Entrepreneurship is not a bed of roses. Dreaming big comes at a cost. An entrepreneur has to make sacrifices every day. When embarking on their entrepreneurial journey, an entrepreneur has to risk their settled life and take the plunge into the unknown. An entrepreneur knows that in their journey to entrepreneurial success, they will encounter many roadblocks. Undeterred by the challenges that are about to come their way, an entrepreneur assumes positive intent and is always prepared to face challenges head-on.
One of the many challenges that most budding entrepreneurs face is a shortage of resources. A small business owner has to don several hats. They have to juggle multiple tasks. One day they might have to reconcile accounts while the very next day, they may have to conduct interviews. Clearly, a small business owner has too much on their plate any given day.
Often, small business owners get so bogged down with tasks that they forget to take care of things that matter. Many small businesses are unable to take-off because of common mistakes committed by their owners. When you are at the helm of a small business, no mistake is small. You need to tread carefully and must not let even minor details slip under your radar. To help you survive and thrive in today’s cutthroat competition, we, in this post, have compiled a list of some common small business mistakes that you need to watch out for.
In this article...
1. Failing to plan
A well-rounded business plan that takes into account every factor that impacts the business lays the foundation for entrepreneurial success. Your business plan must answer every question and address concerns that your stakeholders may have regarding the business’ viability or model. Every investor or creditor you meet would want to take a look at your business plan.
Given the important role that a business plan plays in helping the business owner plan ahead, you’d expect every entrepreneur to have one. Surprisingly, that's not the case. Many small business owners downplay the importance of planning and fail to get a business plan written. Many others trust an amateur to write their business plan, which is a recipe for disaster.
Your business plan is one of your most important business documents. A comprehensive business plan gives direction to the business, helping the business owner come up with an action plan for sustainable development. A well-rounded business plan helps prepare a roadmap to entrepreneurial success.
If you have your hands full, and do not have any time to spare, consider hiring a business plan writer with years of experience of writing insightful plans for businesses from different industries. Equipped with research and ideation skills, a professional business plan writer does not only compile and process data but also knows how to turn them into actionable insights.
A comprehensive business plan is divided into the following sections:
Executive summary: Should provide an overview of the plan. The section must be written in a way to draw readers and get them interested in your business. The section must include the business’ name and location, your mission and vision statements, an overview of the products/services you offer, and the objective of the plan.
Company description: Must include information related to the company such as the legal structure of your business, a summary of market/financial highlights, and a summary of your milestones and goals.
Market analysis: Business plan writers use this section to present findings from different market and consumer behavior studies conducted by them and their teams.
Products and services: This section must focus on covering your products/services. The section must explain how consumers can benefit from using your products/services. The section must include information related to the product/service life cycle, a detailed description of your products/services, and the benefits that they offer over the competitors’. Based on the information and insights included in this section, you can design your asset tagging plan.
Financial plans and projections: The section must include important financial information, historical data including income statements, balance sheets, and cash flow statements for at least the last three years. The section must also forecast cash flows for the next five years.
Strategy and implementation: The section must summarize the business’ sales and marketing strategy and the steps that the business owner plans to take to implement these strategies.
2. Not investing enough time in building the right team
Employees are your most critical asset. Your crew plays an important role in propelling your business in the right direction. Given the critical role that their employees play in taking their business to new heights, every entrepreneur must be very careful when building their team. Hiring the wrong team can be an expensive mistake and hit the business where it hurts the most.
Many small business owners wait for too long to hire their team. Once they feel that they can no longer procrastinate hiring, it’s too late. In many cases, businesses get so desperate to get a professional on board that they hand the job to the first candidate who walks through their door, even if they don’t have the skills required for the job.
Many small businesses do the opposite and hire employees too quickly. To avoid costly hiring mistakes, invest time in designing your recruitment strategy. When hiring employees, clearly outline their roles and responsibilities. In addition to testing the skills of your candidates, screen them for culture fit. If you do not have any time to spare, consider outsourcing your recruitment process.
3. Adopting an inaccurate pricing strategy
To build their customer base, many small businesses undercut their prices. What they fail to understand is that charging less can result in financial stress. Businesses that charge too less do not just fail to make an adequate profit, but can also find it difficult to account for different types of business costs. If the business persists with the strategy, it will die an untimely death.
Why undercut your prices when you are fully confident regarding the quality of your products? Use industry benchmarks to calculate your desired profit margins. When pricing your products/services, consider what your competitors in your area charge.