With a wide and varied landscape of activities to maintain, many are likely to fall outside the expertise of those running the business. Then of course there’s always that classic danger of not seeing the wood for the trees! We’ve benchmarked over 400 small and medium businesses against best business practice and for the first time, are able to get a clear overview of where UK SMEs stand.
When it comes to business know-how, the average SME has got roughly 65% covered. But that leaves a gap of over a third of the business essentials. And gaps can easily turn into pitfalls if they go unspotted. No business can be expected to be doing absolutely everything perfectly, however, performance benchmarking uncovers areas that need improving the most. Those who realise where the gaps exist go on to perform better than those that continue unaware. In fact, the FSB reports 70% of small businesses that receive mentoring survive for five years or more. That’s impressive when you consider 80% of businesses ultimately cease trading before they reach their fifth anniversary.
Fortunately we’re able to highlight the main pitfalls so that your business can avoid such a fate. Here are 9 flags to watch out for.
1. Failing to link tangible performance indicators to the business strategy.
Without continually testing and measuring, a business is running blind. Who knows if resources are being wasted on the wrong activity?!
2. Not knowing the cost per customer.
A business loses money when the cost of obtaining a new customer outweighs the value they bring over their lifetime. If costs are high, it may be time to get smarter in acquiring customers in a cheaper or more scalable way or by focusing on securing repeat business.
3. Failure to delegate important tasks.
Some people can become quite precious over certain tasks and want to maintain control of everything. This is not healthy and it means there’s less time to focus on doing things right. Time to let go; open up the level of communication and trust so that things get done quicker and more effectively.
4. Not knowing the numbers.
It’s essential to know the profit margins on each customer and break-even point each month. Otherwise, financial difficulties and debt can arise before you know it.
5. Lacking a full understanding of the target customer profile.
Marketing not only has to have a compelling message but also speak to the specific needs of the customer. Without the two, you’ll end up missing the mark.
6. No clear referral and retention strategy.
Quite simply, this is the most cost-effective way of obtaining new work but many leave it entirely up to chance.
7. Just being good at delivery.
Many business owners are great at running the service but are limited by the operational factors. If you don’t know, get help from someone that does, whether it’s sales and marketing, finance and administration or any other operations.
8. Competing only on price.
If you try to win business on the basis of undercutting competitors, this means your margins may become too small to grow and develop. Instead use marketing and sales techniques to win business by positioning the value.
9. Low visibility in the marketplace.
Marketing is often seen as a cost and is the first budget to be cut. It is a vital part of running a business and should therefore be viewed as an investment and factored into financial planning.
If you find it a struggle juggling activities in your business, take heart in the fact you’re not alone. But also know help is at hand.
We invite you to take your own Strategic Performance Assessment. Understand where any limitations lie and how you can begin making immediate improvements in your business.
You might also be itching to know how your business measures against this performance landscape benchmark? Access it now for free:TAKE YOUR SPA NOW