Starting and running your own business can be very frustrating and challenging but, done well, it can also very lucrative and fulfilling. The reality is, unfortunately, that most fail due to unnecessary business mistakes. It’s necessary to avoid the most common business mistakes if you want to experience success.
Most small businesses face considerable financial challenges at first. Unless you are extremely well funded, there’s little room for mistakes in the early days. Ensure that you’re not making some of these avoidable errors. Educate yourself before taking the plunge.
Avoid Many of the Business Mistakes That Lead to Disaster
Business Mistake #1: Failing to Listen to Customers
Find out why customers buy (or don't buy) your product or service. Customer feedback is imperative whether you want it or not.
Many small business owners are so in love with their own particular ideas that they refuse to change to accommodate what the market demands. Your customers are your best source of information. Conduct surveys or ask informal questions. Be flexible and change your approach when the feedback dictates it.
Business Mistake #2: Weak leadership
It isn’t necessary to be a dictator, but small businesses require strong leadership. The typical employee in a small business often isn’t considered qualified by larger firms and therefore landed with you. You’ll frequently be faced with employees with limitations or perhaps a more limited skill set. Your leadership is necessary to drive, motivate, and inspire them.
Business Mistake #3: Hiring the wrong people
Every company struggles with the availability of good help especially when the economy is as strong as it has been. Even the most popular companies struggle with hiring mistakes. The difference is that big companies can absorb poor hiring decisions and keep on running. You may not be so lucky.
Without a human resource department, which most small businesses do not have, you'll be on your own to screen, interview, hire and fire. Take the time to ensure that you are hiring people that are qualified and can be effective in their role. Take personalities into consideration. In a small business, an overbearing personality can destroy morale and bring your efforts to a grinding halt.
Business Mistake #4: Being Under Capitalized
When you barely have enough money to keep your business afloat, any small mishap can be disastrous. You’ll be forced to do anything you can in the short-term to pay your bills which can lead to poor, if not fatal, decisions. That’s a poor way to run and grow a business and it can be extremely stressful. Ensure you have the funds you need to get your idea off the ground and be able to sustain your personal expenses for at least 12 months.
Business Mistake #5: Not Understanding the Importance of Marketing
Plan to spend a large portion, perhaps 15% or more, of your budget, on marketing. As you grow, you may be able to reduce that percentage but this is one area you do not want to be cheap. Too many new business owners think that their idea is so wonderful that word of mouth and referrals will drive their business.
Be sure to put together a marketing budget early on in your planning stage. With social media being a great, and inexpensive option, you should be able to maximize every dollar to gain popularity for your new business. While seeking professional help with marketing may seem expensive, the experience of a professional may be exactly what you need and they may save you money in the long run by helping you to build your brand faster than you would on your own.
Business Mistake #6: Failing to Recognize Power of Your Competition
We know that you think your product or service is better than those other guys but if you think that the competition is going to just sit by and watch you draw away their customers or clients, you are in for a rude awakening. Know your competition and know them well.
They've put in the work to build their business and most likely already have the upper hand when it comes to the market and having the funds to ramp up their marketing. Expect things to be tough when building your new business but don't give up hope. In most business categories, there is plenty of room for you and the competition. Collectively, you all make the buying public more aware of the products and services that you offer. Develop a unique proposition for your company that will help set you apart from the competition. Just make sure it is truly unique and valuable to your customers.
Running a small business requires you to wear many hats and requires a wide range of skills. Mistakes will happen and every one of them is a good learning experience. It’s not important or necessary to be perfect, but do your best to avoid the biggest mistakes. Don't let a critical mistake spell the end for your company. Learn from other business owners about the critical errors they've made and do your best to avoid them.