9 mistakes to avoid when setting up a small business
Starting a new business is exciting but often riddled with complex challenges and demands. From research and marketing to customer satisfaction, one has to take care of many aspects to make it a success. It also requires a solid team and sound financial backing. While there is no “right way” to start or run a business, many miscalculations can break a new business. Here are some mistakes that one should avoid while setting up a business:
1. Trying to be a one-man army
It’s understandable; the budget is tight, and the tasks are endless. But often, entrepreneurs who try to run the show all on their own find themselves burned out or even demotivated. So, it’s important to outsource a few important tasks, especially those the entrepreneur does not have much expertise in. This can save a ton of time and help avoid potential mistakes that may cost more money than initially anticipated. That said, one must not shell out thousands of dollars to hire full-time professionals. In fact, this is not even advised. One can use other ways to access talent affordably. For example, freelancers and gig workers can work on a project basis. This simple outsourcing can also free up a lot of one’s time, which can be used to strategically plan expansion and innovation and address pain points in the business.
2. Not knowing the target audience
The only way one’s product or service will stand the test of time is if it reaches the right customers and solves their problems. But knowing the target audience goes beyond knowing their age group and gender. To do it right, one should conduct thorough research and know the habits, lifestyle, preferences, financial standing, and other factors of one’s potential target audience. This will help customize the product to benefit people and fulfill its purpose.
3. Being afraid of failure
Running a business is not an easy feat, and it often requires entrepreneurs to face setbacks or failures in the form of market or demand fluctuations, unexpected obstacles, labor turnover, or seasonal shifts. It’s important to be prepared for such financial and emotional setbacks.
4. Failing to do continual market research
Before kickstarting a business, new business owners may do ample research and development. But one should not stop at that; one should continue to check customer feedback, review the marketing strategy, analyze competition, and tweak tactics as an ongoing process. This will help entrepreneurs improve their products and services, foster brand loyalty, enable innovation, and ensure they recognize any hidden opportunities or threats to the business.
5. Not realizing the importance of cash flow
Cash flow, the net movement of money that flows in and out of the business, is important to run the day-to-day operations smoothly. It focuses on the short-term financial health of a business. Small business owners often underestimate just how important cash flow is to meet short-term obligations and manage their finances effectively. New business owners are advised to make a detailed cash flow forecast with all fixed and floating costs and take steps to optimize it to avoid this mistake. Some ways to do that are by negotiating good deals with suppliers or setting aside money for emergencies or slow seasons.
6. Undervaluing one’s product or service
Many new business owners make the mistake of giving away free products or services, offering steep discounts, or pricing their offerings at a low range to increase visibility. While the intentions may be good, this strategy can harm one’s business, especially in the beginning, when investments are high and returns take time to show. One may also run the risk of creating the image of being the source of giveaways. So, it’s important to study competitor pricing and market demand and set the right price for one’s product or service.
7. Launching too quickly
When the product or service is ready, it’s natural to want to plug it right into the market and wait for the first golden sale. However, launching any new product or service before it is ready can cause unexpected problems. Ensure that one’s business can handle new clients, the systems are well set and planned, and the process, contracts with suppliers, payment methods, and conditions must all be looked into before the big release. Any cracks in the process can not only cost the business owner money but also affect the brand’s image.
8. Failing to develop a foolproof marketing plan
Marketing has become easier than ever, thanks to free and abundant social exposure. But if it’s not used wisely and with a solid marketing plan in place, one may struggle to reach the right target audience, get the proper brand exposure, and make little sales. A marketing plan, especially when starting a business, establishes the brand name and image and helps convert visitors into customers.
9. Trusting verbal assurances
Thanks to free and abundant social exposure, marketing has become easier than ever. But if it’s not used wisely and with a solid marketing plan in place, one may struggle to reach the right target audience, get the proper brand exposure, and make little sales. A marketing plan, especially when starting a business, establishes the brand name and image and helps convert visitors into customers.
