Starting and running your own business can be very lucrative and fulfilling. It’s also very challenging. Most small businesses fail. It’s necessary to avoid the common pitfalls of small business ownership if you want to experience success.
Most small businesses face considerable financial challenges at first. There’s little room for mistakes in the early days. Ensure that you’re not making avoidable errors. Educate yourself before taking the plunge.
Small business owners can avoid many of the mistakes that lead to disaster:
1. Failing to listen to customers. Find out why customers buy your product or service and why they don’t. Customer feedback is imperative.
• Too many small business owners are so in love with a particular idea that they refuse to change to accommodate the market. Your customers are your best source of information. Conduct surveys or ask informal questions. Be flexible and change your approach when the feedback dictates it.
2. Weak leadership. It isn’t necessary to be Attila the Hun, but small businesses require strong leadership. The typical employee in a small business often isn’t considered qualified by larger firms. You’ll frequently be faced with employees with limitations. Your leadership is necessary to drive and inspire them.
3. Hiring the wrong people. Every company is disgruntled regarding the availability of good help. Even the most popular companies are plagued by hiring mistakes. However, big companies can absorb poor hiring decisions and keep on running.
• A small business owner can be severely harmed by a poor hire. Think about the lost time and headaches one bad employee can cause.
• If you don’t have a human resources department, you’re on your own. Take the time to ensure that you’re hiring people that are effective in their job. Consider the job requirements and the temperament and background of any potential employees. It’s much easier to avoid a mistake than to fix it.
4. Undercapitalization. When you barely have enough money to keep your business afloat, any small mishap can disastrous. You’re also forced to do anything you can in the short-term to pay your bills. That’s a poor way to run and grow a business. Ensure you have the funds you need to get your idea off the ground.
5. Not understanding the importance of marketing. New business owners are often convinced that their idea is so amazing that marketing is secondary. Nothing could be further from the truth. Most businesses need to spend around 15% of their annual revenue on marketing to survive. This amount can drop as the business gains traction.
• Small businesses need a marketing budget. When planning your business, ensure you have the funds necessary to let the world know that you exist.
6. Failing to recognize your competition. There might not be someone nearby offering llama burgers, but not all of your competition is direct. You’re also competing with other restaurants of all types within your price point.
• Consider the other alternatives your customers have for their money. Your customers can always spend their money somewhere else. This is significant.
• Make a list of your closest competitors. How can you provide your product or service in a way that causes customers to favor your business?
Running a small business requires a wide range of skills. With so many hats to wear, mistakes are common. It’s not necessary to be perfect, but the biggest mistakes can be avoided. Making a critical mistake can spell the end for your company. Learn about the critical errors business owners make and make plans to avoid them