8 common small business startup mistakes
Whether you’re running your first or fifth business, prevention is key. Here are the common mistakes small business owners make, and how you can avoid them:
1. Not knowing your target audience
Doing quality research comes in two parts: finding product ideas and knowing your customers. The tricky thing here is that you can have customers and then build a product. But it’s very difficult to have a product and then hunt for customers.
It is necessary to look at numbers and analytics when researching a niche. And another is finding an ideal customer and building a customer profile.
When you know who are your customers, how they behave, and why they behave the way they do, you’ll be able to serve them in a way that meets their needs.
Even if your niche has enough demand and a good selection of products, without knowing your ideal customer, it will be a lot harder to sell.
If you dig deep enough, you will find that niches have niches within them. The more you can target, the better, since it will be easier to identify with your customers’ needs.
2. Not writing a business plan
Writing a business plan is an important part of creating a sustainable business. It makes you stand out from the competition. A strategic business plan means that you have a clear and researched idea. You are inspired to succeed.
But many new entrepreneurs begin their venture without thinking about the big picture. They then have no understanding of the market, financials, business model, or logistics. If things go wrong, a lack of understanding can cost time, money, and effort.
Creating a business plan to help identify the unknowns and spot the gaps you need to fill. Do you need to ship manually? How will you manufacture products? Who are you selling to?
Every product you create should relate back to your business plan. This helps you stay on track to meet your business needs and goals—and build one that doesn’t fail.
3. Not having a solid marketing plan
When you set up an eCommerce website, and you know who your customers are and where you can find them, setting up your marketing plan should be easy.
Whatever your plan is, make sure it is in place from the time you launch. New opportunities will arise, but your foundation, if strong, will allow for steady and scalable growth.
4. Not assessing your business idea
One of the biggest mistakes you can make when starting a new business is not doing market research. You’d better learn about the competition. And study how you can differentiate yourself from them.
Sometimes entrepreneurs dive into a niche market without determining if it’s a good fit or not. There are cases where a niche has low demand and too much-established competition. If that’s the case, you may not want to build a business around it.
To understand the market landscape, you’ll need to do some research. Find your niche’s competitors and look at:
Number of online reviews
Social engagement
Blogging habits
Press coverage
Search engine optimization (SEO) rankings
You’ll also want to test whether the market is just a trend.
With a strong understanding of the market, you’ll have no trouble building a business in the right niche.
5. Spreading yourself thin with products
A big mistake new business owners make is selling too many products. Sometimes if one product doesn’t sell well, owners will add more products to their store. It will attract potential customers. But this doesn’t always help.
The error here is more of a branding error than a product error. Building a brand is just as important as the products you sell. Since your brand is how people perceive your business.
6. Not investing in organic marketing
One common mistake businesses make is not focusing on organic marketing. The lure of paid ads like PPC is reasonable. You pay for an ad, someone clicks through and buys your products. Immediate revenue.
But imagine if you could get traffic to your site, for free. On page one alone, the first five organic results get 67.6% of all the clicks.
Sometimes it’s difficult to write content for a boring niche. The key here is to do content marketing not according to a product, but according to your customers.
By building your content marketing strategy around this ideal customer. Not around a product. You have a lot more to write about and a lot more ways to connect with your audience.
Even if your niche is very technical. And you manage to write 50 to 100 articles just on the nuances of your product, that information will only go so far. To really round off your effort, you’d want to have more in common with your customer. Not just the fact that they are buying something you sell.
7. Not hiring help
Doing it alone is the main school of thought for many entrepreneurs.
In economics, there is a concept of opportunity cost. If you choose to pursue anyone opportunity, your time is no longer free for others. So the cost of one opportunity is actually every other opportunity you have.
If you are bootstrapping your own business, chances are you did everything yourself. You set up the website, you tinkered with it, you uploaded products, you wrote all the product descriptions, you did all the marketing. The problem here is that while doing everything yourself is great, it’s also incredibly time-consuming. This is time you could be using elsewhere—spending it with your family, cooking up new ideas, or building business relationships, just to name a few.
Menial tasks come in two varieties: necessary and unnecessary.
You want to try and automate as many necessary menial tasks as possible. This process will cost a bit of money, but the headache and heartache you save typically outweigh the money you’ll spend. Besides, you can often find people that will gladly do these tasks (inventory uploading, data entry, etc.) for you for a reasonable sum.
A business decision you’ll have to make is if you need to hire help. This could be a freelancer or even a part-time or full-time employee to get tasks done and help you grow your business. You don’t have to do it all on your own.
8. Not focusing on cash flow and profits
If you ask any seasoned entrepreneur what the most important skill in running a business is, they’ll say it’s math. Many of them start their business as a hobby and don’t pay as much attention to the numbers as they should.
Business math works very simply. To see how profitable your business can be, use this formula:
Profit = Demand x (Revenue – Expenses)
The expenses include purchasing expenses, promotion expenses, freight, etc.
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