If you’re a small business owner, you know just how tempting it is to move as fast as you can. You want your business to get up and running and turning a profit, and you’re willing to take on as many risks as it takes to make it all happen. All in all, it’s a total rush, and even when you’re stuck in the office doing admin, you’re taking steps to build a business you can be proud of.
But it’s so easy to take a step too far and get ahead of yourself. Building a business is a long process, and your profit margins aren’t going to immediately soar into the green. Tempering your expectations about this will ensure you’re not taking on risk you can’t handle! At the very least, your spending won’t outpace your income at a rate you can’t catch up with.
With that in mind, let’s prevent your small business from becoming an entity too costly for its own good.
Don’t Expand Too Quickly
Rapid expansion can be the most effective business killer. If you expand too quickly without thought for how you’re going to pay for the scale, you could lose everything in the space of a few months.
Many business owners don’t even realise they’ve gone big too quickly. If you’ve had a few good months of sales in a row, it could feel like a turning point. And if a credit company agrees with you, what’s to hold you back?
But it’s important to mete out your expansion goals and move slowly. Always keep things to a minimum when it comes to new hires, new premises, and developing your product line. Any time you put in should be weighed carefully against the cost of it amounting to nothing.
Eliminate Debt Steadily and Surely
Debt is common in the small business sector. Without funding you’re not going to get anywhere, and not everyone is lucky enough to gather investment from crowdfunding or venture sources. So sometimes you have to borrow and pay back on a loan.
However, the more loans you feel the need to take out, the harder it’s going to be to pay the money back on a regular basis. Taking out more than one loan isn’t desirable, and you may even need to dip into your personal account to keep the debt collectors off your shoulders.
It’s why eliminating debt is the number one thing a small business owner should focus on. Keeping debt low puts the value of your business back up, so pay what you owe steadily month by month.
You should also do your research into debt relief, which is something Alex Kleyner feels very passionate about. If you’re struggling to consolidate your debt amount and provide regular payments to every lender you’ve taken credit from, this is the best thing to look into.
Look to Keep Employee Turnover Low
Employee turnover is one of the biggest expenses businesses have to deal with. Employee acquisition is already quite the costly feat, but if that same employee comes into the office and leaves again within the month, you’ll have to pay double the cost to find someone else.
And remember, you’ll have to pay to train both of these new employees, fork out for the benefits allowed to them while they’re on the payroll, and maybe even temporary staff to cover their position while you find a permanent replacement.
Keep employee turnover low by being strict about your hiring process. Hiring the wrong person can backfire tenfold, even if they aced their interview and seemed like the perfect fit. It’s why many businesses have trial periods; you’ll only have to pay out a fraction of the usual cost while you determine if this person is right for the job.
You should also invest in your workplace culture to ensure it’s a welcoming and supportive place. Employees need to know they’re working the right job for their own future, on top of performing at their best.
What to Remember
Your small business can’t afford to get ahead of itself. You need to monitor costs while you’ve got the chance to, no matter how much start up funding you’ve got. That money could soon run out if you’re not careful enough.
Stay on track with the tips above. Expand at a snail’s pace where and when you can, hire the right employees and then treat them right, and always tackle debt before it gets too large.
