HomeNews10 common business mistakes and how to avoid them (Part 1)
10 common business mistakes and how to avoid them (Part 1)
Building a successful business takes time, hard work, and commitment. However, even with the best will in the world, there are still some common business mistakes which can trip you up.
One thing is certain – you’ll not get it right every time – and there’s nothing wrong with that, especially if it helps you learn for the next time. However, to give your business the best advantage, taking a look at some of the more frequent mistakes other business owners have made may help you avoid them yourself.
We’ve put together a 2-part series which identifies 10 of the most common business mistakes and what you can do about them.
Failing to plan
Writing a business plan to describe your business (objectives, strategies, sales, marketing and financial forecasts) is like having a GPS to keep you on track, helping to guide you through each stage of starting and managing your business.
Most of the information you need is likely to be swimming around in your head already, and the act of getting it out onto a plan can help you to really clarify your idea, plus spot potential problems. It may even highlight that your great business idea isn’t quite as lucrative as you thought which, whilst disappointing, is better than investing in something which will cost you time and money.
Business plans are not one-time documents to file away once you tick it off your to do list. Reviewing your plan regularly will help you to measure progress and make any necessary changes as your business develops.
Your business plan will help you to understand how much investment is needed to get started and run your business, plus how much income you expect to make. If you’re approaching an investor or bank for a loan, they will want to see a fully formed business plan to give them confidence that they will see a return on their investment.
Alternatively, have a chat with Kevin Steel our Business Development Manager or Adrian Waite Chief Executive and they’ll be happy to help. You could also be eligible for support for this via our ScaleUp360 programme with Sheffield Hallam University.
Setting unrealistic goals
If you go into business expecting to be rich overnight, you may become quickly discouraged – most businesses take years to achieve overnight success!
Establishing goals will give you a clear direction to work towards, helping you to achieve success much sooner than those who are working on the fly. Make sure that your goals are SMART (specific, measurable, achievable, realistic and timely) as vague or unrealistic ones can become an emotional drain and even damage your credibility.
Once you’ve identified your goals, you can make small steps towards them every day, keeping yourself and your business on track to success. Then, with time, perseverance and a little luck, you too can be an overnight success (in a few years).
Not knowing your ideal customer
Your marketing plan goes hand in hand with your business plan, detailing how you’ll let potential customers know about your products and services. Before writing your marketing plan, you’ll need to spend some time researching your market and customers so that you really understand them inside out.
Some places you can look are local directories, the business section of your local library, market research reports and trade associations. Remember to also check out your competitors, especially how they market themselves on their website and social media.
When it comes to your customers, the opinions of your friends and family is not enough! You really have to narrow down who your ideal customers are and find out what they think. If you’re opening a shop, you could stand in a chosen location and take notes. Online surveys are also a great way to understand more about your customers.
Once you’ve identified who you’re trying to reach and where to find them, it’s time to consider their pain points:
What keeps them up worrying in the middle of the night
What beliefs, desires and fears do they have
What are they typing into Google when seeking answers to their problems
For example, if you’re a digital marketing agency your customers may be searching “how do I get more customers?” rather than “digital marketing agency”.
When you’ve found the answers to that, you’ll be in a better position to understand how to appeal to your customers, how to differentiate yourself from the competition and how they’ll react to your marketing efforts.
Being afraid of marketing
Marketing is often seen as an unnecessary expense and business owners often hold back from allocating money towards the promotion of their products and services. However, it’s a mistake to assume that customers will find you without doing any marketing.
When it comes to marketing, it’s important to give a clear and consistent message. You never know where, when or how a customer is going to hear about you and they’ll be confused about what to expect from you if your messages are mixed.
Marketing can take many forms, from traditional advertising through to digital marketing and word of mouth. The most effective method will be different for every business, but you’ll have a head start if you’ve done your market research and identified your ideal customers and how/where to find them.
Under-pricing or undervaluing your products & services
When business is tough, it can be tempting to cut the price of your products or services, thinking that it will mean more customers. However, this is a dangerous path to follow and could lead to you not being able to cover your business overheads. If your prices aren’t high enough to make a profit, your business will slowly fail as you attract more customers.
Setting lower prices could be a result of undervaluing yourself, a fear of failure or a lack of confidence but, doing so undermines your uniqueness and can also lead to resentment and frustration when you see a low return for all your efforts.
Additionally, once you’ve begun selling your products and services at a lower price, it can be difficult to increase. Many business groups on social media have recurring questions about increasing prices without losing customers, so it’s a common issue.
To create a competitive pricing structure for your business, do your homework and research your market. By benchmarking what the prices are in your industry and calculating what you want to earn, you can establish a realistic price.
You may be tempted to undercut the competition to try and win new business but remember that customers are often prepared to pay more for better quality or convenience. If you’ve calculated that your price is higher than your competitors, understand the extra value you are providing to justify a higher price and then tell your potential customers about it.
Most of us will have made one or more of these mistakes at one time or another but, armed with knowledge, you can be better prepared.
Part 2 of this series covers finances and your own personal skills, so be sure to check it out next month.