Today, I want to share seven mistakes to avoid in your small business. These are common mistakes that most new entrepreneurs make, mostly because they don’t know what they don’t know. Don’t worry though, I’ve made many of these mistakes myself, so hopefully you can learn from me and avoid these mistakes like the plague.
# 1 Trying to Do Everything Yourself
Most entrepreneurs try to do EVERYTHING in their business, especially their first year or two in business. They are the head cook, chief bottle washer, janitor, waiter and whatever else they need to be to get the job done. While I admire the willingness to do whatever it takes, I think this is a foolish way to run your business. Let’s face it, you can’t do everything that needs to get done all by yourself, and still have a life. The sooner you let go of your “control” issue and outsource some of your work, the better off you will be. You can either hire employees or independent contractors to help you. Stop spending your $100 per hour time on $10 per hour tasks. It makes no sense to spend your time on tasks that you could pay someone else minimum wage to do.
# 2 Not Keeping a Close Eye on the Books
You have to keep a close eye on your business financials. It amazes me how many business owners don’t know if they are making a profit or not, what their gross margin is, what their biggest expense is, what their biggest profit center is, etc. Keep a close eye on your books. Update your profit and loss statement once a month and know where you stand at all times. Hire a bookkeeper and use QuickBooks or different accounting software to help you. Whatever you do, don’t neglect this area.
# 3 Focusing Your Valuable Time On the Wrong Activities
There are only 24 hours per day. Most small business owners I know work at least 12 hours per day and most work 14-16 hours or more. Things don’t have to be this way, and they shouldn’t be this way. You need to learn how to work smart. You should identify the activities that produce the revenue and profit for your business (sales and marketing). You should spend 90% of your time on these activities and outsource, or hire help, to do the other 90% of the tasks. Remember, not all tasks are created equal.
# 4 Not Having a Clearly Defined Target Market
Unless you are selling toilet paper, you don’t have an UNLIMITED target market. You should be able to write down in one sentence who your target market is. For example, my target market for my coaching business is “small business owners with 10 or less employees who are looking to build an online presence with their small business.” Does my example help you? I hope so. Spend some time and figure out EXACTLY who your target market is. If you don’t know the answer, survey your current customers to find out. Write it down and keep it in front of you at all times. Once you know a lot about your target market you can do a better job with your marketing and advertising.
# 5 Having Too Much Money
Some of you will wonder why I put this one on the list. I personally believe that having a lot of money when you start a business is a curse. When you have a lot of money, you will end up wasting most of it. If you are on a tight budget, consider yourself lucky. This forces you to be creative and think outside of the box. What you lack in funds you can make up for in innovation and initiative.
# 6 Not Having a Coach or Mentor
Most small business owners try to play the lone wolf. They want to do everything on their own and try to figure things out for themselves. To some, this might sound like a great idea, but I believe it’s a huge mistake. You need to find a mentor. Find a business coach or successful entrepreneur who can share ideas with you and give you an insanity check from time to time. When you have a coach or mentor you can get a fresh set of eyes to help you solve your problems. Plus, you can shorten your learning curve and learn from the other person’s perspective.
# 7 Not Building a List
I think the biggest mistake that most small business owners make is not building a list from day one in their business. Your customer and lead list will be your biggest asset in your business. Make sure you capture every person’s name and email who visits your website. Get the the name, phone number and mailing address of everyone who does business with you. Put all of this information in a contact manager program and follow up with them on a regular basis. Stay in touch with every lead and customer by email, phone AND direct mail at least once a month. This will be your best source for repeat customers and referrals.
Final Thoughts
In summary, these are my top seven mistakes to avoid in your small business. My goal is to help you avoid these mistakes so you can achieve the success you deserve in your small business. What are your thoughts? What do you think is the most common mistake on this list? Which mistake did I leave off the list that I should have included? Leave a comment and let us know.
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Chuck Holmes
Network Marketing Professional (21+ years)
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Your business needs to be treated as such, which is why I want to emphasize your second bullet. The IRS scrutinizes small business owners. They can certainly tell when the books are cooked. Accuracy is vital. Save a hardcopy of all receipts and/or scan them in as a digital copy. This way, there is nothing to raise their eyebrows should you get audited.
Exactly!
This was a well put together of top mistakes that can be made in small business. I do believe that the top mistake is the one you have first. I have been guilty of it, and I know many other business owners are too. We think we can do everything ourselves, and we end up “behind the 8 ball.” It is imperative to delegate responsibility in having a small business. There is no way we can do it all ourselves.
I also really loved the part about having too much money. That is true it can be a curse. Set a budget and stick with it!
Very good post Chuck.
The sooner you outsource the better your business can do.