04 Dec Common Mistakes that Business Owners Make
The first step to avoiding pitfalls is to know where they are. To help you out, I have compiled a list of the most common mistakes that business owners make, along with how you can avoid these mistakes, and what you can do instead.
Working hard – but not smart
I’m sure you’ve heard the phrase “work smarter, not harder” a million times, but it’s a cliche for a reason. It’s easy, especially in the business’ early stages, to focus on working hard. Work hard to get that extra client. Work hard to get that deal. Work hard to grow your income, get the sales, get the business up and running. And I’m sure most of the business owners that do this all think to themselves that the rest will just come later. That they will work hard first, then work smart later.
In reality, I have seen many businesses experience incredible success when they have focused on working on the right things instead of busy work early on.
Which leads me to the next point.
Working IN the business instead of ON the business
This is particularly common when people move from being employed to starting their first business. It’s so easy to act like you’re still an employee – get the sale, do the work, and get paid.
But running a business requires that you switch your focus from the everyday stuff to working ON the business. Things like business plans, brand strategies, growth plans, managing your finances and paperwork become much more important than serving customers. In the long run, this is the work that will truly affect how your business grows.
My best advice is to create a strategy and a schedule from the get-go which allows you to work ON the business as often as required.
Having no exit plan
When are you going to start working on your exit plan? If the answer is anything other than “now”, you might be making a mistake.
In my career, I have had so many meetings with business owners who only started to consider their exit plan when they were nearing their retirement, and unfortunately, for many of them, it was too late to achieve what they wanted in time.
I have previously written a whole post about why you should make your exit plan early on, however, to give you the short version: if you know where and when you want to end your business journey, you’ll be in a better position to achieve all the goals you set for yourself, and get the exit of your dreams.
Doing it all yourself
As much as we would love to, we’re not the best at everything, and we can’t do everything ourselves. This is, of course, also the case in business.
Many business owners want to do it all themselves, and simply don’t delegate enough tasks. If you have a team of employees, utilize them. If you don’t, hire professionals to help you with the tasks you don’t have expertise in or don’t have time for.
It’s natural to assume that you might be the person best suited to do everything, that your judgement is best, and that you will get the best results. But in reality, trying to do it all means you’ll be caught up spending too much time on time consuming tasks that could have been done by someone else, which limits how much time you can spend on other, more important tasks.
Not having enough funding
It can be difficult to get funding as a new business, but having enough working capital is key to success. I often see business owners trying to bootstrap a new business on very low funds, or loan applications being rejected because of minor details.
Having sufficient funding can be the difference between growing the thriving business of your dreams, or simply getting by. With the appropriate funding, you’re able to invest in the best resources, equipment and people that will help you really grow your business to its full potential.
Competing on price – and selling out cheap
No matter how low you go, chances are that there will always be someone cheaper than you. Someone, somewhere will sell the same products, or provide the same services, but with a lower price tag.
I see so many businesses fail because they are focusing too much on trying to be the cheapest – and competing on price – to the point where their sales margins are way too low. They fail because the margins are simply not sustainable over time.
Instead, find out how your products or services differentiate themselves from your competition. Price aside, why should someone buy from you? Do you provide a better service? Faster turnaround? More transparency? Great support? Does your product have superior quality? Do you offer an excellent warranty or return policy?
You can build a successful business without having to lower your prices, simply by deciding what you’re good at and convincing your customers of your worth.
No focus on branding
A business can create buyers, but it takes a brand to create fans. By focusing on your branding, you can make your business recognizable, and help it stand out from your competitors.
Your branding affects how you’re perceived by others. You get to decide your potential customers’ first impressions of your brand. What images and text do you use in advertising, on your website, or on social media? Which values do you want to portray? What do you want to be known for?
Branding includes everything from your logo, designs, colors, business name and uniforms, to more general things like the tone of voice in your written content, and how your employees should act. If you have little experience in marketing, I highly recommend that you work with a brand strategist to make sure that you get it right.
As a business owner, you will probably find that you’re doing the same tasks, or similar tasks, over and over again. Maybe you’re filling out the same documents, or making the same phone calls, or having the same conversations on a weekly basis.
Smart business owners find systems to help them get through these tasks faster. A system could be an app or a website that helps you automate the task. It could also be a structure, an agenda or a template you can duplicate to speed up the process.
Consider which systems you could create to improve the speed or efficiency of your business.
No lead or sales system
How much time would you save if you regularly had enough leads or sales coming in? What if you didn’t have to wake up every morning wondering how you’re going to find your next client?
The good news is that there’s a solution to this. Plenty of businesses in every sector have found a system to generate new leads or sales automatically, without you having to really worry about it. Some of the most common methods today includes having a strong online presence, partnerships with other businesses, social media marketing and various forms of advertising.
Maybe you could develop an affiliate relationship with online influencers who will promote your products for you? Or maybe you could create a system that automatically upsells new product ranges or services to clients? What about scheduling automatic newsletters to previous clients and asking if they require your services again?
Stuck between too much or too little work
Do you find yourself balancing between periods where you’re overwhelmed with the amount of work you have, and periods where you’re too quiet for comfort? This is often a common problem that happens as a consequence of a combination of the problems above.
Moving from job to job, or project to project, without focusing on building a sales funnel and other systems, growing your brand, delegating tasks to employees or otherwise growing your business, will lead you to this exact situation.
This way of working will never lead to significant business growth. Instead, you will lead a stressful life with financial uncertainty, running a business that never fulfills its potential.
If you find yourself making any of these mistakes, you should stop for a minute and consider how you could be running your business differently. Changing your strategy is often an important step to improving your business.
Alan Davidson is a Chartered Accountant, director and founder of Pentins Business Advisers, entrepreneur and author of the Amazon best-seller “Achieve Your Business Vision”. With over 25 years of helping businesses succeed, Alan knows how to build a business with real value, while avoiding costly mistakes.