FATAL MISTAKES’ You Must Absolutely, Positively Eliminate From Your Business Right NOW!
We see it every day. People making these fatal mistakes. And even if they’re not fatal, they are having a massive detrimental effect on a business. It's not that the business owners are doing it on purpose. Of course not. It’s just that these Financial & Marketing Mistakes are being adopted because people simply don't realize that what they're doing is having a catastrophic effect on their businesses.
Call it ignorance. Call it lack of knowledge. Lack of professional guidance. Call it what you like. The point is that almost every business is wasting hundreds of thousands of dollars because they’re making these mistakes – without even knowing it!
Statistics tell us that 80% of businesses go bust during the first five years. And of those that remain, 80% will not be in business ten years from when they started. That’s a scary but true statistic – especially when you think these figures don’t include the current difficult economic conditions!
The fact is the success and failure of any business is almost entirely down to how well the business is financially run and marketed – and not down to how good the product or service is – or the people in the business!
This may be difficult for you to agree with at the moment, but as you read through each one of the following mistakes, you’ll quickly understand that ‘He/She who has sound financial foundations and markets most effectively – wins – and wins big.’ That’s why inferior products and services have stood the test of time. It’s because they were (and still are) marketed well – often better than superior products and services. And the business is supported by sound financial and tax-saving strategies.
In other words, to build a better business you need to apply AND combine proven financial and tax-saving strategies with proven marketing strategies.
When you understand what this means, it’s easy to appreciate why businesses all over the world struggle or don’t do as well as they should…
They simply haven’t found a way(s) to generate a constant stream of customers and keep them buying – time after time and at the same time create a financial infrastructure that helps the business flourish.
This is WHY businesses fail – or don’t prosper as much as they should. Sure we’ve all heard the same excuses…
- Too much competition
- Price-sensitive market
- Poor staff
- Economic slowdown/recession
- Blah, blah, blah!
But when the business owner dedicates a large proportion of their time to effective financial management and marketing, then they make the business ‘immune’ to outside factors such as the competition.
Because these Financial & Marketing Mistakes are SO common, this presents a huge opportunity for you RIGHT NOW. We guarantee your competition will be committing these mistakes in their own businesses. Mistakes they’re not even aware of. Mistakes you can now transform into winning strategies.
By looking at the common mistakes and what negative impact each one has on a business, you’ll get an appreciation of the significant improvements you can make in your own business. You’ll be able to spot the mistake before it happens. And you’ll ultimately be in a position to transform each mistake into powerful financial and marketing strategies that generate windfall profits the moment you take action!
As you read through each mistake, think about your business and see how well you’re doing in each of the areas.
Some mistakes are admittedly worse than others. Some can be catastrophic (hopefully you aren’t committing any of these!). But if you catch them soon enough – you’ll have time to act. And ACT is what you must do. If you keep doing the same things – you’re going to get the same results.
If you take control of your business and ensure you avoid making these common mistakes, you can expect truly amazing results! That’s the true purpose of this e-book. Identify what you’re doing wrong, make it right, and watch the sales and profits of your business soar.
Okay, let's get started...
Financial Mistake #1
Failure To Have An Ultimate Goal And A Plan For How To Get There
You wouldn’t set out on a long road trip without knowing your destination, not unless you want to waste an awful lot of time and money. The same applies to your business.
If you don’t know what your goal is then you have no target to focus on. Your decision-making becomes reactive since there is no forward-looking element to it. Business management lacks consistency since there is no point on the horizon to guide your thinking.
Whatever stage your business is at, taking time to think about what you are actually trying to achieve is invaluable. So if you haven’t already done so…
Take a blank piece of paper.
- Mentally put to one side all your current problems, issues and constraints (Trust us!).
- Write down in bullet-point fashion what it is that you really want to achieve with your business. This should be no more than half a dozen points but could be as few as one.
- Frame It! Now you have some goals.
Now let’s return to the road trip. You know your destination, but that’s not enough on a long trip. You need a map or a GPS to get you there; otherwise you run the risk of a wrong turn at every intersection.
In business, knowing your goal(s) is a big step forward but it is equally important that you have a plan for getting there.
A plan will show you the most effective route and will tell you what’s possible and what changes are needed. More importantly, as circumstances change, so the existence of a plan, like a road map for your business, will help you pick the most effective route for getting you back on track. Guesswork is removed from your decision-making.
Creating an effective business plan isn’t a five-minute exercise. Critically, it must be your plan, not something put together by an accountant to keep the bank happy.
However, it is very difficult to create an achievable and meaningful plan without a trained professional to guide and assist you and your accountant is ideal for this role.
The plan should never be seen as fixed. It will continue to evolve, both during its creation and implementation.
Financial Mistake #2
Failure To Keep Good Financial Records
We know what you’re thinking...typical accountants harping on about the boring stuff! Well, here are two facts that you may not be aware of…
- Failing to maintain proper records is, in many cases, illegal and can lead to penalties, even criminal charges.
- Failing to maintain proper records is recognized as one of the main causes of business failure in Canada.
Imagine taking your car on a long road trip (again) without any dashboard information being available to you. You don’t know what speed you’re going, whether there are any mechanical issues or when you are about to run out of gas.
You may think that you have enough driving experience to be able to gauge these things in your head but at some point you are going to get it wrong and there is nothing to tell you otherwise. You are heading for trouble.
Running your business without good financial information is exactly the same. You may think that things are okay but you have no meaningful record of what you’ve actually done and, more importantly, what’s coming up.
“I don’t have the time” is the most common excuse we hear, followed by “I’m not an accountant, I don’t know how”. In reality they are saying “I don’t think that it’s important and I can’t be bothered to sort it out”. When you consider that the alternative is prosecution or business failure then any excuse seems pretty weak.
It’s all well and good having an accounting system in place but if it’s not kept properly or up-to-date then you still can’t get hold of accurate information on your business as quickly as you need to.
We come across businesses which have invested in an accounting system such as Sage, for example, but use it for little more than doing their HST returns. A wasted investment and opportunity. If you don’t have up-to-date, real-time, accurate accounting records then:
- You have no reliable information to assist you with your everyday business decisions;
- You pay unnecessary fees to your accountant;
- You cannot supply information to your bank, mortgage lender, etc., and therefore can’t get financial help when you need it most.
In other words... You are putting your business at serious risk.
Financial Mistake #3
Not Selling For Your Best Gross Profit
Do you really know how much gross profit you make on each and every sale? Do you even know if you are making a profit? Many businesses are unaware of the exact profit or margin they make as they don’t monitor closely enough the different elements that make up the sales. Costs are generally incomplete or outdated. Price lists are not regularly reviewed and updated. Sales volumes and sales mixes change and become out of step with the costing model.
A simple check lies within your financial statements and is yet another reason why you must keep these up to date. Monitoring your gross profit percentage will identify any negative trends before it’s too late.
If you don’t have a tried and tested costing system in place for your goods and services then it is vital that one is created.
With so many variables influencing your costs they should be regularly reviewed, at least annually and after key economic changes.
Regularly review your own price lists and match them to your costs.
Closely monitor gross profit percentages and margins.
Financial Mistake #4
Not Billing Promptly ...If At All!
Fundamental to any commercial operation is being paid for any sale. The hard work associated with a sale together with costs of product and marketing have all been incurred. Yet we still come across many businesses who simply don’t know whether they have been paid or not!
The main reason for this is simply that they don’t have a system to ensure that all sales are invoiced, and done so in a timely manner.
The cost to any business of weak controls in this area can be catastrophic. Like many things, however, the solution is relatively simple. It comes down to having a good physical and accounting process in place.
A good exercise is to produce a flow chart of how your goods and services are stored, processed and billed. This will identify physical and accounting weaknesses to be addressed.
Financial Mistake #5
Making It Easy For Customers Not To Pay
Good credit control starts long before you get on the phone to chase overdue receivable. You can dramatically reduce the chance of disputes and bad debts by being aware of the risk from the moment they first become a customer. The damage has already been done by the time you issue your invoice unless consideration has been given to some key areas first:
- Credit and background checks on new customers,
- Annual reviews of existing customers,
- Clear and concise terms and conditions for all customers, and
- Clear and precise process for the sales process, including a sign off procedure on new customers.
If you have a clear record that the customer has received exactly what they ordered, fully in line with terms and conditions that they have agreed, then disputes are going to be significantly reduced or eliminated.
If you have taken every step to ensure the financial security of the customer is healthy, then bad debts are going to be significantly reduced.
Now, you complete your defences by having a robust system of credit control aimed at managing the payment of every invoice and you have an effective system for ensuring your hard work is properly rewarded.
Financial Mistake #6
Paying Too Much
Watching the pennies is as good advice now as it has ever been. Often a money-saving opportunity is missed because it seems insignificant given the grander picture. The truth is that the opportunities for dramatic savings are rare whilst a range of small savings over a period of time can have the same effect but are much more achievable. Taking just 1% or 2% off each line of your fixed costs will be significant year over year.
There is a balance to be achieved between cost and value. Cheapest often isn’t the best and you should be looking to achieve best value for your budget as opposed to the lowest possible solution.
It’s too easy to cut back on ‘soft’ spending such as training, marketing and non-essential advice, but all are critical to the development of any business.
The key is to ensure that your spend in these areas is cost-effective.
Stay tuned for next week's part 2 of this 5 part series. Or click the link below to receive our free e-book with all 27 Mistakes in one publication.
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