Mistakes in managing and operating a business can threaten its long-term viability. The key to success is to quickly identify your mistakes and learn from them.
Here are the top 5 mistakes of small business owners:
- Getting into the business for the wrong reasons
The bar business is a very social business, and many owners come into it for the wrong reasons. Running a bar is not as sexy or easy as most people think. Too often, owners get involved for the wrong reasons — whether for social gain or easy money — and do not have the self-discipline or determination to be successful.”
Find your real motivation for starting a business and determine whether you have the entrepreneurial spirit. A great business owner is social by nature but will also possess the financial abilities to manage a business. Remember, it’s a business, not a hobby.
- Not taking responsibility for failures
The common denominator of failure is an excuse. Business owners will blame the economy, the government, their competitors, and every external factor for their failures before they own up to their mistakes. This is wrong – we only fail because of ourselves. The minute you take responsibility, everything changes. - Poor marketing
A small business needs to develop a brand and marketing strategy in order to provide their customers a clear expectation of what their business can offer. There are three specific marketing initiatives for every business: new customer, frequency, and spending programs. A new customer program such as reaching out to local businesses and neighborhoods promoting your business will bring in new business. Frequency programs, such as email blasts and social media promotions, are designed to achieve the retention of existing customers. Spending programs such as up-selling and exclusive deals are aimed to increase the amount of money spent each time the customer does business with you. - Financial neglect
Cash is the lifeblood of any business, so it is imperative that there is a strict record-keeping procedure. Managing expenses is a science and must be done frequently. To be profitable, labor costs should be between 25-32% of all revenue, food costs should never exceed 30% of food sales, and beverage costs should be below 21% of beverage sales. Knowing exactly how much money is going in and out of the business will help guide every business decision. - Not having the necessary experience or help
Only 1 out of 12 first-time owners succeed in the restaurant industry. For second time owners, the success rate is 1 out of 3. Experience is important when it comes to running your own business. Get experience by working for someone else first or have a partner with experience.