7 Simple Mistakes of Small Business Owners
Starting a business is always difficult, especially if you are a first-timer. No matter the kind of business, you cannot be successful if you are not careful.
Statistically, the majority of small businesses go bankrupt in the first 3 years. This is mostly due to a lack of market research and improper management by the owner.
In this digital age, competition is immense for all types of businesses. Only people who can adapt to new challenges can succeed in their business.
These are the 7 common mistakes every Small business Owner should avoid to Succeed.
Not knowing your limit
The biggest reason for anyone to fail is overestimating themselves. This is true for businesses too. After starting the business, do not try to do everything by yourself. You might think this will save money on salaries, but it will only make you exhausted and inefficient. Your productivity drops down which will affect your business.
Decide what you are going to do and hire employees/workers for the rest. This increases the quality of products/services in your business which in turn, brings you more customers. You will also be employing individuals and giving them a livelihood.
Let’s say you have a typical retail stationery store that primarily sells everything a student needs. You could tend to all customers by yourself and make sales. But doing so increases the time every customer has to wait in your shop. Importantly, your customers might feel that they are being ignored. This will decrease them coming back the next time. So, it is better to hire employees by which your store can offer quick and quality service. This will be profitable in the long run.
Do not decrease prices to attract more customers. Decreasing prices in hopes of drawing more customers is risky for a new business. It will be much more difficult to raise back the prices to normal later. Cheap products/ services are usually considered to be inferior in quality. This could affect your business negatively.
If you really think there is no other choice, you can have a discount sale for an initially mentioned, limited period of time.
Trying to satisfy all
Decide exactly the products you are going to sell (or services you are going to offer) and stick to them. Remember that Quality is always better than Quantity.
You don’t need to offer every variety of product available in the market. You cannot maintain every possible item a customer would want to buy. The choice is overrated, too many choices confuse customers and will always leave them unsatisfied.
If you are running a Food Court which offers breakfast. Do not think you would be more successful if you start offering lunch or dinner. Stick to what you know best and try to improve on that.
Expand your business only after doing market research. Try to find out something customers want but other businesses are not offering. Coming to the above example, instead of offering lunch or dinner and hoping for profits, you could offer Tea/Coffee/ Milk along with breakfast. You could also try home delivery if such a market exists where you live.
Combining Business and Personal finance
The first basic thing you need to do after setting up a small business is to create a separate bank account for business. Make sure you manage all business transactions from that account. If you want to take a bank loan, take it with that account. Every transaction for your business should happen through this account.
Even if you are the sole owner of your business, maintain a separate bank account. Always consider your business as a different entity to you. This separation in accounts will also help you a lot when dealing with taxes at the end of the year.
This distinction allows you to visualize your business and personal income differently. Therefore you will have a better picture of how much you are investing and how much you are earning.
No Digital Presence
10 years ago, marketing for small businesses via the internet is unheard of. With an increase in smartphones and cheap internet access, it has become essential.
The first thing you need to do is have a digital presence. Make sure your business is marked in GoogleMaps with your details. If you run a restaurant, make sure you are registered in Online delivery service apps.
To take it up a notch, you can make a website for your business and provide online delivery service in it. Doing so will save you the commission( for the third-party apps) and make your business more official and unique.
Pricing according to Competition
You don’t have to set prices for your products according to those of your competitors. Decide prices, according to what it costs, profits expected, additional costs and target customer demographic.
If it costs you more to prepare a cake, then the price should be high. Don’t be tempted to decrease the price of your cake because the same kind of cake is cheaper in the store opposite to yours. That might be due to poor quality or poor service in that store.
Try to create a brand around your product. Make sure your customers know the products you offer are of fine quality and deserve a little extra money.
Not changing with time
Technology is rapidly changing with every passing year. 10 years ago, selling products and services online is unheard of but the present is a different scenario. Businesses that adapt to changing technology and use it effectively will have an edge over their competitors. So, explore and learn more about digitizing your business.
Consider using applications/ tools to manage and market your business. There are many applications/Softwares like ZohoBooks, Netsuite, Khatabook, Sap, etc. Try them out and find out what works best for you. Use these to manage your business efficiently. Automate mundane tasks like billing using these apps or software.
Let’s say you run a Pharmacy( Drug Store ). You will have thousands of tablets, syrups, medicinal ointments, soaps, etc with you. Normally, when a customer needs a certain drug, you would rely on memory whether the drug is available with you or not. If you don’t remember exactly, you would have no choice but to search for it. This wastes a lot of time. After that, you need to know which drugs are remaining and which got sold at the end of the month. It is tiresome to maintain a book to follow each and every transaction. Instead, using an inventory management tool can simplify this whole process and save you a lot of time.
Lack of Feedback and Adaptability
It is important to know customer’s opinions on your business and products. Take complaints and criticism with an open mind. Don’t hesitate to modify your strategies and business accordingly.
If something goes wrong, it is more beneficial to admit to your mistakes rather than denying them. This will go a long way in helping your business. Making connections and being friendly will draw in more customers than any advertisement can.