Running a business isn’t for the faint-hearted. As an entrepreneur, we’re sure you’ve met many people that would like to be in your shoes, but the majority never pursue their dream because they don’t know where to start.
Those that are brave enough to become their own boss find they make mistakes along the way. While these business errors can be a learning curve, ideally, you wouldn’t want to find yourself in this situation.
Let’s explore the common mistakes business owners make, to help you see if there are problems you could fix as your business continues to grow!
The most common mistakes small business owners make broadly fall into the categories of business planning, marketing, managing money and investing in the right people.
They Create A Business Plan Without A Roadmap
Many companies will have a business plan, but a common mistake is to over-focus on the goals. It’s great to be bouncing with enthusiasm for what you hope to achieve, but reflecting on the possible obstacles is vital in producing a map to success.
A business plan should encapsulate the big picture with more specific details, including a deep dive into the problems your business is solving for the customer – to be sure there is a need for your product or service, as well as an analysis of your target market, the challenges, and the competition. These finer details will enable you to adjust your offering, if necessary, and give you enough information to keep your self-belief going.
Life can be unpredictable, so creating a business plan shouldn’t just be a tick off the ‘to do’ list; it needs to be an agile document and produced annually. You are probably familiar with SMART objectives (specific, measurable, achievable, realistic, timely), but many businesses make the mistake of not integrating these, or similar frameworks, into their business plan. Having structure around your business plan will help you prioritise and monitor your progress.
So channel your energy into making a thorough and realistic business plan, then let your entrepreneurial spirit flow! Just be careful not to grow too fast, keep it steady, manageable and stay focused.
Their Marketing Is Too Generic
The importance of market research can’t be emphasised enough. Businesses often make the mistake of throwing the net too wide; they think appealing to a broader demographic means more sales, but usually, this isn’t the case.
Think about all those competitors vying for the same market, not just small businesses, but the big brands or thought leaders with a greater marketing budget. Please don’t go too generic; the more niche you get, the smaller the competition, plus it helps you tailor your product to a specific group of people, which in turn can lead to greater loyalty.
When customers feel you ‘know them’ and that your product and service solve their problem, you stand a good chance of having repeat business, and your offering is recommended to others. To help you better understand the needs of your target market, you could think about details such as their lifestyle, occupation and interests, and buying behaviour. The devil is in the detail.
Fleeting brand loyalty is a challenge for all businesses, so those that embark on top-notch marketing to get the clients but then don’t maintain customer engagement are missing an opportunity.
You can build credibility through regular customer engagement because, with so much information thrown at us daily, you can be easily forgotten. Make use of the various communications channels – social media, blogs, e-newsletters, as well as phone calls and face to face – to make sure you are providing valuable information to your customers as well as gaining their feedback as a means to improving your service and showing them that you care.
They Don’t Organise Their Finances
A common mistake for small business owners is to either be too frugal or overspend. Pulling together a realistic budget isn’t easy, and if something is off, it can significantly impact how your business operates.
Sometimes small companies make a mistake eagerly spending on the ‘small things’ which when collated at the end of the month can prove a big surprise, so always keep an eye on your outgoings, not just the significant payments. You want to avoid being in a position where overspending becomes a habit, and you end up struggling with your cash flow, or you do not see a decent return on investment.
If you’re more of the cautious type, then this could be hindering your business growth. Take time to reflect on your business plan and consider where it would be good to invest your money. There will always be a degree of risk, but you’re an entrepreneur, so that’s the name of the game; as long as you plan and make sensible decisions, you’ll find a way to grow your business.
This is why it’s imperative to have financial goals too. Some businesses are too broad and vague in this context, making it hard for them to identify when they are underperforming. Having clear financial goals will also help you look for investors now or in the future. Some industries have even come up with a labour cost formula to calculate their employee costs and better manage finances, along with their goals.
Your budget isn’t entirely in your control if the market is volatile and impacting your projections or if customers are dragging their heels on paying invoices, so try to remember the importance of saving during the good times.
They Invest In The Wrong People
Some small business owners are so focused on their targets that they don’t reflect on providing strong leadership. Employees can become complacent, unreliable and feel a lack of commitment to their role if you’re not giving them ownership of their tasks or the recognition to keep them motivated.
Business owners can feel that staff with low morale can drain the business and put pressure on the leader to micromanage. So small business owners can make the mistake of employing the wrong people and not giving employees the chance to own their role.