Last Updated on August 15, 2022 by Treana Wunsch
Almost half of all businesses fail within 5 years. If you want to be part of the small percentage that succeeds, you will need to set yourself up from the very beginning. Keep reading if you want to avoid these common mistakes new business owners make.
Don’t think you’ll just ‘wing it’ and it will all work out. We’ve all heard of someone ‘accidentally’ starting a business and becoming very successful but those cases are extremely rare.
If you think you know all there is to know, think again. There are many mistakes new business owners, including me, have made but here are 5 of the most common ones I’ve seen.
Not having a business plan
Not having a business plan is the most common mistake new business owners make. Even if you’re not in need of large loans or looking for business partners, a business plan is a crucial document to have. For instance, it gives you direction and will guide you through the process of starting your business. Once you get started, you’ll forget about certain tasks and amazing ideas you had in the beginning.
Your business plan is a living document that you should refer to regularly. Furthermore, it can be updated as often as needed. Nothing is set in stone so don’t be afraid to document certain steps or ideas.
If the task of writing a 40 page document about your hopes, dreams and how you’re going to get there is overwhelming, outsource it. Just because you don’t want to write it doesn’t mean you don’t need one. Besides, merely going through the process will teach you a lot about your budding business. Trust me, you won’t regret it.
Thinking they’ll do their own bookkeeping
Being 3 years behind on bookkeeping isn’t uncommon as a business owner. As a bookkeeper, I’ve seen it many times. Truly, it’s a nightmare and causes an obscene amount of stress. Not only that, the business owner can’t focus on their product, service or customers. It’s always lingering in the back of their mind causing them to lose sleep. Thus, their quality of life suffers.
In my opinion, this is one of the top reasons businesses fail. If you don’t keep up with your books, you won’t know whether or not you’re making money. Therefore, financial stress takes over your life.
Unless you love organizing and filing receipts, entering hundreds of tedious transactions every month, are detail oriented and love crunching numbers…hire a bookkeeper.
Not having a website
Most people head straight for Google when they are looking for a product or service. If your business is not on the world wide web, you’re missing out on a lot of business.
Your website can sell your products, it will tell people how to contact you, it can be leveraged for an online marketing strategy.
It doesn’t have to be fancy or elaborate. Web hosting is really affordable these days and there are platforms out there, such as WordPress, that make it easy to create simple but effective landing pages. If you don’t have the skill or desire to create one, outsource it.
Not being consistent with marketing
It’s easy to forget to market when things are busy. But if you drop the ball on marketing, rather than your business staying steady and growing, there will be more ups and downs. Keeping a consistent level of marketing will help to keep business level as well.
If you’re looking to keep business at the level it’s at, you’ll want to invest (yes, it’s an investment) around 5% of your gross revenue into marketing. If you are looking for growth, 20% is a good number to aim for. Some large companies that are looking for extreme growth and have some major competition set their marketing budgets at closer to 50%!
Whether you spend money on marketing or you spend time on marketing, set a budget, create a strategy and keep it consistent through slow times and busy times.
Waiting too long to outsource
Working your butt off 80 hours a week is going to burn you out before you get off the ground. Doing it all yourself will never set your business up for growth. Everyone needs help and smart business owners know when to ask for it. If you can’t learn to let go, you may want to reconsider starting a business.
It may seem like outsourcing is ‘costing’ you but when you hand the reins over to a specialist, they will do it faster and better than you could. Recognizing your weaknesses is an incredible strength.
You also need to set an hourly rate for what your time is worth. Let’s say you calculate that your time is worth $100/hour. Doesn’t it only make sense to hire someone to help with the daily administrative and marketing tasks for half that price? That way you can focus on what you do best.
Just remember, you don’t have to do it alone. There companies and resources, to help you get through the rough patches in your business. There are many business owners who would be happy to share their successes and failures.
Hiring experts to help along the way will set you up to succeed. Knowing what to focus on is half the battle.
So tell me, have you made any of these mistakes new business owners make? Or perhaps, this article has prevented you from making one. I’d love to hear about it! Please comment below.
P.S. One of my favourite resources for business is a book called Rework. The simple and straightforward approach makes it an easy and worthwhile read for anyone who’s thinking of starting a business or who has a business.