No matter what your business is and how much experience you have, managing a company is difficult. As you are starting or growing your business, there is no doubt that mistakes will be made. That’s just a part of being an entrepreneur. As long as you learned from them, there is nothing wrong with that. But, as an aspiring entrepreneur, you also get to learn from the mistakes of seasoned entrepreneurs who have gone through the hardships of founding a business. Learning the most common small business mistakes and historical experiences of others and making an effort to avoid them is one of the most advantageous actions you can take for your company.
Failing to Plan
Even if you are starting just a small endeavor, you need a plan. As Benjamin Franklin put it so wisely, “If you fail to plan, you are planning to fail!” Many business owners fail to plan while they are launching their startup. Because of that, they struggle to bring investors, get loans, and make important decisions. The good news is—you don’t have to hold an MBA to write a business plan. There are plenty of free online tools and templates that can help you do it. For instance, Bplan is one such solution. You will be operating in the dark if you don’t plan. Aside from a business plan, you also need a marketing plan and a financial plan. Planning may be tedious, but it is crucial to success.
Not Understanding the Needs of Your Target Audience
Most small business owners understand their industry, but they do not understand the market. Having experience in your services and products is important, but it is not enough to grow your business. Moreover, it’s not uncommon for an entrepreneur to start a business based on a “hunch.” They’ve been told it’s a “good idea” and they run with it. But this is not nearly enough to sustain and grow a company. Your business will struggle to compete without a well-defined target market and target audience. You need to be sure that your products and services are a solution to a problem your target audience has. Let’s take the iGaming industry as an example. In an industry where lack of transparency, security, safety can be an issue, businesses need to present themselves as a trustworthy solution. The reputable iGaming portal AskGamblers has recognized the needs of the market and operates accordingly. The website offers a solution to players who are looking for trustworthy casinos. To help players find trustworthy platforms, they offer transparent and unbiased casino reviews and ratings, all written by industry experts. In other words—they offer a solution to one of the most common problems of their target audience. And, this wouldn’t be possible without thorough research of the market. Your business idea may sound great on paper, but it won’t be successful if it doesn’t solve a real problem that people have. To find out who your ideal customers are, you can hold focus groups, survey prospective customers, and even use census data.
Not Knowing When to Hire New Talent
Do you have a hard time delegating tasks, or are you trying to save money? Businesses that wait too long to hire eventually end up being swamped with too much work. When it’s high time they find some assistance, they usually rush through the process and hire the first candidate that shows up to the interview. All of this can significantly hurt business growth. To prevent this, get assistance as soon as you predict you will need some. This doesn’t mean you need to hire someone immediately, but you should delegate small tasks as soon as you get started with your venture. For instance, this can mean hiring a freelance graphic designer to create your logo or recruiting one of your children to help you stuff envelopes. Going forward, this will make it easier. Moreover, be selective and careful when the time comes to hire a more permanent employee.
Assembling the Wrong Team
Your business will start off on the wrong foot if you hire the wrong people for the job. It can be just as an expensive mistake as waiting too long to hire or hiring too quickly. When you are building a business and assembling a team for it, you are also creating a company culture. You want to make sure that everyone will fit in well. Even if the candidate is a friend or you’ve worked with them before, make sure to properly interview everyone. Hire thoughtfully and carefully. When you are interviewing a candidate, take a moment to see whether they are a cultural fit.
Not Investing in Marketing
You may hesitate to spend a lot of money on marketing if you are running a small business. No matter how big or small your company is, marketing is necessary. Without it, you won’t be able to create buzz, generate leads, and build brand awareness. It is wrong to consider marketing an expense—it is an investment. On average, businesses spend 7.5% of their total revenue on marketing. To find out what would be the ideal marketing budget for your company, research benchmarks for your niche. If you spend $1,000 on a marketing campaign and land a $10,000 customer, the expense is certainly worth it. If your budget is a bit tight, you can start by utilizing more affordable marketing solutions, such as SEO, social media, and networking. As your business grows, you can ramp up your marketing efforts.
Underpricing Your Services or Products
You may be tempted to lowball to get your first client. This is one of the most common small business mistakes with service-based businesses. Your company will fail if your prices are not high enough to make a profit, no matter how many clients or customers you attract. To calculate your business’ desired profit margins, use your own financial and sales projections, as well as your niche’s benchmarks for profit margins. It may seem like you can get ahead by undercutting competitors on prices, but this seldom works out for small businesses. To justify higher prices, consider how you can add value.
Common Small Business Mistakes - Takeaway
The most common small business mistakes can easily be avoided if you make an effort to learn from others. Explore the mistakes of other entrepreneurs and consider how they might apply to your startup.
Authored by guest contributor Emma Sumner who is a business strategist-turned blogger. She lives in Auckland, New Zealand. Emma is a passionate traveler and yoga aficionado. She is in love with coffee, interior design, books, and good vibes. 🙂