09 Small business fails & how to prevent them.
Hey, are you thinking of starting or running a small business? That’s awesome! But it’s also hard work. Before jumping in to all the interesting insights shared below, you need to understand the big picture of who you are?
World bank says that, SMEs (small and medium size enterprises) contributes, 90% of the global economic growth and 50% of the employment development worldwide, in the emerging economies, 40 percent of the GDP (national income) is contributed by this “Small” businesses who represent a “Larger” economic development globally. You need to avoid some common mistakes that can mess up your success.
Following are 9 mistakes 90 percent of small business owners make and insights on how to avoid them.
01. Not writing a business plan
A business plan is like a roadmap that shows you where you’re going and how to get there. It tells you who your customers are, what makes you different from your competitors, how much money you need and how much you can make, and what problems you might face. Without a business plan, you’re just winging it and risking wasting time and money on the wrong things. Don’t make this mistake. Write a business plan before you start your business and update it as your business grows and changes.
02. Not validating your business idea
You may have a great idea for a product or service, but that doesn’t mean people want it or need it. Many small business owners make the mistake of launching their business without testing their idea with real customers and getting feedback. This can lead to creating something that nobody wants or needs, or that is too similar to what already exists. Don’t make this mistake. Validate your business idea by doing market research, asking potential customers what they think, making prototypes, and launching a minimum viable product (MVP) to see how people react.
03. Not investing in organic marketing
Organic marketing is when you attract and connect with customers through free or cost-effective channels like social media, blogs, podcasts, email newsletters, SEO (search engine optimization), etc. Many small business owners make the mistake of not investing in organic marketing or relying only on paid ads to reach their audience. This can limit how many people see your brand and trust you, and increase how much you spend on marketing. Don’t make this mistake. Invest in organic marketing by creating valuable content that teaches, entertains, or inspires your audience; building relationships with influencers and customers; making your website easy to find on search engines; and growing your email list.
04. Trying to do everything yourself
As a small business owner, you may feel like you have to do everything yourself and handle every part of your business. But trying to do everything yourself can be tiring, stressful, and counterproductive. You may end up doing too much, forgetting important things, making mistakes, or burning out. Don’t make this mistake. Let go of some of the things that are not your strengths or that take too much of your time. For example, you can hire an accountant, a web designer, a social media manager, or a virtual assistant to help you with some of the mundane or technical stuff.
05. No real strategy on cash flow and profits
Cash flow is the money that comes in and goes out of your business over time. Profit is the difference between your income and your expenses. Many small business owners make the mistake of not keeping track of their cash flow and profits regularly and accurately. This can lead to running out of money, missing opportunities, spending too much, charging too little, or going into debt. Don’t make this mistake. Keep an eye on your cash flow and profits daily, weekly, or monthly using accounting software or tools. Also, make a budget and stick to it, cut unnecessary costs, increase your income sources, and have some money saved for emergencies.
06. Not knowing your target audience
Your target audience is the group of people who are most likely to buy your product or service. They are defined by their age, gender, location, interests, values, needs, preferences, and problems. Many small business owners make the mistake of not knowing their target audience well enough or trying to appeal to everyone. This can result in creating a bland or irrelevant message that doesn’t speak to anyone or that attracts the wrong customers who are not loyal or profitable. Don’t make this mistake. Research your target audience by using data from online platforms (Google Analytics, Facebook Insights, etc.), surveys, interviews, focus groups, etc.; create buyer personas that represent your ideal customers; and customize your product, price, place, and promotion to their needs and wants.
07. Not seeking outside help when you need it
Running a small business can be lonely and overwhelming. You may face challenges that you don’t know how to solve or opportunities that you don’t know how to take advantage of. Many small business owners make the mistake of not seeking outside help when they need it, either because they are too proud, too shy, or too scared to ask. This can limit your growth potential, you’re learning curve, and your network. Don’t make this mistake. Seek outside help when you need it by joining a mentorship program, a mastermind group, a trade association, or a local chamber of commerce; hiring a coach, a consultant, or an advisor; or reaching out to other entrepreneurs who have been in your shoes.
08. Not investing in marketing
Marketing is when you create and deliver value to your customers. It helps you attract, keep, and satisfy your customers; increase your brand awareness and reputation; and stand out from your competitors. Many small business owners make the mistake of not investing in marketing or doing it poorly. They may think that marketing is too expensive, too complicated, or too time-consuming. They may also use outdated or ineffective marketing methods that don’t reach their target audience or show their value proposition. Don’t make this mistake. Invest in marketing by setting a realistic budget and goals; choosing the right marketing channels and strategies for your business; measuring and analysing your results; and testing and improving your marketing campaigns.
09. Not securing intellectual property
Intellectual property (IP) is anything you create with your mind that has commercial value. It includes trademarks, patents, copyrights, trade secrets, and designs. IP is one of your most valuable assets as a small business owner. It gives you a competitive edge, protects your brand identity, prevents others from copying or stealing your ideas, and generates income streams. Many small business owners make the mistake of not securing their IP or doing it too late. They may not know how important IP is or how to register and enforce it legally. They may also share their IP with others without proper agreements or safeguards. Don’t make this mistake. Secure your IP by doing an IP audit; registering your trademarks, patents, copyrights, and designs; monitoring and enforcing your IP rights; and using non-disclosure agreements (NDAs), licenses, and contracts when dealing with third parties.
Starting and running a small business is a rewarding but challenging journey. You will definitely make some mistakes along the way, but you can learn from them and improve your business performance. By avoiding these 9 common mistakes 90% of small business owners make, you can increase your potential chances of success and satisfaction by 100%.
Sources Linked: Harvard Business Review, Investopedia, World Bank, Gartner Glossary (Marketing and Communications).
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