I’m back from the ‘Passion to Profit’ tour, which encouraged people to consider turning what they love into a money-making venture. I had a brilliant time and met some wonderful people, and truly hope that many of you do go on to begin your own ventures and have the time of your life turning your passions into profit!
As a way to support you ‘post-tour’ I want to look at some of the common mistakes small business people make and how you can avoid them in your future endeavours.
1. Seeking overnight success
Some people are lucky and get rich fast, but for most business people overnight success usually takes around seven to ten years. Be prepared to build up your business slowly, but always be on the look-out for ways to improve your products and services. Accept that you are in this for the long haul, however if you are pursuing your passion I hope you enjoy every minute of it.
2. Trying to be it all and do it all
When you first start a business you try to do it all. You don’t have a lot of money nor can you afford staff, but there are some areas where you must spend money. If you have a web-based business, hire a professional to set up your business homepage. Do shop around for a quality deal. For example if your homepage is not up to standard it won’t attract customers.
As your business grows don’t try to be an expert at everything. For example, consider hiring the services of a copy writer to describe your products on your homepage. Pay an accountant to look at ways to offset expenses and employ a lawyer if reconfiguring ownership of the company. Sometimes trying to do it all yourself will cost you more in the long run.
3. Putting on the wrong staff
When your business does start making money, you will need more help. Too often small business people turn first to family and friends, but this can be a huge mistake. You may soon discover someone makes a great friend, but a lousy employee then you risk damaging relationships. How do you give your best friend the sack? It is better to employ staff based on their talents rather than assuming your friends and family members will be good workers. Also, consider employing students who may be studying in an area relevant to your business, but invest in them. Train them! Teach them the skills of your trade.
4. Misjudging the market
Small businesses often fail because they don’t understand how their customers shop. You can never do too much research into the profile of customers ahead of starting a business. Also never assume that you have a customers’ business for life. How often do you take all your business to just one outlet? Don’t you shop around for the best deals?
Remember to also budget for marketing expenses and try to give your customers extra value and ‘gifts’ that will keep them coming back for more.
Remember it’s a tough market and you will have lots of competition, perhaps even from areas you never considered.
5. Being strapped for cash
Most small business people run into cash flow problems. They deplete their savings to start up the business and then when they run into a problem they have no reserves. Look at all options to raise funds – crowdfunding, seed funding (investments from friends and family), even government grants. Leave no stone unturned.
6. Lead the way
Every small business needs an effective leader. That doesn’t mean you need to be a dictator! You need listen to your employees but it’s vital that your staff know what your company’s key goals are. Your team needs to be inspired and working on the same page
7. You need a business plan
It’s essential that you have a business plan. Your plan must outline your company’s mission statement or goal. It must also list what you want your company to achieve over the next 12 months. Set out specific measurable goals and the timeline in which you hope to achieve them.
8. Don’t let your business absorb all of you
Too many small business people neglect their family while they are growing their business. A business can absorb a great deal of time, but you must not neglect your health or your friends and family. Work intensely in bursts then switch off – work hard and play hard. Remember, you are not your business. Running a business will have ups and downs, but you separate your identify from your business, otherwise you will be on an emotional rollercoaster. You’ll only be happy when the business is doing well, then despondent when trade gets quiet.
9. Aim for progress
Small business owners don’t answer to anyone so it’s easy to fall into the trap of never changing or developing your products or services, especially when business is good. Aim to remain innovative and proactive. Make sure you achieve two things every day in your business, and at the end of the day work out what two tasks you can accomplish the next day.
10. Don’t resort to cutting prices too quickly
When business falls off, some business people are quick to slash their prices in the hope that it’ll attract customers. Many customers look for quality and are willing to pay more for a better product. Price cutting is dangerous. It can give customers the message that you are not selling a quality product. During tough economic times a price increase and improved product might instead give you the edge over competitors.
11. Trying to perfect your idea, instead of getting it to market
If you have a great idea for a product or service, launch it sooner rather than later. There probably is somebody else out there with the same idea. Also the longer you wait to get your product or service out, the longer you’re going without cash coming in. A better option is to get a simple but working version of your product in the market, have money coming in, and then you can refine and develop your product. Also, you’ll have customer feedback and can modify or improve the product in line with what people want.
12. Have a killer marketing strategy
You need to market your business on several fronts, for example through traditional advertising flyers, social media and your homepage. But on every medium the company message must be consistent.
Never forget, in business you never get a second chance to make a first impression!
ABOUT PAT MESITI
Pat Mesiti is a best-selling author, coach and educator in the area of personal development. Having built some of Australia’s largest people-driven organisations, Pat understands the power of harnessing human potential. He has shared the stage with some of the world’s great business minds and has sold over millions of copies of his books and materials.