Here are some of the mistakes that I’ve made over the years, plus some mistakes that some of my podcast guests have shared with me. Caution, I’m still a work in progress myself so I’m likely still making many of these mistakes.
1. Being Cheap – One of My Biggest Small Business Mistakes
When you’re not making any money with your upstart business it makes sense to pinch your pennies and go the cheap route. Somewhere along the way though you start making money. The problem arises when you never use that earned money to re-invest into the business.
I’m still cheap in a lot of ways. But more and more I ask myself the question, “could I be spending money on my business in some way that would propel me to greater heights?”
You should be stopping to ask that to.
2. Borrowing Money Before Your First Sale
Without “funding” some businesses would never go from good to great. It’s true that financing can take a business to the next level. But I would really question any business that’s looking to generate it’s first sale by using debt.
If the product or service is needed then shouldn’t you have a paying customer, or at least the promise of a paying customer before you go into major debt? Look no further than the crowd-funding of the Pebble watch to find an example.
3. Co-Mingling Your Finances
One of the best things you can do for your maturing business’ finances is to open up a separate bank account. It’s fine to co-mingle business funds when it’s just coming out of the hobby phase, but there are many reasons to go separate once you get serious.
The obvious reason is taxes (i.e. makes filing a heck of a lot easier), but I think the more important reason is so that you can get an isolated picture of your finances so you can start improving your business.
4. Hyper-Focusing on Sales
The business owner that says they had $1 million in sales last year sounds pretty impressive until they tell you that they also had $1.1 million in expenses.
“full of sound and fury, signifying nothing” – Macbeth by William Shakespeare
As a business owner you should be focusing on profit (i.e. the bottom line), not just sales. This means you need to be reviewing and reducing your expenses. You also need to be analyzing your profit margin and attempting to find the right price-point for your product or service.
Appropriately, my friend in sales, David, contributed this point.
5. Not Setting Goals
Quite often, we entrepreneurs fall into our business ideas because of our passion or latest interest. Setting goals for the business, at least initially, may not have come to mind. And goals can sometimes be the antithesis of a good business idea. Goals get in the way initially.
But at some point you’re going to need to start treating your business like a business and provide a framework for your creativity and ingenuity to exist within.
Make sure your goals are SMART and break your goals down into phases and task that can go on a calendar so you actually make time to accomplish them.
6. Building a Glorified Job for Yourself
Be honest with yourself. Is your business just a glorified job? Meaning, did you create something that has you acting like an employee vs an owner? Do you have freedom, creative license, and are you building your brand?
I’m so proud of having left the corporate world and having started my own gig. But I still have to do certain things everyday or week that keep me from being truly free from my business. Not that I want to escape my business, but I need to be able to if I want to…that’s the difference. I’m still a work in progress in this area. How about you?
7. Assuming You Can’t Do Something
You’re a business owner because you were willing to take a risk, no matter how small. That attitude should extend to all parts of your business. Never assume you can’t do something.
I’m not talking about not outsourcing or trying to do it all. I’m talking about not limiting yourself to do more and more with your business. Want to revolutionize your industry? Go do it. Want to be the first to offer something? Make it happen.
So those are some of the more common small business mistakes owners make. Are you making any? Are there any other mistakes you could add to the list?