[List]7 Frequent Business Mistakes Business Owners Make!
Are you a new business owner? Or maybe contemplating a new business? Here are 7 frequent business mistakes that you need to avoid. You need to ensure that you don’t find yourself in the wrong set of statistical percentages when it comes to building your business. Every business needs to have an idea of where they are heading and having a MaxDiff Analysis performed on your business is certainly not a bad idea!
There has been a study of startups who received VC funding from the year 2004 to 2010, which shows that as much as 75% of small start-ups fail. But this shouldn’t come as a deterrent as successful business fall in the remaining 25%.
Are you a new #business owner? Or maybe contemplating a new business? Here are 7 frequent business mistakes that you need to avoid.
Starting a business can be a great experience, with potential for the future. Lifting the business from ground level up isn’t exactly easy. Start-ups encounter difficulties and may end up losing their businesses.
These challenges may put pressure on such entrepreneurs and lead to their making poor decisions that set them back. Many start-up entrepreneurs are overly preoccupied with getting their business off the ground that they may overlook some key facts that could affect them.
Below are 7 frequent mistakes that start-entrepreneurs should avoid.
1. Poor Hiring Decisions
“Reputation is all you have, and if a previous employer can’t be used as a reference then I usually have to assume something negative. Contrast that with an applicant whose former boss says things like ‘Hire them immediately, I wish they were still here!’ and you begin to see the real winners rise to the top”. -Matt Finneran, Cofounder, SparkCentral.
Hiring credible people to fill positions plays a vital role in the success of any business. The team for a startup business can be compared with the queen in a chess game and one wrong can lead to the failure of that business. Much thought has to be put into hiring the right set of people. In addition to hiring is the importance of ensuring that you have the best training possible for your team, it’s all about the Corporate Transformation and the image or brand that you want your business to be known for.
Innovation is the key to continuous growth of a business; startups make the mistake of hiring staff who don’t understand the business’s rate of innovation. A startup business is small and has a high degree of innovation and growth and this is followed by serious work and commitment.
Employees at this level often get to complain that the work goes beyond their job description. This is a condition that’s always found in startup businesses.
Hired employees in such situations have to play different roles; this is mainly due to fewer employed hands. Business owners need to address this expectation before the hiring process begins.
When a small business venture is just in its baby or startup phase, they are only a few people who have a similar mindset. These people normally work around the clock for the success of the company.
But when you hire people who don’t see your vision, growth is hindered as they input little or absolutely nothing. In interviewing viable candidates for a position, it has to be a 2-round process. It should:
- ensure that the candidates are of good fit
- and are technically sound.
A majority of startup business owners see hiring accounting or finance experts as beyond their capacity or even a luxury. In order for higher level of proficiency, resources have to be spent.
Startups should not be afraid of spending on administrative functions as not investing capital severely limits their potential for success. Finally, nobody should be hired unless a minimum of 10 people have been interviewed for that said position.
Most startup business executives always feel the need to spend huge amounts of money to purchase top-notch equipment and software. They forget that new businesses doesn’t necessary require a large investment.
A lot of new business owners always spend funds on cars, trips and expensive electronics that have no impact on the growth of the company.
Enough thought and careful consideration needs to be taken before any resource is spent. If the expense doesn’t generate any revenue in the long-term, then such spending should immediately be discouraged. They are always less expensive alternatives as well which can perform the exact function required.
Some business owners tend to use their personal accounts to raise funds for their business and all these have huge price tags, ranging from an ad or marketing campaign or an early expansion. This may all be failure bound. Having a business budget helps to limit overspending.
A startup company or business has less disposable cash to spend. It is a better recommendation to grow the business to a better financial state before embarking on expensive purchases or training.
In a situation where a new business owner has over spent money and an unexpected business occurrence that requires funds to sort out comes up, where would funds come from? A new business owner needs to regulate his personal and business finances for the growth of his company.
As an executive of a startup enterprise, it is in the best interest of your company that all expenses should be tracked in case of unforeseen occurrences as stated above; have a budget planned and try not to use personal finances for business purposes.
Generation of revenue should be the underlying thought in any money spent.
3. The Fear Of Marketing
A lot of startup business owners always have this false belief that their product and services will sell themselves. They immediately consider marketing a negative option and lose the chance of tapping from the huge network that today’s technology driven world has provided, as possible consumers are found on social media platforms like Facebook and Instagram.
First of all, a business owner has to know who he has plans of his being his customer. Secondly, decide the best avenue of reaching the targeted customer.
With the ever growing popularity of social media platforms, it becomes a question of which social media platform that his customers can be reached on.
A lot of potential customers come online to watch videos or view photos on Instagram and Facebook, so posting interesting videos about your company or a photo that captures the attention of your customer, can be a great start for initiating conversation with potential clients/customers about what your company has to offer.
The whole premise of marketing entails sowing a seed today and getting to reap its benefits tomorrow. Yes, marketing is about future sales. All long term businesses employ the use of marketing.
It shouldn’t be neglected especially for startup businesses. A good amount of time and money shouldn’t be dedicated to marketing. Neglecting marketing activities is at the loss of a new business.
Marketing activities have to do with:
- letting go of products that don’t generate profit or possibly bringing a better refined product on-board
- choosing a platform where an advertisement can be profitable
- and making a decision of expanding a product’s line.
4. Ignoring Making Plans
Any big business or small growing business exists because of their plans. Planning also marks the difference between big businesses and wannabe’s.
A lot of new business owners skip the planning phase; this may be due to the tedious nature of the planning exercise. The business, marketing and financial plans are the plans to be considered when starting up a business. Like the old adage says, “failing to plan is synonymous with planning to fail”.
Failure is not an option for a business, but without the relevant keys put in place, failure becomes a possibility.
Running a business can be tricky and at the same time-consuming. Making plans for a business can be directly linked to managing the business. So as a business owner, during the day, notes should be logged into your notebook.
All these notes or ideas should then be summarized into a plan. When this is done, the action or activity that is known to be of utmost importance and possibly yield better returns should be the first on the list.
5. Skipping Market Research
“Don’t think an idea is all you need to build a viable business. And if you do, at least test that assertion with robust and independent research”.- Ajay Patel, Founder & CEO HighQ.
Most start up entrepreneurs skip market research forgetting that for any good business to succeed, a business research on the targeted market has to be done. In starting a business, market research is a compulsory factor for those who know what they are doing.
A market research shows if the business is viable and is sure to bring returns. It’s not logically correct to launch a product or service after having a chat with your loved ones.
For example, let’s say a decision is made to generate traffic and making users spend more time on a website by having an amazing web design and uploading great contents.
This strategy can prove to be successful, however research has to made on the content that your target audience is more interested in and which keywords to put in.
Execution is what transforms a good idea into a great business, and marketing research is singled out as the essential stage of execution.
Skipping market research leads to failure of a business. This may be because, the idea isn’t as original as it appeared or the market not being ready at the moment for the said product or service. This alongside a host of other valuable business information is to be known from a market research.
It should be noted that after research is concluded, there’s need for a strategy. No matter how brilliant a business idea is, if it doesn’t solve peoples’ problems, there’s no way that service or product can achieve any success.
When research is completed, the help of primary and secondary sources can then be applied in order to help in the identification of ideal clients and also in the hiring of competent people that will aid in achieving the much desired success.
6. Not Launching The Product Early
Some startup executives may be too embarrassed to share their product or may just be waiting for the perfect time to hit the market forgetting that a product that nobody knows about isn’t a product at all. This illusion idea of grand launching a new business is instrumental to huge success is faux.
A lot of businesses begin small, without as much as a good website but made sales and receive feedback. Feedback shouldn’t be underestimated or overestimated. It is definitely good for a business.
When there’s constant feedback from customers about a change in something we thought the users might love will help provide a solution for any product or service.
When that change happens, the customers would feel like an integral part of the family and will remain as loyal ambassadors of the brand.
It’s not wrong to envision greatness for your business, who doesn’t? But this shouldn’t hinder an early release of your product. There’s no brand unless it’s actually one that the consumers can access.
7. Undervaluing Products Or Services
This is a problem sometimes found in new businesses. When a product or service is under-priced, it stands a chance of losing customers immediately, as they may think it is substandard.
Companies like Apple and Coca-cola used their product pricing to their advantage. Apple sells one of the world’s most expensive products but is still on the list of the world’s biggest companies.
This is mostly caused by:
– lack of belief or confidence in the business
– lack of proper research
– or possibly fear of failure.
Fear of failure is the worst. Undervaluing a product or service greatly reduces the original value of the product or service, leading to frustration.
This is not good for business growth. Before a product or service is made available for public consumption, there should be massive market research before a price is set.
My Final Thoughts 7 Frequent Business Mistakes Business Owners Make!
Generating market for your new business and also staying relevant in the market isn’t exactly easy. Big businesses began from a humble position before their massive growth.
Marketing and a well-organized team among other things all play a role in promoting your business and accomplishing the goals set.
These 7 mistakes should be avoided or lessons should be learned by any business owner who unfortunately becomes a victim.
Although one of the most effective ways that an entrepreneur learns is by making mistakes (themselves), or learning from the business mistakes made by others, it is no doubt that we become better in business when we learn from previous mistakes.
However, if these frequent business mistakes are avoided a small business will be likely to grow.
Images courtesy of Pixabay.
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