You’ve done it. You’ve started a business and have been open for several weeks or months. You have a steady stream of customers, and your product or service is selling well. But there’s something since after the honeymoon phase – the high you felt from starting your own business, there’s really not been any substantial change in your business. For some reason, the growth phase which is often the hardest for entrepreneurs to navigate has been a trough of sorrow for you because of certain mistakes you’ve made and keep making.
But that’s fine, business owners make mistakes every day it’s a part of life, and that’s okay—because they’re also learning from those mistakes. But what if you’re not learning from your mistakes? What if you keep making the same ones over and over again, to the point where it’s hurting your business?
Many times this is the case, this is why the annual statistics on business failures yearly is always very shocking. Just a preview: Statistics show that there are thousands of businesses started each day but only 10% of them survive past the first two years.
Another important statistic on startup failures annually comes from Small Business Administration data which shows that 1 in 4 startups fail within their first five years! Many entrepreneurs don’t realize that even though you start a new business, it doesn’t mean that the business is going to be successful. There are many reasons why businesses fail including poor management skills, inadequate capital, and lack of proper planning.
Some companies may have had good intentions when they started but ran into issues with cash flow or didn’t gain enough customers fast enough to sustain themselves long term. Sometimes all these because of the mistakes business owners make
Top Mistakes Business Owners Make Driving Business/Startup Failures
We all know that as a business owner you’ve got a lot on your plate and sometimes you just don’t have time to think about the mistakes you could be making that might be hurting your business. Many times, it is difficult to see these mistakes from the inside and you just need some outside perspective to get things right.
Of course, it is not enough to just put your head down and work as hard as you can. There are some mistakes that you need to avoid at all costs if you want your business to succeed. Working with various startups and businesses over the years, we’ve seen the mistakes business owners make, taken note of them, and cumulated the most recurrent, to provide you with an encompassing and detailed overview.
Here are the top mistakes business owners make:
1. Failure to conduct proper market research
Market research is one of the most important things a business owner can do to succeed. It gives you a deeper understanding of your customers, competitors, product and service, and industry.
Market research helps you understand what others have done before you in the same space, who are your competitors, and their strengths and weaknesses? What are the needs of your customers? Why do they use these products or services? How could those needs be better fulfilled by adding additional value to them through different offerings or new features/benefits?
Many business owners are not ignorant about this, but the problem they make is that they do not conduct in-depth and detailed research of their market, leaving room for surprises in the market.
2. Failing to create a business plan/business model
Creating a business plan is the first step to launching and sustaining your company. It is the blueprint, road map, and guidebook telling you where you’re going and how best to get there. Without one, you’ll be operating in the dark and likely make many costly mistakes along the way.
Contrary to the belief of many business owners, a business plan is not only for your investors, it is also important to create a detailed business plan for yourself periodically to get a birds-eye view of your business and trends in your industry. This is a good way to evaluate and recalibrate your business and business operations. The same with your business model, this help define the best strategy to create, deliver, and capture value for your customers and your business.
Business plans and business models help you make decisions about doing things like:
- Pricing products or services
- Determining where to advertise or who to partner with
- Setting financial goals for yourself (like getting back on track with debt payments)
Seeing the importance of these two business tools it is easy to understand why many businesses fail without them.
3. Failing to understand your customers
Understanding your customers is the most important thing you can do as a business owner.
Your customers are the lifeblood of your business, and they should be at the center of everything you do. But many businesses don’t know who their customers are or what they want, which can lead to serious problems down the line.
It’s not just about demographics—and it’s not just about what they want in terms of products or services either. You need to understand their worldviews and values; why they buy from you instead of someone else; why they make certain purchasing decisions; how your company fits with their personal identities; how much loyalty and advocacy there is among existing customers (and potential ones); what makes people loyal to one another within your target audience, etc.
Because of the magnitude of what this is doing to businesses, we wrote an entire article on how to truly understand your customers to be able to create the best value for them, and by extension your business. This has helped hundreds of businesses, and yours won’t be any different.
Even if you think you know your customers, you want to keep up with them. Because the minute you get left behind, your business begins to suffer, and if you are not able to catch up with them fast enough, your business dies.
4. Having an inconsistent brand
Inconsistency in branding is one of the most underestimated killers of businesses. Imagine you as a customer came across a powerful brand advert online, one that spoke directly to your pain point. You are excited, but only to get to their website for you to make a purchase, and to see an entirely different messaging and brand you cannot realize. What does this raise in your mind? Skepticism. You become unsure whether to buy or just wait to understand the brand. In this wait, you lose interest or go for a competitor.
Inconsistency is a slow killer. Consistency is the key to building a successful brand. Your audience will be more likely to trust your brand if they see the same look, message, feel and tone in all of your marketing materials, from websites to social media posts. Consistency also helps build familiarity—if a customer knows what to expect from you when they visit one of your locations or read one of your blog posts, it’s easier for them to make decisions about purchasing from you.
A consistent brand also lets customers know what kind of experience they can expect when working with or buying from you. If you have multiple locations, for example, having an inconsistent design across those locations can confuse customers who come into each one looking for something familiar and find something different instead. This could lead some shoppers not only away from your business but also away from other businesses that look similar but aren’t as consistent as yours (which could result in lost revenue).
5. Not setting realistic goals
You need to set realistic goals. This is probably the easiest mistake to make, and it’s definitely one that could be avoided by simply thinking about the consequences before acting. If you don’t set realistic goals for your business, you may end up failing because of it.
When setting goals for your business, you want them to be achievable; if they’re not, then what’s the point? You want your goals to be achievable in both short-term and long-term periods so that they can help improve various aspects of your business as well as guide it towards success over time. For example, if one of your short-term objectives is reaching 1 million dollars worth of revenue per year by 2020 while another one involves achieving a certain amount of profit margin by 2021 (without considering any other factors), then those two things may not go hand in hand with each other if there isn’t enough time left between now and 2020 when compared against 2022 when profits could take place due to increased competition from other businesses which would result in lower profit margins overall.”
6. Not having a marketing strategy
Another mistake business owners make is not having a marketing strategy for their business. This mistake can stem from one of the mistakes earlier stated – not having a business plan or business model.
A marketing strategy lays out your goals and actions, which allows you to take the right steps towards achieving them. You can create a marketing strategy by writing down everything that you want to achieve, and then breaking it into small steps that will take you there. For example:
- My goal is to attract more customers by increasing traffic to my website through organic search rankings. Here are some ways I can do this:
- I’ll write blog posts about topics related to my business so people will find me when they search Google for those topics.
- Once you’ve listed all of your ideas for how to reach your goals, figure out which ones would be most effective for reaching them (and which ones are actually feasible), then prioritize them accordingly before deciding what steps are necessary for each action item on the list to become reality!
Failure to identify the best strategy to market to your target audience might lead to them not having the opportunity to interact with your business and make transactions with you.
7. Not knowing when to pivot
Not knowing when to, how to pivot, and change things a bit in your business and business model is a very big mistake many business owners make.
A pivot is a sudden change in direction. It’s the point at which you decide to move away from your initial business idea and focus on something different.
If you feel like your business is failing, it might be time for a pivot. Here are some signs that indicate this could be the case:
- Your product or service isn’t selling well
- You aren’t getting any traction with customers or clients
- People aren’t interested in what you’re offering them
8. Not getting help when needed
Delegate and outsource – This is the key to scaling your business.
What is outsourcing? Outsourcing simply means getting help from freelancers or companies who are experts in certain areas or tasks of your business. For example, if you want to scale your business by hiring a sales team, then you can outsource this part of the company to an outside company that specializes in sales and marketing.
What do I need to do? Ideally, find someone who has done what you want before and be very clear about what they have gotten from other companies like yours before asking them how much it will cost (or even 20% off their hourly rate as a discount). If they don’t give you any guarantee of results at all during negotiations, then walk away from this deal immediately because there is no way it will work out well for either party involved when there isn’t mutual trust between both parties involved in any negotiation scenario like this one where both sides could go through great lengths just trying not only to protect themselves but also make sure that everybody else does as well!
Another serious aspect of all of these is not being prepared for failure (and not getting help when it becomes apparent that your business is failing). For some reason, many business owners make this mistake, and it just leads to a straight death of their business.
Other Factors Driving Business/Startup Failures
While the factors stated above are often the most unrecognized/overlooked factors driving business failures, these other mistakes business owners make are also important factors they know cause business failure.
- Lack of funding. This is the most common reason for a startup to fail. Many businesses are not able to get enough funding, which results in them having to close their doors.
- Lack of customers/sales leads is another major reason why startups fail because without customers willing to take their products off their hands there is no way for these firms.
- Not having a solid financial plan in place. A good financial plan is what keeps your business running smoothly and helps you make good decisions as a leader. If you don’t have one, or if it’s not up to date, you’re at risk of making poor business decisions that could hurt your company down the road.
- Not taking enough time off work. It’s easy to get sucked into workaholism when you run your own company—you feel like if you’re not working 24/7 then someone else will take advantage of that opportunity while they can! But trust me when this is a wrong perception that just kills your business and damages your health.
How To Position a Startup for Success
- Define your business model
- Define your brand and establish a messaging strategy that supports the brand
- Always create a marketing and sales strategy for your business
- Seek professional help to grow and scale your business, or whenever needed.
- Plan your business and set clear realistic goals.
- Most importantly, know your target audience, and how best to reach them.
Businesses fail all the time, but the main reason they fail is not what you think it is.
It’s inevitable, right? We’re all human, and we all make mistakes. But what happens when you make a mistake as a business owner that ends up hurting your business? You could lose customers and employees, lose money, or even lose your entire company. It’s not an experience you want to go through!
By avoiding the pitfalls above, you can help to improve the chances of success for your new business. Having a clear understanding of what is needed to run a successful startup will help you avoid these common mistakes.