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Even the most successful business owners have made plenty of mistakes along the way. There’s certainly no shame in making mistakes. But as you launch and grow your new business, you likely want to make as few as possible. Here’s a look at some of the most common, and biggest, missteps that people make when starting a business to help you avoid the very same problems.Mistakes Small Business Owners Make
While you can’t entirely avoid making mistakes, you can learn from the ones other business owners have made in the past. Here are some common errors to be aware of as you continue to build your small business.1. Setting Unrealistic Goals
Every entrepreneur wants to have a successful company. But in order to achieve that, you need to have measurable and attainable goals at all stages of growth. You generally can’t rely on a lucky break to propel your company from obscurity to notoriety. It may happen, but you can’t count on it. There’s a common saying that it takes ten years of hard work to become an overnight success. You might think some people have all the luck, but the reality is that they’ve likely been preparing for their “lucky moment” for years. This doesn’t mean you shouldn’t be ambitious or optimistic. But expecting your company to make it big overnight is like expecting to win the lottery. A better idea is to start with manageable goals and, as you meet them, gently increase your expectations a little bit every month or quarter. If you’re serious about being successful, know that a lot of hard work, late nights, and tough decisions are coming your way, and that’s what will propel your company forward.2. Not Having a Defined Business Plan or Strategy
A fatal flaw of many businesses is not formulating a proper business plan from the get-go. A proper business plan estimates how much money your company will need to get up and running, how much money you anticipate it will bring in during its first quarter of operation, and a clear outline of how you expect it to accomplish these goals. It also entails a clear marketing plan, because it doesn’t matter what you’re selling if no one knows about you. Your marketing plan should identify your target customer and outline the best ways to reach that customer within a given budget. Putting this all together can take a lot of time and effort, which is why many business owners choose to simply jump in and figure things out as they go along. However, doing it on the fly can be a recipe for disaster. It’s one of the biggest business mistakes a company can make. Not having a plan means that you can’t assess where you are or correct your course when you need to. Plus, if you’re looking for any type of funding, potential lenders or grantors may want to see your business plan so they’ll have a sense of where you’re going, what your goals are, and how organized you are about reaching them.You might want to get started with a three year business plan. Three years allows enough time for a healthy and moderately aggressive strategy to develop and take shape, but isn’t so far off that you’re over-projecting. Writing a business plan does take a hefty amount of forethought and strategizing, so be sure to allow time to research, plan, write, and revise. 3. Overspending or Underspending
Business owners often fall into one of two camps. They’re either too frugal or too liberal with their spending — either can jeopardize a business. Owners who don’t want to spend any money often limit their company’s potential by not taking any risks. Contrary to many people’s initial gut reaction, a risk in business can be a good thing. A new investment, for instance, could help you get your product in front of a wider audience. The risk for each business is unique and should be weighed in its own individual context.On the flip side is overspending. Some owners believe they need the best of everything if they are to succeed: the best marketing teams, the best products, the best location, etc. While you can certainly have the best of some things, you can’t necessarily have the best of all things, especially if you’re operating on a limited budget. Therefore, while going through your finances, you may want to determine one or two must-haves, and then begin looking for ways you can lower your expenditures in other areas. The best path lies between the two extremes. You might consider getting financial assistance from an outside source. For example, there are many small business grants you can apply for that could greatly reduce the risk factors involved in expanding your business. There are also small business loans with low annual percentage rates (APRs), too. And, of course, you don’t have to choose one or the other. It’s a good idea to explore all of your options to give your business every advantage it can get moving forward.4. Ignoring New Technology
Technology changes and evolves every year, and much of it can help your business grow in ways you never imagined. While new technology can be intimidating, and require time to learn and understand, failing to keep up with emerging technologies can hurt your business in both the short- and long-term.Keep in mind, too, that new technology doesn’t necessarily have to be expensive or overly complicated to be able to improve your company’s efficiency and profitability. It might simply be an app that helps you communicate with your employees better, or accounting software that dramatically simplifies bookkeeping and tax preparation. Regardless of the resource, smart business owners are always on the lookout for new ways to make running their business easier. 5. Not Knowing When to Delegate
Far too many new business owners take it upon themselves to do everything their business needs themselves. In other words, they micromanage to their own detriment. However, the most successful entrepreneurs recognize what they can and cannot do themselves. They will often specialize in one thing, and devote all of their energy into that one area.Even if you’re capable of creating a modern website, designing a new logo, and making a killer new product all at the same time, there are only so many hours in the day. Recognize what you do the best, and, as much as you can, farm out the rest. Hate social networking and responding to emails? Bring on an assistant or intern. Don’t have time to do your taxes? Hire a CPA. Devoting more time to the part of your business that you love the most can help your business prosper. Recommended: How Much Can a Small Business Make Before Paying Taxes?Looking to Start a Business?
You don’t need to have everything figured out in order to successfully launch a small business. But you can shorten the learning curve by avoiding common mistakes before you even make them.If you think that a loan could help expedite the growth of your new business, Lantern by SoFi can help. With our online debt financing marketplace, you can access a range of business financing options (including term loans, lines of credit, and SBA loans) without scouring the web and checking multiple sites. With one short application, you’ll be matched with a loan option that meets your company’s needs and qualifications.Find the right financing solution for your small business on Lantern's Marketplace. Photo credit: iStock/MangoStar_Studio
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About the Author
Lauren Ward
Lauren Ward is a personal finance expert with nearly a decade of experience writing online content. Her work has appeared on websites such as MSN, Time, and Bankrate. Lauren writes on a variety of personal finance topics for SoFi, including credit and banking.
