My name is CA Arun Tiwari. The aim of my video is to explore the reasons for those people who are doing business for a long time and are unable to grow their business. They might be looking to find out the reasons for the same. I will discuss here those five great blunders which are responsible for the failure of small business. Your business might not be growing for the last five, ten or many years, these mistakes may be responsible for the same. These five mistakes are usually committed by every small business owner or service providers. Let’s discuss these five mistakes one by one.
MISTAKE NUMBER 1:- Doing all your work by yourself
In a simpler manner, it should be stated as until and unless you will not delegate the responsibilities to other people, your business will not grow. If all the relevant decision making of your business decision will be centralized to you only, then the prospects of your business growth will diminish as your precious time and energy will be wasted in taking petty decisions rather than making big strategic decisions.
It might be possible in initial years of business that to avoid extra expenses the owner may be doing all the tasks itself but later it became his habit and due to this habit of the owner to do all the things under his thumb only, heavy opportunity losses are incurred in the business.
If the work of business has not been allocated other people, the owner may not be able to pay attention to its customers as well as other important domain like marketing, Customer support, Business Development, Training.
Solution:- Here the key is to delegate the work. Delegation itself is an art, which requires great planning.
Basically, there are there types of work which can be delegated.
- First is the work which requires no prior training and can be delegated without any training and is known as immediate delegation.
- Second is that in which you need to give basic training for the work to be done by other people and then the work can be delegated. It is better known as short term delegation.
- The third one, which is better known as Long-term delegation requires formal structured training. Such kind of specialized work can be outsourced also.
You will be shocked to realize that after a delegation of the relevant work, you were supposed to do only 10% of the total tasks you were doing earlier.
MISTAKE NUMBER 2:- Not Investing Money at the right time
Now we will discuss problem number 2, which is not investing money at an appropriate time, according to the requirements of the business. If we assume business as a tree, it will require water and fertilizer to grow.
Generally, it is a tendency of the small businessmen to avoid investing money for the growth of the business. They keep postponing the reinvesting decision but again this tendency has a significant negative impact upon the prospects of the business. If you will avoiding to invest, the business will never grow at a rapid pace.
The best possible sources of finance for the business is Bank loans although sometimes you may rely upon friends, relatives, financiers, etc. However, in order to get the loan from the Bank, you are supposed to maintain all relevant documents in an appropriate manner.
MISTAKE NUMBER 3:- Not Maintaining Books of Accounts
Not maintaining Book of Accounts or not maintaining them at all leads to the third biggest blunder. Sixty percent of the small traders are not maintaining their Accounting record of business in India. They do not have any real measure to evaluate the success or failure of their business in monetary terms. Sometimes ignorance of the true knowledge of accounts of business may result in loss of total capital invested in the business. Actually, the purpose of maintaining a book of accounts is not only meant for Government authorities or Income tax. It is an efficient tool to evaluate the success or failure of business along with its possible causes. The full records of the business are also supposed to serve the interest of the investors who are willing to invest funds in the business. Again it is also required to safeguard the risk of notices and other tax-related issues. The analysis of expenses and controlling of expenses can be implemented by maintaining the records itself.
MISTAKE NUMBER 4:- Not Hiring Right People at Right Time
The fourth blunder is missing a chance to hire skilled people at the right time. As I have discussed earlier also that at one level when the business starts growing, you need the support from your employees to deal with a variety of tasks. Now one stage is also there when you are supposed to manage many employees at the same time. Supposedly if you are being reported by fifty employees at the same time, you may likely get no time left to think and take strategic decisions for the growth of the business. We require skilled personnel to manage and supervise our manpower so that the owner may be left with ample time to devote time to the growth of his business. If the business is not growing, it means it is deteriorating. It means investing in skilled manpower is not a wastage but ultimately it leads to the growth of the business. So here inculcating Middle-level management and outsourcing tasks in the system of business the need of the hour to improve the growth prospects of the business.
If you just keep postponing hiring and training of middle management just because they are costly as compared to your earlier entry-level employees then you are not just delaying hiring but you’re delaying the growth of your business.
So once you feel your business needs a middle tier of people either hire them directly or Train and promote from existing employees, The later is always better.
MISTAKE NUMBER 5:- Loose Control, To gain the growth
The last and the foremost point to ponder while doing a business is “Reluctance to lose control of the company”. simply means that you are not giving controlling powers to anyone.
The owner may be reluctant to share controlling powers with anyone because of the emotional bonding with the business. The thing to understand here is that business is never static. Either it grows or deteriorates. Basically, we need a support system for controlling when the business has been expanded to a considerable level. In order to avoid the scenario of old dead businesses, we need more professionals, more investors, and more customers. The owner must trust them and delegate the controlling power within the right time frame, so as to avoid the harmful consequences of centralizing authority in business. Until and unless, the controlling authority will not be transferred, the business will not take a giant leap for the growth.
Dear friends, these were those five big mistakes which are commonly found in small businessmen which restrict the growth of their business. You can comment on your query in the comment box. You can also contact us for enhancing the scope of your running or to be an established business. We can assist you with our professional guidance to level up the stage of your business to higher levels. Any business with the right kind of approach and professional guidance can make it to a higher level of volume and success.
Thanks for reading the article.
CA Arun Tiwari