A journey from rags to riches can become a reality through hard work. But it’s not always easy. Like a roller coaster ride, when you put up a business, it has its ups and downs.
For aspiring entrepreneurs or established business owners, the goal is to keep the same principle: learn from your mistakes and don’t repeat them. Making the wrong decision repeatedly can have major repercussions on your company.
So, whether you’re just starting a venture or running an enterprise—let us guide you through common pitfalls on this journey together.
1. Overlooking market research
Commonly, new entrepreneurs are overconfident that their products will become best-seller without even doing the proper market research. The result is expected:
- No one buys the product
- Unsold stocks pile up
- Delayed salaries of disgruntled employees
- Business goes bankrupt
Instead of making money, the funds invested are wasted and often used to cover bankruptcy.
To avoid this, you can start by listening on social media and other channels to discover what consumers think about your products.
Try to understand the competition and observe what makes your target consumers tick. The easiest and most free option is joining groups on Facebook, Reddit, and more.
2. Neglecting to know the target market
New entrepreneurs often make the common mistake of identifying everyone as their target market. However, having a small target market is not bad. Understanding the specific needs of a group is crucial to making them buy into what you’re selling.
Segmenting your market allows you to develop and implement an effective marketing strategy, catering to all customers with different needs.
3. Failing to exploit the network
Many entrepreneurs don’t realize their contacts can become a potential target market. This can include family, friends, or even colleagues. You already have a relationship with these people, so selling your products can be easily achieved.
Your network can expand when you join communities and groups. You can easily promote your business for free.
4. Forgetting sales as a focus
Let’s be honest – sales are the lifeblood of any business. Without them, you won’t have any revenue. Without revenue, you won’t have a business. Yet some entrepreneurs make the mistake of treating sales as an afterthought, something to be dealt with only when everything else is taken care of.
This is a big no-no. If you want your business to succeed, you must prioritize sales from the get-go. Don’t wait until you’re in crunch time to start thinking about how to generate revenue. Start laying the groundwork early on.
5. Setting the price too low
Setting the right price for your product or service can be a tricky business. And while you may be tempted to set your prices lower than your competitors to drive sales, too low of a price can actually do more harm than good.
Think about it this way: customers may think the quality is also low if you underprice your product or service. They might even wonder what else you’re cutting corners on. Plus, you could end up struggling to make a profit and have to close up shop entirely.
So how do you avoid this trap? The key is to do your research. Know your competitors’ prices and what your target market is willing to pay. Find out what added value you’re offering and what that’s worth to the customer.
6. Focusing on revenue instead of profit
As locals, we get the challenges local entrepreneurs have in building businesses. One mistake is focusing on revenue instead of profit. You can generate more money, but if expenses remain high, you’ll end up with zero in your bank account.
Let’s say you run a restaurant. You may think that offering lots of discounts and promotions will attract more customers and bring in more money. However, if your costs of goods sold, rent, and labor are too high, you could actually be losing money on every meal.
It’s like trying to fill a bucket with a giant hole in the bottom – no matter how much water you pour in, it will just leak out. Always watch out for your net profit, not just the gross revenue.
7. Missing to track expenses
Tracking expenses is critical as you can unconsciously spend your capital without even realizing how much you’re parting with. Only spending on what you know will result in profit.
No doubt, there will be circumstances where you encounter an expense you didn’t plan for. Unplanned expenses are exactly that – unplanned. However, you should set aside some emergency funds for this exact reason.
8. Lacking customer support
You see, customer support is not just about answering queries or solving problems. It’s about building relationships with your customers and ensuring their loyalty and satisfaction. When your customers feel valued, they are more likely to stick with your brand and even become advocates for it.
On the other hand, neglecting customer support can lead to negative reviews, poor ratings, and loss of trust. If customers have a negative experience with your brand, they are likelier to tell their friends and family about it than the positive one. Imagine, due to bad customer experiences, U.S. businesses lose $75 billion annually.
Ah, overstaffing. The dreaded mistake that many entrepreneurs make in their businesses. It’s like ordering too much food at a buffet—you think you can handle it all, but it leads to waste and regret in the end.
But the real kicker with overstaffing is the cost. More employees mean more wages and benefits, which can consume much of your business’s budget. And if you’re not careful, it can lead to cash flow problems, which can be the death knell for any business.
So, what can you do to avoid overstaffing? Well, for starters, ensure you have a solid business plan. This should include a staffing plan outlining each employee’s roles and responsibilities and how they will contribute to your company’s success.
10. Lacking vision
Having a vision means knowing what your business stands for and where you want it to go. It’s like having a roadmap that tells you how to get from point A to point B. If you don’t have that roadmap, you might as well be driving blindfolded.
When you are too focused on the short term, you neglect to see the bigger picture. You want to make money now without considering your decisions’ long-term implications.
To avoid this, take the time to think about what you want to achieve and why it matters. Talk to your customers, your team, and your mentors. Experiment and learn from your failures.
It’s easy to get caught up in the excitement of starting a business that we don’t stop and think about all the pitfalls that could make us fail. Avoiding these common mistakes will help set you on the right path as you build and grow your company.
The bottom line is to not let small details slide by and do the necessary research to ensure your business is successful. Invest in customer service and promote your business across social networks to reach customers – don’t cut any corners when it comes to building trust with them.
Ready to launch your business?
Every step of the roadmap should be taken purposefully, so doing it right from day one is always the best practice.
Let us know what you think – best of luck in your own entrepreneurship adventure!