If you're a small business owner, you cannot afford to make these four mistakes. These four mistakes will absolutely kill you. You've got to avoid them if you want to grow beyond $5 million in annual revenue.

Want to know what the mistakes are? Want to know how to avoid them? You got to join me for this episode of the Inside BS Show. Hey now, I'm Dave Lorenzo. I'm the Godfather of growth and today we're talking about the four mistakes, four mistakes you need to avoid if you want to take your small business to a big business.

I despise the term small business because if you've got the guts to start a business, it's big and it's important to you. I prefer to call businesses that do less than $5 million a year in annual revenue, main street businesses. So here are the four mistakes that main street business owners make that keep them stuck on main street.

That's the way we're going to phrase it. The first mistake is that you're making the business entirely dependent upon you. So if you're the business owner and the business is completely dependent on you, you've essentially bought yourself a job and that's not a good thing if you want to sell the business.

If you want to sell the business or you want to scale the business, you've got to put systems and processes in place so that other people can do those jobs for you. So here's what I love to do. I love to think about what my strengths are and my strengths are in business strategy.

My strengths are in sales and growing and building the sales team. My strengths are in positioning the business in the marketplace. My strengths are not in operations.

They're not in finance and they're certainly not in managing the details of the day-to-day running of the business. So for me, it was critically important to find a partner who's great at managing details. I also need someone who's fantastic at handling the finances.

So those are the first two people that I look for when I'm starting a business venture or when I'm helping to position a business that is owned by someone else. I want somebody who's great at sales, somebody who's great at operations, and somebody who's great at the finances. Those are the first three areas.

Then the fourth person we always look for is the person who gets the day-to-day stuff done. Now in a small business, you may call this person an office manager. In a larger business, you may call them a chief of staff.

They are essentially the person who makes everything happen behind the scenes. So while your operations people are making sure that your product gets to market, while your finance people are making sure that everything lines up from a dollars and cents perspective, and while you're out there managing the big picture and handling the sales, there's somebody behind the scenes making all those things happen. So you've got to avoid having everything be dependent upon you.

In some places, you'll hear this called key person risk. But essentially, as a business owner, if the business is dependent upon you, that's a big mistake and that's one of the small business mistakes that you cannot afford to make. The second mistake small businesses cannot afford to make is having only one way to get your product into a customer's hands.

Having a single sales channel. If you're distributing on Amazon and you're absolutely killing it, you're doing 20 million a month in Amazon sales, but that's the only place you're selling. If Amazon decides to shut you down, your 20 million dollar a month business is gone.

Now let's make that a little bit more realistic. If you're doing 50,000 a month or 100,000 a month on Amazon and that's the only place you're selling, you're in deep doo-doo if Amazon shuts you down too. So I would recommend that you find another channel, another distribution system to get your product into the hands of the customer.

Having a single sales channel is death for a small business. That's the second mistake to avoid. The third mistake to avoid is having only one vendor provide you with something that's critical for your business.

Now most people learn this lesson during COVID, but as COVID gets further and further into the rearview mirror, we're forgetting some of the things that we learned during that time period. If you only have one vendor for a key piece of your product development, you are in big trouble because there's too much risk associated with that. At least have 20% of your supply chain distributed among other people.

You never want any one vendor to be any more than, like for my purposes, risk of 60% or greater is a big problem in a supply chain, but I would start if you're a small business with 80% and work your way back to 70% and then 60% and then as low as you can get. If you can spread your purchasing out over multiple vendors, you'll always do better than having a single vendor for any one product fulfillment process that you're trying to put together. All right, the fourth and final small business mistake you cannot afford to make is being dependent upon one customer.

Now customer diversity is a big, big thing for me. I like customer diversity. I like geographic diversity.

I like industry diversity. So I want you to think about customer diversity along those lines. Many small business owners, many main street business owners think to themselves, well, if I only have one customer, I only have one person to please.

I only have one place to ship the products or services to. I only have one thing I need to do for one person at any given time. It's more effective.

It's more efficient. Maybe, but the risk is so great. If that one customer goes out of business or that one customer wakes up in a bad mood, you've got big, big trouble.

I would encourage you to think about customer diversity like this. You want to make sure that no one customer ever makes up more than 10% of your revenue because you never want to take a 10% revenue hit or more in any one month. And you want to make sure that no one industry makes up more than 20% of your revenue because you don't want a recession that's industry specific to wipe you out.

Customer diversity is a huge topic. Think about it along the lines of individual customers, industry specific, and then geography specific. If all your business is in Florida and there's a hurricane in Florida, you've got a problem.

If all your business is in Los Angeles and there are wildfires in Los Angeles, you've got a problem. Customer diversity, industry diversity, big, big considerations. So the four mistakes that small businesses cannot afford to make, single person diversity or business owner diversity or key person diversity, think about that first.

Single sales channel issues, think about that. Vendor diversity and then customer diversity. Those are the four mistakes business owners can't afford to make.

As we're finishing up today, as we're wrapping up today, I want to just say that I appreciate all of you. I made a show yesterday, and if you haven't listened to it, you should go back and give it a shot. I made a show yesterday talking about how entrepreneurs can stay motivated.

And I mentioned that I had a bad day and I'll tell you that it was a relatively tough day, but making the show made me feel better because it was one of the positive things that I took away from the day. Well, a positive thing that I'm grateful for today is all of you who reached out to me, who connected with me, who asked me if I was okay. And I want to say thank you to you for checking in with me and making sure I was all right.

This process, this podcast, the process of documenting what's going on in my business and how I'm handling the things that are going on in our business is valuable for a number of reasons, not the least of which is that all of us can learn, as I'm going to learn from my own mistakes and experiences, all of us can learn from my experience as I make it in real time. And one of the things that I took away from yesterday is that we have some really great people who are out there listening to the show. We have some really great people who are willing to express that they care about you if you put yourself out there.

So there's nothing wrong with me personally. There's nothing. My family, thank God, is healthy.

Everybody's great. It just was a day where, you know, bumps in the road and things didn't go well and we all have them. So I wanted to make sure that you understood that I'm not one of these people who's posting on social media about every day being sunshine and roses.

I will share with you when things are real. And sometimes when you're an entrepreneur, you get rejected a lot. Things are real.

And I share it with you, the good, the bad and the ugly. Today's a great day. And it's a great day because all of you reached out to me and told me that you were thinking of me and asking me if I was OK.

And I deeply, deeply appreciate it. So enjoy your four mistakes that small business owners can't make. And please accept my gratitude for checking in with me and letting me know that you're here for me.

I sincerely appreciate it. This is the Inside BS Show. I'm Dave Lorenzo, the Godfather of Growth.

Tomorrow and the next day, I'm going to be coming at you live from a volleyball tournament up in Fort Lauderdale. That's right. We're bringing the gear with us to the volleyball tournament at the Fort Lauderdale Convention Center, the Cloverleaf Tournament.

I'll be recording for you from the lobby of the Cloverleaf Volleyball Tournament. So you got that to look forward to. Thanks for joining me today.

I'll see you next time. I'm Dave Lorenzo. I'm your host, Dave Lorenzo, who's hoping you make a great living and live a great life.