Failure to Research

Some people will tell you, you need money to make money, but the reality is you need CUSTOMERS to make money. Without customers you do not have a business. 

Conducting market research is crucial in helping businesses identify and reach their target audiences. It will let you know, before you invest in a product/service, if the product or service you want to bring forth is a viable product and not only viable, are people willing to pay for it. 

Market research is an organized effort to gather information about target markets and customers: know about them, starting with who they are. It is an important component of business strategy and a major factor in maintaining competitiveness. Market research helps to identify and analyze the needs of the market, the market size and the competition.

Advantages of market research, you can better interpret:

Customers, current or prospective.

Markets, new or established, domestic or abroad.

Competition, prevailing or up-and-coming.

Products or services presently offered or in-the-works.

Technology, public or private, emerging or existing.

Entire industries, accounting for many of the variables above.

Disadvantages of NOT doing market research

Never learning your competitive advantage- Businesses that know their strengths, capabilities and pain points are far better equipped to make strength-maximizing, risk-mitigating business decisions. It’s a form of self-awareness   

Not knowing what your potential customers want- If you do not know what makes your customer tick, how can you effectively help them. Your product/service is not about what you want but what you can provide to your customer. 

Increasing strategic and operational risk- Instead of making decisions in the dark, performing market research grounds business decisions and reduces the chance of plans going awry. Organizations have precise insights into what works and what doesn’t, both internally and externally. Backed by this information, they can tweak processes and resources

Unable to make data backed decisions– data-backed enterprise decisions inspire more confidence since they’re composed of real-world, reliable data.

Conducting market research is a proactive approach to starting a business and allows business leaders to rest assured their organization has done its due diligence. It can also SAVE you money be forewarning a not so good business idea. 

Failure to Plan

A crucial step to starting a business is having a plan. A business plan is your roadmap and forces you to think about your business on the simplest level.

You can start with a one-page simple business plan that answers the basic questions such as:

What problem will my business solve?

Who is my target audience?

Why will they buy from me and not someone else?

How will I reach my target audience?

How will I fund the business?

What do I expect to earn in year 1…year 2…year 3?

Who are the key players in the business?

Failure to plan is a plan to fail…

Failure to Ask for Assistance

Although we are all strong in our own right we have to be able to admit we cannot do everything. And that is ok. The shame is not in asking for help, the shame is in wasting time on tasks that would be better suited for an expert in that field.

Let’s use me for example, I am good with numbers but I am not a bookkeeper. I can spend time trying to figure out a system to keep my books or I can hire someone that has a system in place. Why reinvent the wheel. The hours I spend creating or figuring out a system could be better spent doing what I do.

When we start our business we call it being frugal to do everything but let me tell you that you are going to pay, one way or another. You will pay with money or you will pay with time. I don’t know about you but my time is much more valuable than my money. I can make more money, I cannot reclaim time wasted.

There are three people every business owner needs on their team, a mentor, an attorney, and a CPA.

Having a mentor, not a ear-tickling mentor, but someone that is going to make you uncomfortable to make you better. Trust that they know things you don’t yet know.  As I previously mentioned, time is more valuable than money. The less time you can spend reinventing the wheel the better. A mentor brings not only knowledge but also experience you will not have when starting a business. You will not always understand why your mentor has you doing certain things but TRUST THE PROCESS.

When it comes to legal issues, there is no way one can do it all by themselves neither is there a short cut. One wrong legal move can successfully end a small business, don’t risk it. As a business owner, not every part of the small business law may be comprehended. Inexperience or unawareness is not regarded as a shield to any actions. 

When it comes to finacial issues, it goes back to reinventing the wheel. Every business, no matter how small, needs a financial and tax advisor. A CPA will bring financial expertise that unless you are a finacial advisor, accountant or something of the sort you will not bring. They will have insight regarding managing small business finances, taxes, payroll, investing and scaling your business. At the end of the day it is not how much money you make it is how much money you keep. A CPA is vital in ensuring you have the best financial outcome. 

And just so you know in these cases SIZE DOES NOT MATTER. Small businesses are subject to the same laws and regulations as big business. 

Failure to Promote

There are lots of benefits that come with making promotion a priority for your business. Even if your business has been around for years, you still need to make sure you’re doing as much as possible to promote it.

The following are some of the main reasons that marketing matters to businesses of all ages and sizes:

Build Brand Awareness

If you want more people to know about your business and what you have to offer, you need to make marketing a priority.

Increase Profits

The more people know about your brand, the more people are going to actually make purchases from you.

Improves Reputation

The right marketing campaign can make it easier for you to start improving your business’s reputation.

Makes Businesses Competitive

Good promotion helps businesses to stay relevant and stand out from their competition.

Provides Value

Promoting isn’t all about billboards and online ads. It’s also about providing value to your current and future customers.

Create Learning Opportunities

When you develop and implement a promotion strategy, you also gain opportunities to learn more about your customers and what they value.

Outside of ads, social media, etc. ensure you become your biggest promoter. 

Failure to Keep Good Records

Keeping good records is very important to your business. When I worked in corporate America, I drove the point home to my staff that if it was not written down, it did not happen. Record keeping is also about understanding your business, to monitor the progress of your business, now and in the future. 

Good records will help you do the following:

Monitor the progress of your business

Records can show whether your business is improving, which items are selling, or what changes you need to make. Good records can increase the likelihood of business success. 

Prepare your financial statements

These include income (profit and loss) statements and balance sheets. These statements can help you in dealing with your bank or creditors and help you manage your business. 

An income statement shows the income and expenses of the business for a given period of time.

A balance sheet shows the assets, liabilities, and your equity in the business on a given date. 

Identify sources of your income

You will receive money or property from many sources. Your records can identify the sources of your income. You need this information to separate business from nonbusiness receipts and taxable from nontaxable income. 

Keep track of your deductible expenses

Unless you record them when they occur, you may forget expenses when you prepare your tax return.

Keep track of your basis in property

Your basis is the amount of your investment in property for tax purposes. You will use the basis to figure the gain or loss on the sale, exchange, or other disposition of property, as well as deductions for depreciation, amortization, depletion, and casualty losses.

Prepare your tax returns

You need good records to prepare your tax returns. These records must support the income, expenses, and credits you report. Generally, these are the same records you use to monitor your business and prepare your financial statement. 

Support items reported on your tax returns

You must keep your business records available at all times for inspection by the IRS. If the IRS examines any of your tax returns, you may be asked to explain the items reported. A complete set of records will speed up the examination

Failure to Comply

Legal Compliance  

Numerous federal laws require employers to create and retain various forms of employment records and in some instances, to make filing with governmental agencies.  The more employees a company has, the more record-keeping laws it will be obligated under.  The business owner is responsible for meeting your monthly, quarterly and annual federal, state, and city tax obligations. Your small business must file timely monthly, quarterly and annual tax returns.

Benefits of Compliance

Reduce your Legal Risks and Avoid Future Costs

Compliance will help your company avoid legal risks. Lawsuits and settlements can easily cost you millions of dollars. Fines and other compensatory payments can also add up.

Build Trust with Your Customer Base

Complying with federal laws will show your customers that you care about keeping them safe. Should you adhere to them, they will have little cause for complaint, as you will have delivered goods that meet the relevant standard, and suitable reparations in the event of failing to do so.

Compliance Ensures the Smooth Running of your Business

If nothing else, legal disputes can wreak havoc on the everyday running of your business. Time that you must divert towards dealing with them is time that could have been used to the benefit of your company, and this means that the inconvenience of them ought to be avoided at all costs. Instead of paying little heed to the rules and regulations that govern you, make a conscious decision to abide by them, in order to ensure the smooth running and success of your venture going forwards.

The Cost of Non Compliance

Piercing of Corporate Veil  

“Corporate veil” (also called a “corporate shield”) is the legal distinction between an LLC or corporation and its owner(s). It is the legal separation established by keeping a company’s activities, assets and liabilities independent from those of the business owner(s). If an LLC or Corporation fails to fulfill its compliance requirements, a court might decide that the corporate veil has been pierced and that the individuals who own or oversee the business are personally accountable for the debts or legal wrongdoing of the company.

Audits

Noncompliance draws closer inspection of a business’s processes and financials. No one likes to hear the word “audit.” That’s no wonder because audits demand a lot of time and money as business owners and employees get pulled away from doing revenue-generating work.

Financial penalties

Noncompliance can hit a business’s checking account hard. There may be fines, back taxes, interest, and other financial penalties levied if a company fails to fulfill its compliance requirements.

Suspension or termination of the business

If the frequency or severity of noncompliance warrants it, a company may fall out of good standing with the state and be forced to either suspend operations or close its doors entirely. Stating the obvious, this can be fatal for a business.

Imprisonment

The LLC and Corporation business entity types provide some liability protection to owners and directors. However, noncompliance may lead to civil or criminal prosecution of owners, officers, and directors if their personal actions were unlawful or negligent.

Damaged brand reputation

As word gets out publicly about a company’s noncompliance, it could permanently hurt the business’s reputation. That could destroy customer and vendor confidence as well as make lenders wary of providing financing to the business in the future. The hit to a brand’s reputation can destroy trust in the company and limit future opportunities.

If you think Compliance is expensive, try Noncompliance

In closing, In order to be treated like a business you Must Look Like A Business