Beginning and managing a business is difficult, no matter who you are or what your business is. At the end of the day, there’s no doubt that you’ll make some mistakes as you go about the process of starting your business, and there’s nothing wrong with that (especially if you can learn from them).
According to the data provided by the U.S. Bureau of Labor Statistics, 20% of new businesses fail during the first two years of operation, and roughly half of all businesses don’t survive past the fifth year.
Here are 10 mistakes that could wreak havoc on your startup:
1 FAILING TO PLAN
The saying goes: “When you fail to plan, you’re planning to fail”. One of the most common small business mistakes is failing to plan, especially when first starting your business. Without a business plan to guide your startup and growth, you’ll struggle to make decisions, get loans, or bring investors on board.
2 SKIPPING MARKET RESEARCH
I see increasing numbers of people starting businesses without bothering to do any of this, and then being heartbroken when their new business, which they’ve invested so much time and money in, collapses.
Test your products and service first before you start a business. If you don’t, you have no idea if people are even going to want to buy them.
3 IGNORING THE COMPETITION
Ignoring the competition is another potentially fatal business mistake.
If you’re selling your products for #10 apiece and Emma down the street is selling his for #7 apiece, how many products are you going to sell? Absolutely none (except you are offering something your competitor isn’t).
Another aspect of competition you need to understand is market saturation. For instance, if you want to open a laundry business, there may not be any “room” left in your local area to do so because of the number of laundry businesses that already exist; the market is already saturated with this kind of business.
4 NOT INVESTING IN MARKETING
Far too many small businesses are reluctant to spend any money on marketing, let alone a significant amount.
Create a marketing plan, set up some marketing campaigns, and keep doing it if you want your business to be successful.
If you still doubt the importance of marketing, then read this article on Why Marketing Is So Important.
5 NOT BOTHERING WITH ANY ONLINE MARKETING
Try as much as possible to make sure your business is online. You may or may not need a website, but your business needs to be able to be found by and promoted to the ever increasing number of people who use the web to find the products and services they want.
If you’re not going to do anything else, establish some sort of home base for your business online. Actively marketing your business online is even better and will give it a far better chance of reaching your customers.
6 TRYING TO DO EVERYTHING YOURSELF
Running a business, even if it’s a one-person business, involves so many different tasks that no one person can do them all well. Even if you have all the skills to do an outstanding job at whatever you set our hands to, you are still constrained by time.
Learn how to delegate, hire and outsource to make the most of your skills and benefit from outside expertise.
7 DON’T UNDERVALUE YOUR PRODUCT OR SERVICE
Don’t price too high, but don’t price too low just to gain market share. As long as your product or service is premium and quality, people will surely patronize it at the right price.
Many entrepreneurs start with the best of intentions and give things away for free, or do free things for charity, community or visibility. Be very careful with this, because you don’t want to be known as a source of freebies.
8 DON’T LAUNCH TOO QUICKLY
One of the biggest mistakes startups make is launching before they are ready.
Once you have launched into the public and you start getting clients, ensure that your systems and processes are in place, such as payment terms and process, contracts, communications, whilst still being able to maintain your marketing strategy.
The back-end processes need to be watertight before you start taking on clients; if they aren’t, these are the cracks that will show and you appear unprofessional.
9 IMPLEMENT A PROPER BOOKKEEPING PROCESS
Many startup founders begin without a bookkeeping process in place. Great bookkeeping habits help you make smarter business decisions, keep a check on your business’s financial status and steer away problems before they become unmanageable.
Good bookkeeping practices also ensure that you’re on top of issues like tax and insurance payments that can get otherwise great businesses into trouble.
10 NEGLECTING THE VOICE OF YOUR CUSTOMER
Respect your customers and think of them as your friends. They are your friends because they are the ones who believe in your product enough to use it – and even more than that, your customers will tell you exactly how to design and market your product in a way that appeals to them.
This is huge, and so many entrepreneurs overlook the fact that you are building something to better someone else. At the same time, just because your product fits the needs of one group doesn’t mean that it will suit the rest of your customers. Learning how to qualify feedback is essential.
If starting a business is in your future, understand that starting a business is a process, not an event.
If you take the time to make your research and avoid the business mistakes discussed, you’ll hugely increase the likelihood of your new business succeeding.