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Even the most successful business owners have made a lot of mistakes that they wish they could go back in time and fix. After all, the road to financial independence is bumpy. If you want your ride to be as smooth as possible, do your due diligence and avoid these five small business mistakes.Mistakes Small Business Owners Make
Experience is a part of growth, but you can also learn a lot from other people’s errors. Avoid the following common mishaps 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 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 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. 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 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.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. You won’t be able to do it in a weekend. 3. Ignoring Finances
Surprisingly, many entrepreneurs and business owners haven’t read any business finance management tips — even though there’s a wealth of information out there. (The #1 tip: Opening a business bank account ASAP). That said, business owners often fall into one of two camps. They’re either too frugal or too liberal with their spending, both of which attitudes 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, 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 online small business loans with low APRs, too. And, of course, you don’t have to choose one or the other. Explore all of your options to give your business every advantage it can get moving forward.4. Not Getting Educated About Resources
Technology changes and evolves every year, and much of it can help your business grow in ways you never imagined. Failing to keep up with emerging technologies can actually create major setbacks for your business.Of course, it may seem safer to operate according to a tried-and-tested formula that has worked in the past, but that’s not always the case. For example, a couple of years ago, digital restaurant ordering took off, and restaurants that adopted online ordering methods saw a 20% increase per purchase on average compared to orders made on their actual premises.The technology doesn’t necessarily have to revolve around sales. It may be an app that helps you communicate with your employees better, or accounting software that makes your taxes super easy. 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 specialize in one thing, and they 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? Hire a virtual assistant. Don’t have time to do your taxes? Hire a CPA. Devote more time to the part of your business that you love the most and your business will prosper. 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 these major mistakes before you even make them.The Takeaway
Mistakes should be learning experiences. But learning from other people’s missteps as well as your own can help you get your business on track more quickly. If you think that a loan could help your company grow, you can explore multiple types of financing options using Lantern by SoFi’s small business loan platform. You can compare offers from multiple lenders in our network by filling out just one easy-to-use form.
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.
