All entrepreneurs know that when you start your own business, you will make mistakes. Both mistakes and failure are inevitable. Whether it is your first business you're starting—or your fifth—you will run into mistakes. Fortunately, many of them can be avoided. Below is a list of five common mistakes and solutions that you can use to prevent them from occurring in your business.
Business Mistake #1: Not Having a Marketing Message
Any business must have a clear message that is relevant, compelling and interesting to those who are searching for what you sell. A 2015 study conducted by IBM concluded that nearly 80% of consumers feel the average business does not understand their needs as an individual and would rather sell them a misaligned product just to make money off of them.
The Solution: Have you heard the old saying that people hate to be sold, but they love to buy? The best way to improve your marketing is to create dynamic messages that solve one problem, meet one need, or fulfill one desire for one person.
Rather than shotgunning your message to slightly fit everyone's needs and wants, try to cater your product toward a specific audience's needs. Identify your target market and position your entire brand and product toward that market.
Business Mistake #2: Ignoring Smaller-Dollar Sales that Provide Cash Flow
As a small business, it's tough to make the right call as to what opportunities are worth pursuing and what opportunities simply aren't worth your time. However, be aware that the top reason for business failure is cash flow. In fact, in the case of 82% of all business failures, it is because they didn’t have enough cash coming in to meet their regular expenses like utilities, rent, payroll and taxes.
The Solution: First, we'd reference our point above in making sure you address the right target market. Figure out who your customers are and what their price preferences are. If applicable, try creating a tiered pricing structure. A common method is to create a three-tiered product line that's priced at a low, medium and high relative price point.
If your customers demand a set of varied price points, this can help ensure that you capture all the sales opportunities you can. You don't want to miss out on a sale just because you didn't have a catered price available.
Business Mistake #3: Hiring the Wrong Employees
Hiring the wrong employee can drain energy, resources and time from both you and other productive members of your team. The wrong decision here can have a dramatic productivity, financial and morale cost to your business. It's a decision that can have a significantly positive or negative impact on your business, so you want to be sure you make the right one.
The Solution: Instead of using a single interview and a couple references to validate whether an employee is the right fit, we recommend getting creative and expanding the process to better identify the right employee. Will this take increased time and effort? Yes, hiring the wrong employee can have significant costs.
Set up a group interview to see how candidates perform in a group setting. It's an interesting way to test how candidates perform in a slightly unfamiliar environment, as group interviews aren't exactly extremely common, and it's also a good way to see who speaks out and steps up as a leader. As you know, every single member of a team is important.
Business Mistake #4: Lack of Processes and Systems
Every business is dependent upon systems and processes. Unfortunately, many businesses do not have formal structures to guide them. If formal systems and processes are not in place, it could lead to loss of productivity and efficiency, and missing important deadlines for regulations and taxes.
The Solution: Every part of your business should have a documented set of standard operating procedures (SOPs).
Some example of SOP needs may include:
- Onboarding new employees
- Moving cash from the business’s location to the bank
- Financial record keeping
- How to handle customer complaints
- Purchase order requests
On top having a set SOP, make sure you have a higher level business plan in place. A business plan will help you define a strategy, and it's useful for both internal and external references. Lenders, business partners and others may all ask to see it.
Business Mistake #5: Going it Alone
Those who operate their businesses entirely alone will face significant opportunity costs from not working with others. This builds off mistake number three, but you'll want to be sure to surround yourself with competent leaders and employees. You don't want to miss opportunities just because you lack knowledge or experience in one area. You also don't want to spread yourself too thin and find yourself micromanaging every facet of your business, which may lead to your business failing to perform as best as it possibly can.
The Solution: Hire the best talent possible and empower them to make decisions. A good leader knows how to delegate and trust their employees to make the right decisions. As your business grows, you'll want to pay more and more attention to the higher level initiatives and concerns that have the biggest impacts.
Of course, the level to which this advice should be followed directly correlates to the size of your business. If you're just starting, it makes sense to keep very close tabs on everything that goes on. If you've been operating for a few years, gradually try taking a more hands-off approach and train employees to help you.