Starting a small retail business is a difficult task. Nearly every potential product and service is dominated by large corporations with a sizable competitive advantage over small businesses. Even if a new business owner works hard and overcomes these disadvantages, there are still many missteps that must be avoided to prevent the failure of that new company.
Small Business Mistakes in Advertising and Promotion
Properly promoting and advertising a small business is one of the keys to success, but many new business owners hurt their bottom line by falling into these traps.
- Do not overspend on advertising - Small businesses in small towns can create great advertising campaigns based on word of mouth and a couple of well-placed flyers or newspaper ads.
- Do not ignore signage - If potential customers don't see an "open" sign on a business, then that business is not open.
- Do not get cute with the business name - Owners should consider the business name from a customer's point of view. A salon named "Curl Up and Dye Hair Salon" sounds cute and might have excellent stylists, but customers will think of bugs and exterminators.
Small Business Mistakes With Taxes and Accounting
Cash flow is the lifeblood of a business. Managing this cash flow inadequately will kill a new business faster than anything else.
- Do not forego an accountant - Even a business owner with a degree in statistics can better spend his or her time working on improving the business instead of filing tax forms.
- Do not ignore taxes - The IRS will find delinquent business owners. Pay business taxes and pay them on time!
- Do not keep sloppy records - Accurate records are invaluable in areas from taxes and payroll to analyzing marketing campaigns and inventory.
- Do not be wasteful - Reuse items when possible. Small amounts of money add up.
- Do not spend the cash - Small business owners often purchase items that aren't absolutely necessary, such as fancy paper napkins when cheaper napkins will suffice.
Mistakes When Running a Small Retail Business
Day to day operations of a business offer numerous opportunities for mistakes. Fortunately, these are some of the easiest errors to avoid or rectify.
- Do not skimp - Furniture, restroom fixtures, and microwaves will break with regularity under heavy customer use. Commercial grade items are worth the extra cost.
- Do not be inconsistent - Repeat customers want products that are equally good each time. Train employees to create products and service customers in a consistent manner.
- Do not be inefficient - As a business grows, small inefficiencies result in huge waste and increased customer wait times.
- Do not provide endless freebies - Customers become accustomed to free offerings, making it difficult to eliminate those freebies when times are tough.
- Do not overstock - Inventory is evil. All retail businesses must have backup stock, but a full storeroom ties up capital.
- Do not be idealistic - The majority of customers are good people, but the occasional bad egg will appear. Small business owners should keep police numbers handy, establish back exits, lock the doors after hours, and try to have at least two employees in the store during the business day.
The decision to start a retail business is an exciting time, but a truly successful business pays just as much attention to what it does not do as it pays to what it does do.
