So what are the pitfalls you must avoid in running a business? Part 2

6. Living too high for the business. There is an age old adage that represents the opposite side of this coin and that’s “Waste not want not.” Too many times operators forget that there are business cycles and the cycles cut both ways. You must prepare for the “bad times” during the good times.

7. Expansion too rapid. We here at Numerico believe in getting rich slowly. It takes time to build all business functions (administration, marketing and production) and all three must be intact to grow profitably. As you grow it is very easy to let the expenses in these areas get away from you but you can’t. With the average small business putting just 3% on the bottom line there is no room, on the expense side, for error. Again “Waste not want not”. Active management of operating expenses is essential.

8. Wasted advertising budget. Promoting your business, however your industry does so, is a science, art and requires money. Given the limited resources we all have, our marketing plan cannot be weak, or worse, non-existent. You have got to have a plan and it has got to be in writing.

9. Inadequate borrowing practices. Trick question. Do you go to the bank when you need the money or when you don’t need the money??? Of course the answer is when you don’t need the money. Let’s face it, the bank is not a venture capitalist and as such is not in the business of lending you anything when you need it. The ability to anticipate cash needs, WELL AHEAD of the actual demand, is proactive planning (See item #1 from part 1).

10. Non-payment of taxes. Let me just remind you that the IRS has no sense of humor what so ever! This is clearly a pitfall to be avoided and as such we have two rules here. Rule #1 – Pay the taxes! And Rule #2 – Refer to rule #1!

Pitfall avoidance is good for the health of your business. Fall prey to any of these and it will mean the demise of your business.

Certainly we have all made our share of these mistakes and in varying degrees. Should you find yourself in need of ways to help restore your business to heathy growth because of this feel free to contact for consultation. The initial consultation is on us.