20 Bad habits/practices often used in small businesses

I was once asked to give my views on the bad practices found in small businesses. After careful consideration and consulting with entrepreneurs I had coached in the past, this is my top 20 list, accepting, of course, that there are many more.

By Bob Power

While many of the practices listed are, in fact, tantamount to breaking the law, cash-strapped businesses caught in a catch-22 situation may resort to these practices in an effort to ensure they live to fight another day.

How do we stop these habits/practices? Typically these bad practices stem from two factors - not having the right mentality to own a business and/or a lack of resources. If these practices result because the owner does not have a head for business, they should seriously consider going back into employment. If it is a lack of finances, it may be addressed by attending training on how to own and sustain a business.

1. Appointing a third party to prepare your business plan and then not making the effort to understand the basics of that plan. While such a business plan may convince the bank, your future success depends on your grasp of the business plan.
2. Complicating the business plan. Keep the business plan simple and practical, especially the executive summary. Business plans should never exaggerate; be honest and realistic even when, as is often the case for new ventures, you are forecasting a loss for the first year.
3. Being on bad footing with your bank manager. Remember, he can put you out of business.

Cultivating a good relationship is good business practice.

4. Ignoring communication from the Receiver of Revenue or lawyers is never a winning solution.
5. Poor communications is a sure way to put yourself out of business. Answer all communications, no matter how unpleasant and be particularly attentive to your customers’ queries. Under the heading of good communication practices, remember to switch your cell phone off during meetings.
6. Overcharging on your invoicing. Invoicing an exaggerated number of hours worked in an attempt to boost your cash flow constitutes fraud.
7. Not clearly distinguishing between personal and business expenses. Don’t use the company credit card for personal expenses, don’t abuse the company vehicle and don’t claim personal travel as a business expense. Balance your leave so as not to leave unqualified people in charge of the business and take enough leave to alleviate stress and family problems.
8. Poor time management. Always being late for meetings will not necessarily be interpreted by other parties to mean that you are very busy and making a lot of money.
9. Letting stress get the better of you. Stress may lead to heavy smoking, drinking and gambling - get advice before the habit becomes a problem.
10. Falling prey to ‘entrepreneurial excitement’ and watching the product, not the profit. Avoid the pitfalls of rushing products into the market without the necessary testing.
11. Signing legal documents and financial statements without understanding the content and/or obtaining advice.
12. Poor presentation skills. Watch out for proposals that are too long and riddled with incorrect spelling and grammatical errors.
13. Procrastination. The Oxford dictionary defines procrastination as: indecisive, delay, dither, drag your feet, put things off, etc. We all do it, but it has no place in running a successful business.
14. Pushing debtors for payment, but delaying payments to creditors. While this may alleviate a momentary cash flow problem, this habit may cause problems with creditors.

15. Neglecting advertising, marketing and even security may be a short term fix to a cash flow problem, but is it worth the long term impact it may have on your business success?
16. Incurring expenses by leasing premises, hiring staff and buying equipment before you are ready.
17. Not understanding people. Loyalty quickly disappears when employees are continually threatened with losing their jobs.
18. Making your mistakes the customer’s problem. What happened to ‘the customer is always right’?
19. Confusing turnover with profit.
20. An issue raised by the entrepreneurs who assisted me in compiling this list is that the term ‘entrepreneur’ is often overplayed. By referring to themselves as small business owners instead, they have, for example, found it easier to obtain finance. This results from the notion that entrepreneurs take too many risks, while small business owners are perceived as being more conservative. An interesting point for debate certainly, however, I do believe that the ‘entrepreneur’ takes calculated risks. 

Perhaps the worst habit of all is operating under the illusion of the 11^th commandment – ‘Thou shall not be found out’. So early in the new year, I would encourage small business owners to assess their current situation objectively and brave the necessary changes.

Power Corporate Consulting

www.powerconsulting.co.za

rpower@mweb.co.za

+27 11 880 7850