According to the U.S. Bureau of Labor Statistics, 20% of new businesses close within their first two years of operation. As any business owner will tell you, running a business can be tough. Starting a business from scratch can be even tougher.
With so many decisions to make, it is easy to accidentally make the wrong ones. Although there is no full-proof plan to avoid business mistakes altogether, many new business owners make the same beginner mistakes.
To avoid falling victim to beginner blunders, take a look at these common start-up mistakes so you can avoid them when starting your own business.
1. Skipping the Business Plan
Creating a business plan may feel tedious and boring, especially when you feel like you have all the information you need in your head. However, creating a business plan forces business owners to outline all aspects of the business – from finances and marketing to researching the best target market.
A business plan contains the word “plan” for a reason. Without one, business owners lose momentum and consistency from the start.
2. Starting too Cheap
With any new business or product, it is easy to think selling at a low price will help attract new customers. Many new business owners simply lack confidence or are afraid of failure, so they are quick to offer the cheapest price for their products and services.
Not so fast! If your business brings a unique product or service to the market, do not be so quick to undermine its value. Research the market and your customers to find the best price for the quality of your offering. Customers are used to, “paying for what they get.” Do not send the wrong message with immediate low prices.
3. Starting too Expensive
Appropriately pricing your products and services is one thing, but appropriately pricing the products and services you need as a business owner is another. Many products and services, like merchant account and shipping providers, have varied rates depending on the provider. In some cases, rates are even negotiable.
According to Double Helix, who specialize in high risk merchant accounts, spending a little time getting quotes for credit card processing will pay off, as the rates can vary as much as 10%. If you are a new business with no credit, expect to pay more, and look for a provider that is familiar with high risk accounts.
Then after a year, approach your provider to renegotiate. Negotiate on specific fees such as batch fees or reporting fees in addition to the standard percentage of sale. Do not always assume the standard or out-of-the-box pricing is set in stone.
The same goes for shipping rates. Initially a volume discount may be obtainable, or you may have to prove your velocity over time. Compare DHL, FedEx, and UPS.
4. Avoiding Technology
It is true, upgrading software and equipment takes money, time and effort. It is enough to scare away many first-time or new business owners.
Although it may be intimidating, new technology can make work more efficient and actually save money in the long run. Do not allow fear or an unwillingness to learn and change to hurt your business over time.
5. Delaying Marketing
New businesses also assume that marketing – whether traditional or online – is expensive or unnecessary. Traditional word-of-mouth marketing is great, but it should not be viewed as a catch-all.
Especially with the free marketing channels that social media provides, there is no excuse for a new business to delay marketing efforts. Consider your business and target audience to understand what marketing strategy will best cater to them.
From social media and web banners to newspaper ads, do not assume customers will come running to your door without purposely spreading awareness.
6. Going it Alone
A business with only one owner does not have to be a business with only one employee. Delegation is a very powerful business tool. Not only does it lend an extra helping hand, but it also ensures that you – as the business owner – have more time to focus on growing the business.
Start small by hiring an assistant to help with day-to-day activities like fulfilling orders and answering emails. Freeing up your time from these administrative tasks allows you to spend more time on duties like financial planning, marketing strategies, and new product ideas.
7. Lacking Commitment
Many business owners dream of owning a business, so they can create their own schedule and make lots of money. We are here to provide a quick reality check!
Starting a business requires sacrifice and commitment. You must be willing to put in the time and effort to help your business reach success (and there will be lots of bumps in the road along the way!). Many new businesses fail in their first couple years simply because owners give up when the going gets tough. Be resilient and understand that true success rarely happens overnight.
A successful new business is not built quickly, and it is rarely built by only one person. Although mistakes are unavoidable, understanding these common errors will help shorten your business’s list of woes.
The ability to prepare for mistakes and quickly bounce back from them can make or break a new business. Think proactively, try new approaches, and do not be scared of changing. Once you are a seasoned business owner, you can share wisdom and encouragement to new business owners that follow.