According to the U.S. Bureau of Labor Statistics, 50% of businesses fail within the first 5 years of operation. That’s a scary statistic isn’t it? The key is avoiding common pitfalls that drain time, energy and resources. In this post, we’ll take a look at the seven most common mistakes business owners make at startup, and how you can avoid falling victim to these problems yourself. Let’s explore each point to see whether you made or are about to make these mistakes.
1. Failure to Plan as a Business Owner
Just like a sports team, your business needs a strategy to succeed.
As a business owner, practice, planning, and research aren’t tasks you perform occasionally, they happen every day.
• Study the Competition – Keeping tabs on your competitors is a great way to find what you’re doing right and wrong. You don’t want to outright copy anyone, but business owners with more experience than you, are a wealth of information and expertise. What are your competitors doing on social media? How are they advertising? What services do they offer? These are just a few of the questions you’ll want to ask yourself.
• Consider the Risks – Owning a business is risky. If it wasn’t, everybody would do it. Assessing things like the health of the local economy, or the cost of acquiring customers is necessary to get an idea of what challenges you’ll face down the road.
• Set Milestones – Goal setting is another part of planning you don’t want to skip. If you aren’t setting goals, how will you ever know if you’re a success or not? Milestones don’t have to be major, but it’s important to break them down into steps. (IE: Daily goals, weekly goals, monthly goals, and yearly goals.)Set aside time each month to see how you’re doing. Are you meeting the goals you’ve set? Or are you expecting too much?
2. Unintended Procrastination
Remember when you were in school and waited until the last minute to write a term paper or turn in your homework? That might of worked when you were a teenager, but as a business owner, it isn’t going to fly. We know business owners wear way too many hats, and sometimes that causes unintended procrastination. Keep it simple and organize your priorities.
Customers don’t want to spend their money on an unreliable service or product. Adhering to deadlines, being punctual, showing up on time to meetings, and filling out necessary forms (IE: Tax documentation, employee paperwork, etc.) are just some of he things you’ll need to do regularly.
In the real world, deadline extensions rarely happen. What are you waiting for? It’s time to get to work… on the right priorities that is.
3. Lack of Diversification
When you’re starting a new business, you never know what’s going to work and what isn’t. Being flexible and thinking on your feet is absolutely necessary if you want to succeed.
• Limited Options – The more options you have, the better. That way, if something doesn’t work, there’s always a backup plan. As a business owner, what will you offer your customers? Apple didn’t stop inventing after the iPod came out. If anything, it inspired them to do more. You want the same kind of mindset: Always hungry for “the next big thing.”
• Not Expanding – You might love serving your local community, but if you aren’t willing to expand, you’ll never reach your full potential. Are you willing to take a leap of faith and reach out to more customers? Is fear keeping you from being all that you can be? Your opportunities are what you make of them, never stop growing.
4. Poor Follow Up Practices
Now is the time to address proper follow up practices; as a business owner, this area of expertise is especially important. Not only are you responsible for leading a team, you also need to attract and keep clients, while working side-by-side with fellow staff members.
• Following Up With Clients – When one of your friends call and leaves a voicemail, you answer it eventually, right? The same should go for your business. Getting back to current clients and potential leads as soon as possible is critical to the health and success of your business. Has a client complained or brought a concern to your attention? Addressing issueS like these quickly and professionally is critical to keeping your customer base coming back for more.
• Following Up With Employees – As the captain of your business, it’s your job to keep morale high and lines of communication open. Is your workplace a welcoming environment? Do employees feel like they can bring their concerns or problems to you? If not, your business can face high turnover rates and even legal problems. Yikes!
• Following Up With Peers – Are you building relationships with fellow business owners? If not, you should be! Networking with professionals not only helps get your name out there, it also provides opportunity to help others and in turn, them helping you.
In short: Always follow up.
5. Cockiness — Too much of it
There’s nothing wrong with loving your business and the products or services that you sell, but cockiness isn’t a good look, especially for a business owner.
You don’t need to be a pushover, or completely passive, but you also don’t want to make enemies or burn bridges within your community.
Let your work ethic, leadership skills, and business smarts shine through your products, and the positive feedback your customers provide.
People enjoy sharing about the services they love, just like they’ll turn to the competition if you have a bad attitude.
6. Lack of Consistency
Whether you’re selling a product or service, you need to keep consistent standards:
Have you ever been to a restaurant, ordered your favorite dish and then while eating it, realized that it’s completely different from the last time you ate it?
You went back to the restaurant for a reason, and it wasn’t for a surprise.
Likewise, as a business owner, your goals, services, and business practices have to stay consistent. If you can provide the same high quality products or services every day of the week, your customers will learn to trust you. On the other hand, if you provide a great job one time, and an awful one the next, your clients are sure to choose someone who does it right. The same goes for your goal setting and planning.
If you find yourself struggling, don’t reinvent the wheel. Yes, you can adapt to what your clientele wants, but owning a business is a long game. It requires dedication and vision. Consistency is the key to making that vision a reality.
7. Bad Accounting Practices
Just like financial mismanagement can cause problems in your personal life, it will affect your business too.
• Finances – Regular budgeting, and tracking of expenses is crucial for your success as a business owner. The more you know about your financial situation the better.
• Keeping Records – Keeping track of investments and expenditures is crucial to knowing what’s in the bank. Don’t throw any paperwork away, and create a file management system that’s intuitive and easy to sort through. If any problems arise, you’ll be able to back yourself up with data and numbers in your arsenal.
• Paying Taxes – Taxes are a part of life, and paying them regularly and accurately is crucial to the success of your business. Again, make sure to keep records of everything. If you are ever audited, you’ll have the necessary documentation to protect yourself and all of your hard work.
• Following Rules and Regulations – While paying employees under the table might sound like a way to save on costs and paperwork at the beginning, illegal business practices never pay off. Adhere to all state and federal guidelines and regulations. If you have questions, hire a legal consult. It’s better safe than sorry.
You’ve been warned! Now it’s time to analyze your options. Will listening to this advice and being mindful of these common mistakes, fail proof your business? Probably not, but the fact that you’ve read this post, and are taking the suggestions to heart already sets you head and shoulders above the competition. By staying positive, and continuing to learn and grow, you’re on the right track. Review the seven points discussed and check the potential mistakes in your our business; then create a plan to correct them before is too late.