Six mistakes that could kill off your small business
Ready to start a small business? Make sure you avoid these six mistakes – blunders that could kill it off before it really gets going.
As we recent revealed, as many as 50% of small business fail to survive past the two year mark. And as there are several reasons for this, we thought we’d look at some of the mistakes first time entrepreneurs are making that may be contributing to it.
Six mistakes that could kill off your small business
So if you’re on the verge of starting a small business, or have recently launched, here are six common mistakes you really, really want to avoid!
1) Not putting in the effort
Forget those Facebook ads promising you an income while you sleep (find out why these promises are little more than a con), or friends offering you an amazing income opportunity from home (here’s why we believe that MLM or network marketing is another modern day scam) – starting a business takes hard work.
Often a LOT of hard work.
So if you’re not prepared to put in the hours, often with little promise of reward, then you might as well give up now.
As a startup entrepreneur it could be weeks or even months before you can pay yourself. And you won’t have a manager giving you deadlines and pushing you on. Instead, you’ll need to be entirely self-motivated; driven by passion and self-belief.
And not just at the start. As an entrepreneur you need to be just as motivated in month nine as you were on day one. So you don’t just need to put in the effort, you need to find a level of effort you can sustain.
We’ve seen too many small businesses launch in a flurry of excitement and enthusiasm, only to wither away months later because the entrepreneur got bored or lost heart, and they couldn’t sustain their early effort.
So if you want to launch a business that’s going to outlive that two year deadline, it’s important to find a level of effort you can maintain – and stick to it. (Another reason why having a roadmap for your business to follow is essential.)
2) Not enough money
Starting a business isn’t just exhausting – it’s expensive. Before you take a penny in profit you need to invest in a website, branding, equipment, software, business cards… there’s almost no end to the things you need to find money for. And while some items, like social media management subscriptions, may seem affordable, they all add up.
All this is without considering any direct costs in actually producing or delivering your products or services. Or your own personal expenses that you need your business to cover – including childcare.
So before you launch into your new business with enthusiasm, check you can afford it. And really check. Create spreadsheets. Forecast future expenses. And budget for sudden costs and worst case scenarios.
Work out too how long you can afford to work for your business for free. And how you can supplement your business income (or lack of) with work – and still have time and energy to devote to your business.
If you need to, and it’s feasible, consider looking for funding. Virgin Startup will lend up to £25,000 over a maximum of five years (and give you free mentoring too).
3) Poor planning
So many of the 10 top reasons why small business fail in the first two years come down to one simple flaw: poor planning.
Launching a business with a stab in the dark or fingers crossed approach is a disaster waiting to happen. In order to drive a thriving business forward with confidence you need to know what you’re doing, and why, how and when.
You need to make decisions that are based as much as possible on knowledge, and take into account all possibilities. You need to have clear systems for the boring parts of owning your own business too, such as administration and accounting.
If you want your business to succeed you won’t be haring around blind bends hoping for your best. You’ll have mapped out a clear journey, packed appropriately and embark with a clear view of the road ahead.
So if you’re getting a creeping feeling that you’re not as prepared as you thought you were, now’s the time to go back to that drawing board and properly plan your business. Trust us, it’s more than worth the effort. (Find out how we can help you do this over 12 months here.)
4) Unrealistic expectations
No one starts their business expecting it to fail. Every single one of those 50% of entrepreneurs who gave up on their business (or were forced to) less than two years in, thought their business had a good chance of making it. But maybe they were too confident.
It’s all too easy to be seduced by other businesses’ carefully crafted PR success stories, and believe that starting a business is easier than it really is.
And if you have bought the illusion, then it can be hard to live with the reality of starting a business from scratch. And that is working for free (or very little) for a long time. Indeed, it can take two to three years before a business is profitable.
So if you launch your business assuming it’s all going to be easy – that you’ll attract as many customers as you want, they’ll love what you do, and sales will be booming – you’ve quite probably got a rude awakening waiting for you.
And for many that realisation is too much. The reality of running a business doesn’t match up with their expectations and they can’t continue. So ensure that you’re as realistic as you can be about the potential of your business, and hope to be pleasantly surprised!
5) Lack of resilience
It’s very easy to talk about starting a business, and toy with the fun bits of launching one (crafting your social media profiles, picking a logo, choosing business cards…). But as you’re probably beginning to grasp now, starting a business requires a LOT more graft than that – and most of it isn’t much fun!
That’s where resilience comes into play. You need to completely and utterly committed to making your business a success. Be willing to roll up your sleeves and work. And prepared to wait for success.
And you have to find this commitment every single day. To find it in the face of bad news. And in the wake of weeks of disappointment.
Every successful entrepreneur we have spoken to has had that moment when they’d felt like giving up (us too). When they’d had the wrong piece of news at the wrong time. Or something didn’t work for the nth time. But they rallied round. They dug deep and, somewhere within them, they found the courage, resilience and sheer doggedness to keep going.
That doesn’t mean that they simply flogged a dead horse. They revised, learned, reworked and retried. And eventually found ways to make their business really work. So ask yourself if you too have this level of resilience.
6) Working IN not ON your business
This is one of the most fundamental mistakes we see businesses make – usually after they’ve completed their launch and are ready to move onto the next stage of growth.
Often people start small businesses because they want to monetise their skills or passions. And in the early days, their business often revolves around that skill or passion. But as the business grows, you need to move your focus higher, and take on a more strategic role in it.
The best analogy for this we can think of is a war. Battles are usually directed by generals who have a strategic overview of the entire war – and can make the right decisions as a result (hopefully!). The battles themselves are fought by foot soldiers, who don’t need to know what’s happening in other parts of the war – they just need to know what they have to do, right now.
You need to be your business’ general – not a foot soldier.
This means outsourcing where possible tasks you don’t like, aren’t good at, or that take you away from your business’ growth. And this can be hard, especially if you enjoy those tasks, or worry no one can do them as well as you.
But if you don’t free yourself up to be a general, you’ll be stuck as a foot soldier fighting a battle blind.
If you want to be your business’ general you need to understand how to plan, and have the right information and experts to help them. A general would never fight – or win – a war completely on their own, and no successful entrepreneur we’ve spoken to has built their business in isolation either.
The truth is that, if you want the perspective to grow a business that has the best chances of thriving past year two, you need to invest in outside support and training (as we ourselves do, every month).
For some that’s hiring a brilliant business coach, and plugging skills gaps with training. For others it’s following a supportive business course (like our 12-month Kickstart course) that gives you not just guidance, but that all-important perspective on your business.
Make sure you avoid these six mistakes!
It always pains us when we see businesses fail. As entrepreneurs ourselves we know how much hope, passion, time, energy and money goes into starting a business. So please give your own business a fighting chance of surviving that tricky two year mark, and avoid these six common mistakes!
Photo by Luiza Sayfullina