If you’re a business owner, and you’ve been in business for a while, then you’ve made many mistakes. I’ve personally made more mistakes than I have made good decisions. But a mistake is only bad if you fail to learn from it. What are the most common business mistakes and how can you learn from them?
So before I dig right into some of the most common mistakes businesses make today, I would like to say this.
Keep making mistakes and continue learning. The path to overnight success involves countless nights of hard work, dedication, decision making, and learning.
So give yourself a pat on the back and continue your progress. But at the same time, try your best to avoid these 8 Deadly Sins of Small businesses.
1. Failing to Plan
In the words of famous investor and business guru Warren Buffet, “An idiot with a plan can beat a genius without a plan:
Planning for business success is just as important as working towards success. If not more.
It helps you forecast and mitigate risk, set goals, and keep yourself focused on reaching them, helps you efficiently use the resources at your disposal, and create competitive advantage to stay ahead of your competitors.
So make sure you plan for success before starting on the road to achieving success.
2. Skipping the Boring Market research part of your business plan
One of the common business mistakes is skipping a market research. It will help you identify a number of important things crucial to the success of your business.
It helps you better understand your customers and get a clear idea of your competitors and how they approach their business. It can also help you understand whether your product or service is a good fit before you launch it and waste thousands of dollars in the process.
By conducting market research, you will not only know if your product will work before you launch it, but it will also give you insights into what the best way to go about marketing the product is.
We do this exercise with all of our clients regardless of how big or small they are.
3. Not Investing in a Good Website
In case you may have missed it. It’s the 21st century and having a good website is more crucial than ever before. It is your business’s first impression on a prospective customer, investor, or employee.
Make sure your website resonates well with all stakeholders of your company.
4. Underpricing your product or service
Most small businesses think that pricing their product lower than the value being provided can result in business won. While this is true, it can severely affect your business in a negative way.
Pricing too low can result in a low perceived value of your services. Essentially, people who are looking for a quality product or service will ignore your business in this way.
In addition to that, the notion that starting at a low price and increasing it along the way can also be negative. Your customers get too used to the low price point and then when you do decide to increase the price, they stop buying.
Pricing is important and it’s important to set the price right. Some of the strategies you can use are competitor based pricing, cost-plus or penetration pricing.
Do some research before setting your price and then let the market decide your next move.
5. Failing to invest in marketing
Marketing is the leading revenue growth generator at 37.5% of companies surveyed.
In simpler words, most companies report that their marketing efforts are the biggest reason for their growth.
If you are not actively marketing yourself, then you are literally leaving money on the table.
6. Ignoring the financial health of your business
Accounting and finance are very important & the lifeline of all businesses. Way too often I see businesses ignore their finances until they need to.
This model has 2 inherent problems.
- You are unable to identify issues and fix them before they cause irreparable harm.
- You are likely to have a misunderstanding of how successful your business is, and you will make the wrong decisions on a day to day basis.
So get ahead of your finances, plan around them, and make sure you are aware of where your business stands in terms of cash flow and profitability. It could mean the difference between life and death for your small business.
7. Hiring Fast and Firing Slow
Okay, so you’ve grown a bit over the past few months. And you need more hands-on deck. We’ve all been there.
But deciding who you should hire can be one of the most important decisions you will make in your business. My recommendation to you is to hire slow and fire fast.
What this means is to make sure you do your due diligence when hiring, don’t make emotional decisions, and really think through who you are hiring and why.
And then test them for some time. If they are not making a positive impact on your business, don’t be afraid to fire them. If they haven’t shown their value in 2 months, they are unlikely to do so in 4 months' time.
8. So make a decision. (Which also happens to be the last and final sin - Taking Too Long to Decide)
Cut your losses and power on.
With that, I would like to conclude this piece. There is no single way to run your business the right way, and everyone has their own style. However understanding the mistakes you are likely to make along the way before you make them, can be great in terms of the speed at which your business will grow.
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