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, but only those who learn from them will succeed.
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 your prices in order to undercut your competitors and keep the business rolling in.
You’ll undermine your business offering and end up in the trap of diminishing returns and won’t make enough profit to keep your business running. Do market research so you can work out what you need to charge and balance that against what’s competitive.
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, worse, defaulting customers by being choosy about who you work with. Run credit checks on all new customers and be explicitly clear about pricing and terms of payment before you work with them.
One of the top mistakes new businesses make is to end up working for free.
3. Having no clear business strategy
Another common error start-ups make is not having a clear business strategy, because if you don’t know exactly what you need to do in order to succeed, you won’t.
When you are starting a new business, you need to be able to answer these questions;
- What are your priorities?
- How are you going to generate new business?
- How are you going to measure success?
If you’re aiming to build a business you want to get good business processes in place from day one.
Failing to build strong foundations, will mean that you will struggle when you start to scale up your business to something bigger.
4. Failing to plan for the long-term
Many new business owners make the mistake of not investing in the longer-term when they’re busy in the short-term. Lack of investment in new business development and marketing is a sure-fire way to stall your business.
Getting this balance right is crucial. If you’re all out busy filling orders now, what will happen in six months when your sales pipeline is empty?
You need to develop a long-term plan that can ensure your business thrives 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 after which 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 responsibility as a new business owner is to identify your strengths and weaknesses and then hire someone who’s strong where you’re not – so you can focus your time in the areas you can add the most value.
While time might be scarce, investing the time in employing and developing staff who can help your new business continue its growth is absolutely crucial to your business success and your personal well-being.
6. Ignoring brand
Assuming that their product is the be-all and end-all of their small business is another frequent error new proprietors make. You need to really think about your company brand, because that’s what forges an emotional connection with your customer and keeps them loyal to you.
Things you need 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 an absolutely crucial step – it’s well worth getting a professional involved if you’re able to.
7. Being emotional
Sometimes it can be difficult to distance yourself from your new business, but it would be a big mistake if you let the business world and emotional world overlap.
Your business is your favourite child but it’s also your source of income, and you need to treat it rationally. If you let your emotions cloud your judgement you’ll end up making business decisions that are based on emotion… and that’s never good for business.
It’s good practice for every new business owner to look at the cold hard facts when making a decision, and as much as possible taking some 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 an unexpected cashflow problem, and firms that need to access extra finance at short-notice are not in a position to negotiate favourable terms.
So have you thought about what you’ll do if you need further investment to enable you to expand, or to help your business through a lean time?
These days there are many are different funding options available to businesses. Well-established financing options such as a bank loan or overdraft and invoice finance are complemented by a growing range of alternative forms of finance such as crowd funding, Peer-to-Peer lending and business cash advances.
Each solution has its benefits and drawbacks so a bit of research will stand you in good stead. By being aware of your options, and contacting potential sources of business finance in good time, you will be in a stronger position to find the best solution.
This guide has been written for ByteStart by Nick Joelson, Marketing Manager at small business cash advance lender, Liberis. Nick has a track record in financial services and has extensive expertise in bringing products to market, improving profit and funding for businesses.