Top 5 Pitfalls for New Small Businesses to Avoid
Many small businesses commence life as a micro business in a sole operator capacity, developing over time into larger businesses or companies with a diverse range of challenges and opportunities.
Today, I’m going to focus on the first group, the first time micro business owner. In the early stages of growth, when the financial positioning is generally more precarious, there’s a hell of a lot more at stake. I remember as a sole operator in my first business, making small mistakes early on that nearly ‘sank the boat’.
I mean, ditching the job and going out on your own is a huge step and comes with considerable risks and pitfalls. Here are five big challenges I faced along the road.
One big question to ask yourself is “Where’s the moolah coming from?”. How are you going to support yourself in the early stages when cashflow is building up and profits are often fed back into the business? You might have a better half that can support you or you might have been given a helping hand from another family member. You may have even been able to secure a bank loan.
Regardless of where the money came from or what your initial cashflow position currently is, you should have a clear understanding of what is required of you to keep your head above water. You would have obviously done your homework and maybe even sought advice from your accountant or finacial planner. Good call!
Okay, this is a big one. Stress is the killer of everything fun and positive. Manage it well and you’ll be fine. Let it get hold of you and fester in your soul and you’ll risk everything. Let’s be real, stress is a normal factor of life but, for individual reasons, it seems to be off the charts when first starting out in business. I’ve never commenced a business project without a higher than normal amount of stress. Nowadays, I simply see it as an alarm bell for my subconscious. It keeps my on my toes and helps me to consistently evaluate my current position.
We all have our own ways to relax and de-stress. I like to go mountain biking and go to the gym on a regular basis, and I get remedial massages every now and then. Oh, and I love to watch a great action movie, it really helps me switch off and wind down.
Being over stressed can also cloud one’s judgement and may even manifest into depression. Make sure you keep right on top of it and get help if needed.
The relationships topic is often overlooked, but I really believe that it is deserving of a top 5 concern for small business owners. It’s pretty much tied in with the above 2 topics of stress and finances. If you own a small business and have found yourself under the pump financially, timewise and emotionally, what generally happens? Yep, you start arguing with your partner for all sorts of reasons. Maybe it’s about finances (or lack of), it could be about the lack of effort around the house, or that the intimacy is just not there at the moment.
In any event, keep open lines of communication and review your current business model if the issues aren’t resolved.
Reaching Potential Customers (Digital Marketing)
Unless you have a background or some previous experience in digital marketing, you’re going to have a heck of a time reaching your potential customers. Zero customers equals zero bucks. For a new business, traditional marketing platforms such as Yellow Pages, radio and television are a waste of your time and money. Flyers are okay for some local coverage but can be very time consuming and be hit and miss.
To be blunt, if you’re not digital, you’re not competetive. Even whacking up an ad on Facebook and hitting the Boost button isn’t going to bring in the sales but at least it gets some coverage. These days the digital marketing capabilities are so laser-focussed that when I build out an ad, I’m thinking of one single person (client persona) that I want to buy my product or service. I’m even thinking of where they are at in their buying journey. Basically, I want to get in front of THAT person at THAT time and offer them THAT product or service.
At digitalmarketinghub.com.au we offer Done-For-You Digital Marketing packages plus Coaching so you can learn to do it all yourself.
Lack of Future Planning
This topic is one of the main reasons that 20% of business fail in their first year and around 60% close their doors within the first three years. Generally speaking, you really must plan for your success. You’ve heard the saying ‘fail to plan, plan to fail’, it’s absolutely true. That doesn’t mean developing an initial business plan and then filing it away, never to be seen again.
My first few businesses all did well up to a point. Guess what point that was. It was where my future planning and vision stopped. I had mapped everything out for the first few years and had those targets and actions burned into memory. And I nailed it! And then I wasn’t nailing it anymore. By the time I’d figured out that I had no plan and vision for the future of the business, I had become disheartened, disinterested and had moved on to something new.
Luckily I learned from those mistakes years ago. Now in my current businesses, I plan and review, plan and review, plan and review. It works, it really does. Treat your business plan as a fluid document and you will be taking a huge step in setting yourself up for success and not becoming one of those statistics above.