The most common mistakes a small business owner makes when starting and running their business
In this article, I will highlight the most typical startup mistakes an entrepreneur can make when starting their business. I will discuss common pitfalls you can avoid in order to build a successful business. If you’re a new entrepreneur, and you’re looking online for startup help, you will soon find big words such as business goals, financial planning, intellectual property, marketing plan, marketing strategy, financial projection, thorough market research and more!
Without being overly corporate and geeky here, I will provide some tips you can use in your business startup. I am not a business coach and I am not providing legal business advice here, but tips on what has helped me to grow my business once I started to have all my business ducks in a row.
I hope you will find them useful 🙂
1. You don’t have a business plan
You may think that you don’t need this and that a solid business plan is only something bigger businesses need. It might sound overly complex, but think of a business plan for your small business like an exercise of business goal setting.
If you don’t know where you’re headed, how do you know you arrived?
It took me years to take this seriously and for that reason, in my first business years, my business didn’t grow as much as it could. I will provide a blog post on how to create a business plan for your small business in the near future.
If you don’t know where you’re headed, how do you know you arrived?
2. You don’t have a target customer
This is a very common mistake. Let’s say you’re a photographer and all you want to do is take more photos and make money from it. Sounds about right?
WRONG! There are photographers who offer cheap photography products and there are photographers who specialise in the luxury market. And there are millions in between!
It’s easy to say that you aim for the luxury market, but you need to really think about your target customer. You need to know what they think, where they hang out, what they read and how they want to be served. I have provided a target customer exercise which takes about an hour and it will be the BEST hour you can spend for your business going forward.
Once I knew my target customer and I aligned ALL my communications towards this “person” things turned around for my business and I started to get more and more clients who wanted my services.
With a little bit of market research, you can avoid this costly business mistake and even as a new business owner with little experience you can research your target market.
Align ALL your communication with your target customer!
3. You don’t keep money back to build up your cash flow
This is what I did for years. Money came into the business and it was easily spent too. If you see money coming into your business, that’s not YOUR money to spend. That’s business money.
It’s best to have a reserve account that only exists to receive money. You should only transfer money out of this account if you absolutely need to. I have an account with a bank different from my main business bank.
I actually have to CALL the bank if I need to transfer money out this reserve account. I have made it awkward for myself to easily spend my reserve on things I “want” rather than things I need for my business.
4. You don’t make time for marketing
This is a big problem many small business owners face unfortunately. You may lack confidence (I did for years!!) to sing from the rooftops that your product or service is amazing!
You may also think that this “singing from the rooftops” is boasting. We all get told strange things when we’re young and carry with us a lot of stupid sayings that prevent us from achieving business success.
We may have been told “money is dirty”, “self-praise is bad”, “be humble and don’t boast”, “rich people are greedy” and other such BS! One thing that WILL not happen: Your product WILL NOT sell itself.
Good marketing is essential and helps create awareness that your product exists. It creates a connection with your target audience and marketing can help build brand loyalty.
Your product WILL NOT sell itself.
5. You do everything in your business
When you start your business, you may not have the funds to outsource things that you’re not good at (e.g. bookkeeping, accounts, tax returns, photography etc.). However, especially if you’re offering a service, you’re asking other businesses to outsource this to you!
Change your thinking about outsourcing and start early! I outsourced my accounts from year one.
Being from Germany, I was not prepared to learn about the UK tax system. A professional and experienced accountant can save you so much money that the fee you pay will be absolutely worth it.
A good accountant really pays for themselves. If you do everything in your business yourself, you can easily run into a burnout situation which is not a pretty place to be in (speaking from experience here!).
Start outsourcing and delegation early. But be prepared to “fire” people if they don’t do a good job and then look for those who do. Having help will make a HUGE difference in your business.
6. You don’t look after your online presence
Everyone is online. Everyone and their granny! Make sure your website is top notch and includes the information people need when looking for your product or service. Make sure your website is fast, user- and mobile-friendly.
Pick a social media platform where your target customer hangs out and build up a following. Don’t try to do ALL the platforms! Pick one and master it before you add a second one.
7. You don’t know about legal and tax obligations
For example, if you’re making food products, there are a lot of legislations in place to protect customers. It’s your task to know about these and follow them. Another important thing is your tax year.
The exact date you started your business is your “year start” and 365 days later is your “year end”. So if you started your business on 1st September, then your year end is 31 August. In the UK, you need to report any tax liabilities to the HMRC by 31 January after your year-end.
If you don’t do this, you risk fines and serious legal consequences down the line. Also think about what type of business you have, for example sole trader, limited company etc.
8. You don’t network
I officially started my business on 1st Sep 2004. Within the first month, I had attended about 10 different networking meetings telling everyone I was new in business as a website designer.
Even if you’re an introvert (I am!) and you get clammy hands thinking about standing up and talking about your business for 2 minutes in front of 30 strangers – trust me – this is a great thing to do for your confidence and your business.
You NEED to come out of your comfort zone, speak to strangers and promote yourself and your business. People buy from people. The more people you know, the more will buy from you!
Even if you're an introvert, you need to network and learn to speak to strangers about your business confidently.
9. You don’t adapt to what customers want
If you work in a traditional industry, such as upholstery (just picking an example here!!), you may think you don’t need to be online.
Check your opinions about ALL of your business aspects and see what customers want and if your opinions are still up-to-date.
Customers might expect an online meeting, for example, whereas you only offer in person meetings? Customers might expect an online booking system and you don’t offer a phone number and wonder why no-one is calling you.
Be flexible, be observant and see what trends are emerging. Adapting to trends early can give you a competitive edge.
See what trends are emerging. Adapting to trends early can give you a competitive edge.
10. You are undercutting your competitors
This is a really bad strategy. It’s a mistake I made when I started out and it’s not a sustainable business model for most service-based businesses.
Cheap is not best. Cheap often is just that: cheap!
It also means there’s no money left for you to actually take out of the business and support your lifestyle!
By all means, check your competitors, but don’t fix your pricing £5 below your competitor average. This WILL not net you more customers.
Depending on what you sell, not every person on this planet is price conscious. Think Rolex, yachts, supercars!
Also, when you start out, you may think due to the lack of experience (and confidence), you simply charge quite a bit less to get started in your business. This is also a super bad strategy.
Reason 1: If you’re doing a good job, your customers recommend you and tell your prices to potential new customers. So you keep working A LOT for not much reward.
Reason 2: Your hourly rate is likely below the standard living wage! If you offer your services for less than £12 an hour, you might as well get a job in a burger joint. Less responsibility!
Cheap is not best. Cheap often is just that: cheap!
11. You charge too much
You might want to serve the luxury market and it can happen that your prices are simply too high. Check your competition and see what the different prices are for the same product.
A cheap digital watch can cost as little as £2. A luxury gold watch encrusted in diamonds can be £100,000. They both say it’s half past two!
Find a price that reflects the value of your service. Don’t scare customers away with prices that are too high if everything else in your business does not match the price point (branding premises, stationery, logo, copywriting etc.).
Don’t scare customers away with prices that are too high if everything else in your business does not match that price point!
12. You’re in the pricing “dead zone”
This is a difficult place to be in. For example, you may have had bookings at a previous lower price point. You then increased your prices and you now don’t make any sales.
You’re now in the dead zone.
For example, everyone in your industry charges £500 for a certain service. The cheaper suppliers charge £300, but the luxury ones charge £1000.
You raised your prices and you now charge £650. This means that you’re now out of financial reach of your existing clients, but you’re considered “cheap” by those looking for luxury services.
This means you need to either go substantially higher – £1000, or drop back to the standard industry price – £500.
13. You don’t have a mentor or coach
I have had several business coaches since I started my business 2004. Some were good, some were hopeless. Initially, I picked a person based on if I liked them and if they were overly empathetic towards me, i.e. praising me for what I already achieved. This is not helpful if that’s ALL they do.
You want a business coach that kicks ass and that sets you tasks and keeps you accountable.
I’ve now had the same business coach for nearly 5 years.
There was a situation in my business where I procrastinated over a certain thing. I kept saying to my business coach that I will get around to doing it eventually. At one point, he made me pledge to donate £100 to a political party I absolutely detest if I didn’t do the thing.
That got me going and it was done within a couple of days! Find your levers and get stuff done. Find a business coach or mentor that kicks ass!
Find a business coach or mentor that kicks ass!
14. You are obsessed with your “branding”.
I get it, playing around with logo design is super exciting, you can see something appearing in front of you and once your logo is ready, it’s like you’ve officially given birth to your business. You then use your logo everywhere and want to make it really big on your website, because it’s really important. Apart from: it’s not! Your logo today, or at the start of your business is just that: A first version.
It might change, you may even change your business name, you may change your logo, your colours.
Don’t invest too much in your logo when funds are tight! Use a website like Vectorstock or Smashing Logo and get started.
Disclaimer: Any designer reading this: I am not saying a professional logo design is not important, but it’s not the be and end all for someone starting their own business on a shoestring 🙂 There’s a place and budget for getting your logo designed properly. And for many small business owners who give up a 9 to 5, the logo should be the last of their worries.
15. You don’t read books
Start reading books. Today! Not fiction, not romance, but business books! Devour them, make a plan to read AT LEAST one book per month.
You will grow as a person by learning from other people. You will learn how to think differently and how to evaluate your own business efforts.
I kept a list of the things I’ve read over the years here.
If you can’t imagine sitting down with a paper book, get yourself an Audible Subscription and listen to one book a month.
Use every spare minute in your car and listen to business books. Turn your car into your business university!
If you’re a crafter, turn off the music and start listening to business books. You’ll be amazed about your transformation!
Turn your car into your business university!
16. Bonus Mistake 🙂 You don’t take time off
Avoid working ALL the time! Avoid working EVERY weekend.
If you have to work a weekend, make sure you take off some time during the week.
I can tell you from personal experience, burnout and depression are not much fun!
Step away from your business and do fun things with your friends and family that have absolutely nothing to do with your business.
Dig up your garden, crochet, do metal detecting – anything that kicks you out of business mode!
It will keep you sane and you can start afresh on Monday morning.
