11 Mistakes For Small Businesses To Avoid
Every small business is different, with different needs and different measures of success. However, there are some mistakes that almost all small businesses are liable to make at one time or another.
Whether you’re a start-up at the beginning of your journey, or you’re a well-established small business looking to take the next big step there are some things you should always be looking out for.
Here are 11 common mistakes that small businesses make:
1. Not doing enough research
If there’s one thing we can all be guilty of in life it’s thinking we know everything. When you spend a lot of time working in a specific field, it’s even easier to assume you already know the score. For small businesses, this is probably the one mistake that happens more than any other.
If you have a great new product or spot a potential new market you want to get running with it as quickly as possible. While this enthusiasm is important and is what makes small businesses grow, jumping in feet first without doing some research can be a costly mistake.
Before you invest heavily in new products, advertising opportunities, technology, and even people, do some research and make sure that the cold hard facts back up your expectations.
2. Misjudging marketing spend
Marketing can be a problematic area for a lot of businesses because there’s a fine line between what can be done in house by anyone, and what should be left to the experts.
For a lot of small businesses there might be no need to employ someone with a background in marketing. A lot of basic marketing you can do yourself for relatively little money. If you can get to grips with social media, local SEO, and even some low cost paid advertising like PPC you can self-manage quite an effective little marketing campaign.
Where many people fall down though is thinking because they do some marketing in house, they can also manage big budget campaigns themselves.
This can very quickly lead to costly mistakes. If you want to spend big on your marketing then it is definitely worth investing money in an agency or an in house marketing specialist.
3. Failing to choose an ideal customer
If you’ve got something to sell, you probably want to sell it to as many people as possible. This leads a lot of companies to make the common mistake of trying to sell their product to everyone.
Why is this a mistake? Because it means you either dilute your message so it “kind of” applies to lots of people, or you spend money promoting a good message to the wrong crowd.
In order to make the most of your marketing and sales process, it’s best to define your ideal customer as much as possible.
For example if you sell clothes do you want to sell them to men or women? Old or young? Traditional people or people with a crazy style?
The more you can narrow down this audience the better your business will be. You can tailor everything about the business to the needs of the customer from your marketing right down to your customer service.
It all starts with the customer, so get as good an idea of your ideal customer as you possibly can.
4. Not Establishing A Brand
Most businesses when asked will say they have a brand. What the majority will mean though is they have a logo and maybe a signature colour. A true brand is so much more than that.
Once you’ve decided who your ideal customer is, you build your entire brand around them. Imagine your brand is the personality of your business, you need to make that personality someone your ideal customer would trust and be friends with.
This means everything from the way you talk in your marketing and social media, through to the kind of images you use to advertise your products.
Once you get your brand right the rest of your communication strategy will fall into place.
5. Making Pricing Mistakes
Pricing is a tricky business. Get it too high and you’ll price yourself out of the market. Get it too low and you’ll hack in to your profit margin.
For people setting up their first business a lot of the problems come from actually calculating their costs. Make sure you properly account for things like waste and delivery cost when you set the cost value for your product.
Once you have this tied down the challenge becomes finding the right price for your market.
A good place to start is to find out what your competitors are pricing their product at. This doesn’t mean you should necessarily try and beat them, but you definitely need to be aware because it shows what people are willing to pay.
If you have a luxury brand they may be willing to pay more for your product. It could be the case that you’re losing potential revenue by pricing too low.
Get your pricing right and you can make the most of your potential earnings.
6. Panicking When Faced With Change
If you find out a competitor has launched a new product, that one of your staff members is leaving, or there’s a new regulation coming into your industry, it’s easy to panic and try and fix the problem immediately.
This is a natural reaction, but is almost always the worst thing you could do.
Whenever there is a big shift for your business or your market place (whether good or bad) it’s always a good idea to sit back and take stock.
For example if there is a new regulation make sure you get to know it properly before reacting to a headline in the press. It might be that you’re barely affected.
If a competitor launches a new product it doesn’t mean it’s going to sweep the market – they might be barking up the wrong tree.
And even if a staff member does leave you don’t necessarily have to replace them. It could be an excellent opportunity to change the way the business is structured.
Before you follow your gut sit down, look at the figures, and do what’s best for business.
7. Waiting instead of acting
How many times have you heard someone say “I have a great idea for a business” or “I thought of that years ago”?
The reality is most people have the ideas it takes to be an entrepreneur. What makes an entrepreneur is having the courage to put those ideas into action.
As we have covered, research is important in business, but so is getting things done. One of the worst things a business can do is miss an opportunity because they were waiting to see what would happen, or because they weren’t sure if the costs were too high.
By all means don’t be reckless, but getting your business to grow takes an element of risk. If you have an idea or see an opportunity you should grab it with both hands, because if you don’t your competitors will.
There are a lot of different functions that are needed to make any modern business run.
There’s sales, there’s managing the customers, there’s building and running the website, there’s managing the money – and that’s before you get the the jobs specific to your niche.
With so many different skills required it’s easy to see how businesses can become overstaffed.
Many small businesses will fall into the trap of overstaffing in the face of technology.
If you’re a guy in his 50’s the idea of running your own website might seem impossible and leave you thinking you need to get someone in to do it. The reality is though with WordPress almost anyone can run their own website once it’s been set up by a web developer.
This principle applies to almost every function of your business. If you simply outsource the highly technical aspects, the day today running of things like customer service and doing the books can be done yourself.
Don’t fall into the trap of overstaffing, just pay for what you need by outsourcing.
Given the last point, it might seem strange that I now tell you that understaffing is another risk.
However, while it’s certainly important not to rush into to employing someone it’s equally important to know when the time is right.
Employing staff is incredibly expensive – especially when it’s your first staff member. From having only your own salary to worry about you suddenly need to find an additional £18K a year to pay an assistant.
It’s easy to understand why lots of businesses are understaffed.
The fact of the matter is though there are only so many hours in a day, and while a business remains understaffed there is no way it can grow, as it doesn’t have the infrastructure to meet growing demand.
Also, adding more members to your team will bring a whole new array of skills to the business, and if you interview properly and get the right skill set, it can be a fantastic boost.
For any business to grow it will need new staff – you simply can’t do it all yourself which brings us on to our next point…
10. Working Too Hard
Small businesses are often owner managed businesses. If you own a business sometimes it’s hard to say when.
When you’re sat at home watching Dinner Date, at the back of your mind you’re thinking about money you could be making. The temptation to jump in your home office or to check your emails is hard to overcome.
This can easily result in overworking as a business owner, and if you’ve got a small and dedicated team that believe in the business it’s a mind-set that can spread.
While it’s true that getting a business off the ground requires a lot of hard work, you also need time away from the business.
This reduces stress and improves your ability to think and problem solve, and can actually boost productivity in the long term.
11. Closing At 5
In some small businesses, typically older businesses, there can be a tendency to hold on to habits and values that are long gone in the rest of the business world. One example of this is the idea that the world stops at 5.
While it’s true you should make time for yourself to step away from the office, thanks to the internet if you have a website the business itself is always open. That means your customers and clients expect to be able to talk to someone 24/7 regardless of whether there is anyone physically in your office.
Neglecting to prepare for this can result in lost business as people go to your competitors who provide the level of service they want.
If you need help providing better customer service outside of office hours we have the answer. At alldayPA we provide 24/7 call answering that keeps businesses open at all times and ensures you never miss a call. Get it touch today to find out more.