Tuesday, March 18, 2014

Mistakes entrepreneurs often make

This is the fourth in our series about mistakes entrepreneurs make.  We have talked about the perils of not having a business plan, the problems partners run into if they don't have a detailed, written operating agreement and how a business can suffer from not having good accounting right from the start.  This week we will discuss how poor communication skills can hold a business back.

Prompt, courteous and accurate communication is important whether you are dealing with a customer, a vendor, a colleague or an employee.  We have had numerous issues come up due to poor communication from clients.  It is very important to let your accountant know immediately if you receive correspondence from the federal government (IRS) or the state.  Filing requirement change frequently and penalties can occur if you are notified that you must file your payroll or sales taxes monthly instead of quarterly and you don't do so.  Your accountant can't do this if you don't let them know about the change.

It is also important to deal with customers quickly and politely.  While the customer isn't always right, you need to consider all aspects of the situation before you respond.  Even if they are wrong or being unreasonable, you must consider the downside to responding negatively.  It is usually better to try and compromise if possible to maintain goodwill.  If the cost of compromise is too high, at least maintain your positive tone and don't respond with a nasty tone.

The same is true with vendors.  If you have cash flow issues, it is important to be upfront with everyone.  Don't make promises you can't keep.  If you negotiate for extended terms, make sure you can meet the expectations.

When dealing with employees, make sure you have all reviews and discussions documented whenever possible.  It is a good practice to have both the employee and the supervisor sign the review form to document that the discussion with the possible repercussions took place.  This can be helpful if ending an employment relationship becomes litigious.

If you cannot respond to an email from someone in a reasonable period of time, make sure you at least acknowledge the email and let the sender know when to expect a detailed reply.

Good communication skills can help a business run smoother and more profitably.  Small business owners are busy and usually wear multiple hats, but they still need to take the time to be good communicators.

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