June 23, 2021 By SmartBiz Team

With all of the turmoil affecting small businesses across America, entrepreneurs are understandably scrambling to stay above water and rebuild. With the consumer landscape shifting, business owners need to pay attention to business operations and pivot when necessary.

Certain important business operations should be on your radar in 2021. Slow down and take time to set yourself up for success in the coming year and beyond. Here are roadblocks to avoid.

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Not budgeting

Entrepreneurs frequently fail to use information they have on hand to build budgets that can inform decisions to invest or cut costs and empower their ability to scale. Cash flow woes are the first warning sign that a business needs to adjust its budget. Being prepared allows a business to continue operating successfully despite bumps in the road. In the end, a business will struggle to grow without proper budgeting. Use financial forecasting to help keep you on track. Our article defines forecasting, lays out the benefits, and will help get you started. Financial Forecasting: How to Prepare Your Budget.

Not updating your business plan

According to the small business mentoring organization SCORE, a business plan has two primary purposes. First, it acts as an organized roadmap to help you analyze your plans for marketing, sales, production, distribution, etc.
The second purpose is the reason many entrepreneurs put together a plan-seeking funding from a bank, credit union, or other type of lender. Some financial institutions or other lenders will not invest in your company unless you present a business plan that demonstrates your steps to success. SCORE reports that banks want to mitigate their risk of default and private investors, such as Angel investors, want a realistic forecast for when they will get a return on their capital. (NOTE: SmartBiz does not require a business plan when you apply for an SBA loan or a bank term loan through one of our marketplace banks.)

Other reasons for creating a business plan include defining new business, outlining an agreement between partners, setting a value if selling your business, and to help you manage and track business planning.
In light of the 2020/2021 coronavirus pandemic, most business owners probably need to pivot operations. A business plan can be a roadmap to rebuild. Here’s how to get started if you don’t have this important document in place: The Ultimate Guide to Help you Write a Business Plan.

Payroll mistakes

A small business owner can face fines and penalties when he or she does not classify the employees properly such as an independent contractor, part-time or full-time hourly workers. Different classifications are necessary for tax purposes, and these can also affect the possible benefits and necessary compensation for work. If you’re new to payroll, though, or if you’re afraid of making a mistake, you may also want to get specialist advice. Spending some money now on good tools and advice could save you a huge amount of money, time, and hassle in the future.

 
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Failing to develop a cohesive brand

Your employees and customer service operations are a huge part of securing loyal repeat customers. Repeat customers are important because it is very likely that they will regularly spend more on your products than a new customer would. Additionally, repeat customers can provide (free) word of mouth marketing for your business.

The best way to develop a strong base of loyal customers is to create a consistent and positive brand experience that really resonates with your target audience. Does your business have an established set of brand guidelines? If not, you could be missing out on an entire group of customers that would otherwise be passionate about your brand. Note that you may have to revise your branding in light of the pandemic. Perform a down and dirty competitive analysis to see where others in your industry stand and what they are doing to succeed.

Ignoring business tax obligations

Your business tax obligations are extremely important. If you own a small business, you’ll be responsible for a number of business taxes and must navigate several tax laws. Your taxes can influence decisions about how you organize, staff, and run your businesses. Tax considerations also guide your pricing strategy for goods and services. For a guide on taxes you may owe quarterly or annually, visit the IRS website: Business Taxes for Small Businesses.

Failing to go digital

If you haven’t done so already, there are countless benefits to making your business paperless. As you process your paperwork, create digital records of receipts and important documents. Most businesses should be embracing cloud computing these days as more and more employees work remotely. Here’s basic information to know: Benefits of Cloud Software for Small Business.

Not having a strategic online presence

If you don’t have a strong online presence for your small business, you could be missing out on a lot of potential customers. Online marketing is arguably the most important form of advertising in this tech-driven era. Plus, it is virtually free for the most part— making it a much more cost-effective option when compared to traditional print, radio, and television advertising.

Though it may seem too easy to be true, it is important to realize that online marketing could be damaging if not approached strategically. If you’re not diligent in monitoring and controlling what is being said about you online, unsatisfied customers will do it for you.

Not keeping accurate records

Have you heard of “shoebox accounting”? It’s just like it sound and a terrible way to run a business. Here are basic steps to implement as you beef up your tracking and business organization skills:

Collect Receipts & Invoices

Start by collecting all receipts and invoices related to your business expenses.

Reconcile Your Bank Records

Reconciling your bank records accomplishes two things: 1) It ensures you don’t miss any business expenses or important records and 2) It helps you catch any mistakes your bank may have made.

You can do this by comparing each transaction from your bank statement with the same transaction in your company accounting records. If the transactions don’t match, identify and fix any errors to ensure they balance out.

Not Separating Personal and Business Expenses

Keeping your personal and business expenses in the same account is known as piercing the corporate veil—which may result in you being held personally liable for your business’s debt and actions. The sooner you separate your business and personal expenses, the better. Learn how to open a small business bank account and keep your finances separate.

Not Reviewing Your Books With a Professional

Developing a relationship with a financial pro, well before you need their help, will prevent last-minute scrambling and bring you peace of mind that your books are in order. Here’s how to hire an accountant: How to Hire a Small Business Accountant.

The bottom line

Small business ownership is tough! Stick to your guns this year and resolve to rebuild smartly. For more actionable advice about business operations, marketing, employee management, credit, and lending, visit the SmartBiz Small Business Blog regularly.

 
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