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Over 100 million startups are created and launched every year. Out of those, only a tiny fraction will become profitable. In fact unfortunately 50% of small businesses fail in the first five years.
This number is massive. What does this mean for small business owners? Will this be their fate as well? Is there anything they can do to increase their chances of survival?
Well, the crazy thing is that most of these mistakes are avoidable and preventable. If small business owners educate themselves on what NOT to do, they can improve their chances of success significantly.
For a little help, here are some of the biggest small business mistakes you need to know and how to avoid them.
Founder's Attitude Problem
Running a business is like a marathon. They are agonizingly demanding and challenging, especially for small businesses. While trying your best to get your small business off the ground, expect to take blows from all angles.
Generally, you'll face unfit partners, cutthroat competitors, and skeptical family members. And sometimes angry employees and customers. Hence, to thrive in the shadow of giants, you must maintain an entrepreneurial attitude and get into the right headspace.
Many early-stage business owners tend to have an impostor syndrome. It refers to the persistent feeling of self-doubt, inadequacy, and fear of being exposed as a "fraud." This attitude can be a huge problem because if you don't believe you can do it, who else will?
So, how to fix it. Well, maybe you heard this term, you can fake it till you make it. While this isn't for everyone, this technique can tap into your super persona and fuel your attitude. For example, if you tell yourself that you're a born leader, you'll start to see yourself as one and might actually become one.
The key is not to give up when the going gets tough. When you work hard to develop yourself, you'll undoubtedly change and evolve.
Another attitude problem most business owners have is the passion pinch. Your passion isn't enough to achieve success in today's business landscape. You need to have an insatiable hunger to succeed. That means being willing to put in the extra work, making personal sacrifices, and being comfortable with change.
Passion is only the beginning. You need to supplement it with intelligent planning, effective execution, and a whole lot of grit. Merge your passion with your mission to create a powerful engine that'll move you closer to your goals.
A can-do attitude is critical for any business owner, but it's not always easy to maintain. If you find yourself struggling, take a step back and assess your mindset. Don't just follow a fleeting passion. Develop a clear mission and let it be your guide.
What's more, solo entrepreneurs often have this lone-wolf syndrome, wherein you have full control and all the financial gains, but also all the losses, hardships, problems, and anxiety.
Do yourself a favor and find your pack, which means getting experience in your industry before starting your business or partnering up with someone who shares your vision.
All in all, it's not enough to recognize these attitude mistakes; you have to change your thinking and take action to improve your mindset. Leave doubt at the door. Be relentless in your pursuit of success. And, finally, don't go at it alone. Find a partner or community to help you on your journey.
Flawed Business Models
Surprisingly, many small businesses fail to create meaningful business plans. As a result, they're unable to articulate what they do, who their target audience is, and how they plan to make a profit. Without this critical foundation, it's no wonder that so many small businesses fail.
Young and eager business owners often believe that they can simply "wing it" and figure things out as they go. Unfortunately, this approach almost always leads to disaster. If you want your small business to succeed, you need to have a solid plan in place from the very beginning.
All it needs is a simple fix. Put your plan on paper. Writing a business plan is often seen as a tedious task, but it doesn't have to be. Keep it simple and straightforward. Just get your thoughts down on paper so you can refer back to it as needed.
Your business plan doesn't have to be hundreds of pages long; just make sure it covers the essentials, such as:
- key partners
- key activities
- key resources
- value proposition
- customer relationships
- customer segments
- channels
- cost structure
- revenue stream
Also, your choice of the industry directly impacts your outcome. Carefully consider the industry you're entering and make sure it's one that you have a good chance of succeeding in. There are good and bad industries for small businesses, so do your research and choose wisely.
Some industries are simply too competitive for small businesses to survive in. For example, the digital marketing industry is extremely competitive, with huge digital marketing agencies dominating the landscape. If you're a small business owner in this industry, you'll need to be extremely innovative and nimble just to keep up, let alone succeed.
Choose an industry with a sustainable competitive advantage that enables you to be lucrative and profitable for years to come. And you can only do that by determining:
- competitive salary
- the threat of new entrants
- supplier's bargaining power
- threat of substitutions
- buyer's bargaining power
Another mistake is starting with the solution rather than the problem. Remember that no problems to be solved mean no financial gains. So, what problem is your product or service solving?
Visualize it like this: You have a hammer (your product or service). Now, what are you going to hit with that hammer (the problem)? Your answer to that question should be your focus. Build your business around solving that problem, and you'll be on the right track.
Poor Market Research
Entrepreneurs should have solid market research from the get-go. Unfortunately, however, many small businesses mistake basing their business on assumptions.
For example, you might assume that because you like a particular product, everyone else will too. Or, you might think that because your friends and family support your business venture, everyone else will be too.
Both of these assumptions could not be further from the truth. The fact is that you cannot base your business on assumptions. Also, you can't copy other business models, marketing efforts, or marketing campaigns and expect to have the same level of success because what works for them might not work for you.
So what can you do? The answer is market research. Conducting the proper market research will help you avoid making assumptions about your business, product, and target market. It will also give you insight into your target audience's needs and how to reach them.
You can start by reaching out to us. We offer local digital marketing services and can help you create a plan and conduct market research specific to your business marketing goals.
We'll help you ensure that your product or service fits the market, focus on your marketing strategies, use the correct business model for your niche, use actionable metrics, and fight to stay ahead of your competition.
Lack of Funding
Another common reason why small businesses are unsuccessful is the lack of funding or running out of money. When you don't have enough money to cover your expenses, staying afloat and keeping your business going is tough.
So, if you're not wealthy enough to fund your business, you'll need to look into other options like taking out loans, finding investors, or raising money through crowdfunding. Hence, know how to pitch so that people will want to invest in your business.
A good pitch is a representation of your personality as an entrepreneur. It should be short, clear, engaging, and capture the essence of your business. You may need to talk to at least fifty people before you find one person interested in investing, so don't give up.
Also, make sure to do your research on the person or organization you're pitching to. You need to know if they're a good fit for your business and if they have the means to invest in your venture.
Pitching can be nerve-wracking, but it's an essential skill for any entrepreneur if you're not comfortable pitching your business, practice with a friend or family member until you get the hang of it.
One last piece of advice: don't put all your eggs in one basket. It's always good to have multiple sources of marketing investment so that if one falls through, you have others to fall back on.
Besides getting funding, it's important to balance your business budget and know how to manage your finances. Be mindful of what you're spending, and always keep an eye on your bottom line. By doing so, you can avoid financial surprises and keep your business on track.
Limited Product Thinking
About 30,000 new products are introduced each year. Some are complete head scratches, while others are pretty amazing. With so many products available, how does a company know which ones will succeed?
The answer is simple: they don't. No one can predict the future, no matter how much data business owners have. Young and seasoned business owners often face limited thinking regarding their product business ideas. They either think they have the next best thing or that their product is so great that it will sell itself.
The reality is that most products fail because entrepreneurs get stuck in their vision that they forget it should be a direction rather than the destination. They get so focused on the product that they lose sight of what their customers want.
So, how do you go about it? Well, understand what your product or service is and keep it simple. Then, take a step back and look at the big picture. Does it offer a unique solution? Is it easy to use and understand? Can it be manufactured or delivered at a reasonable price? These are all critical factors to consider.
Poor Pivoting
Business owners must be introspective to be successful. They're willing to take a hard look at what they're doing wrong and change it. Unfortunately, many business owners are poor at this skill. They continue to do the same things that aren't working and wonder why their businesses fail.
If plan A doesn't work, the correct move is to try plan B. If that doesn't work, move to plan C. The alphabet has a lot of letters. So, use them all until you find a solution that works. The key is never to give up and always be willing to pivot your business.
For your business to grow, you must be willing to change. If something isn't working, don't keep doing it and expect different results. That's the definition of insanity. Instead, be willing to pivot your business and try new things. Only then will you find the success you're looking for.
Conclusion
While there are many potential pitfalls for small businesses, avoiding the most significant mistakes can make a difference. With careful planning and execution, any business can overcome the challenges of a competitive marketplace and find success.
The key is to stay focused on your goals, work hard, and never give up. With these three principles in mind, any business can find success. Also, we, are a local digital marketing company based in Los Angeles, can help you with digital advertising, internet marketing, SEO marketing, content marketing, and marketing Automation to help your business grow.
Schedule a FREE strategy call with no string attached and show you how we can help you achieve your goals, like your own business growth. No other digital marketing firm or internet marketing agency offers the same level of service or affordable digital solutions. So, please don't wait any longer and contact us!