You found your niche, created a demand for your products and services. You invested time, expertise and your money to make that all important sale of your goods only to let it all slip away?
- Not Using Accounting Software—Often when you start out in business you are starting small. Unfortunately we get into the bad habit of using paper receipt books and or Excel to keep track of our sales. One thing I know to be true, if it’s not tracked and measured it gets forgotten. Out of sight out of mind. Your Income statement should be at your fingertips. If you have to wait for an accountant to prepare it for you then you aren’t running your business, your business is running you. Basic software will help you create invoices, build estimates, track expenses and even help you produce profit or loss statements at the push of a button. There are several accounting programs that are available to you. They can be downloaded to your computer or you can get one that is cloud based. I suggest doing some research, looking into a free trial and then moving on from there.
- Sending Invoices Late—I know you’re a likeable loveable person, but your customers should make payment when services are delivered. NO exceptions! Hand them an invoice at the conclusion of your business or email them one that day. All too often I run into people that haven’t sent invoices in a week or two and they can’t figure out why they can’t make their CASH FLOW.
- Letting Late Invoices Slide— I know your customers would NEVER take advantage of YOU. Yeah right! Whether intentionally or not, MOST people will push the envelope on when they pay. Know this, they can’t go to a big box retailer and walk out of the store without paying so why should they be allowed to with you. The only reason they get away with it is because you LET THEM. I have actually gone to a customer’s place of business and sat in the waiting area until they wrote me a check. Next month you better believe that the check was on time. Once people realize that you are not a push over they will stop pushing you over.
- How Many Times Have You Heard “the Check is in the Mail”?—If you take a lot of payments by check in the mail it can slow down your cash flow. Processing companies like PayPal, Square and Stripe have made it easier than ever to accept credit cards. Unfortunately we all feel scalped when we pay up to 5% in merchant fees. I would advise setting up your business thinking that everyone will pay by credit card to account for those fees.
- Employees & Staffing—Friends are friends and should be kept as such. I’ve NEVER seen a situation where having friends as employees works out. Someone always feels like they are being taken advantage of, this goes for family as well.Not hiring enough people. Always know that some people just won’t work out no matter how great of an interview that they had. It’s better to have too many and weed out the ones that don’t cut the mustard. I want you to think of your staff and model it after your favorite sports team. How good is your bench, and do you have any free agents waiting in the wings?
Quick Story. When I first started in business I was so scared to do my first firing that I went so far as to get him a job with my competitor because it made me feel better about letting him go. Don’t be afraid to let underperforming employees go. You will ALWAYS make it worse in your mind than it will be in reality.