There are several common business mistakes made by small business owners and entrepreneurs that can negatively impact their businesses. Here we talk about 7 of the most common mistakes to avoid when starting a new business.
20% of small businesses fail in their first year,
30% of small businesses fail by the second year,
50% of them fail just after five years in business.
Source: Small Business Administration (SBA)
Needless to say, running a business is not a piece of cake. But the point is, while there can be some amount of truth in these numbers, you cannot let it kill the entrepreneur inside you!
So, to safeguard your establishment, we’ve listed down some of the key mistakes that you need to avoid when starting out your future empire.
Here’s a list of 7 common business mistakes and how to avoid them:
1. Not Having A Clear Vision
The key responsibility of you as a business owner is to have a clear vision for the company.
Vision brings clarity and also helps in various other things including:
- Inspiring and motivating employees to work towards a common goal.
- Drives the decision-making process into a seamless affair within the company.
- Filtering what your brand and it’s every employee commits to.
- Attracting amazing talent, customers and other businesses to engage with yours.
When you do not have a clear vision, chances are the work-process becomes disorganised and unaligned. A clear cut vision gives birth to uniformity and unity.
For example, Microsoft’s corporate vision is “to help people and businesses throughout the world realize their full potential.”
Their work is a testament to their vision. Their products are used globally by businesses and organizations for continuous development and improvement.
So, what is your company’s vision?
2. Ignoring Your Digital Presence
Most of the modern world relies heavily on the internet for everything today. As a new or growing business, it’s imperative for you to carry presence and consistency on the world wide web.
Your website isn’t just a place to promote and sell your company’s products and services, but it also helps you to distinguish yourself from your competitors.
Here are some various advantages of having a website for your business:
- Easily Accessible: A website conveys vital information and is an option to purchase your product or service for your customers – at any given time of the day.
- Consumers Love Websites: According to the Local Search Association’s 2017 report, 63% of consumers primarily engage with a brand’s website.
- Answers For Your Customers: Your company’s bio, the description of your products, the handy blogs you share – a website helps you share all of it within a click.
- Building Credibility: It’s a behavioural fact. How many brands do you engage with that aren’t online today? Without a website, your business may be seen as too small to trust.
We understand the importance of digital. For us, your website is more than just a website. It’s a chance to drive your business forward. Thinking of a revamp or maybe creating one from the ground up? Let’s talk. Coffee’s on us!
3. Hiring The Wrong People
Some problems are bad, but a few are good. As a business that’s scaling, you’re under the constant pressure of hiring new employees who are good at what they do and are aligned to your overall vision.
Hiring the perfect candidate for the job can be harder than it seems.
Quite often, due to time or delivery crunch, bootstrap businesses hire talent with average skills or contrasting backgrounds instead of looking for the right person. The cost of hiring the wrong person can be disastrous for your company and may affect you in the long run for both parties.
Be clear about the skills you want from your employee before you hire them. When you know the qualities and characteristics you’re looking for, choosing the right talent will demand patience and time but it can also sort you out for the years to come.
4. Not Doing Proper Market Research
Sometimes we start a business just because it seems like a “good idea” to us.
“Hm… digitally equipped mannequins for retail rentals seems like a good idea for a new business. Let’s get forward with it!”
While ideas like these may strike your mind every now and then, to really implement them successfully you need to do your research.
To understand if your idea deserves to be in the market, you need to do your due diligence on the following things:
- What’s the market size? How much can you capture?
- What’s the cost of operating until you start earning?
- Which companies operate in your niche?
- What marketing strategies do they follow?
- What sets you apart from your competitors?
- What’s your target audience? How can you reach them?
- How much time will take for you to break profit? Is the risk worth the reward?
Here’s a quick example – Starbucks has been using stellar business strategies by expertly employing market research over the years.
One way the brand does market research is through its My Starbuck Idea platform which rolled out back in 2008. The idea behind the platform is for customers, potential customers and employees to submit their ideas for new offerings, changes in what already exists or requests to bring back an old product.
In this way, the company launch new tests products in selected stores to help them figure out if it can further be launched in other markets or not.
5. Not Listening To Customers
The opinion of 1 customer is as important as that of the other 1,000.
Keep in mind that it is your customers who make your business successful. Their reviews, feedback, and questions are more important to your brand than anything else.
There are a number of ways you can listen to your customers. Some of them include:
- Customer Reviews: Reviews can be both good and bad. You need to listen to them both equally. There are three types of customer reviews and how to deal with them:
- Those who are happy: Thank them!
- Those who have doubts: Answer them.
- Those who are unhappy: Ask them how you can improve.
- Understanding Your Customers: To know your customer’s likes and dislikes is vital for any business to succeed.
When they purchase your product or service, they expect it to benefit them or solve their problem. When they are fully satisfied, they might return to repeat purchase or maybe suggest it to others. So it becomes important to understand what is making your customers come back and make a purchase again.
6. Avoid Using More Technology
Small-scale or new businesses often overlook the blessing that is technology. This is mostly due to a poor understanding of technology or cost-factor.
But did you know there are many technologies specifically designed to improve small and new businesses? These are mostly cost-effective and help your business grow. Some of these include:
- Online Ordering: Online ordering has become the most powerful force for businesses today. In fact, according to Upserve, 45% of consumers say that offering mobile ordering would encourage them to use online ordering services more often.
- Online Payments: Contactless payment options make transactions more convenient and increase customer satisfaction. Payment options such as Apple Pay and Google pay provide major benefits for both consumers and businesses. Owing to the pandemic, this factor has become more important for all businesses than ever before.
- Cloud Computing: Cloud computing is the delivery of on-demand computing services over the internet.
- Chatbots: Chatbots are just a computer programme designed to mimic human conversations over the internet. But you wouldn’t believe how useful they can be. Chatbots help businesses, small and huge, to find new leads, convert customers and provide better customer service without a time delay or extending costs.
Not being able to leverage these technologies is one of the most common business mistakes which should be avoided.
7. Lowering The Prices
Small and new businesses often lower their prices to attract their first set of customers. This can be a huge mistake!
If your prices aren’t high enough to make a sufficient profit, you’re likely to harm your business. If you increase the prices after acquiring new customers, it hinders with your brand’s image and makes previous customers reluctant.
Calculate your desired profit by using your industry’s current standards and your own sales or financial estimates – then price your product. Just for a quick understanding, you can always look at what your competitors are charging.
Instead of cutting down the prices or shooting them up the next day, figure out what value you can add to your product to justify the pricing.
In conclusion, it’s okay to make some common business mistakes when you’re starting a new business. After all, you’re growing and learning through them. But ignoring the ones that you can gives you the edge.
See and observe successful businesses in your industry. See how you can apply what they are doing. Once you’re an experienced and successful business in your industry, other small businesses will look up to and learn from you!
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