With the current rave to “be your own boss”, new entrepreneurs are rising every day. If you are one of them, chances are that you are brimming with excellent ideas to promote your new business and nurture it till it becomes a well-known brand. However, as you learn how to do all the necessary things the right way, (how to write a business plan, a proposal, a successful pitch, send cold e-mails the right way, and so on), there are some common mistakes that business owners make when starting, that you should watch out for. Learning to avoid these now will save you the stress of needing to tackle problems that may arise from making them.
Common Mistakes Made in Business Include:
1. Winging it without a Detailed Business Plan
There is a saying that if you fail to plan, you have inevitably planned to fail. Just as that saying is true in the case of students who show up to examinations ill-prepared, it is also true for business owners who launch their start-ups without a detailed business plan. Your business plan doesn’t have to be unnecessarily long or particularly detailed, but it should contain a clear outline of how you intend to achieve success in your first year at least. Having a business plan keeps you in check, serves as a guide for your team, and provides something you can use to track your progress over time.
Here’s an article on how to write a business plan for better insight. Another article that might come in handy when reaching out to clients, is this one about: how to write a winning business proposal.
2. Neglecting Proper Financial Planning.
When running a business, every penny spent should be accounted for, and plans made to earn it back. However, many entrepreneurs start their businesses without proper planning on how to manage their finances. Too often, this results in the business quickly running out of funds when it is time to take on big projects. When situations like that arise, the company will be forced to take a loan to successfully execute the project.
You can avoid all that by simply dedicating time to laying down strategies for revenue generation for the first 12 months before you launch your business. Mapping out how available funds will be spent, is also helpful. If you are too preoccupied with other relevant things and can afford that, it is best to hire the expertise of a financial analyst or accountant to help with this.
3. Acquiring Long-term Assets with your Operating Cash aka Cash Flow
This is another one of the common mistakes that new business owners often make unknowingly. It is a mantra in the business world that investments help a business or establishment grow faster. However, it is dangerous to buy a long-term asset with your operating cash. That is because it might take a while to receive dividends from that investment, and your business will suffer while you wait since there is no cash flow to restock with. When you evaluate your earnings for the year, set your cash flow aside and buy whatever assets you desire with the profit gained instead. You can also take a business loan if you plan to invest the money in another start-up that is equally (or more) lucrative than your current one.
A pro tip when taking a business loan is to match the grace period till payback, with how much time it’ll take for you to start reaping dividends from your investment. You should only get the loan from a bank, stay away from loan apps, please.
4. Not Outsourcing when Necessary
New entrepreneurs are always too shy and independent to ask for help, and that is one of the common mistakes they make in business. Truthfully, no man is an island, and it takes a team effort to run a business successfully. If you are ever stuck or in a dilemma at any point in growing your business, reach out to your mentor or ask for expert advice from a business consultant.
You should always be willing to delegate duties and outsource relevant projects that are beyond your level of expertise. A jack-of-all-trades mindset only encourages mediocrity. For most new business owners, the reason why they don’t delegate jobs or outsource is that they are trying to manage the organization’s available funds. However, in doing so they take on too many responsibilities and may end up breaking down.
5. Being Reluctant to Make Relevant Changes over time.
One purpose of writing a business plan is so that you can track your brand’s progress over time and see if you are smashing the goals you had set. While you monitor your progress, make changes as necessary and update your plans too. Most entrepreneurs are scared to try new things in their business, they are more inclined to find one thing that works and stick to it forever. However, variety is the spice of life, and in the process of trying new things, you might stumble upon an idea or method that works even better than your usual.
6. Setting your Rates Much Lower or Higher than the Average Market Price
When starting a business, you should conduct extensive research on the current market of your chosen industry. Whatever price you set for your products or services will be greatly influenced by this market survey. You should not fix a product or service at a particular price because you think it will give you an edge over your competitors – tailor it according to the cost of each singular material you use in production.
Stay updated on the changes in the cost price of these materials so you can make adjustments to your selling price as needed. If you fix a price that is much lower than the average because you aim to attract more clients to patronize you, you might be at risk of running your business at a loss. However, if you charge too high (way above average price), you would scare your prospective clients away and may stand the chance of running down your business due to a lack of paying customers.
7. Not getting on the Digitalization Bandwagon
Digital marketing is an effective way to promote your brand in the online space. If you steer clear of marketing on the internet, your new organization may remain a small business forever. There is no perfect time to start using technology in your operations or add digital marketing to your physical advertisement campaigns, just start with the forms you can afford first, till you can invest in costlier ones. Running ads on social media platforms like YouTube, Facebook and Instagram, for example, can help you reach specific segments of your target audience. When choosing the digital tools to incorporate into your business operations, look out for the ones that will improve your brand’s growth, and would be cost-effective.
8. Keeping a Closed Mindset.
Just like change, growth is constant in business. You have to be open to learning, relearning and unlearning, to keep up with the constantly changing times so your business can excel. It is also important to keep an open mind and let go of imposter syndrome when starting a business. If the start-up doesn’t make it big the first time, pack up, go and study to be better, re-strategize, and try again later – never give up on your first try.
The business world is more than what we see as clients or employees. To run a successful business requires months of strategic planning, consultations, and too many sleepless nights. However, it can be done and all the efforts will be worth it in the end. When starting your business, remember to avoid these common mistakes, and you will do just fine.
All of us at HubforJobs are rooting for you!