Running a successful business is exciting, challenging and can be hugely rewarding. But a sad fact is that a high proportion of SME’s fail within their first few years, many from mistakes that could easily have been avoided.
All businesses are different and there is no one magic formula that will determine whether a business fails or succeeds. However, avoiding some of the common mistakes made by small businesses and start-ups could make all the difference to long-term success and profitability.
Six common mistakes small businesses make
1. Lack of research
Launching a new business without undertaking adequate market research is a surprisingly common mistake new businesses make. Often enthusiasm, coupled with a resolute belief in the viability of a particular product or service can mean the important area of research is overlooked. However, before you embark on any business venture it is essential that you have fully researched your market, your customers and your competitors. You must be able to answer questions like; where does your product or service fit into the current market? Who are your target market and what needs do they have? Who are your competitors and what are their strategies? You cannot make informed business decisions without a solid understanding of your market and insight into your customers and competitors.
2. Poor planning
It may not always be everybody’s favourite area of business management, but I can’t stress the importance of proper planning enough. Every business should have at the very minimum a business plan, financial plan and marketing plan. You cannot successfully move your business forward without proper planning in each of these key areas. There are plenty of free resources available (I’ve listed some below) that provide guides on how to put together useful and relevant planning documents for your business.
3. No clear goals
A number of SME’S find themselves floundering because they don’t really have a long-term goal for their business. Every business needs to have a clear vision of what they are working towards and what it is they want to achieve. Without this your business is likely to lack the direction it needs to enable it to move forward. Setting realistic long, medium and short-term goals and objectives will help you focus your precious time and effort into the important areas of the business. Of course goals and objectives are only useful if they are realistic. So when setting them use the SMART acronym and make sure they are Specific, Measurable, Achievable, Realistic and Timely.
4. Poor understanding of finance and how it works
Many successful and profitable businesses have failed because they haven’t fully understood the financial elements of their business. You need to be able to manage and monitor business finance closely as it is all too easy lose track of where you are financially. Getting to grips with the monetary aspects of your business such as cash flow, contingency planning, budgeting, forecasting, invoicing and tax is essential. Either spend time learning about these elements yourself or call in some expert help. Either way finance not an area to be left to chance.
5. Overlooking marketing
Ignore marketing at your peril. A surprising number businesses make the mistake of assuming that their product is so amazing that it will sell itself and customers will simply come to them. Unfortunately that’s not how it works. You need to raise the visibility of your business in order to drive traffic and sales. It is essential that you put time and resources into marketing strategy, planning and implementation. No matter how small your budget, with time and planning there are plenty of low-cost inbound marketing tactics you can undertake to help drive traffic and increase sales. Have a read of the attached blog from SmartInsights for a few helpful tips to get you started. http://www.smartinsights.com/digital-marketing-platforms/business-blogging/inbound-marketing-small-businesses-and-start-ups/
6. Trying to wear too many hats
As a small business owner it is tempting to try to do everything yourself which means you can end up putting all your time energy into areas that don’t warrant it. Don’t be afraid to outsource where you can. That way you can actually focus on the business areas that you need to in order to move your business forward, rather than being bogged down in issues that someone else could quite easily manage.
There are plenty of free resources out there that can help you get started and equipped with the knowledge you need to avoid some of the common pitfalls that we’ve outlined above.
We’d really love to hear your thoughts on this post, so please do leave a comment.