5 Pitfalls Every Small Business Should Avoid

Running your own business means that you have a lot on your mind - at all times. Just when everything seems to be going swimmingly, something takes a turn for the worse, and you’re back to worrying and wondering how far your business will even make it. Small business owners have it tough these days, but you can make it a bit easier on yourself by learning where the biggest pitfalls hide.

It doesn’t mean that nothing will go wrong with your business as long as you avoid them, though, as the market can be unpredictable. By steering clear of the most common reasons startups fail, you might be able to make it past the five year-hump at least - and hopefully secure financial success for many more years to come. 

1. Financial Problems 

The financial problems of startups are many, and it doesn’t stop with the simple fact that many small business owners struggle with managing their budget. They overspend to get their business up on its feet as soon as possible, and it makes it so much easier to fall behind before you’ve even opened the doors. 

Keep an eye on your figures and work hard to stay on top of them; the last thing a small business need is an ocean of debt they have to work through. Consider hiring an accountant, for example, even if it costs you a bit of money - at least they’ll be able to make sure you’re not falling behind before your time. A proper accounting software is another good idea if you can’t afford an accountant, so have a look at this list and find one that works for your company. 

Late payments are another financial problem for startups and it’s one that’s hard to beat sometimes. Some people simply don’t pay on time or they never pay at all - and your business will suffer from it. When your clients are late with payments, it affects the whole process of your business as you’ll be late with your own payments because of them, so they slow everything down. If you’re struggling with late payments already, it’s time to take back control. 

2. Management Problems 

Startup owners find themselves in the strange position of having to allow other people to manage their valuable business. It makes sense when you think about it; all the time you’ve spent building it, pouring your blood, sweat, and tears into getting it on its feet - and now you’re just supposed to let other people take care of it? 

The problem for many young businesses is that their owners are reluctant to expand the team. Instead of just hiring more people to help out, they try to maintain the control themselves and wear all sorts of hats throughout the day. Needless to say, it’s not going to build your business as the problems tend to pile up. 

When you understand that you need a great team behind you to help with the management tasks, you’ve already understood something many business owners struggle to comprehend. Either because they don’t agree or because they simply don’t want to - either way, it’s bad for business. It means that they end up spending a lot of time on other areas when they could have established a long strategy for the business, formulates small-term goals, and kept an eye on how the processes are running.

Plus, many business owners don’t realize that they might not even have the skills to manage everything on their own. Someone else will do a much better job and treat your company to proper management skills, while you’re able to handle the areas you know you do well. And remember that the goals and strategies you hatch out must be communicated to the rest of the team as well to make sure everybody is onboard. 

As a manager, you might also be in the unfortunate position of not quite knowing how to be a boss. It makes a lot of sense if you’ve built the business from the ground-up and hired a few people on the way; they’re like friends to you now and it seems strange to boss them around, so to speak. Another big problem for small business owners is that they’re not quite sure about how to be a boss - but there is a difference between being a friendly boss and being friends with your employees. 

Stay friendly and interested in their lives, but learn to draw a line somewhere. Otherwise, it will be exceptionally difficult to manage the workplace as you should, even if you’d have a flat structure rather than a strict top-down way of managing. 

3. Not Investing In The Right Places 

To figure out where to should be spending money can be tough sometimes, and many owners have seen their businesses tumble downhill as they didn’t quite know where to put more money. Don’t focus on getting the best kind of office straight away; even a business led from your mother’s basement can be more successful than one that starts out in a fancy office and a lot of debt. 

The same goes for the processes you choose to hire, outsource or simply ignore - such as IT and customer service. The former is necessary for all businesses these days, but that doesn’t mean you need to hire an entire crew; outsource your IT services and keep a rigid eye on the technology you’re using to make sure nothing breaks when you need it the most. It’s not to say nothing will break, though, so it’s a good idea to have a laptop repair service up your sleeve if something should go wrong. 

Customer service is vital for your business and for building your brand, but it doesn’t do you any good if you hire someone who doesn’t provide proper customer service. It’s typical for those looking to save a bit of money by delegating the task to someone they’ve already hired but without the proper training - the service will be of low quality and it might even hurt your reputation. 

Outsource this one as well until you’ve built a strong enough revenue to hire a small and dedicated team. That way, you’ll be able to build relations with your customers and help them out when they need you without having to focus on it when you’re still very small. 

4. Marketing Mistakes 

The sooner you manage to find your own ground in the new market, the trickier it will be for other business to nudge you out. A strong brand can do this for you; it forms the personality of your business and is a way for your customers to connect with you. Focus on building a strong brand from day one and you might have a better chance of survival - or at least a good chance of staying in the market for as long as possible. 

Develop the brand at the same time as you’re developing new products and let them go hand-in-hand at all times. Otherwise, the brand will be nothing but an afterthought and won’t carry the same weight as it could have if it were to shine through in the products you’re launching. 

To beat their existing competitors, many young businesses think they only have one area where there’s a chance of beating them. It is, of course, through price competition, and it’s a good idea to focus on anything else than beating them with low prices. It will be so tough to beat them on this one unless you’re an established giant who can afford to sell their products at a low price - try other areas instead, where the giants may be lacking, such as in quality or customer service. 

Many people would rather pay up a bit more and have a brand they’re able to connect with, the quality that follows, and an impeccable customer service. Let your business offer this to your customers instead, and it should be easier to beat the competition. 

Marketing problems are comprehensive, though, and you’ll run into many of them along your way. Figuring out which channels to use, for example, is a problem for many startup owners and they end up using too many - instead of concentrating on master just a few. A small business has limited resources and you’ll actually be taking a huge risk by spreading it out on multiple channels - pick a few to excel in, first of all, and work your way to the other ones at a later stage. 

5. Strategy Problems 

Last, small business owners can be terribly impatient. With all the time you’ve spent planning and anticipating the launch, it makes sense that you’d like to see it take off as soon as possible. Yet, many business owners find that their early decisions will hold them back later on, making it difficult to reach the targets you could have reached if you just didn’t rush the initial stages. 

That's where a sound strategy comes into place. Have patience and allow yourself some time to reflect on your decisions before jumping to one - it will prove to be really fruitful later. 

Build Better Business

Research all the options you have, contact references before hiring new people, and take a few moments to breathe as well. No business will benefit from their owners being completely overworked and stressed out, and your decision-making skills will certainly not improve from it either.

I hope you enjoyed this article about pitfalls that all entrepreneurs and small business owners should avoid. 

Interested in more articles about small business management?

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