I’ve worked with startups that couldn’t afford to pay their workforce. Nothing can stop production faster than a company that is weeks behind on making payroll.
What can cause financial problems for small businesses?
1. Unrealistic sales expectations. It’s not uncommon for small businesses to keep increasing their sales quotas. The problem is other parts of the machine that drive sales doesn’t get the attention. Marketing is one of the first ‘peripherals’ to get the ax.
2. Unrealistic project completion timetables. When I’m given a project I multiply the time I think it will take to complete by 3. It’s easy for small businesses to want to turn around projects ASAP. Here’s a problem.
Clients don’t always move on your timetable. The internal team may not have all the tools in place or technical experience to complete the assignment.
Unrealistic timetables typically result in a rush to finish a job without any quality control or quality assurance measures in place.
3. Taking on projects that are too big. Chasing big dollar items is a risky move- even for the savviest of managers. If you’re a small business you have to know the limits of your team and whether or not you should walk away, outsource or refer to another agency.
4. Poor scaling. Growing your business is fine. But, you have to do it smart and steady. Adding too many programs too quickly will create confusion among the ranks and your clients. Neither of which will want to do business with you.
The core business must be solid and firmly in place before you even think about adding another line.
Any one of these four problem areas will hurt your bottom line. They expose you to unnecessary threats. Lawsuits, high employee turnover and zero growth are all valid threats for the small business that misses the mark on having sufficient capital.
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