I have written before about not to blame the recession for your and your business hardship. I would like to emphasise once again, that quite often, the culprit of bankruptcies and business failures is the business owner, not the recession.
People do make mistakes; Small business owners do, too – We are not super-humans. Nevertheless, we need to identify what common mistakes we often do – consciously or not – that eventually fail our businesses.
The 10 mistakes small business owners make that cost them their businesses
Let us explore the top 10 most commonly done mistakes by small business owners:
- No business plan
Not surprisingly, many of us small business owners don’t have one. We tend to keep everything in our head and not on any written forms. You should treat a business plan as your business diary, and start writing one to help you organise and strategise your business plan for the future.
- Risking everything in one entity
Some promising startups have a surge in sales relying on a single product or service. In other case, some small businesses rely on one, major client to support the entire business. The main pitfall: If your single product or service declined, your business will too; If your major client left your business, your business is failing. To tackle those problems, you need to continuously develop new products or services, or seek new clients.
- Trying to do everything yourself
It’s your decision to keep your business small by do things yourself, but you will eventually need other people’s help to grow your business. – Otherwise, your business will be swallowed alive by the competition. Wearing many hats as a sole proprietor: bookkeeping, administrative, marketing, selling, etc. will tire you sooner or later – You need others to tackle those and let you do what’s best for your business: Grow and develop your business.
- Lack of financial control
Accounting is your business language, and if you can’t master the basics of it, you better hire an accountant to keep things in order. Cash management is also paramount: Your cash flow is your business blood flow – Lacking of cash means a dying business. Your control and decision making in cash spending will determine the direction of your business.
- Poor startup phase execution
I learned this the hard way… Having your startup budget and investment ready doesn’t make your business chance to survive better. You need to research, research and research – Learn about your target market well, study your location and premise extensively, spy your local competitors well. Also, you need to have all systems go – Prepare your manpower well, plan your business well (just like what I mentioned on #1 above.) And, yes, purchasing a franchise unit doesn’t help you with better chance of survivability – You still need to do your homework, albeit the proven franchise system in place.
- Treating your business as a hobby or the other way around
Your business is a business, and your hobby is a hobby – Don’t mix-and-match them! You surely can start a business from your hobby, but be warned, it’s not fun anymore. And if it’s not fun anymore, you’ll soon lose interest in your business. What’s more, not all hobbies can make a good business – Let your hobbies… be your hobbies.
- Poor time management
Entrepreneurs are well known as their acute “lack of time” problems. They are becoming very busy, in a way that their other parts of life are becoming more and more abandoned. Juggling entrepreneurship with personal life is difficult, but seeking a balance should be your top priority. Just take heed to a statement made by one of our writer, Scott Messinger in one of our email communications: “I want to build businesses around my life and lifestyle, not the other way around.” – And Scott is running a successful business brokerage company, thanks to such principle he has.
- Poor marketing campaign
Spending too much on your marketing campaign is just like throwing your money on burning fire. Again, I learned this the hard way… Your endeavour is to run the right marketing campaign at the right time and budget. In many cases, the word-of-mouth marketing beats the effectiveness of other marketing campaigns – And the best thing of word-of-mouth is the fact that it costs you nothing.
- Reading or listening too much expert advices
Believe it or not, following experts advice too much could do your business worse. Although experts know a lot, testing their suggestion on your “live” business is risky. You know your business and situation better – Therefore, you should take which advices you think would work and discard the others. Business mentoring works wonder, but unless the mentor is directly involved in transforming your business, nobody would guarantee you a success.
- Fail to manage your “entrepreneurial fatigue”
There will be stages in your life where everything looks tiring – Indeed, entrepreneurship requires huge amount of time, money and energy investment. When that happens to you, be sure you are prepared with the breakdown – Focus on building a business that can runs well with or without your involvement. This way, you can recharge your mental batteries to get back on track.
Us small business owners have to set aside our ego, strong our will and learn from our mistakes to better our business – And eventually the economy.
Learn from mistakes and thrive your small business