6 Common Mistakes Small Business Owners Make
Updated March 27, 2023
Being an entrepreneur definitely comes with its perks. For starters, you have the independence to make decisions that will enhance your business' growth and success. Moreover, you aren't subject to any boss, and you can decide when and how to work. It's also an excellent way to provide innovative solutions while obtaining financial gains and building wealth.
A 2022 SBA survey revealed that approximately 32.5 million small businesses exist in the US, crediting the benefits of owning one. However, many entrepreneurs don't seem to enjoy its benefits. Statistics reveal that over 20% fail in the first year, while 49.7% close down in five years.
Start with a strategy, not simply an idea
Your business strategy comprises plans, goals, and actions that show how your business will compete and thrive with your products and services. It helps you map a vision that provides guidance and direction while keeping you focused and motivated.
Likewise, it enables you to discover trends and opportunities that influence future business decisions. For instance, you can easily detect a change in consumer behavior and tailor your products and services to suit them.
Without a clearly defined strategy, you risk having an unclear business organization, lack of objectives, and poor communication flow. What's more, you waste valuable resources, leading to a failed venture.
Fortunately, any business owner can draft a strategy, whether they own an existing or startup business. First, begin by stating your mission and vision statement and identify your strategic objectives. (Ensure that these objectives are specific, measurable, achievable, realistic, and time-bound.) It's also essential to make tactical plans and consistently measure your performance to determine your strategy's feasibility and success.
For example, you have factored in advertising campaigns in your strategy. You may want to weigh your options before getting started. Are you confident about setting up and running the campaigns yourself, or will it be a better idea to seek the expertise of a reliable PPC advertising agency? Maybe the latter is too expensive for your budget, but it can also be a sound option if you don’t have experience in the field of PPC advertising. The choice can ultimately make or break your entire marketing plan, so it is important to come up with a decision that you won’t regret.
Once you have your strategy in place, avoid these six common mistakes.
Doing what you love
It's not unusual for people to encourage you to do what you love, especially when you decide to start a business. While this sounds ideal, it may not be beneficial. For starters, you may do less of what you love, should you decide to go that path.
For instance, if you establish a restaurant because you enjoy cooking, you'll find yourself dealing with other entrepreneurial aspects like marketing, accounting, customer service, etc. Also, your passion may not be what people are looking for, so you may make little profit than expected. Even worse, your passion can quickly die when your expectations aren't met. Therefore, your best bet is to avoid chasing passion solely.
Business experts advise that you start a business based on an unmet market need to reap the benefits of entrepreneurship. If your passion has the potential to administer solutions that consumers are after, you're on the right track. If it doesn't, it may be time to drop it and source for another option. Better yet, look out for loopholes in existing commodities and services, and build your business around solving them.
Having insufficient funds
Although most entrepreneurs ideally start their business solely on their funds and without debt, it's not always possible.
A CBInsights research revealed that 29% of small businesses collapse because they don't have adequate cash to operate. That said, venturing into your business without a solid financial background will only set you up for failure. Not only will you miss out on hiring top talents, but you'll also be tempted to cut corners that will affect business operations.
Fortunately, many financing options are available, and you can choose what's most suitable for your specific situation. For example, you can seek financial help from your family and friends. (Always put these types of arrangements in writing to avoid ruining your relationships.)
You can also source for loans from your banks, researching the loan options to determine what's best for your business. On the other hand, you can use a business loan calculator to determine how much it will cost to take out a loan. Crowdfunding is also an effective way to get financial help from the public, while angel investors will invest in your enterprise in exchange for shares. Other options include venture capitalists and SBA loans.
Doing everything by yourself
Being an entrepreneur requires you to wear multiple hats. However, doing everything by yourself can cause more harm than good. Although you may know more about your business, attempting to fill all roles can be a sign of bad leadership.
You also risk stunting your business growth, as your team has to wait on you before anything is done. Moreover, you may find it challenging to relate with your employees who feel they're being micromanaged, leading to high turnover rates.
While your passion is important, it can be a source of concern for investors and employees when you need to be part of every process. Therefore, it's prudent to delegate tasks to your team for the best results.
Delegation is a crucial leadership skill that will contribute to your business's growth. Begin by determining the strengths and weaknesses of your team members to help you delegate the tasks that are most suited to them.
Also, consider outsourcing tasks to third-party firms to help you concentrate on other tasks and take full advantage of AI-powered solutions likely to save your time and money. You can also leverage technology options like the US Based Appointment Reminders to help you keep track of upcoming meetings, collaborative sessions, and virtual appointments.
Failing to determine your ideal customers
While it's prudent to have a good business strategy and top-notch products, you may struggle to keep your business afloat if you don't have the right customers or you're trying to target too wide of an audience.
Before beginning any marketing campaign or significant investment in advertising, fully understand your products or services from your customers' point of view. Then, jot down what you offer to your clients, determining what problems you solve and how it differentiates you from your competitors. This unique value proposition should drive all of your decisions and how you effectively communicate your message to potential customers.
Poor marketing efforts
A 2021 SemRush survey indicated that 63.9% of small businesses lacked the time and resources for marketing, while 51.2% lacked feasible marketing objectives and strategies.
Failure to prioritize marketing can be detrimental to your business. A CBInsights poll revealed that 14% of businesses fail due to poor marketing. Whether it's poor execution, lack of research and planning, or inconsistent communications, marketing is a full-time job and a major driver in whether new businesses fail or succeed.
Start small with platforms you own (your website, email list, etc.) and prioritize quality over quantity when it comes to content. If and when resources are available, choose the social media platforms where your customers are most likely to be and use those to drive traffic to your website.
Almost every industry can benefit from content marketing, as well. Consider adding a blog to your website with weekly content around your industry, educating your target audience, and providing value. This content is likely to help you drive search traffic and, when done well, often eliminates the need for paid advertising.
If you're a small business owner, tell us what mistakes you made early on and advice for others following behind you!
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