Common Small Business Mistakesby kapil Mehta # Guest Blogger
According to the US Small Business Administration, 99.9% of all American companies consist of small businesses. Entrepreneurship inarguably presents an appealing proposition for many individuals. It is not only about the opportunity to make more money or be your own boss. You get to pursue your passion, develop new skills, and watch the results of all your hard work materialize into a product or service that benefits others. The enormous personal satisfaction you stand to gain could often obliterate the monetary gains.
Of course, running a small business is full of challenges, especially when it is your first attempt at entrepreneurship. Studies show that around 20% of companies fail during their first year of operations. So, what are the common mistakes small enterprises make that affect their ability to survive and thrive? Let’s take a closer look.
Starting Without a Plan
Before setting up a company, you must develop a strategy and plan. They are essential to get a holistic view of your business proposition and to understand and define critical aspects of a viable business.
For instance, what strengths and weaknesses do you possess? What threats and opportunities exist in the market? Who is your customer? What problems will your product or service help resolve for them? How is your solution better than what your competitors are offering? What is your go-to-market strategy? At what price point will you offer your product? Most importantly, how will you finance your startup?
An effective business strategy will answer all these questions and offer medium to long-term strategic direction. The business plan will then provide tactical direction for essential operational activities—from marketing and distribution to finance and supply chain—and guide your business decisions.
Taking Too Much Onto Your Plate
A common mistake many first-time entrepreneurs make is taking up too many business responsibilities. Understandably, at the early stages of a company, you would want to keep expenses low and maintain tighter control over the overall operations. However, this doesn’t mean you should not seek support where it matters most.
Remember, a subject-matter expert can add significant value. They can contribute with expertise and knowledge you do not possess and free up your time to focus on areas where your time is better spent.
Besides, unlike in the old days, you no longer need to hire permanent employees if there isn’t enough work for a full-time position. You can consider fractional experts, part-time staff, or freelancers to take over day-to-day activities, repetitive tasks, or critical functions that require specific knowledge and experience. These can include marketing, bookkeeping, and sales, as well as filing, scheduling, and other administrative tasks.
Focusing on a Broad Market
Many small business owners choose a broader market for their products in a bid to capture as many customers as possible. But this strategy often backfires due to several reasons.
To begin with, competing in a large market is a costly affair. When there is more competition, it is not easy to stand out. So, you need to invest heavily to differentiate your product, communicate your brand proposition, and grab customer attention in a cluttered marketplace.
Moreover, with mass marketing, building a personal relationship with your audience is difficult. As a result, creating brand loyalty takes substantial effort. And when you are dealing with multiple customer profiles, you could easily end up with a one-size-fits-all solution that is hard to differentiate and market.
This is why many experts recommend niche marketing for startups. By narrowing your scope to target a less competitive marketplace, it will be easier to establish your brand. You can personalize communications and build a more intimate relationship with customers that lasts longer. Ultimately, you get to create better market demand and enjoy a higher return on your efforts and investment.
Ignoring the Budget and Cash Flow
Budgeting is crucial for a business of any scale. It allows you to reflect on your cost base, determine pricing, revenue, and profit margins, and understand the viability of your business model.
It is a crucial step, whether you are starting a small business, launching a new product, or expanding operations. A detailed budget will provide a comprehensive picture of the potential return on your efforts so you can make necessary adjustments before embarking on an important project.
Keeping a tab on your budgets is equally important once you kick-start your business. Effective cash flow management, for instance, is critical for a company’s operational success; Today, cash flow issues are behind the failure of 82% of small businesses.
So, building your financial knowledge and keeping a close eye on your company’s financial health makes every sense.
Forgetting Your Personal Brand
Did you know that your personal brand could create massive opportunities for business growth? The network you have amassed in your personal and professional lives is a tremendous asset for generating endorsements and creating word-of-mouth awareness. And the credibility you have built as a professional and individual could help create trust in your product and business—no doubt a pivotal ingredient for the success of a startup.
However, many entrepreneurs fail to understand the power of their personal brand. Neglecting it will not only result in missed opportunities, but may also hinder your business growth. A single post, comment, or photograph on social media, for instance, can tarnish your reputation as well as your company image.
So, when you are preparing to launch a business, scanning your online personal brand is crucial. Google your name and check what details appear on the first few result pages. Search your phone number on PhoneHistory and review what type of personal information is aggregated from public sources. Assess your social media profiles, including your posts, comments, and likes.
All these will give you insights into publicly available data related to you. Ensure they are accurate and consistent and provide a positive representation of you. You can also carefully curate your online image by sharing content that presents you in a positive light.
Running your own small business involves a continuous learning process, during which you are bound to make mistakes. But certain mistakes can be costlier than others and may even lead to total business failure. The good news is, many of them are avoidable. So, watch for these common small business mistakes and steer your business toward success.
Created on May 30th 2023 02:26. Viewed 87 times.