Whether you’re just starting out in the small business world or have been around for a few years, the odds are generally stacked against your success. Big-box stores and franchise names have been pushing out their mom-and-pop competition for years.
This uneven playing field should concern you, but don’t let it drive you into making bad decisions. Every small business owner makes mistakes. We’re here to discuss a few of the most common errors made by small business owners, both novices and veterans. Knowledge is power! If you know which blunders to look out for, you’ll be less likely to fall into them.
And remember, the vast majority of mistakes are fixable with hard work from you and your team. Let’s look at a few common errors made in business so you can brainstorm solutions.
Wearing Too Many Hats
While a business owner does need to be competent in multiple areas of the company, an experienced owner also knows when to step back and delegate authority. When you insist on filling too many roles, your business can’t reach its full potential. A business can only grow so much if one person is doing the majority of the work.
In the early stages of your business, yes, you will have to wear several hats, so to speak. But as you grow, you’ll develop the ability to hand off those hats to other competent folks—accountants, sales managers, and the like. Don’t be afraid to do so! Hire high-quality employees who care about the company as much as you do.
Skimping on the Business Plan
Before you open for business, you should have a firm five-year business plan. Think of it like your GPS: you wouldn’t go on a road trip without any directions, so why start a business without any idea of what lies ahead? Many small business owners go into operation relatively blind and end up floundering at the first roadblock.
Draw up a business plan that details projected monthly budgets, annual goals, and marketing strategies. It’ll act as a road map for you. Plus, if you ever need to apply for a private start-up business loan, your prospective lender will want to see the plan. It’s best to have it at the ready now.
Not Knowing the Market
Let’s say you’ve always wanted to start a landscaping company. You and your employees love the outdoors and jump at the chance to work in nature all day. But perhaps you live in a desert area or deep in an urban environment with a very limited number of hedges to prune. Are you going to stick to your landscaping idea simply because it’s what you want to do?
Many small businesses fail within the first couple of years because their communities simply aren’t interested in the products or services they provide. Market research is the cornerstone of a solid business plan; you need to identify and target a market in order to have a customer base.
Failing To Plan Ahead
You probably know the cliché at this point: if you fail to plan, you plan to fail. Your business plan should stretch over the next few years—have an idea of where you’re going as a business! This includes new sales and marketing strategies, as well as ideas for new products and/or services. If your current “plan” is to continue doing what you’ve always done, your business will stall.
In addition, you should have plans in place for failures and emergencies. What will you do if your business fails to turn a profit? Can you pivot the strategies you have in place? Hope for the best, but always remain prepared for the worst.
Hiring the Wrong Team
Hiring new employees is an exciting part of being a business owner. You feel like a real boss! When your business starts making enough money to bring on new employees, it’s easy to get carried away hiring people who seem friendly and ready to work.
However, finding the right fit for your company matters. Don’t just hire your friends so you can spend time with them all day. Be picky in hiring, and look for people who want to stay with the company because they care about what you do.
Neglecting the Brand
If your business sells a product, it’s easy to think that the business revolves around that product. Or, if your business offers a service, you may be tempted to focus solely on that service. However, one element of your business is crucial to bringing customers back and keeping them with your company—your brand.
Stop for a moment and think about your core values, both as an individual and as a business owner. How can you better display those core values as you do business? How do you want customers to view your business? Build an image of your business, both in the community and on social media, that draws potential customers in and puts them at ease.
Remaining Cash Poor
Many business owners, both new and experienced, focus on their bottom line every month. They’re making more money than they’re spending, so they’re doing well, right? Maybe for now. But emergencies happen sometimes, and too many companies find themselves without emergency funds.
Having extra cash on hand is essential for a business’s continued growth and survival. Simply making ends meet isn’t enough. Make sure you’ve got enough additional capital to grow your business and deal with cash flow problems if and when they occur. If you’re caught off guard by a financial emergency and need to apply for a loan, your business could stall while you wait for the loan to be approved.
Forgoing Work-Life Balance
Maintaining a balance between business concerns and personal life is difficult for many business owners. After all, you’re the owner! However, burning yourself out on work does no favors for your company. Give yourself—and your employees—a break every so often.
As you emphasize the importance of work-life balance for yourself, extend that courtesy to your employees. A happy, well-rested staff will be more productive and better for business than employees who are burned out on overtime. Highlighting that balance will also reduce employee turnover and keep your best workers with the company.
While every small business owner makes mistakes, your long-term success depends on how well you can identify and correct those common blunders. If you find yourself falling into one of these eight traps, it’s not too late to get back on the right track.
Are you already sliding into debt and in need of additional business funding, but unsure where to start? Head over to Pango Financial’s funding solutions tool to get some ideas.