By Brooklin Nash
Starting a business is a huge undertaking. Done right, it can lead to long term success and an enjoyable career. Done incorrectly, it can lead to lost money, damaged relationships, and a limit placed on future career opportunities.
Thankfully, people have been starting their own businesses for a long time. One of the best ways to ensure success is to take a look at what others may have done wrong. This allows for a strong start, which can lead to a strong future.
Here, we discuss seven of the most common mistakes made by new businesses so that you can avoid them on your path to success.
1. Forgetting a Marketing Plan
Often, those starting up small businesses rely on business from friends and families to get the ball rolling. However, modern marketing techniques are important in the modern business world. If you limit your marketing strategy to target those you already know, they will continue to be the bulk of your customer base.
However, it’s unrealistic to think that a business catering only to friends and family is sustainable. Instead, make use of all of the modern marketing technology available: a mobile-friendly web page, strong social media presence, and sponsored ads all have a place in most marketing plans.
2. Overspending or Underspending
Obviously, finances are a tricky part of starting a business. It’s easy to slip up in deciding what’s worth the money and what’s not. The key is to find a balance between overspending and underspending.
Many small business owners overspend because they believe that’s the only way to drive future success. Others underspend because they’re so worried about spending money they aren’t sure if they’ll make.
The balance combines spending what you need to attract and keep customers while making sure to do things a cheaper way when it’s feasible.
3. Underpricing Your Product or Service
Another financial mistake often made by small business owners is charging too little for what they’re providing. Overpricing is perhaps less common but has the potential to be just as disastrous.
They key here is making a good estimate of what your product or service is worth. It’s important to keep in mind the cost of similar products or services, as well as how much time or resources you put into providing it. You don’t want to lose money making an item too cheap, but you don’t want to lose sales for hiking up a price higher than a customer will pay.
Again, the key is balance.
4. Avoiding Written Agreements
When a business first gets going, it can be easy to slip into a pattern of casual relationships with both customers and business partners. It’s important to keep in mind that professionalism matters even in the early days of operation.
Often, this means making written agreements even when it seems a little silly. Sending professional invoices for services rendered, providing receipts for purchases, and signing contracts with partners are all ways to ensure effective record-keeping. What’s more, they’re ways to make sure that customers are satisfied and service providers are paid in full and on time.
5. Failing to Protect Intellectual Property
Another way that new business owners set themselves up for future problems is by neglecting to follow the legal processes that register their intellectual property as their own.
Whether a business owner has created a logo, a name, a resource, or a set of photos, it’s important that the creation doesn’t get stolen down the road. Depending on the type of content, this could mean filing for a copyright, trademark, or other kinds of legal ownership. Knowing these types in advance allows business owners to be prepared to apply or register as they make new things.
6. Hiring Too Quickly or Too Slowly
Part of what new small business owners often overspend or underspend on are staff members. Again, too much in either direction is the wrong choice, and they key is balance.
For example, a business owner doesn’t need to spend money on staff members who will just be standing around. You can always hire more staff when you need it, and you don’t need to go through the process too far in advance of actual growth.
On the other hand, you shouldn’t work yourself into the ground unnecessarily. Business will struggle if you don’t have enough people to share the workload.
7. Thinking in the Short-Term
It’s important to look to the future when making business decisions. Right from the beginning, everything should be functioning with a long-term plan in mind.
Usually, this means sitting down and planning out goal for different time periods. What do you want your business to look like after one year? Five years? Ten years?
The goals can be focused on future products, financial stability, personnel, or other aspects of the business. Whatever they are, the business owner must make all decisions with these goals in mind.
Starting Out on the Right Foot
There’s plenty to think about when starting a business. Thankfully, learning from others’ mistakes makes it easier to avoid major pitfalls. You can save both time and money by being aware of these problems and preparing yourself to combat them.