Alright. I know you got here out of curiosity, or probably because you’re an entrepreneur concerned if your business might be making the same mistakes.
If you’re new to the venture, you’re probably having a hard time where to begin. And that’s okay. Success is a long process of continuous learning, so don’t be too hard on yourself. But what makes this process difficult are the errors along the way. Handling and resolving these errors is another story to tell.
No one becomes successful without making any mistakes. It may sound cliché, but success comes to those who rise after tumbling down. But then, as an entrepreneur, you don’t want to see your business having errors now and then, right? Because this will lead you to a huge amount of loss and eventually, bankruptcy.
Prevention is still better than cure. How to do that? Learn from other people’s mistakes. So, here’s the list of the common mistakes done by small business owners that can help you to avoid doing the wrong thing:
1. Doing business without a plan
You can’t expect your business to grow if you don’t know where it is going. Some business owners are like that. They take a risk without a solid plan of the pathway to their goal. Starting up a business is tricky and tedious, but remember, planning is the foundation of all successful businesses. Ask yourself, “How will I get to my goal?”
2. Goals are not SMART
In setting up goals, it’s better to apply SMART, an acronym that stands for Specific, Measurable, Attainable, Relevant, and Time-based. These elements must be present to your goal for you to achieve your desired result. Don’t dream of earning a million in one year if your product or service is hitting the wrong target market.
3. Products or services are underpriced
So, how do you price your products or services? Some entrepreneurs who don’t have an idea on how to value their products or services might just rely on their competitors’ pricing then cut the price to attract more customers. It’s not wrong, but doing so will disregard the costs spent on creating the product or service.
In valuing your products or service, you must consider all the expenses you made. How much did you spend on making a product/service? Then add your desired profit margin. If you have no idea how much profit margin you should add, explore, and do research about the benchmark of your industry.
4. Not giving much attention to marketing
There are a lot of ways to market your product or service to people. You can use the technology, which is more effective and convenient nowadays, or some traditional advertising. However, you must keep in mind that marketing requires research for you to understand your target audience. Don’t be afraid of investing in marketing, because eventually, it will surely pay off.
5. Not having appropriate budget plans
Budgeting doesn’t mean restrictions on your spending. But having budget plans will help you foresee your cash flow, and knowing if you are overspending or underspending. Some business owners overlook this part because what they focus on are the present figures of money that they release and receive.
6. Agreements without written proof
As an entrepreneur, you should be careful about dealing with agreements. Whatever kind of agreements you have with your suppliers or clients, make sure they are in written form with both parties’ consent. This will avoid misunderstanding and future problems, or worst-case scenario, lawsuits.
7. Doing business all alone
It’s alright if you’re passionate about your dream and actively doing the job on your own. But then, your business is evolving. And sooner, you will need a team that you can rely on. Know when to delegate the duties to the appropriate person to reach your goals efficiently. Besides, as the saying goes, two heads are better than one, right?
8. Ignoring accounting
Yes, you can hire an accountant and bookkeeper to take care of your financial processes, especially taxes. But not because you hand over this entire job to the expert, you’re free from the responsibility of your business’ accounting concerns.
Don’t just focus on marketing and operations. Give attention to your business’ accounting as well. Because doing so will reduce the risk of cash flow problems, embezzlement, or any financial issues.
9. Combining Personal and Business Cash
Some business owners think that it is okay to use business cash for their own personal finances. Since the business capital comes from their own pocket, they think that they can use the business assets anytime and anywhere for personal reasons.
As the business grows, they will eventually reap the disadvantages of this habit. They can’t track down the business’ real cash flow, thus it will be difficult for them to know if it’s earning or not. So if you have just started a business, avoid doing the same thing. Separate your business finances from your personal finances.
But if you’re using only one bank account for your business and personal finances, you can create an Excel spreadsheet to record your daily business bank transactions. In this way, when your accountant asks you about these transactions, it will be easy for you to dig the necessary data.
10. Disregarding the advice
Being passionate and dedicated to the growth of your business is great and amazing. There may be some people who will criticize your work, but then, don’t completely close your doors for advice, especially those constructive criticisms.
You can’t see the whole picture of what’s going on outside of your venture, so considering other people’s words might give you opportunities to improve your business. Learn to figure out which ones are useful. Feedback from customers, suppliers, or investors can be helpful too.
Everyone makes mistakes.
Don’t be afraid and anxious when you encounter mistakes. They are just proof that you are moving forward to the goal you aim. But still, be cautious about the errors that can be easily avoided. Learn from others and apply that knowledge to your business. You’ll certainly save a lot of time, effort, and money by being aware and well-informed.
So, what are your thoughts about these common mistakes? Let me know and put your comments below.
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