Entrepreneurship is a risky business. Isn’t it? There’s a lot to understand and explore in this exciting phase of business. You have just opened your world to new possibilities; hence it is obvious that you might end up making a lot of mistakes. That’s the reason people are scared of starting a business. One should not let business mistakes bring down your enthusiasm but treat them as lessons. Those who are afraid fail to understand that mistakes are the learning points of business. It is crucial to resolve them during the early phase because if ignored, they can lead to business failures.
No matter how carefully you have carved out your path, some mistakes are just unavoidable. However, there are some common mistakes that you can avoid by learning lessons from others’ experiences. In this article, we will talk about common mistakes that small business owners tend to make and tips to help you avoid those.
1. No Business Plan
Starting a venture without a business plan is prone to failure. Why? It is because writing a business plan is crucial when it comes to creating a sustainable model that stands still in the competitive market. When you write a business plan it means your thoughts are clear, ideas have been well-researched, and you are prepared to tackle unavoidable circumstances. A business plan helps you think about the bigger goals and spot gaps that needed to be filled.
Entrepreneurs with no business plan lack understanding about finances, business models, market, logistics, etc and when things go wrong this can cost effort, time and money. How products will be manufactured? Will you need a third-party logistics provider or ship yourself? Who is your target audience? Plenty of such questions will pop up along your way. With a sound business plan, you will be able to address several unanticipated questions from the word go. This will help your business stay on track and meet all the set goals.
2. Not Validating Idea
Market research is important when starting a venture. One needs to understand the market trend, sustainability of your product and competition among others. Without proper market research, you won’t be able to make your brand stand out among other similar businesses. Some entrepreneurs go into a niche market without evaluating important aspects. In some cases, a niche product has low demand with tight competition. In such a case, you might not want to start your business around it.
To understand the market of your product, one has to research press coverage, blogging content and frequency, social media engagement, number of online reviews and search engine optimization (SEO) rankings.
3. Not Understanding Your Target Audience
Good research has two integral parts- finding product ideas and understanding your target audience. You can have customers and then you can create a product for them, but it is quite difficult to build a product and then start the hunt for customers. Knowing your customers can help you in both product development and marketing.
While researching a niche, it is important to look at analytics and numbers. However, you can’t ignore the significance of knowing your ideal customer and building a customer profile. Even if your niche has demand in the market, it will be tough to sell without knowing the ideal customer. As you know niches have niches within them, so it is better to precisely target your desired audience. This will help you in identifying your customers’ specific needs
4. No Proper Marketing Plan
After finding your target audience, one should prepare a solid marketing plan. Entrepreneurs with a properly documented strategy are 313 percent more likely to achieve their goals. A marketing plan should cover all bases. It is obvious that some mediums will be more effective than others. While some ventures perform better with social media or SEO, others do better with pay-per-click advertising.
Keep your foundation strong by working on your marketing plan right from the launch. Revise foundational thinking of marketing plan and get SWOT analysis done at a regular intervals. Do not forget to check and analyse the result of your marketing. Tweak it, test it and fine-tune your efforts to achieve the desired results.
5. No Enough Networking
Though starting a business can be a lonely pursuit, remember it is a social entity. One has to grow along with the business. You need to learn techniques, skills, approaches, perspectives and tools in time for your business to succeed. For this, it is important to work on your networking skills. Networking can help you in multiple ways. If harnessed correctly, it is one avenue where you can meet potential clients, customers, partners, employees, collaborators and investors. If you are able to sell your product to even one person, it can create awareness and lead to many more purchases.
Finding the right network is also a task. You can start a page or community to attract customers and start conversations or discussions to keep them engaged. You can also attend entrepreneur seminars or trade forums as they have networking potential. Keep an eye on all the related events happening in your industry because these are the places where you can meet pioneers and get valuable feedback.
6. No Sustainable Growth Plan
It is really great to boost sales and make a profit on a monthly basis, but one should keep in mind long-term growth. To transform today’s profit into sustainable growth, you need to understand your customer’s choices. You can even launch a product extension or integrate the latest trend into your product. In order to plan a sustainable business, get as much data as you can. Keep a tab on market data, competitor analysis, customer insights and trends affecting customers’ tastes.
If you have an offline business, then you can easily make the transition and use online channels to offer your customers an omnichannel experience. Such a transition ensures that your business grows sustainably. Be aware of changes in trends, marketing channels, production technologies and innovations in your industry. All these factors and many more will ensure that your business has sustainable growth.
7. Adapting Without Evolving
When you face challenges in your small business setup, you will make changes to tackle them. Some changes might set you in a different direction from your earlier set goals while others may be tiny ones with significant impact. It is important to understand that a business acts as a complete entity with several moving parts. It is quite possible that changes in certain areas of your business can lead to hidden impacts on other aspects.
For example, a common mistake made by most business owners is selling a lot of products. If the single product does not sell well, entrepreneurs add more items to attract customers. This might not help always. Assume that you create a brand selling handmade crafts, but you have failed to get customers so far. Now you have tweaked your business a bit by adding handmade pickles as well. So, your entire store comprises different products and all of them have one common factor, that is they are handmade.
Now, along with the changes in products, you also have to bring change in the branding. If it is still about crafts, then you are not going to find the right customers. Though you have adapted to the challenge set in front of you, but your brand has not evolved. Thus, you won’t be able to achieve the desired results. By extensively evaluating changes in your business and noting the unseen outcomes, one can avoid the mistake of adapting without evolving.
8. Not Knowing Business Math
As a new entrepreneur, you should pay attention to the profit you are making. You can’t ignore that knowing business math is an important skill required to run a business. To evaluate how profitable your venture can turn out to be, make use of this formula: Profit=Demand x (Revenue – Expenses). Let’s understand this formula with a simple example. Assume 10,000 people search for your product every month. Even if you are able to place your brand in front of half of those people, you will get 5000 potential buyers.
If you make 100-200 sales per month with an average order value of INR 1000, you get a net profit margin of 30 percent (revenue – expenses). According to this, your profit will be between INR 30,000-60,000 per month. Though it seems simple, it is a challenge to do this on a regular basis. Experienced entrepreneurs become habitual of doing this calculation before their every decision. You should too bring this into a habit and keep track of your profit numbers.
9. Not Focusing on Organic Marketing
Not paying attention to organic marketing is one of the most common mistakes made by entrepreneurs. The lure of immediate revenue through paid ads is not sustainable. As you might know that in 2021 Apple brought anti-tracking changes reducing the effectiveness of paid ads on iOS. The company refused to share user data which means advertisers won’t have access to users’ information like who downloaded an app after coming through an ad and more. Google also introduced similar measures. They allow users to opt out of personalised advertisements. If you choose the option, Google deleted the unique advertisement ID of the user. This means that you won’t receive a return on investment like before if you opt for paid ads. Also, there won’t be any assurance that your personalised ads reach your target audience. In such cases, targeting can be based on the website visited by the users and their general location.
Hence, it is better to go for organic marketing to boost sales for Android and iOS users. With organic marketing, you can drive traffic to your site without any cost. All you need to do is to invest in content creation that would attract customers. Do you know that the top three organic searches on Google mint over 50 percent of total click-throughs? If someone search with a particular brand name, the earnings are even more.
Build your content marketing strategy around your target customer rather than the product you sell. In this way you will have more to write on, thus connecting with your potential customers in multiple ways. You can also contact your buyers via email newsletters. Several start-ups send their product promotion on a weekly basis. Provide your customers with extra information and grab their attention through entertainment, ongoing trends and trivia.
If you are thinking that the word ‘content’ means text, then you are wrong. Content includes videos, images, and podcasts among others. Social media is a place where you can combine all forms of content and promote your venture. Don’t forget to keep in mind the format that your potential buyers consume
10. Not Securing Intellectual Property
Intellectual property is your right to a product you have originally created. Intellectual property rights such as trademarks, copyrights, patents and trade secrets save your business or idea from competitors. In case your IP gets infringed upon, you can move to court and protect your IP as per national and international regulations. If you want to secure IPR in India, you have to register with Trademark Registry. It is important to file for a patent or trademark as soon as possible because, in case of a similar application, the first to apply will win IPR.
What to do?
In your entrepreneurial journey, you will succeed, make mistakes and grow. By knowing about common mistakes, you can plan in advance how to overcome them. Now that we have listed the most common mistakes made by entrepreneurs, we will also tell you what you should do before launching your online business. Below is the list of to-dos that form an integral part of pre-launch.
- You must have a business plan
- Do complete research regarding customers and demand in the market
- Research about the market. Will your brand bring some value addition?
- Make use of a marketing plan and organic marketing
- Think about sustainable growth
- Socialise and network
