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Common Small Business Blunders and How to Avoid Them
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The road to running a successful small business is full of potholes and pitfalls that could ruin your long-term entrepreneurial hopes and dreams. To save yourself some trouble (and potentially some heartache), take a minute to read about eight common small business mistakes and how to avoid them.
- Skipping market research. Or ignoring the market as you grow.
Even if you have the world’s coolest product to sell, if you don’t know the market you’ll be competing in or the target customers you should be…well, targeting…your product won’t sell. Your market research should be thorough and include knowing what’s already failed in the market and why, what the market is missing and why/how you can provide it, who your target market/customers are (as narrowly and as detailed as possible), and, if you’re primarily a brick-and-mortar store, how your geographic market may differ from the broader market. Use secondary sources—government censuses or market research companies—and primary sources—focus groups and local surveys. Once your business is up and running, you will need to keep tabs on shifts in the market to keep customers coming in the door.
- Failing to plan. At the beginning and throughout your business’s life.
With sufficient market research at hand, you’ll be ready to craft a business plan to guide your business through startup and expansion. Without a proper business plan, you’ll struggle to make the best decisions for your business, secure financing and investors, or plan your next steps.
- Choosing the wrong form of business.
Not all business structures are the same, which means there is a right one for you and a whole bunch of wrong ones. Do you need to set up an LLC, an S or a C corp, a sole proprietorship, or something else? Speaking with an attorney or accountant can help you pick the right one. This will allow you to more easily and properly raise capital, pay tax obligations, and avoid costly mistakes.
- Waiting too long to seek financing.
Access to financing—business loans, lines of credit, etc.—is important throughout a business’s life to stay on top of cash flow needs and invest in needed stock or equipment. So, financing should be top of mind for entrepreneurs from day one. If you wait until the last minute to secure money you need ASAP, you’ll either miss out completely on the needed cash or be forced to accept less-than-ideal terms. A great financial resource for a small business is a local credit union. They offer many small business services and, because their lending practices are relationship based, they may be more likely to lend to a small business than a large national bank.
- Not having a website ready to go from day one (a mobile-friendly one, too!).
These days, not having a website for your business is like not having a front door—it’s how more and more people are finding businesses and what they might want to purchase. Luckily, most web-hosting companies can also design, maintain, and market your website as well. There are also a host of companies that have simple-to-use website-building platforms so you can do it yourself.
- Procrastinating and not hiring qualified help.
Just like waiting until the last minute to apply for financing, waiting until you’re desperate for help means you’ll be forced to make rushed decisions and possibly hire candidates that aren’t the best fit. While you may be able to do everything for your small business at first, that won’t last long. Hire carefully and thoughtfully by creating an interview process that evaluates clients based on culture fit as well as skillset. Being clear and explicit about your company’s goals and ethos will help you find the right people to build the best possible team.
- Failing to invest in marketing.
Marketing builds brand awareness, generates sales leads, and creates buzz about your business. With all of the weight it pulls, marketing should be thought of as an investment and not an expense to be minimized. Find out what percentage of revenues your competitors and businesses you respect reinvest in marketing to get a good idea of what you should be spending. Next, create a marketing strategy and brand voice for your business and be consistent with all messaging.
- Not putting agreements in writing.
Especially with your very first clients, it will be tempting to do business based on a handshake agreement. However, this can set you up for misunderstandings, late or unpaid invoices, or even lawsuits. From day one, have a written contract for vendors, freelancers you may hire, and clients. There are templates you can find online, or you may want to consult a lawyer to create one for you.