My daughter took a Business Innovation class in high school this year and needed to pick a business to analyze for one of her units. She came home and informed me that everyone was using their parent’s businesses, so she decided to use Break the Frame. Immediately, my stomach seized, and I wanted to hide. My daughter was going to look under the proverbial covers of my business with her teacher. What would they find that I didn’t already know?
Her first request was for my business plan. How outdated was it, I wondered? Why didn’t I keep it updated? After all, I’d worked with clients to help them keep their plans alive. Dead documents are a waste of time and poor guides.
In the end, she completed her analysis, and I got a kick in the pants. Too much working in my business and not enough on it. It was time for a change.
Over the past few years, I’d worked with plenty of small businesses that I wondered how they stayed afloat. Just like I fell into some bad business habits, they had too.
Here’s what some of the uglier bits looked like:
- For the third time, I wrote to the business: “Please send me your bill. I’d like to pay you.”
- They said they could do the work but had to get back to me on parts. I never heard from them again. Should I keep pestering?
- Dates were wrong, pieces missing, and I wondered if the details were forgotten or logged outside of the shared plan.
- Five days passed, and still no response to my question.
In the USA, in the first year of business, 20% of small businesses fail, and within five years it’s over 50%. In Australia, statistics show that more than 60% close within their first three years. However, businesses fail for many reasons. As you read on, ask yourself which of the mistakes small business owners make you’re guilty of making too.
In these strange COVID times, many businesses discovered that the path they were on had to shift. Others refused to change course. Make now the time for a change for you and your business too.
The Absolute Biggest Mistakes Small Business Owners Make
Let’s assume you have your niche down pat. If you don’t, pause and figure it out. Few businesses serve everyone. Type “how to find my niche” in Google, and you’ll find some great resources among the 162,000,000 results. I’m not going to include a lack of a niche on the list of the biggest mistakes small business owners make. Until you know your niche, the rest won’t fall into place.
No Business Plan
Why do you need a business plan if you’re starting something small? Well, first of all, things start small and then grow. Second of all, your business plan is the foundation of your business. Think of it as the foundation of your house that will stop it from blowing away or falling down during the first big storm.
Your business plan, at the most basic level, should include your vision, products and services, completion, target customer, marketing overview, SWOT analysis, sales forecasts and payment options, and projected costs.
Without thinking those things through, you’re not setting yourself up for success. Moreover, your business plan should be a living document. Review it at least annually and make adjustments as your business changes and grows.
Your current client has emailed you with a question. Do you: a) Get to it eventually or b) Assume they know you’ve got it, and it’s all under control or 3) Have a timeline to respond to the message.
Your prospective client called or messaged. This time there are two options: a) Get back to them in a reasonable timeline. b) Ignore them forever. Who needs new clients?
I took an informal survey on Twitter and asked: “What do you think? How long should it take a company that you’re doing business with to respond to your message?”
Nearly every person who responded said 24 hours or less whenever possible.
Billing / Poor Accounting
Money in, money out, right? Your numbers are more than how you pay yourself. Profitability matters. You can’t know if you’re profitable if your accounting practices are essentially going through receipts and hoping you find everything in the days before finishing your taxes.
You know what mistake small business owners make that almost beats poor accounting? Lax billing. When you don’t bill your clients, it tells them you don’t care if or when you get paid. And please, do not make your customers ask you for your bill.
Create a system for yourself. Maybe it’s the end of the month or the first of the month. Get your accounts in order and billing done. Boom. That’s it—no more excuses.
Facebook in Lieu of a Website
I’m sure you’ve heard it before, but you still haven’t got the message if you have a Facebook page instead of a website.
You don’t own your Facebook real estate – Facebook does.
Think of Facebook as “in addition to” not “in lieu of.”
Besides, back to that niche you definitely have sorted out, are those people on Facebook? Believe it or not, the whole world isn’t on there, no matter how it may seem.
Where I live, many businesses are only on Facebook and do not have a website. If you want to expand beyond your local community to attract clients, don’t neglect to get your website up and running. It doesn’t have to be fancy, and a blog isn’t necessary, but it’s your little digital corner of the universe.
Forget You’re Running a Business, Not Only Working in Your Business
There are a lot of founders who start their business because they love what they do. It makes total sense. However, as the business grows, they continue to spend most of their time doing what they love and ignoring what they don’t.
When I work with solopreneurs and micro business owners, it happens often. Their billing, accounting, and business practices take a backseat to do the client-centric work. They contact me because they’re overwhelmed trying to do it all, burning the midnight oil, and have no life.
Outsourcing is not a dirty word. Virtual Assistants are lifesavers too. Instead of trying to do it all, hire or outsource so you can still do what you love, lead your business and your team, and have a successful business.
There are more mistakes small business owners make that didn’t make it into my top five like:
- Handshake (or text) instead of a written agreement
- Missed deadlines
- No attention to detail
- Refusing to partner
- Unwilling to pivot
What would you add? What are some of the biggest mistakes small business owners make? Have you made mistakes that you’ve learned from in your business?