10 Mistakes To Avoid When Starting a Business

If you want to start a business, read through the following list of business mistakes and go out of your way to avoid them. Any one of them could sabotage your new business venture and turn it into a failure rather than a success.

Not Creating a Business Plan

Many people believe in their business idea. The problem is unless they write a business plan, there's no clear sense of whether or not their idea is actually feasible. That’s the main purpose of a business plan.

It may be time-consuming and demand a lot of research, but investing time now will save you endless amounts of time and money in the future.

Doing What You Love

“Do what you love” is a piece of business advice that's been doled out ad nauseam. But for many people, it's a big business mistake.

The reality is there are a whole lot of people out there who love things they’re not good at. You can likely name several you know offhand. The person who thinks she's a great cook—but isn't. The person who thinks he can fix pretty well anything—but can't. My official advice for starting a business? Don’t do what you love; do what you’re good at and what people will pay you (well) for. It’s not as catchy, but it’s a whole lot more profitable—and isn't making a profit the reason you're opening a business?

Not Doing Market Research

Don't fall into the trap of starting a business without performing market research. How do you know there is even a market for your business idea? You can't expect the rest of the world to be as enthusiastic about your idea as you are. Doing market research will help you better understand 1) what consumers are looking for and 2) how to reach them. Test your products and service first before you start a business. If you don’t, you have no idea if people are even going to want to buy them. You may think you make the tastiest pierogi in all the world. But will anyone else?

Ignoring the Competition

Ignoring the competition is another potentially fatal business mistake. If you’re selling your sandwiches for $10.00 apiece and Vera down the street is selling hers for $6.00, how many sandwiches are you going to sell?

Researching your competition shows you what your peers are doing well. It also shows you what challenges lie ahead for your own business. Strong competitive research will help you not repeat your competition's same mistakes.

Another aspect of competition you need to understand is market saturation. The pie is only so big, so to speak, for every product or service. So, for instance, if you want to open a dog grooming business, there may not be any “room” left in your local area to do so because of the number of dog grooming businesses that already exist; the market is already "saturated" with this kind of business.

Not Understanding Your Strengths and Weaknesses

Everyone has strengths and weaknesses. Unfortunately, sometimes our strengths or weaknesses don’t fit well with the business model we want to use, leading to disastrous results. For example, if you’re not a particularly friendly, outgoing type of person with good people skills, it's likely retail is not going to be a good fit.

However, if you've always dreamed of, say, running a bookstore or ice cream parlor, it doesn’t mean you can’t buy such a business or start one yourself. But you need to be aware that working behind the counter and being the main point of contact for each customer likely won't lead to the most optimal results. It's not something you should be doing; you’ll need to hire staff right away.

Not Understanding What You’re Actually Selling

Helena Rubinstein, the first self-made female millionaire, didn’t become rich selling face cream; she became rich selling beauty. ("There are no ugly women,” she used to say, “only lazy ones”.) If your new business is going to be successful, you need to know what you’re actually selling and craft your unique selling proposition accordingly.

Not Making Sure You Have Enough Money

Ninety-five percent of businesses will not make money when they first open and a large proportion of new businesses will not make significant money for years. (The exception, the five percent that makes money when they first open, is for businesses that are actually just “carry-overs”, employees who become contractors, a fairly common practice in industries such as IT.)

Which means you (and your family) have to have enough money to live on while your new business is getting established, as well as enough money for the business to survive and grow. Not getting the money to do this lined up before you start your small business is a serious business mistake.

Small business financing of some kind is the most obvious way to do this, either through a traditional lender or through a non-traditional alternative. Perhaps you can qualify for a startup grant.

How to Get Your New Small Business to Make Money includes some other ways you can bring in bucks while starting up.

Not Investing in Marketing

Following the common advice “Build it and they will come” is another serious business mistake. Come where? Why? Or even when? No one will know without effective marketing.

Far too many small businesses are reluctant to spend any money on marketing, let alone a significant amount. Free marketing can be excellent, but most free marketing strategies take a significant amount of time before they become effective. (Referrals and social media marketing are examples.)

Create a marketing plan, set up some marketing campaigns, and keep doing it if you want your business to be successful.

My best tip? Market your business before you open it. There’s no rule that says you have to wait until your physical or virtual doors are actually open.

Not Bothering with Any Online Marketing

One way or another, your small business has to be online. You may or may not need a website (many individuals who provide services use other “homes” on the web, such as Facebook or LinkedIn pages or Etsy sites) but your business needs to be able to be found by and promoted to the ever increasing number of people who use the web to find the products and services they want.

If you’re not going to do anything else, establish some sort of home base for your business online and be sure that your small business is listed in various online directories. Actively marketing your small business online is even better and will give it a far better chance of reaching your customers.

One possibility is to engage customers through social media.

Trying To Do Everything Yourself

You can’t. It’s that simple and that aggravating. Running a small business, even if it’s a one-person business, involves so many different tasks that no one person can do them all well. Even if each of us was perfect and had all the skills to do an outstanding job at whatever we set our hands to, each of us is still constrained by time. Most days, you’ll be lucky if you even get done what you planned to get done when your day started.

So sidestep the business mistake of trying to do it all and increase the chance of your new business succeeding by getting the help you need from the get-go. Learn how to delegate, hire and outsource to make the most of your skills and benefit from outside expertise. For example, do you really need to do your own accounting? Accountants have a lot more financial and tax knowledge than you have, more than likely, and can save you a bundle of time (and even money!) at tax-time.

(Speaking of outside expertise, have you thought about creating an advisory board for your small business? It can give you a real management advantage.)

The Bottom Line

I’ve yet to meet a person who wants to start a business that’s going to fail.

If starting a business is in your future, understand that starting a business is a process, not an event. If you take the time to do the thinking and the research and avoid the business mistakes discussed above, you’ll hugely increase the likelihood of your new business succeeding.

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