Ten Of The Biggest Mistakes A New Business Can Make
Updated: Jul 7, 2021
For most, the beginning is often the hardest. If you're a neophyte businessperson starting to build an empire, it is easy to get overwhelmed by the magnitude of tasks at hand. What should you do then, so you don’t lose motivation and give up so soon?
One effective way is to master the ropes of the game by learning from successful entrepreneurs who have been there, done that. Here are 10 insights gathered from people who have failed and learned:
1. Expecting Immediate Results
When it comes to your business, patience is a virtue. As cliche as it may sound, success doesn’t happen overnight. Imagine a newly-planted seed. Just like you, it will take years before it grows to be a sturdy tree.
Realize that as a beginner, you are starting from zero. Mastering your business and finding the right rhythm will take time. Don’t be too hard on yourself. While you have to work double time, be realistic as well. In the early stages, it is normal to test the waters. Even if you have a solid plan to execute, sometimes, trial and error determines which strategy will work and which will not.
Mishaps and failures can happen but they bring lessons you will not gain unless you’ve experienced them yourself. Your mistakes form part of your success. Learn as much as you can and put them to practice. Good results will eventually follow. For as long as you don’t give up, you will get where you want to be.
2. Doing Everything by Yourself
Your business needs a leader, a person who is overall in charge of operations, resource management, finances and more. And that is you. You are the CEO, the strategist, the one who calls the shots. If you micromanage all throughout, you might miss the big opportunities as well as the hazards you must avoid along the way. Plus, you will burn yourself out.
Focus on the big picture instead of spending too much time on small day-to-day tasks. In order for your company to grow, you need a team to help you execute your plan. You cannot do it all alone.
Delegating tasks increases your efficiency and productivity. Learn to trust other people, train them to be like you. Create an environment where every individual has the freedom to think and voice out ideas to make the organization better.
As control measure, come up with an employee handbook and a set of business policies. This way, everyone is aligned as to the quality and standard of work you require. Also, determine the metrics that will enable you to objectively assess the performance of your team members. Assign them based on their strengths and capabilities.
Even this step can take time. You are likely your only employee in the beginning. If true employees are not in the cards, utilize family and friends as supports. Sometimes they are able to help with certain tasks that can really help free up time.
3. Not Hiring the Right People
Hiring an employee not fit for the job can be a costly mistake. It’s your time, money and company’s reputation on the line.
Hiring the right people not only saves you from rehiring and retraining, but it also protects your business from falling into the wrong hands. Even well-meaning staff can jeopardize the quality of your products and services. And while most will try their best to meet the job requirements, if it’s not their forte, things can get risky.
There is no perfect team but if you are lucky enough to have efficient, honest and skilled individuals around you, you don’t have to deal with employees not working well together. You’re also least likely to get into labor cases and lawsuits.
For starters, create an organizational chart based on your company’s needs. Determine the job description of each person you will need. Identify their KPIs (Key Performance Indicators), identify what their educational attainment or employment background should be. This way, you would know if you have the right applicant even before you invite him/her over.
4. Not Managing Your Finances
Hiring someone to manage your finances, if you can't do it yourself, is fine. Hire an accountant or a bookkeeper to help you with financial management. Review your cash flow and assess your cash ins over your cash outs. This person can also help advise you on taxes, how much to set aside and when to pay the IRS.
When you have a clear sight of how much you are earning, you get a clear vision of how fast your business is growing. It will also keep you from overspending. Also, awareness of your financial health will help you make the right business decisions. Such as if the company is ready to expand with another branch or if cost-cutting is necessary when profit is below target.
Wisely manage your finances now or realize too late when you’ve turned bankrupt.
5. Not Documenting Transactions and Agreements
Everything has to be in black and white. And that includes business transactions with your family and friends.
Not having a paper trail (or email, at the least) can be a serious problem. It’s as if the transaction did not happen. Secure patents and copyrights, convert agreements into legal contracts and keep invoices and receipts. This is a good way to organize your records and extract data when you have to do audits.
Documentation is mandatory to protect the parties involved in every transaction. It determines who are the people accountable and what the deliverables are. With documentation, your workforce is well-informed and coordinated on matters that will require succeeding actions. Also, with a wealth of records at your disposal, you now have an accurate source of data that can be the basis for creating training modules, assessing business performance, generating customer database and more.
6. Not Having a Plan and a Back Up Plan
What’s worse than not having a back up plan is not having any plan to start with. It’s like navigating a ship in the middle of the Atlantic with no compass. You don’t know where you are, where you’re going, and how far you still need to go. And if you have people working for you, you are dragging them down as well.
Without direction, your business will fail. It will not take care of itself nor operate on its own. Know what you want to make out of it and plan the steps that will take you there.
Allot considerable time to craft a good business plan. What are your goals and objectives? Who is your target market? What is your marketing mix? What is your strategy? Who are your competitors and how can you beat them? What are the metrics to assess growth? What is the timeline? These are just some of the questions you should put much thought into when writing your business plan. And once you’re done with it, roll it out to your workforce so everybody will work towards the same direction.
7. Not Measuring Goals
A wise mentor once said, “whatever gets measured, gets done”. Set measurable and achievable goals. Doing so gives you tangible proof that you are in the right direction or in the wrong one.
You cannot manage what you do not know. It is important that you track the performance of your business on a regular basis. This way, you can address emerging issues timely and accordingly. It also allows you to assess your company’s strengths and weaknesses so you can immediately work on areas that need improvement.
8. Not Knowing Your Market
You don't go to your office and check daily operations alone. Your marketing strategy is equally important. Go out into the field and assess the marketability of you products and services.
The people buying your products and services, your customers, are key players to your success. If they are not patronizing your business, ask why and get to the root cause of it. Are they the right target customers in the first place? A business with the wrong market is as bad as a business without a plan.
Focus on your marketing mix. Assess what unmet needs can be fulfilled by your product or service. What should be the right price for what you are offering? Where should you sell and display them? What promotions can be launched to create awareness that will lead to purchase? Is there a new social media platform your target market has gravitated towards?
Sometimes, it’s not always because the services are poor or the products are not effective. All you need is a marketing plan.
9. Starting a Business That Doesn’t Interest You But It Is What’s “in”
There’s always a tendency for us to go with the flow and follow the trend. Regardless of the current fad, remember that your business should be where your heart is. What is your passion? What is it that you love doing the most?
Otherwise, you will not have the fulfillment you crave. You will not have the strength or resiliency to evolve and compete in the long run. You will simply stress yourself out in trying to understand something that doesn’t interest you. When all these consume you, you will burn out and lose motivation.
Love what you do!
10. Not Having Your Own Trademark
Following a certain pattern or a proven formula to run your business is not a bad thing. Same goes with having another business or successful entrepreneur as inspiration. But when you make your business an exact replica of another, that’s where it can get dangerous.
Build your own brand and create your unique identity. The existence of copycats is short-lived, your customers are smart enough to notice and will always prefer the original.
When you’re bent on becoming like others, before you know it, you are already losing touch of your own style and much worse, start veering far from your own vision. Create your own trademark - what is it that you have that others don’t? What makes your business stand out from the rest? What do you want to be known for?
When you have a solid, distinct brand image, you become the top of mind in your niche.