Home Business Insights & Advice Six small business mistakes and how to avoid them

Six small business mistakes and how to avoid them

by John Saunders
9th Dec 20 3:49 pm

Starting and managing a small business is hard work. You will do some things right and others wrong. The good news is many of the mistakes you may make have been made before by other businesses.

Below are some of the most common mistakes small businesses make. You can avoid these mistakes easily with a bit of knowledge and caution.

Failing to make a business plan

A quality business plan will look at the market for your product or service and the number of competitors you face. It also looks at how much money you need to start and run the business. You also should have a good idea of how much money you can make.

Assembling a business plan takes effort, and there is a chance that your business idea isn’t so hot after all. That is why some small business owners jump into business without writing a plan, and then they wonder why they are broke and going out of business.

Not establishing solid company communication

When a small company is getting off the ground, you may put little thought into ensuring that all employees communicate effectively inside the organization. Having excellent communication is necessary for the business to succeed in the long term. Fortunately, excellent social intranet products allow everyone in the company to communicate effectively on projects and other business necessities.

Failing to make a marketing plan

The marketing plan for your company accompanies your business plan. You cannot make cash if no one knows your company exists. As part of the marketing plan, you need to identify who your target customer is and determine the best ways to appeal to them and make yourself stand out from your competitors. It is also vital to set up ways to measure success so you can adapt if things get off track.

Spending too much money

Many small companies flame out because they spend too much money in the early days. It will always pay off to be conservative in spending money until you have a steady record of profits. Be careful of budget killers such as renting office or retail space that is too big or too pricey. Also, do not hire unneeded employees or buy equipment that is fancier than what you need.

Also, watch out for incurring too much debt. You may have to sign a personal guarantee on anything you borrow. You will be on the hook for those debts if the business crashes and burns.

Not getting insurance

You can set up a business entity such as an LLC to limit personal liability for your business. But it does not protect you if someone falls and breaks their arm in your building. It will also not help you if an employee kills someone with a company car or is sued for a poorly designed product.

These devastating financial claims can destroy your business. It is vital to talk to an insurance agent and get the coverage you need.

Thinking you can do it all

Entrepreneurs tend to be go-getters and self-reliant. However, knowing your limits and learning to delegate work to your employees is vital if you want your company to succeed. Focus on what you are best at and enjoy, and hire others who can do tasks you dislike or require technical knowledge.

Many small businesses fail because they make too many of the mistakes mentioned above. Now that you know what sinks many small companies, hopefully, you can avoid them and enjoy great success.

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