According to the LendingTree analysis of BLS data, the business failure rate in the U.S. within the first two years is 37%, to be exact. The BLS report that about 50% fail during their first five years and 65% during the first 10 years. So, what are the common mistakes that small-business owners make when their businesses begin growing? Below are the common business mistakes likely to happen during business growth.
13 common mistakes that small-business owners make when their businesses begin growing
1. Keeping secrets from the team
Small-business owners often make the mistake of keeping secrets from their team members when their businesses grow.
The reason for this is that the small-business owner may feel like they need to have all the answers, or they may be afraid of losing control of the business.
This can lead to mistrust and resentment among team members, and can ultimately hinder the growth of the business.
It’s important to be transparent with your team and to make sure that everyone is on the same page in terms of the company’s goals and objectives.
2. Not closing money loops
One common mistake that small-business owners make when their businesses grow is failing to close money loops.
You create a money loop when you spend money on something that doesn’t directly generate revenue for the business.
For example, if you spend $500 on office supplies but only bring in $300 in sales, you’ve created a $200 money loop.
Over time, these small expenses can add up and put a strain on your business’s cash flow.
This can happen when businesses expand too quickly and don’t have the proper systems in place to track their finances.
Without closing these loops, businesses can miss out on important revenue and end up in financial trouble.
To avoid this, be mindful of where you’re spending your money and make sure that every purchase is helping to grow your business.
3. Hiring too quickly
Hiring too quickly is one of the most common mistakes small business owners make when their businesses grow.
The problem with this is that it can lead to hiring inefficiencies and can also be very costly.
Hiring too many employees can lead to a decrease in productivity and an increase in expenses.
It’s important to take the time to assess your needs and figure out exactly what positions need to be filled before you start the hiring process.
You should use temp or part-time employees to help with the increased workload until you’re ready to make full-time hires.
4. Making uninformed decisions because they’re “good enough”
As your small business grows, there is this temptation to decide based on what seems “good enough.”
However, this can often lead to uninformed decisions that can have negative consequences for your business.
Instead, take the time to research your options and consult with experts when necessary. Don’t simply go with the first option that seems “good enough.”
This will help you avoid costly mistakes and ensure your business continues to grow and thrive.
5. Excessive micromanagement
As a small business grows, it is common for the owner to micromanage every aspect of the business.
This can be a mistake, as it can lead to employees feeling overwhelmed and bogged down by too much detail.
Instead, the owner should focus on giving employees clear objectives and the freedom to achieve them in their own way. This will lead to a more motivated and productive workforce.
6. Not being open to new ideas and changes in direction
As businesses grow, it’s important for owners to be open to new ideas and changes in direction. Often, business owners become so set in their ways that they’re not willing to adapt to the changing landscape.
This can lead to problems down the road, as the business may not keep up with the competition.
By being open to new ideas, the business owner can learn from their mistakes and changes to avoid making the same mistakes in the future.
It’s important to be flexible and willing to change course when necessary in order to keep your business growing.
7. Not staying focused
When small businesses grow, it can be difficult for the owners to stay focused. You see situations where Employees, customers, and suppliers are pulling them in different directions.
This can lead to them making mistakes, such as not being able to delegate tasks or forgetting about important details.
However, there are a few things that you can do to help you stay focused, especially when the business still growing.
- First, try to keep a routine and stick to a schedule as much as possible. This will help your mind stay focused on the task at hand.
- Second, delegate tasks to others so that you can focus on the most important tasks.
- Last, take breaks when needed and get plenty of rest so that you can be fresh and focused when working on your business.
It’s important for small-business owners to remember to stay focused on their goals and not get distracted by the day-to-day operations of their businesses.
8. Failing to delegate tasks
Many small-business owners make the mistake of failing to delegate tasks when their businesses grow.
This can be a major problem because it can lead to the owner becoming overwhelmed and bogged down with work.
Instead, it’s important to delegate tasks to other employees or contractors so that you can focus on the bigger picture. This will help ensure that your business continues to run smoothly as it grows.
Here are a few tips for delegating tasks effectively:
- Assign tasks based on employees’ strengths and interests.
- Be clear and concise when explaining the task and expectations.
- Follow up with employees to ensure the task is being completed as desired.
- Be open to feedback from employees about the task and improvement suggestions.
By following these tips, you can delegate tasks effectively and help your business continue to run smoothly as it grows.
9. Not have the proper infrastructure in place to support a larger business
Not having the proper infrastructure in place is a common mistake that small-business owners make in business.
The most successful businesses have a solid foundation that includes the following key components: financial stability human resources marketing and sales operations and customer service.
You must give each of these areas careful attention in order for the business to run smoothly and effectively.
One of the first steps to take in ensuring that your business has a solid infrastructure is to put together a team of qualified individuals who can help you build the various components mentioned above.
You will need to find individuals who are experts in their respective fields and who are ready to help you grow your business.
You will need to establish systems and procedures for each area of your business so that everyone knows the desired expectations and so that there is a clear chain of command.
10. Not keeping track of finances
As a small business owner, it is important to keep track of your finances. Many owners make the mistake of not keeping track of their finances as their businesses grow.
This can lead to financial problems down the road. By keeping track of your finances, you can avoid these problems and keep your business on track.
There are a few things that business owners can do to stay on top of their finances. First, they should create a budget and stick to it. This will help them know where their money is going and track their expenses.
They should also keep track of their income and make sure that they are making enough money to cover their expenses.
Business owners should keep track of their tax obligations and make sure that they are paying all of their taxes on time.
By following these tips, business owners can keep track of their finances and ensure that their businesses are running smoothly.
11. Neglecting to invest in their skills and development
Small-business owners often neglect to invest in their skills and development when their businesses grow. This is a mistake that can have serious consequences down the road.
Without proper training and development, small-business owners will probably struggle to keep up with the competition. They may find it difficult to attract and keep top talent too.
Investing in skills and development is essential for small-business owners who want to ensure long-term success. By investing in their own development, they can stay ahead of the curve and position their businesses for continued growth.
12. Not hiring enough employees
When businesses grow, small-business owners make the mistake of not hiring enough employees.
This can have several negative consequences, including decreased productivity, poor customer service, and increased stress levels for existing employees.
Deciding to hire additional staff is not always easy, but it is often necessary in order to keep your business running smoothly and efficiently.
If you are unsure whether you can afford to hire more employees, there are several ways to cut costs in other areas of your business in order to free up some funds.
Ultimately, the decision to hire more staff is important to keep the business on the path of growth.
13. Neglecting the need for the injection of more funds into the business
Neglecting the need to inject more funds into the business during business growth is a common mistake by business owners.
The belief that the current cash flow will sustain the growth momentum is often misplaced.
A lack of working capital can lead to suppliers refusing to provide inventory on credit which can lead to production delays and a loss of market share.
It is, therefore, crucial to have a sound understanding of your business’s working capital needs and to plan for additional funding well before when the need arises.
Growth can be a very exciting time for small business owners. However, it can also be a time when things can get overwhelming quickly. However, you know some of the common mistakes that small-business owners make when their businesses begin growing.
To avoid making common mistakes during this period of growth, it is better to apply some of the suggested actions and business policies. Thanks for reading. I hope you found this article helpful. If you have questions leave them below. I’ll do my best to answer them as soon as possible.