Small businesses seem to pop up like weeds these days, but that doesn’t automatically mean that all of the owners know what they’re doing.
There is also a large portion of them who have zero experience with running a business, or who have the necessary skills for making it successful, like marketing, promotion, leading a team, bookkeeping, and many other skills.
This is a recipe for a scenario wherein a lot of mistakes can be made—sometimes, very costly mistakes. If you’re starting a business, then do yourself a favor and take a few minutes to look over these very common mistakes that new owners make.
There’s no need to feel bad about it when you make a mistake such as the ones we’re going to cite here because we all learn as we go. You might just be able to avoid setbacks and cultivate success for your company much faster with the following advice.
1. Skipping Market Research
Market research for a new business is an absolute essential stage of the planning process & is kind of like a huge pile of homework that you need to complete to affirm many things. One of which is confirming whether or not your business model is viable. You will find out some very interesting info in the process, though, such as what kind of people live in your area, what products are performing the best for your market, and how much customers are willing to pay for what you plan to sell.
Many people start a business based on a feeling, without doing the research to know for sure that there are enough people willing to buy their product. If you’re not one of those owners, that’s excellent, but you would be surprised how many entrepreneurs actually launch a company based on their gut feeling. Sometimes, you’re just so convinced that what you have is an awesome idea, that you don’t even bother to check if it’s really marketable.
At the bare minimum, you should at least see if anyone else has ever tried your idea before because looking into your competitors is an extremely valuable part of the research. Just because your friends & family all tell you that you have an awesome idea and that they would buy it, doesn’t guarantee it’s going to be successful.
2. Starting Out with Insufficient Funding
This can be tough for obvious reasons. In the modern world, money governs just about every aspect of our lives, and that is only amplified for people who are trying to run a successful business. This seems like a point that’s almost too obvious to go on this list, but running out of money is still an all-too-common reason that small businesses fail.
Even established companies who have been running for years can fall prey to this unfortunate event. For businesses starting out, probably the main reason that they fall victim to underfunding is because they underestimate how much money they’re going to need.
Many businesses don’t even turn a profit in the first year, which can make bootstrapping very difficult if you decide not to take on any investors; so, you can’t depend on profits to fund your business in the beginning. As a rule of thumb, whatever amount of money you have for a runway you should triple to be on the safe side because it could very well make the difference between staying alive or being forced to close your doors.
If you are securing funds from investors, then you need to make sure that they can provide what you need until the business is bringing in profit. As new owners have a tendency to take what they can get because they want to get it off the ground, and then hope they can get more money from their investors should the need arise.
If you don’t prepare yourself sufficiently regarding funding, you can easily end up being a statistic instead of pulling through the very difficult early stages of growth and coming out unscathed.
3. No Website
If you have a business, then there is absolutely no reason why you shouldn’t have a website. It doesn’t matter one bit what kind of business you have, either. You could be a sole proprietor who makes jewelry out of your home, a storefront restaurant, an auto parts retailer, or any other type of business. If you’re in business, you need to have a website.
Today, it’s like having a phone number; a website is like a utility that you simply can’t do without. Most importantly, your website is where customers are going to look for you first. Before they call you, text you, or email you, they’re going to check out your website.
You could miss out on a lot of new sales because the sad truth is that many people will see if you have a website (or at least a Facebook or Twitter account) to check out who you are, what you offer & what your pricing is. If they don’t find a website, they might not even bother to look any further than that. There is a misconception among some small business owners that it’s only for online companies; they think that you don’t really need a website unless you’re some kind of online seller or service provider.
That’s obviously false because the purpose of having a website is not only to sell products online (which you should be doing whenever possible), but it’s also to show customers what you’re about, to make it easy for them to find info about your company quickly & to give them a touchpoint from which they can contact you.
When you do build your website, make sure that it looks good and that you have your contact information readily available and visible on the site. If you’re not sure how to get started, there are so many helpful site-builders out there. Sites such as Squarespace or Wix can allow you to easily build a great-looking, functioning website in no time.
4. Not Enough Exposure
As you continue to grow, word-of-mouth is one of the greatest forms of advertising. But in the beginning, you need as much exposure as possible in any form you can find, to promote your new company. You need more than word-of-mouth, more than a billboard, and more than a website.
If you don’t spread the word and put your name in front of as many eyes as possible, then how will anyone know that you exist, aside from the few customers who drive by your store & see the sign? Without going into too much detail, there is one way that is now a more effective generator of new sales than just about any other method, and that is content marketing.
This is primarily done by creating regular articles in a blog attached to your website, which you can cross-promote through social media channels. How it essentially works is that you post your blog articles online, that you’ve designed specifically to target your market with titles that have certain keywords. Then when people search for those keywords or topics in Google, your article comes up and they click on it.
Then, they’re already on your website & can convert them into a customer from there. There is more to understand about it to get really good at it, and you can find a ton of information about content marketing in the materials on our blog.
5. Waiting Too Long to Launch
Launching a new small business can be a very scary time, filled with the prospect of great risk and uncertainty about whether it’s going to work. This is why many entrepreneurs have trepidation about finally opening to the public, causing them to second-guess their every move and even completely redesign their product or service for fear that they’ve made any number of mistakes.
One of the most common ways this can manifest is when you take way too long to perfect your product. When you’re just about ready to open, it can be very nerve-wracking. You’ve got to do your best to avoid stalling & constantly going back to add and change things because this can take even more time and delay your opening date further and further.
During that time when you’re endlessly tweaking your product, you’re burning up your runway and missing out on revenue that you could be making by releasing it.
6. Charging Too Little
Once you’ve done your research about pricing for your particular product or service, you’ve created a quality product and you know it, and even done some polling to the public, don’t doubt yourself once you’ve set your price. For new businesses, it’s actually more likely that you’re charging too little than too much for your product.
New business owners worry obsessively about charging too much, so they end up charging too little to stay on the safe side. This could potentially end up having the inverse effect, unfortunately; there are a few problems that can result from charging too little for your product.
You make it more likely, first of all, that you won’t be bringing in the revenue that you need for your business to stay afloat. You also run the risk of undervaluing your product and your brand. The perceived value of what you’re selling is really important because, though there are certain factors that go into deciding how much something is literally worth in hard currency, its value is actually vague until you dictate its value to your customers.
Your customers don’t set the price for your product; you do. So, what you set as the price says a lot about it, as it either attaches more value to the product, or devalues it simply by charging less for it.
When you charge too little, you send a message that you don’t feel your product has much value (even though you’re just trying to offer a fair price, so that you don’t alienate your customers), which, in turn, makes the customer feel that it isn’t as valuable as it really is. Don’t fall into that trap but set your price to correspond with what you know it’s worth.
7. Creating a Low-Quality Product
It’s easy to cut corners when you’re designing & building your product or service. Don’t do that. Unless your customers already know that what you’re selling is cheap and are okay with that for some reason, there’s really no scenario in which you can benefit from creating a low-quality product.
You may want to make a cheaper product at some point to cut costs, or for some other reason, but it’s just about guaranteed that you’ll regret it. Word will spread fast that you have a cheap product, but word will spread even faster that you have an awesome, uncommonly high-quality product.
With a cheaper product, you’re playing a short game, but with a high-quality, thoughtfully-designed product or service, you’re playing a long game that will benefit your business for some time to come. Not only are you selling something to people that is giving them the best experience possible with whatever item or service it may be, but it is also the fastest and most reliable way to produce positive word-of-mouth advertising.
If you have a customer who bought something from your business and has a friend that also needs it, then that customer is going to recommend your business to their friend & tell them nothing but good things about it. As long as you pair your excellent product with customer service and support that is equally as good, you’ve got the perfect recipe for a successful small business.