Starting and managing a business venture is a tough task irrespective of who you are and your business experience. It comes with numerous things to deliberate upon and decisions to make; the pressure alone can influence you to make a poor decision that can as well hurt your business potential for success, or at least set you back.
With that in mind, At the end of the day, there’s no doubt that you are prone to make some errors as you embark on the process of starting or setting up your business. There’s absolutely nothing wrong with that (specifically if you can learn from them).
This being said, however, with all of the historical experience of other businesses and business owners, one of the most advantageous actions you can take for your enterprise is to gain from the common small business mistakes they’ve made.
With this, you’ll be putting your best foot forward and you’ll have the liberty to make your own mistakes that future entrepreneurs can then gain from.
While there is no fool-proof strategic plan to grasp small business startup success, there are numerous common and daring mistakes various new entrepreneurs and business owners make that might negatively influence their businesses.
15 of the Most Common Small Business Mistakes
As we’ve stated, mistakes do happen and they’ll definitely take place throughout the lifecycle of your business venture. Nevertheless, by studying the most common small business mistakes others have actually made in their business journey– and learning what to do to avoid them— you can start your endeavour in the most intelligent way possible.
Let’s take a careful look at 15 of the most common small business mistakes made by entrepreneurs and start-ups:
1. Failing to plan or Skipping the Planning Phase
As the saying goes: “When you fail to plan, you’re planning to fail.” One of the most common small business mistakes that are predominant with small business owners is failing to plan, especially on the occasion of starting out their business ventures.
Planning for your new business idea may be tedious, but if you don’t have a solid plan for your business venture which includes business idea research and market potential, you may simply be operating in the dark
Starting without any form of a business plan to direct your startup and growth, you’ll have a hard time to make informed decisions, get loans, or even to bring financiers on board.
Tips: They are plenty of tools and resources out there to help you craft a good business plan for your business. For instance, BPlans.com provides free sample business plans and a completely free business plan template that you can customize and use.
2. Avoiding market research
One important part of any effective marketing campaign is your knowledge and understanding of who your ideal target audience is. It’s not adequate to come up with a marketing budget and attempt a little bit of everything.
You will need to do proper market research to identify your ideal customers to reach, where to find them and how they will respond to your marketing activities.
Some business entrepreneurs start their businesses based upon a cursory survey of family and friends who say to them that their business idea is a “good idea.”
But forgetting that friends and family are not sufficient to sustain a start-up business idea going forward, and without a defined and distinct target market, your business venture will struggle a great deal to compete. Therefore, do not make the common small business mistake of avoiding to do proper market research for your business idea.
Tips: Instead, carry out extensive market research to identify your perfect target customers as closely as possible. Utilize secondary sources, like Statista, and primary sources, such as holding or surveying potential customers focus groups to research study and collect the most information you can.
3. Picking the Wrong type of Business – Common Small Business Mistakes to Avoid
Is your business enterprise a sole proprietorship simply by default, or maybe you form a C corporation since that’s “the standard way to do it”? Well, by not carefully selecting your type of business can expose you to legal risks, thereby making it hard for you to raise capital, or even entangle you in a tight corner. Plus, there are benefits and drawbacks to selecting each of the business entity types, and there might be a type that has more advantages to your business.
Tips: Before making your business public, talk through your strategies and goals with an attorney and accountant. They can help you evaluate your existing scenario and future plans to select the business structure that best fits your needs.
4. Not Setting SMART Goals
Setting the right goals can provide you with the needed direction when first starting your business venture. It will further keep you on track throughout your business day-to-day operations. By ensuring your goals are SMART goals, you can rapidly identify where you want to go and get to outline specific steps and processes that you will take to get there.
5. Avoiding New Technology
As small business owners, the use of technology can offer new business opportunities, which is design to aid us to do our work more effectively and efficiently and even aid us to save money. However, new technology might be very intimidating and require some time to learn and understand, but an unwillingness from the part of the business owner to adapt to technological advances can have a negative impact hurt your business in the short- and long-term.
6. Doing It All Alone – Common Small Business Mistakes to Avoid
As a small business owner you may be tempted and willing to learn the rudiment to be a jack of all trades, nevertheless it doesn’t have to be that way. Effective delegation can be seen as one of the best ways for new small business owners to effectively build their businesses, free up more of their time for business activities which require their unique expertise, and build a solid team positioned for the business future success
If you don’t hire assistance when you need it, or employ the very first candidate you satisfy because you’re overloaded, you’ll wind up with more work instead of the support your business really needs.
Tips: Whether it’s employing someone close by to help you with some administrative duties or utilizing the services of a freelance graphic designer to produce your logo design, force yourself to delegate little tasks from the beginning of your business start-up.
This will make it simpler going forward. Also, acknowledge when it’s time to employ a more long-term employee and be mindful and selective as you go through that procedure.
7. Constituting the Wrong Team
A similarly costly mistake, as we’ve simply discussed, is employing too rapidly, such that you employ the wrong team. Employing the wrong group of people will not just cost you money, but it’ll kick-start your business enterprise on the wrong footing and demoralize everyone involved.
Tips: Employ carefully and thoughtfully. Go through the normal interview procedure with everyone — even if you’ve worked with the individual prior to starting your business or probably the candidate is a pal. Moreover, before you appoint somebody simply based on skill, take a moment to examine whether this person is a culture fit. Groups work best when everyone collaborating gets along.
8. Not having a Business website
According to a recent study, almost half of small business owners do not have a business website. In a digital-first age, this common small business mistake is more like starting your business enterprise without informing anyone about it, or better still put up signage outside of the shop to let people know.
Tips: in Today’s competitive environment, most web-hosting companies will not just host your website for you but will go the extra mile to also help you with other add-ons to ensure your website is visible on the internet for prices as low as a couple of dollars a month. Even if you have little or no technical experience, there are numerous solutions readily available that can assist you to start a business website rapidly and easily.
9. Waiting too long to look for financing
Looking for and getting small business funding can be much of a headache, and if you wait up until you truly need the money, you may be forced to opt for less-than-ideal options.
Tips: ensure to maintain steady cash flow and develop ongoing financial forecasts. This will assist you to find possible money crunches well in advance, so you can take steps to look for capital early on. Applying for financing while your business finances are still in good shape improves your possibilities of approval.
10. Underpricing your service or product
Your business will gradually stop working even as you bring more and more customers on board if your prices are not high enough to make you an adequate profit. This is among the most common small business mistakes that frequently afflicts service-based businesses, where the temptation is to lowball to get your very first clients. Sadly, this can be a detrimental error.
Tips: Use your industry’s standards for profit margins, in addition to your monetary projections and own sales, to calculate your wanted earnings margins– and after that price your product and services appropriately. You can also evaluate what other competing businesses in your location charge. This being said, however, damaging others on rate hardly ever works for small businesses– instead, figure out what value you can add to validate higher rates.
11. Believing a Business loan is your only answer
When your business needs financing, you might think it’s helpless due to the fact that you’ve had trouble getting a bank loan in the past, or you do not fulfil lending institutions’ requirements.
Tips: Think outside the box. Traditional bank loans are not the only source of funding. Billing financing, equipment financing, merchant cash advances, and even utilizing credit cards could work for you, so examine all your options. Plus, if you remember our idea from above, don’t wait up until you definitely require the funding to start looking and exploring the funding that’s offered for your kind of business– be proactive.
12. Failing to Invest in marketing
Lots of small business owners see marketing as an unnecessary expenditure and are reluctant to invest significant funds if at all, to market their business. As a result, however, they never build brand awareness, generate leads, or create buzz.
Tips: Remember, marketing is an investment, not an expense. Depending upon your market, goals, and your business phase, the percentage of earnings you spend on marketing may differ from 2% to 20%. Research your market to know the benchmark, and be willing to invest.
If a $2,000 ad campaign could land a $20,000 customer, isn’t that worth it? Plus, you can get started by using free or almost free marketing options, such as social media, networking, and SEO, and scaling up as your business grows.
13. Not putting contracts in writing
You might be so thrilled that you leap right into getting started and disregard to iron out all the details when you land a new customer or collaboration. If something goes wrong or a misconception develops, this is one of the most common small business mistakes that can trigger big issues– and might be including claims.
Tips: To avoid this concern, always insist on a written contract prior to providing a product or service or going into a business relationship. Use templates at websites such as Rocket Lawyer to prepare contracts for common circumstances your business deals with, and after that have a lawyer review them.
14. Overlooking accounting
Accounting isn’t everyone’s strong point. As your business grows, you might be lured to hand over your monetary procedures to an accountant and stop taking note. Regrettably, neglecting your accounting puts you at risk of capital issues, embezzlement, or worse. Not focusing on your cash flow, in particular, can be one of the most common small business mistakes that can injure your business the most.
Tips: Even if your bookkeeper deals with your day-to-day accounting activities, you’ll want to understand basic accounting concepts. You can find courses in basic accounting and how to utilize QuickBooks in places like Udemy and Coursera for a few dollars. Moreover, with user-friendly accounting programs like QuickBooks and Wave, you must have the ability to use among these systems to monitor your business financial resources at a glimpse.
15. Not listening to business Advice.
It’s fantastic that you’re enthusiastic about your idea– and sometimes, you need to overlook the cynics to understand your dream. However, some zealous business owner falls trap to dismissing any constructive criticism or recommendations they get, which can lead you to miss out on the chance to attend to possible problems before they occur.
Tips: Figure out how to sort through genuinely negative comments and useful criticism. Think about stopping and listening thoroughly if somebody is giving you genuine recommendations.
Unbiased sources like potential consumers, investors, lenders or coaches are most likely, to be honest with you than friends and family, so pay specific attention to what they need to state and you can prevent making some major mistakes with your small business.
Conclusion – Common Small Business Mistakes
At the end of the day, although we’ve discussed 15 of the most common small business mistakes start-ups and entrepreneurs make, you shouldn’t be afraid to make mistakes. Rather, you should be afraid of making errors that could have easily be avoided.
As we’ve said, starting a business venture and managing it is not an easy thing to do, and therefore, you’ll want to attempt and save yourself whenever and troubles when you can.
One of the best methods to do this, once again, is to learn from the mistakes of others– checking out the errors they’ve made, considering how they may apply to your business, and what you can do to avoid them.
Then, when you’re an experienced and seasoned business owner, you can help those just beginning by supplying your insight and talk to them about the mistakes you did make, and how they can gain from you to help their business to be successful and grow.
It’s always very easy to write concerning the success stories of business owners who have hit it big by being and becoming their own boss. However, if you have ever actually dig into the stories, you will almost not get any type of take-home tips on how to become a successful entrepreneur. The truth still remains that, by all means, new business owners fail. But if you study and avoid some of the mistakes listed above, your chances of success in your business will go up dramatically.
What are the biggest mistakes that you’ve made in business as a small business owner? What lessons did you learn from them? Share with us!