Top 10 Biggest Mistakes Small Business Owners Make
Having your own business is a task in itself! As business owners, we tend to overanalyze our processes and think that the more we try to do what is right in our business, we will be successful. Millions of small business have made mistakes that have guided them and molded them for success. Mistakes shape your business and you start to recognize what hurts or makes your business successful.
Let's look at the top ten mistakes that small businesses continue to make and how to stop making them!
- Trying to do everything yourself
- Not taking the competition seriously
- Budgeting...or Not
- Not knowing your numbers
- Hiring the wrong people
- Tax liabilities
- Lack of resources
- Trying to structure your business like the competition
- Not moving on with the times
- Not knowing your ideal customer
Let's dive in
1: Trying to do everything by yourself
The mistake: we all try to be jack-of-all-trades and run our business, bill clients, sell products, count inventory, make trips to purchase supplies. In a 24-hour day, when do we have time to ourselves? We want to work for ourselves but not having the right people to delegate responsibilities to can cause a serious burnout. This can definitely make us lose focus of our business!
The solution: Outsourcing! The times have changed and Covid-19 have hit the reset button with how businesses tend to run in 2021. We can outsource any type of service for the fraction of what it cost to hire an employee. Outsourcing has become the way to go from HR services to Bookkeeping, companies are finding the most cost effective way to get the services they need, for a fraction of the cost of an employee.
2: Not taking the competition seriously
The mistake: Many business owners think their product is the best product and the competition doesn't matter. Not keeping track of what your competition is doing can put you behind in the market.
The solution: Know who your competition is. Compare your products or services and figure out what they are not offering their customers. Capitalize on what your competitors lack.
3: Budgeting...or not
The mistake: New small business have the hardest time coming up with an accurate budget. This tends to happen due to lack of market research. Either a business thinks that they have the means to buy everything right away not knowing if they will have any business within the first few months, or some businesses penny pinch in every opportunity they can get and miss out. These are both easily made mistakes that can be easily avoidable.
The solution: Market research pays off. Know what is required in your market and account for it. Create a budget that accounts from projected sales to cleaning supplies and stick to it! Understand what you actually need and what you don't early on.
4: Not knowing your finances
The mistake: Many small business owners don't have a financial background and push their finances off until their tax accountant tells them what they actually made in their business for the prior year. Missed opportunities are created and tax breaks are missed.
The solution: Outsourcing a bookkeeper with the knowledge and experience to teach you how to budget, read financial statements and watch for trends is key to helping your business grow and helping you as the owner to understand your finances.
5: Hiring the wrong people
The mistake: Small business owners tend to handle all their business functions by themselves, until they can't. This is when they get desperate and hire employees without the proper checks. This can lead to fraud, missed business opportunities, and many, many headaches!!
The solution: Depending on the position, hire a recruiter. Recruiters usually screen individuals that are qualified and trickle them down to you. It is still up to you to conduct a background and reference check. Don't skip on this step. Many successful small business conduct a thorough background check through an outsourced HR company.
6: Tax liabilities
The mistake: As your revenue grows, so does your tax liabilities. Many business owners fail to consider the tax implications of increase of revenue, payroll and sales tax payments. This can lead to a big tax surprise.
The solution: Outsourcing a qualified Bookkeeper can help to ensure that you have a good idea of where you stand. Bookkeepers also pay your quarterly payroll taxes, monthly sales tax liabilities, and they can also keep track of your estimated payments that were set up during tax time. Qualified bookkeepers can help lower the surprises at year end with monthly trends and communicating with you regarding any spikes.
7: Lack of resources
The mistake: Not knowing what resources are available to your business can definitely impact how you function and your success. According to the SBA 67% of small businesses fail within the first 10 years.
The solution: The SBA is located in every state. They provide much guidance to small businesses with the correct resources and guides to help you succeed. Not knowing what is out there for your business can start you off in a bad foot.
8: Trying to structure your business like the competition
The mistake: Some small business owners don't know how to start their great idea and make it into a business. They decide that they will copy the competition until they get their feet in the door and do things their way. The problem is that you end up being just like the competition and don't offer anything different. If you don't have many differences between your competition, you will have to spend more on marketing the same services above your competition.
The solution: Start your business the way you want to run it. Dedication and seeing your start up through will pay off in the end. Having the right guidance and understanding of the market will make an impact in how your business is introduced to the industry.
9: Not moving on with the times
The mistake: The old way is the right way!
The solution: Stay on top of trends can provide new opportunities. Knowing the technologies that are available to your business that will make your business successful is key! Don't be afraid to change as long as you don't get away from your core business structure.
10: Not knowing your ideal customer
The mistake: Not knowing your target audience can hinder your marketing strategy since you're targeting anyone and everyone.
The solution: Market research is vital to your marketing strategy. Decide who your services and products are for and target your ads to penetrate these markets.
Starting your business isn't always easy, but having a plan in place and knowing the types of resources are available to your business will help set you off on the right path.