Common Mistakes Small Business Owners Make
Starting your own small business can be intimidating. Most people fear that they will make a mistake and fail. Business owners make mistakes at some point. Here is the list of the common mistakes small business owners make:
1. Not establishing a business plan.
Whether your startup business is big or small, it is essential for you as an entrepreneur to have a business plan to guide you with your business decisions.
Benjamin Franklin once said “If you fail to plan, you are planning to fail.” Starting to work on a new business is exciting that most new entrepreneurs are tempted to skip the planning phase and jump on the startup mode.
A business plan is essential because it will:
- Help you to stay focused on the important actions you have to take towards reaching your short-term and long-term goals.
- Serve as your roadmap to make sound decisions.
- Let you know if your business in viable.
- Help you communicate your ideas to acquire funding.
- Identify your business’ strengths and weaknesses.
A business plan does not have to be complicated. Just think of where your business is right now and where you want it to go in the future. From there you could list down what you want and need to do to make your business plan work.
Although a business idea is important to make your business successful, you need to take action to make it come to life by executing and implementing your business plan properly.
2. Not giving value to your products or services.
“Value” in a product or service means the price your customer perceived. It is their desire to obtain what you are selling no matter what the price is.
Some small businesses fail because they are not setting the right price for their products or services. There are reasons why some businesses set their prices low. One reason is that they lower their prices for competitive reasons—to attract customers. But the top reason why is because most business owners are not confident with products and services, so, they set the price for their products or services low because they are afraid that no one will avail.
You need to make your strategy in pricing your products or services before you start selling. When coming up with your prices, you must consider that your prices and total sales should make a profit in your business.
You could add value to your product or service by:
- Offering your consumers better quality products/services than your competitors.
- Making your packaging design and advertisements attractive.
- Delivering your product/service faster.
- Providing your consumers the best customer service.
3. Doing everything all alone.
There’s nothing wrong with starting up your business alone, especially when your business is small and you want to gain knowledge in all areas of your business. Delegating tasks for most small business owners is not easy because they want everything to be right and meet their expectations.
Almost all small business owners goal is to grow their business and become a big company someday. But for you to grow your business efficiently, you need to learn how to delegate your tasks. Some business owners are not a fan of this (at first) because they are used to getting everything done by themselves and this makes them feel they will lose control of everything, and they also lack trust in others doing the job for them. Because of this, business owners become overwhelmed and swamped with work.
Delegating is a powerful tool to help business owners manage their time well and keep them focused on the important things like thinking of ways how to develop their business and earn more. But how can you delegate tasks effectively? This is by hiring the right people. By hiring the right people, you are not simply telling these people to do the work. These people have the initiative to excel on their job efficiently with fewer to no errors. Thus, they are contributing to the success of your business.
4. Not making solid business agreements and contracts.
Some contracts are done verbally but it is much preferred to get your contract done through writing so that your agreement is clear and it is more enforceable.
Even if you are collaborating your business with a family member or a friend, you still should have a written agreement to avoid any misunderstanding and to save your relationship with them if anything arises.
This is also a common mistake for some business owners who just had made a deal to do business with a new client, partner, or investor. They sometimes get too excited and verbally agreed to start doing business without putting down what they have agreed in black and white.
By stating all the terms and conditions in the agreement or contract, you will avoid future headaches and legal issues.
5. Overspending and underspending.
When you are starting a small business, spending money is unavoidable. Some businesses need to spend to fund their equipment, pay construction for their physical store, buy materials for the production of their products, and a lot more.
However, some business owners allot their money to unnecessary things and most of the time they are not aware that they are already over spending. They think that by throwing money to invest on their capital will help generate profit in their business faster. Some younger entrepreneurs also have a habit of overspending on purchasing expensive assets on their business; for example, renting a hip office or stylish commercial space that is pricey. You could upgrade these in the future when your business is already established.
On the other hand, some business owners are too frugal and afraid to spend or invest their money because they are thinking that they will fail and lose their money. You are putting your business at risk when you are under spending because you need fund to invest in your business for it to grow and reach its potential success.
6. Not doing market research.
For your business to have more sales, you need to have a better understanding of your customer. Doing market research will help you have a better idea of who are your target consumers, where to find them, how they will respond to your products or services.
You don’t need to spend to hire a market research team to do this job. You could talk to your customer personally for their feedback or use social media for reaching out to them and to keep an eye on their feedback on your social media comments sections.
If you know what your consumers want and if you are fulfilling their needs, chances are, your business would be successful.
7. Not adapting to the latest technology.
Nowadays, many small and big business owners are using technology to help them increase productivity faster and efficiently. There are also tools that you can use for task management that will help you stay on top and updated on whatever is happening in your business.
Not only technology will help you increase your production, it will also help you improve your customer service. This is by establishing an interactive website for your customers or by having a virtual customer support that is available for them 24/7.
Technology also has a huge factor on businesses marketing. You can use email marketing to send commercial messages to your prospects and customers. Build attractive websites and create social media accounts like Facebook, Twitter, and Instagram to promote your business’ products or services.
You can also use the latest technology to keep your files safe and virtually share it with your colleagues, business partners, clients, vendors, etc. in real time.