are some of the most common mistakes to be avoided.
Letting customer service slack
Your customers should be your number one priority. Customer retention is a huge factor when it comes to bringing in sales, even more than new business. People are more likely to stick with a brand they have previously dealt with than a new one, so when you do get new customers on board it’s vital to try your best to keep them.
The easiest way to do this is by simply offering excellent customer service; addressing all queries and complaints promptly and to the best of your ability. Today, customer complaints take place online as well as offline, with customers less likely to call or write a letter and more likely to post comments publicly on the internet.
Unfortunately, these comments can be seen by everyone and can tarnish a company’s reputation, driving away new or potential customers if not answered correctly and swiftly. It’s wise to set up a system that will let you monitor everything said about your company in real time.
For example, using Google Alerts you can monitor keywords such as your business name via email and respond to complaints quickly.
Preoccupation with competitors
It’s crucial for small businesses to research competitors and gauge what they are doing well, especially when starting out. By knowing their market shares and USPs, you can position your own company’s presence.
However, it’s important not to become too preoccupied with them and risk losing sight of your own company’s USP and mission. Businesses should avoid draining resources in an attempt to compete with competitors with larger budgets. By all means take inspiration from competitors, but don’t under any circumstances, copy them.
Being ‘too busy’
You’d be surprised how many companies fall into this trap, especially SMEs who are low on staff. However, there is a way to handle this. Take a step back and ensure that everything you are doing is cost effective, productive and efficient.
Be careful with your money and put aside some time to analyse where it’s best allocated. Make sure your trained staff aren’t wasting time doing time consuming admin tasks or reception work. Sparing a little money to hire someone that can take care of the smaller jobs will benefit you in the long term. It’ll allow your more qualified staff to undertake the more demanding tasks and focus on bringing in more customers.
No cash safety net
Not having a cash safety net is like not having house insurance. Without one, if something happens out of your control, such as a big customer failing to pay you, the whole business could come crashing down.
Having some money set aside as a reserve can save you in times of need, and doesn’t have to come from your own personal funds. Try budgeting an emergency fund into your business plan. If your business is doing well, money should be feeding into it every month, so if a crisis does arise you’ll be able to deal with it.
Failing to credit check
Every business owner will at some point have had their fingers burnt by a late payer. However, dealing with them regularly could damage your business’ cash flow and this is a serious consequence for those who fail to credit check.
Company credit reports, such as those offered by Creditsafe, reveal the key financials, performance and payment behaviour of a company. By credit checking you can assess how well a company pays before doing business with them. If you don’t like what you see, you can avoid a potentially costly mistake.
In summary, take some time out to analyse your business. Avoid these business mistakes and there’s a better chance that you won’t be joining the growing insolvency club.
This article was written by Rachel Mainwaring, operations director at Creditsafe.