Small and Medium Enterprises (SMEs) are a key component of the country’s economy. SMEs have continued to provide sought after financial empowerment and relief to many people who are not in formal employment. Starting and running an SME takes business acumen and abiding by key business principles. Here are some pitfalls you should avoid as a small business entrepreneur.
Bank loans can be helpful in giving a company the money it needs to expand, but taking on unnecessary loans is one of the biggest mistakes made by small businesses. Do not simply go out and get a loan because you think that that’s what new businesses do; outstanding institutional debt can be the thing that puts an end to your company. Loans should always be for the purpose of business growth.
Startups require time and focus in the beginning. It is therefore not a good idea to spread your energy and resources with various ventures at the beginning. Start with one business idea and once you have figured out what works by running your first startup, it will be much easier the second time around to make things work in the way that you hope they will.
Inadequate market research
It is important to conduct adequate market research before launching your business idea. Failure to understand if there’s adequate demand for your product can be detrimental to your business. No matter how brilliant your idea might be, if it doesn’t solve people’s problems it can’t be successful. You can only know this through market research.
Poor financial management
SME success largely depends on your ability to implement sound financial management principles from the start. Poor financial management and literacy which will result in struggles to manage cash flow and generally failing to plough profits back into the business.
The world is now a global village driven by technological innovation. Effective technological usage in your business is key in achieving growth, efficiency and profitability. Neglecting technology in your production, marketing and customer services may hinder business progress and cause you to close shop.
Poor customer service
Customer experiences will be defined by the skill and quality of support they receive. Quality products without quality customers will not push the business to desired levels of profitability. It is therefore important that customer queries, requests and even complaints are given the necessary attention in order to increase customer retention.
Avoiding the pitfalls listed above will assist you in achieving business success.