Whenever we run workshops, we always say our best qualification to run them is the amount of mistakes we’ve made in our time! It always seems to worry people, we never understand why…
Of course, that is meant slightly tongue in cheek, but the truth is that making mistakes is all part of growing a business and if you don’t make mistakes you are probably not trying enough things.
However, the key to the success of any small business is avoiding the silly mistakes or the ones that others can help you avoid - which is where our workshops come in, and now this guide to the common mistakes small businesses make when they get started.
In truth, across our time building multiple businesses and working directly with small business owners, we’ve made or seen a lot of small business mistakes and we thought it would be a great idea to document them and help more small businesses avoid the same mistakes.
No One Cares What You Have To Say!
Well that’s not easy to hear is it? When businesses first go to market, the temptation is to tell the world how amazing they are, how brilliant their product is or why people should buy from them. You must resist this urge and instead focus on what the customer cares about.
We talk about this all the time, the key to reaching and connecting with an audience is explaining what you do or offer in language that the customer understands and cares about. Learn what matters to them, their pains, needs and desires - then translate your offering into one that fulfils these things.
If you sell candles with personal messages on them, don’t tell me about how they work or what you did to create them. If you know your customer is looking for a unique and special gift, talk about how you offer this amazing gift that is personal and unique - that’s the thing that grabs the customer's interest.
Write Down What Success Means
And you cannot just write “Making loads of money”. Think about sitting down in 12 months and looking back on a ‘great first year’ - why was it great? What constitutes a good first year? It will be different for everyone, for some it will be 100 customers, for others it will be 4 retained clients, for the next person it might just be a good work/life balance.
Why is this important? Because without it, you cannot focus your efforts. Every time you get a new idea, you have to judge if it’s worth investing time into based on its ability to help you achieve that 12-month ambition. If it won’t then put it into the ideas drawer for a later date.
A big small business mistake so many make at the start is to take on too much. To try lots of things at once, launch multiple products at the same time, try and gain too many customers, and market into loads of channels from day one. To avoid this, focus on what you want to achieve and don’t get distracted by everything else.
Not Giving Yourself A Head Start
You are likely entering a market with competitors that have an established name and credentials, putting you at a disadvantage, but that’s not the mistake we often see. No, the mistake is when people enter a market and don’t take advantage of competitor analysis.
Because it’s madness to enter a market with people already trading and not learn the following
- What their customers are saying their weaknesses are. For example, if people are saying they are consistently late with deliveries, you can launch in the market with a message of a faster and more reliable delivery service
- Learn where they sell. Are they selling F2F, do they have a website, do they use marketplaces like Etsy or maybe Facebook or even TikTok
- How to price your products or services. Too often small businesses undervalue their offering, go in low and struggle to raise prices over time. Learn what the customer is willing to pay and be brave enough to match that
Ultimately, take advantage of arriving later into the marketplace and launch with a better version than everyone else.
Don’t Forget There Is More To A Name
You might have a great idea for a name. It's smart, it tells people what you are about and you are confident it will be something that people remember. Then you create your website and set up your social media channels, and whoops, you cannot register the name.
We have seen it happen so often. When creating a modern business, it is critical to consider your website and social handles when you choose your name. Find out if the domain you want is available. Check that you can get the same social handle across all the platforms you intend to use.
You are not well-known when you launch your business, so it's vital people can find you easily. The last thing you need is for a prospect to learn about your business and then not be able to find it easily online. Don’t put any barriers in the customer's way and avoid this classic small business mistake.
Trying To Sell To Everyone
Sorry, everyone is not your customer. Even the biggest companies need to focus on a specific set of customers and as a small business, it’s even more important that you do. The big mistake we see is trying to appeal to everyone and ending up appealing to no one. Spread your net too wide and your message becomes generic and doesn’t resonate with anyone.
Focus on a smaller, targeted audience and speak to them directly. It’s better to convert 10% of a smaller audience than 0.1% of a massive one - it’s simple maths!
Budgeting For The Little Things
We tend to find most small business owners are sensible with putting together a business plan including a budget forecast. However, whilst most obvious things like overheads, rental costs, staff and even paying yourself are considered, it's often the smaller things people forget.
Those little things add up faster than people think, and we normally refer to them as the hidden costs of running a small business.
For example, office equipment like monitors, paper, desks and even chairs. Some people often forget they need a computer! Another area is permits and licences. These could be ones needed to trade in your chosen field or maybe for different software you’ll need to do the job.
On a similar theme, insurance is one we often notice is missing but most businesses need some form of insurance depending on the type of work they do. This will appear in most tender documents or agreements with larger clients.
Cash Flow Is King
One final cost-based small business mistake that’s never well planned for is clients not paying promptly and its effect on your cash flow. We see people’s budget plans and they all assume they do work and get paid within 30-60 days, sometimes even faster. I’m afraid that rarely happens.
You need to plan that up to 25% of your clients will pay late, or dispute invoicing to slow it down or even refuse to pay. It’s critical for cash flow, which is the thing that kills most small businesses. We often talk to people who have stopped trading not because of a lack of interest but because they couldn’t afford to run at a loss.
Plan out your budget to assume slow collection, build in a cash buffer and stay on top of your invoices - if you are not chasing, don’t expect your clients to remember.
Assuming It Will All Go Well
We have to end the article talking about planning for the worst. It might not be what you want to think about at the start, you are full of enthusiasm and excitement, who wants to plan for what will go wrong!
But the reality is things will go awry and ignoring that is one of the single biggest small business mistakes people make when they start up. You need to spend time thinking about what different things could go wrong and building a plan for what you’ll do if it does.
For example, what happens if you don’t get any clients in the first 3 months? How do you manage things if a member of staff walks out without giving notice? If a supplier turns around and increases their prices by 20% at short notice, what would you do?
Every business has different scenarios it needs to plan for, so no list we could write is exhaustive, but if you work through your internal plans, and then think about customers, and then suppliers, you’ll have covered most of the worst things that could happen.
Hopefully, we’ve helped you avoid some of the worst and most avoidable small business mistakes that people make at the start, which means you can get going with confidence and then go make your own mistakes - remember, mistakes are ok, just learn from them and continue to grow - good luck!
