Starting a Business? 5 Common Mistakes You Can Avoid
Tired of your back-breaking 9 to 5? Or the ever-present two-hour commute to your office? Thinking about turning a hobby or experience into a business? Hold your horses. Why? Because thinking about and launching a business are two very different things.
You might dream of financial freedom, but that glorious dream can quickly turn into a nightmare if you don’t set your chess pieces in the right place at the beginning of your power play. So, how can you avoid being checkmated in your industry or booted off the board? What are some common business mistakes you can avoid to get your business off the ground?
Let’s check out five common business mistakes almost everyone makes when starting a business.
1. Not Setting Realistic Goals
According to a study by Fundera based on data collected by the Bureau of Labor Statistics, around 20 percent of small-medium businesses fail within the first year. This number rises to 30 percent in the second year and 50% in the fifth year.
And in ten years, only 30% of small-medium businesses will remain. The cherry on top? These statistics haven’t changed since the early ‘90s, so out of
One of the primary reasons for this high failure rate is that many business owners don’t set realistic goals and instead become overly optimistic about the potential success of their venture, which can have serious consequences, such as:
- Poor Resource Allocation – If you set goals that are too aggressive, you may end up spending too much money or overextending yourself, which can lead to financial problems down the line.
- Lack of Focus – If you have too many goals or goals that are too broad or vague, staying focused and on track can be challenging.
- Disappointment and Burnout – If you set goals that are too ambitious, you may become discouraged and burned out if you’re unable to achieve them, which can lead to a loss of motivation and even quitting the business altogether.
To avoid these problems, setting realistic goals when starting a business is essential. This means being honest with yourself about the potential challenges and limitations of your business and setting goals that are achievable and aligned with your resources and capabilities.
2. Hiring the Wrong People
The right people are crucial to business success. Think of it this way: you want to hire Bob, the carpenter, as the accounts manager because he’s hard up for some cash. Plus, he’s family and willing to put in the work to learn the ins and outs of pay stub generation.
But you didn’t consider how long it would take Bob to learn the right skills. And every delay he runs into will set you back several hundred dollars. So, instead of giving sympathy jobs to friends and family, ask yourself: will employing Bob give you a return on investment?
If the answer’s no, don’t shoot yourself in the foot, no matter how much your heart bleeds. Find people with the skills to help you keep an eye on your business. Why?
Because according to the Harvard Business Review, poor hires can decrease team productivity by nearly 50%, which cuts your deliverables in half, as you won’t be able to meet deadlines. If this continues, your business will go bust.
So, focus on value instead of empathy when hiring employees for your small business.
3. Not Focusing on Your Customers
Understanding your customer’s needs and delivering products or services that meet those desires is crucial for the success of your business. And to do that, you need to have an in-depth understanding of who your customers are and what they want.
The only way to meet customer expectations is to continuously gather feedback, analyze customer behavior, and make changes based on the insights gained. But why should you focus on customer satisfaction?
Think of it like this: if a customer likes your service or product, they’ll recommend it to people in their inner circle, creating new leads that you can convert into new customers, which means increased revenue. Plus, your customer will be likely to buy your product the next time.
So, by focusing on customer satisfaction, you improve customer loyalty and increase the chances of repeat business and positive word of mouth. In fact, loyal customers can account for up to 65% of a company’s revenue.
On the other hand, failing to meet customer expectations can lead to dissatisfaction and an increased likelihood of switching to a competitor. For instance, in 2022, 61% of customers were likely to switch to a competitor after just one poor experience.
So, instead of focusing too much on your branding or marketing campaigns, prioritize your customers and ensure you’ll never lose the game.
4. Not Using Technology to Your Advantage
From streamlining processes and improving efficiency to reaching new customers and expanding your market, the right technology can make or break your business. by automating routine tasks using project management software or meeting planning apps, you can free up time and resources to focus on more strategic initiatives.
Technology can also help you reach new customers and expand your market. For example, e-commerce platforms and social media marketing have made it easier than ever to reach a global audience.
retail sales generated through e-commerce accounted for nearly 14.8% of total sales in Q4 of 2022, taking a share of $37.2 billion out of $251.7 billion in total sales. This means the technology can help you reach a target market potentially worth millions.
5. Not Seeking Help When You Need It
Whether it’s seeking guidance from a mentor, connecting with other entrepreneurs through networking, or hiring a consultant or coach, seeking support can help you overcome obstacles, achieve your goals, and keep away from financial risks.
And that’s as true for a start-up as it is for any area of life. So, you should always seek help when you think you need it. having a mentor can be particularly helpful. Why? Because entrepreneurs who work with a mentor are more likely to succeed and grow their businesses. Mentors can provide valuable insights, advice, and support as you navigate the challenges of starting and running a business.
Networking with other entrepreneurs can also be beneficial. By connecting with other business owners, you can share ideas, learn from their experiences, and find new opportunities for growth and collaboration. hiring a consultant or coach can also be a smart move for business owners who want to take their business to the next level. A consultant can provide specialized expertise and guidance in areas such as marketing, finance, and operations which you might not be familiar with.
