Cruz and Co

We know tax. Let us look after yours.

  • Home
  • About
    • Meet the Team
    • Our Clients
    • Testimonials
  • Services
    • Tax Consultant and Compliance Services
    • Small Business and Sole Trader Accountant
    • Outsourced Accounting Solutions
    • Business Structure
    • Outsourced CFO
    • Working Visa Refunds
  • Resources
    • Tax Refund Process
    • Client Assistant Schedule forms
    • Downloadables
    • Helpful Links
    • Rental Property Cashflow calculator
    • SMSF Tax Refund Process
  • Contact Us
  • Blog

Connect with us

  • Facebook
  • LinkedIn

7 Survival Tips To Avoid Common Business Mistakes

By: Sarah Smith

iStock_000028436142_MediumGrowing a business is a special talent, part science, part art and doing it well can be one of the most rewarding life experiences. It can also spell financial disaster from which it is very difficult to recover, when things don’t go well. In this article we discuss 5 common mistakes made by businesses.

CASH FLOW

Cash is the life-blood of every business. Business owners know as much. Expanding on that metaphor, when the cash flow stops, the business can no longer survive. Even though every business owner knows this intuitively, putting it into practice becomes problematic when faced with the many decisions which they must make.

An effective cash flow calculator takes into consideration the minimum cash necessary to support basic operations for a minimum of six months. This figure represents the cash management cycle: 2 months to acquire a new customer, 2 months to do the work. Add another 2 months for the billing cycle from cutting the invoice until the funds are in the bank.

ACQUIRING UNNECESSARY CREDIT

It can be exciting to have a bank pre-approve a generous credit line to a business in its early growth stages. But it’s when such opportunities present themselves, that business owners need to ask themselves whether such an infusion is absolutely critical. A key question business need to ask themselves about funding projects this way, is what the return on the investment will be and when that return will be realized.

It’s critical to consider whether now is the right time for pet projects, especially when with money that comes with a finance charge and interest rate that has to be paid on top of the other monthly bills.

Financing from non bank sources further exacerbates this issue.

EXCESSIVELY LOW PRICING

Every business needs sales to survive. A pricing structure that doesn’t cover costs causes two problems. First, it creates discount expectations in new customers, who will continue to expect the below cost pricing. When the accountant puts his foot down that selling at these prices means bankruptcy, it causes the second derivative problem — customer dissatisfaction and mass exodus.

It’s best to implement fair pricing upfront and have fewer customers paying the actual costs, than to try to leverage a sizable customer-base which pushes the business further into the red with every purchase. Selling below costs for prolonged periods is not a viable means of constructive finance.

UNNECESSARY BUSINESS ACQUISITIONS

What about new laptops for the entire sales staff, and administrative assistants to answer phones, prepare the spreadsheets, take messages and write emails?

They’re fine. So long as they’re absolutely necessary and return at least their value. Remember, overhead staff and early adopter technology upgrades cut into profit margins and should be acquired sparingly and put off for as long as possible.

UNNECESSARY RISK TAKING

During one interview, a CEO of an entertainment company boasted that he could make decisions quicker than his colleagues. He said that taking risks is part of the game and some people have the stomach for it and the rest sit on the sidelines and wish they were in his C-Suite office. The next time I went to interview, there was a new CEO who was significantly more cautious when it came to pulling the trigger. He had a huge mess to clean up from all of the reckless decisions which his predecessor made, which included unrealistic promises to previously satisfied customers and staff which would never be kept.

A BUSINESS PLAN

A business plan is your roadmap to success.

The primary focus of a business plan is to create a written guideline of the economic viability to a related market. Furthermore, this plan should have all aspects of a business venture evaluated and analyzed with the realization of consumer concerns and benefactors.

Want to know how to avoid mistakes in a business plan? The plan should include the following: A product summary, business description, market overview, all aspects of funding, the small business failure rate in your niche, and a reasonable but realistic risk vs. reward.

On average, 25% of small businesses fail in the first year, fortunately having a business plan in an arsenal increases the chance of success and avoids business mistakes.

Tip: A common business mistake is not researching a niche enough to know if it’s a lucrative business for the allotted amount of time and funds.

HEALTHY COMPETITION

Finding a market with a reasonable amount of competition and being able to compete against it is essential to business survival. A business offline or online has general subjects to research.

How to avoid being a part of that small business failure rate?

Online business:

  • Extensive keyword research and selection
  • PPC (Pay Per Click) Ads or equivalent alternative research
  • SEO (Search Engine Optimization) utilization and techniques
  • Analysis tools for Ad campaigns and traffic
  • Google “Business results” (for local traffic)
  • Great website structure, evaluation, and superb content

Offline Business:

  • Know competitor offers
  • Create frameworks
  • Start mailers or ad campaigns
  • Know and research key brand differentiators
  • Do events and collaborations
  • Research locations and targeted consumers

Research on these topics revolves around what the competition is producing. Evaluating each topic is crucial for business survival with these methods. Remember, applicating and implementing knowledge improves overall performance and health in business building.

Risk taking is a must for someone whose hobbies include sky diving and bungee jumping. In the business world, it undermines everything that the entrepreneur has worked so hard to build.

Source via Dynamic Business

Testimonials

  • Kellie Pincham

    Director
    Automotive Parts Retailing business

    Cruz & Co offer a great professional and friendly service. Ritchie gave me confidence running the business knowing that he was readily available for…

    Read full testimonial
  • Dr Krish Perananthan

    Cosmetic and Implant Dentistry

    Ritchie was recommended to me by my father and I have also continued to recommend him to my friends. He is reliable, efficient and has a…

    Read full testimonial
  • Vanita Aloda

    Restaurant Owner

    Ritchie Cruz is my Accountant. We have a solid 10 year relationship.

    Ritchie as always provide me with honest and efficient service.

    Is a great communicator, always replies efficiently to…

    Read full testimonial
  • Napoleon Guines

    Director, Travel Company Operations

    Ritchie Cruz and Co are accommodating and have excellent service.

    Cruz & Co have impressed me the most is due to their efficient service.  They are…

    Read full testimonial
  • Regina Wang

    Business Tax – Beauty Salon 

    Ritchie has been managing my tax matters as a sole trader for 2 years+. Always very responsive to my questions and make effort to reply…

    Read full testimonial
  • Jae Kwon Yoo

    Business Tax – Electrical Contractors

    Ritchie is awesome. He is very professional and responsive and he is always there to help you. He even replies during weekend. He needs some…

    Read full testimonial
  • Jonathan Yeoman

    Director, Technical Design Company

    This is a new business startup and Cruz&Co. have provided great help, guidance and reassurance from the beginning.

    Ritchie has provided us with excellent service and…

    Read full testimonial
  • Jonathan Fambart

    Business Tax – Travel Industry

    Cruz & Co was introduced to me this year and it was the best decision for my sole trader and personal taxation affairs. Ritchie the…

    Read full testimonial
  • Zac Fryer

    Director, Import and Distribution Company

    Ritchie Cruz provides and high level of accounting expertise and goes above and beyond in answering any queries we have.

    Read full testimonial
  • Daniel Robey

    I have and continue to recommend Cruz and Co to many businesses and individuals who are looking for a business advisor and accountant that goes over and above…

    Read full testimonial

© 2025 Cruz & Co.

  • Home
  • About
    • Meet the Team
    • Our Clients
    • Testimonials
  • Services
    • Tax Consultant and Compliance Services
    • Small Business and Sole Trader Accountant
    • Outsourced Accounting Solutions
    • Business Structure
    • Outsourced CFO
    • Working Visa Refunds
  • Resources
    • Tax Refund Process
    • Client Assistant Schedule forms
    • Downloadables
    • Helpful Links
    • Rental Property Cashflow calculator
    • SMSF Tax Refund Process
  • Contact Us
  • Blog