Running your own business is challenging enough without making mistakes. While a misstep here or there is inevitable, there are some errors you’ll want to avoid at all costs – errors that can cost you your business. Worst of all? Most business owners don’t even realize they’re making these blunders!
Mistake #1: Diving into the Deep End
When you’re excited about a new business venture, it makes sense to capitalize on your enthusiasm. You want to move quickly and get up and running ASAP! That’s all well and good – unless you dive in without all the information you need. Before you run with your business idea, you need to have a clear idea of:
- Your target demographic
- The existing competition
- The direction your industry is moving
- Whether or not your idea works in the real world
Test your idea. Do the research. Plan for a changing future.
Mistake #2: Undercharging
New businesses are often tempted to undercharge. This is often justified to undercut the competition. And while yes, the cheaper option may initially attract more people, you’re starting off painted into a corner. Not only does it restrict your profit margins, but it makes it difficult to raise prices down the line. Make sure you’re being paid appropriately for the goods or services you provide! You don’t want to be known as the cheap option. You want to be known as the best option.
Mistake #3: Over-relying on the Benefit of the Doubt
In a business where transactions are service-based, you’re going to do most if not all the work before you’re paid – or at least, paid in full. That’s just the nature of the business beast. Because of this, there’s room for clients to take advantage of you. Don’t work without a formal contract in place. Keep that paper trail. And if you’re not paid for your work? Don’t continue to do the work for that client. Stand firm and prevent yourself from being taken advantage of.
Mistake #4: Keeping Only a Vague Business Plan
Every business owner needs a solid business plan. Go beyond your idea and figure out:
- Specific, measurable goals for your first year
- Where your “break-even” is
- Who your client is and how to market to them
- How much you’ll need to scale your business
- Plans for who and when to hire
- Your business strengths and weaknesses
Too many businesses fail because they lack a clear vision and a concrete plan!
Mistake #5: Fudging Boundaries
Business owners (especially entrepreneurs) can struggle to keep appropriate boundaries in the first stages of getting their business off the ground. You can expect sacrifice to play a part here. It will demand more of your time and effort than you ever anticipated. But personal boundaries aren’t just about separating work from pleasure.
It’s all-too-easy for new businesses to let the client run the show. In a bid to appease new customers, owners will work beyond the scope of their contract – essentially working for free. Stick to your guns and be sure you’re fairly compensated for your work.
Mistake #6: Underestimating the Competition
Businesses don’t exist in a vacuum. You’re part of an ecosystem of potential customers, clients, and competition. That competition is jockeying for their attention. And the hard truth might be that they’re better than you. While we’d like to believe we can succeed on our own merits in our own little bubble? The competition can kill your business if you let them. See what they’re doing and where they succeed. Adapt accordingly.
Mistake #7: Trying to Grow Too Quickly
Businesses are designed to grow. Knowing when to grow and how much to grow at any given time is the challenge. Beware of investing too much too quickly in your business! Not only with the burden of extra debt turn up the pressure, but you may not be in a place to sustain that level of growth. When you do decide to scale, you need to know that your business infrastructure is sound enough to handle the growing pains. Whether you think you need more hires, more space, or more product, take a step back first. Crunch the numbers. Evaluate the need. Weigh the opportunity costs.