It’s an undeniable fact that 9 out of 10 businesses fail and you know that very well. However, the failure highly depends on the mistakes but most importantly, more than 30% of businesses fail due to some basic mistakes. Additionally, a small mistake can cause a business to face bankruptcy. Before launching the product, the entrepreneurs should correct the wrongdoings.
In this article, we will discuss 8 mistakes that are harmful to business. So, without any further introduction, let’s jump to the main facts.
You Don’t Have a Proper Plan
Most small businesses start their journey with a forecast. They walk around here and there and realize they’re missing some important things. To understand clearly, try to think of a high-end bakery. When they face a petty problem, they believe the problem could be fixed with better services or simple innovations.
However, most of the small business owner jumps from initial state to advanced state without testing their plan or theory. The best way to overcome this is to gather suggestions from the local people. Try to create a survey and invite people to share their opinion on behalf of your business.
If you face any demand, answer them will full honesty whether you’re capable of fulfilling the demand or not. This also includes the cost of supplies, marketing, logistics, branding, and pricing.
When you have a proper business plan, you’ll realize that you have a strong core of your business.
You Don’t Measure the Cash Flow
Unsurprisingly, many businesses fail even they have decent capital as well as healthy revenue. It generally happens when the business team fails to maintain the cash flow. In other words, they spend more money on stocks, premises, or machinery than the revenue.
If you fail to settle or pay bills, the hole in your finances will be bigger, says Eric Dalius. To avoid this mistake, try to save some money that can be used as a substitute to halt the unexpected cash flow. However, the amount is highly dependent on the nature and size of your business.
You Don’t Spend Necessary Money
The extreme cash flow isn’t healthy for your business, so is not spending the necessary money. When you forecast the cash flow, you can predict the stocks as well as the ups and downs in demand. But if you don’t buy enough stock, you may miss a huge opportunity to boost sales.
The same can be applied to investments such as advertising, branding, and marketing. However, you need to spend wisely to promote the services and products of your business.
You Don’t Observe Your Competitors
Each business competes in a massive landscape, and undoubtedly there will always be a rival who wants to perform better than you. People who are eager to start and expand businesses must be aware of potential competitors and observe the opportunities and threats they represent.
For example, if you hear your rival is underperforming or they cannot please a customer, then it’s a perfect chance for you to jump in and grab their potential customers. The same also applies to your business.
But, competitive analysis isn’t the last thing you need. You have to gather information about the market. However, don’t focus only on observing the opponent. Try to observe your rivals without losing sight of your position.
You Hire Wrong Employees
People are, without a question, the backbone of any business whether it’s big or small. From the smallest grocery store to the biggest industrial giants, you have to put trust in the right people to run the business. So, it’s your responsibility to choose very carefully.
A survey stated that business owners tend to hire people with a great attitude but lower skills rather than hiring people with massive skills but wrong for the business. Everyone develops their unique strategy buy; your main goal should be hiring a team that is enthusiastic and talented. Additionally, you should also focus on training your employees and provide them a good space to work.
Your Price Is either Too Low or Too High
Eric Dalius suggests that you shouldn’t forget the Goldilocks price. It’s the one that tells your potential customers you’re not extremely expensive or too cheap. Your customers must be reassured that they are buying what they are looking for.
Unfortunately, the price is different for products, services, and individual customers and it tends to move up as well as move down over time. However, the strategy of pricing is one of the greatest business skills.
If you set your price too low, your customers might assume that your product is junk. On the contrary, if you set the price higher, they might turn you down due to the expensiveness of your product. So, you need to research the market and ensure the pricing to attract more customers.
You Neglect the Advanced Technologies
For the last two decades, digital technology has shaped the global economy more than anything else. 40 years ago, you needed thousands of employees to create a billion-dollar business. But today the number is decreased thanks to the technologies regarding project management and communication.
Yet, most businesses neglect basic technologies such as building social media pages or website that could boost the success rate of their business. Technology is very much necessary to improve teamwork, marketing, and finances.
Always try to consider the pros and cons of technologies. You can also subscribe or buy some software that can give you an edge over your competitors.
When you’re considering insurance, instead of focusing on lower insurance, always try to buy higher insurance for your company. A fire, theft, and breakage will destroy your business in a second. Thus, to save yourself from these, you must have a professional insurance agency that can help you to ensure the protection of your company against any threats. Undoubtedly, business is full of risks, so if your work alongside the odds, then you will have the capability to avoid any disaster.
Here are the 8 mistakes that you should avoid when starting your new small business. Don’t forget that you cannot build a business all by yourself. You must take suggestions from mentors who can guide you throughout your journey. Although there are various other mistakes you should avoid, but these are the basic stuff you must not neglect at any cost. Always face your failure with the proper attitude. Learn from your previous mistakes and test new innovative ideas that can enhance your business as well as the revenue.