Building a successful new business is a roller coaster. There will be days you know you couldn’t do anything else, and days you wish you did. Sometimes you’ll be on top of the world, but at other times it will be a struggle to drag yourself out of bed.
In the high-stakes world of starting a new business, only one thing is certain: everyone will make mistakes. The people who last are the ones who spot them quickly, learn, and adjust.
So, to help you learn from these common errors without making them yourself, here are 8 mistakes that startups frequently make:
1. Slashing prices
In the early (or difficult) days, it can be tempting to slash prices to undercut competitors and keep the business running.
Don’t.
You’ll undermine your offering, fall into the trap of diminishing returns, and still not make enough profit to keep the business running.
Conduct market research to determine what you need to charge, then balance that against the competitive rate.
2. Being indiscriminate about customers
When sales aren’t coming easily, the instinctive response is to leap at the prospect of making a sale, any sale. But this is a mistake. Imagine how much worse it’ll feel to do the work without getting paid for it.
Minimise the risk of slow (or defaulting) customers by being choosy about who you work with.
Run credit checks on new customers where appropriate, and be explicit about pricing and payment terms before you begin work.
One of the most painful mistakes new businesses make is ending up effectively working for free.
3. Having no clear business strategy
Another common error startups make is failing to have a clear business strategy. If you don’t know exactly what you need to do in order to succeed, you won’t do it consistently.
When you are starting a new business, you need to be able to answer these questions:
- What are your priorities?
- How will you generate new business?
- How will you measure success?
If you’re aiming to build a business, you want good processes in place from day one.
Failing to build strong foundations will mean you struggle to scale up.
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4. Failing to plan for the long term
Many new business owners make the mistake of not investing for the long term while they’re focused on the short term. Lack of investment in business development and marketing is a sure-fire way to stall your business.
Getting this balance right is crucial. If you’re flat out filling orders now, what happens in six months when your sales pipeline is empty?
You need to develop a long-term plan that can help your business thrive well into the future.
5. Trying to do it all
The business world does need people who can wear many hats, but there comes a point where the business will suffer if you do everything yourself.
One of the cardinal sins new business owners make is not being able (or willing) to delegate responsibility to others once the business starts to grow.
Your job as a new business owner is to identify your strengths and weaknesses, then hire someone who’s strong where you’re not, so you can focus your time on the areas where you add the most value.
Even if time feels scarce, investing it in hiring and developing staff who can help your business continue to grow can make a big difference to both results and well-being.
6. Ignoring brand
Another frequent error new proprietors make is assuming that their product is the be-all and end-all of their business.
You need to think properly about your brand, because that’s what creates an emotional connection with customers and keeps them loyal.
Things to consider when starting out include:
- How will people view your business?
- What are your core values?
- What do you stand for?
- Why will customers choose you?
This is a crucial step. If you can afford it, bringing in a professional can be money well spent.
7. Being emotional
Sometimes it can be difficult to distance yourself from your new business, but it’s a mistake to let your business decisions become purely emotional ones.
Your business might feel like your favourite child, but it’s also your source of income, and you need to treat it rationally. If you let emotions cloud your judgement, you’ll make decisions in the moment, then pay for them later.
It’s good practice to consider the cold, hard facts when making a decision and, where possible, take time to weigh up the pros and cons. Decide in haste, regret at leisure.
8. Not seeking financial help in time
Many new owners fail to realise that successful businesses often need extra finance to fuel growth.
Failing to plan ahead financially can lead to unexpected cash-flow problems, and businesses that need funding on short notice are rarely in a position to negotiate favourable terms.
Have you considered what you’ll do if you need further investment to expand, or simply to get through a lean period?
There are many funding options available. Traditional routes, such as bank loans, overdrafts, and invoice finance, sit alongside alternatives including crowdfunding, peer-to-peer lending, and business cash advances.
Each option has benefits and drawbacks, so a bit of research will stand you in good stead. If you understand your choices and start conversations early, you’ll be in a stronger position to find the best solution.
