Burgeoning entrepreneurs must start somewhere, often with an idea, a little seed capital, and a dream. From there, they can make their small business a reality. However, taking the next step and growing into something bigger and better takes a lot of work. There are key mistakes to avoid when growing your small business, and finding your way around them will help set you and your business up for success.
Not Reinvesting Profits
A key mistake business owners can make that will hurt their business’ growth potential is not reinvesting profits correctly. Profits are hard to find in the first few years of a small business, but when you get them, you need to put them back into the business. Financial management is one of several things that you might forget about when running a business, but it is essential. Instead of taking those profits home, invest in the following:
- New equipment
- More training
- Market research
- Employee pay
It can seem like you’re losing your money, but when you reinvest this way, you are making growth much more attainable, meaning those profit margins will soar in the future.
When you don’t have a business plan that outlines your next 5-10 years of operations, and you just go with whatever the world throws at you, you likely won’t grow. There are rare cases where a business will still grow, but these events are often out of your control. Organic growth requires careful preparation and work, and you can’t make that a reality when you don’t have a plan.
Develop a plan that incorporates your internal metrics and market projections. From there, you can see areas of improvement, think about potential pivots, and find ways to expand your business in the right direction.
Poor Team Management
Poor team management is one major common financial mistake that can hurt your small business—or a business of any size. Business owners work to minimize costs in every way possible, and that often falls on the back of their team in the form of understaffing. While this strategy does save money, it hurts your business in the long run, making growth almost impossible.
If you want to grow your business, you must anticipate this growth, and you need a team that will stick with you through this growth. Having one employee do multiple jobs without proper pay quickly leads to burnout. When you allow for burnout, you’ll experience low employee retention, making it much more difficult to grow as you constantly need to rehire and retrain new employees. Value your employees and ensure they’re part of the team so that growth becomes easier to reach.
If you want your small business to grow and succeed, it’s crucial that you avoid key mistakes that can hurt your business and limit your growth ability. It’s hard to find 100 percent guarantees in business since the market can be unpredictable, but if you make these mistakes, you will have a harder time growing your business. Make sure that doesn’t happen, avoid these mistakes, and make your business dream a reality.