Whether you’re just starting a small business or you’ve been running one for a while, avoiding pitfalls can help you reach business goals faster. These pitfalls have been committed by many business owners and what better way to learn than from other people’s mistakes.
Mistake #1: Investing Too Much Too Soon
New business owners are excited business owners. They often look for funding before they even start. To get the wheels going, they want to invest money in too much too soon. This may sound like a good idea at first, but a business usually doesn’t have the momentum it will a few months or years in, and this means revenue isn’t coming in. Businesses also change, significantly, within the first year. Many will end up scraping business plans, changing business models, and even the business name in the beginning. All this money often goes to waste.
As a result, some business owners find themselves broke quickly because of this mistake. They end up having to close their business because of it. They also end up with bruised egos.
How to Avoid It
Think of a business as a baby. When a baby is born, it needs just a small amount of food to grow. As the baby starts to get bigger, he needs a bit more food to grow even bigger. The bigger the baby gets the more food you’ll need to feed him.
When you start your business, only invest as little as you need to get started. As you start to see income, feed the business with a little more money. As income increases, invest a little more. Always allow your income dictate the amount of money you invest, and always allow your income to exceed the amount you invest.
Mistake #2: Unable to Meet Demand
While you may not think this is a mistake, it can lead to a business’ demise. When customers demand a product or service, they expect they will receive it with exceptional quality and customer service. When customers don’t get what they expect, they become dissatisfied, and these customers can tell others how unhappy they are with your business.
When people hear that your business isn’t meeting its customer’s expectations, they are less likely to buy from you. Before you know it, your demand starts to decline. When your demand decreases, so does your revenue.
How to Avoid It
It’s true you want a booming business, but you need to make sure you have what it takes to meet the demand. Ensure you have a reasonable supply when starting your business, and have a plan in place in case you run out.
If customers end up not being able to get the service or product they expect, be sure to compensate that with extraordinary customer service. This means you may need to give them a discount and superior communication about the status of their order.
Once you’re able to catch up to the demand, be sure to rectify any issues that occurred that ended up creating this bottleneck in production or supply. This will ensure you don’t end up having to give out special discounts or risking the chance of getting negative reviews.
Mistake #3: Slacking Off with Marketing
New business owners know the only way to gain attention and customers is through effective marketing. As their business takes off, they start to see the fruits of their marketing pay off. Instead of continuing their marketing efforts, they slack off a bit thinking that the business will market itself.
This can be catastrophic to a business. Marketing is like a domino effect. It takes a while to see results, and when you stop…it takes a little while to see the effects of stopping. Soon, there’s a decrease in the number of customers and revenue coming in. While this should signal the business owner to start marketing again, it often just leads to denial that the business is going through a slow spurt. This slow spurt turns into a business that quickly hits rocks bottom, and for some, it is never able to get off the ground again.
How to Avoid It
To keep a business running, marketing efforts must continue to run. Many successful business owners call it feeding the funnel.
Imagine a funnel, with the tube coming out of the bottom of it. The funnel should be filled with prospective customers, and the tube filled with paying customers. If you have your funnel full, the tube will never be empty of customers.
The only way to keep the funnel full is to continuously bring in prospective customers. When you market, your funnel stays full, and so does your business’ tube, which keeps it running and growing.
Avoid the Pitfalls to Achieve Business Success
While you can’t avoid all pitfalls, you can now escape at least three of the biggest mistakes. Keep these in mind, and always learn from the mistakes you make. Running a business isn’t easy, but with time, you’ll learn the tricks of your trade, and you’ll be well on your way to achieving success.
About the Author:
Marcelina Hardy is a writer for Plan to Start, covering topics & tips for small businesses. She writes practical, hands on advice, from her own experience as a small business entrepreneur for 7 years.