It’s completely normal to slip up sometimes – particularly in the early days of a new business. However, knowing which mistakes to look out for in your owner-managed business may help you to avoid stumbling blocks.
Let’s look at some of the most common mistakes you may make and how you can address them.
Trying to do everything yourself
Building a business from the ground up gives you a great sense of achievement, but it can be difficult to let go of control. As a result, countless business owners take on the bulk of tasks alone.
While this approach may work at first, in time your workload will become too much to handle. If you’re juggling too many responsibilities, you won’t be able to give your business the attention it needs to grow.
Furthermore, tackling tasks outside your area of expertise may lead to more serious mistakes on tax returns or legal documents.
Knowing when to delegate can help you avoid this problem. If you focus on what you do best and allow others to take the reins elsewhere, you’ll be able to set your owner-managed business up for success.
You don’t necessarily need to hire new employees to tackle this problem; outsourcing tasks to experts outside your organisation is often a more cost-effective way to lighten your workload.
Paying too much tax
One common mistake that owner-managed businesses make is paying too much tax. Meeting your obligations to HMRC is important, but you shouldn’t end up overpaying your bill in the process.
Thankfully, there’s a wide range of ways to reduce your liabilities – you just need to know which tax reliefs and allowances you’re entitled to and how to claim them.
Careful tax planning will keep you compliant and ensure you don’t pay more tax than you need to. As a tax expert, your accountant can draw up a strategy designed to save you costs. They’ll also keep you in the loop with any changes to legislation.
Good bookkeeping practices are also essential if you want to make the most of your money. Once you have detailed records of your business transactions, it will be much easier to deduct your allowable expenses from your taxable income.
As the cost of living crisis continues to affect customer spending habits, it can be tempting to cut your prices to boost sales. However, it’s important to find the right balance.
Lower prices mean smaller profit margins. As a result, you may need to cut costs elsewhere to keep yourself in business.
Rather than price-slashing, it’s worth looking at different ways to increase your revenue. Investing in a better marketing strategy and increasing the quality of your products or services may help you to attract new customers and encourage existing ones to spend more.
Not planning ahead
A business plan can help you to set realistic goals and track financial performance. However, many owner-managed businesses operate without a strategy in place.
Neglecting to draw up a business plan may make it more difficult to budget effectively, increasing the risk of you running into cashflow problems later down the line.
Meanwhile, if you run a company, you may find it harder to get the funding you need without a plan. Lenders will want to look at the facts and figures before they’ll consider investing in your company.
Creating a solid business plan takes skill and financial expertise, so it’s a good idea to work with professionals.
As experienced business advisors, we’ll be able to write up a document designed to help you secure your business’s financial future.
Need help with your owner-managed business? Get in touch to speak with expert accountants and business advisors today.