Running a small business is one of the most challenging and rewarding things you’ll ever do. It’s a unique combination of vision, obstacles, goals, and dreams. Even with the best idea on the market, the odds of success can still be daunting.
According to the latest information from the U.S. Bureau of Labor Statistics, one in five (18.4%) small businesses fail in the first year, and nearly half (49.7%) fail within the five-year mark. This is not meant as a discouragement to your venture, but rather friendly advice to help you avoid the common mistakes many of these business owners fell victim to.
Here are 4 of the most common mistakes that hurt small businesses, along with how you can avoid them:
1. Not Doing Your Research
Before launching any venture, it is incredibly important to prepare a well-researched, professional business plan. It needs to provide a 3-5 year roadmap for your company, detailing what your business is, who the target audience is, how you plan to reach them, competition in the marketplace, and key financial data. Other areas to research thoroughly are payment processing options and flexible financing solutions.
2. Insufficient Working Capital
Few things about your business will remain the same from start to finish, but working capital is one of them. Every business, at one point or another, will need capital. Whether it’s launching your business or fueling rapid growth, big changes and unexpected costs require cash. It’s important to know which business financing options are available to you, how quickly you can secure funds, and what you need to be approved.
3. Wearing Too Many Hats
Entrepreneurs are known for juggling many hats at once. From greeting customers and covering payroll to interviewing candidates and setting goals, the list of responsibilities is endless. It can feel like you need to do it all because no one else knows your business as you do. But this mentality can quickly lead to burnout. It’s important to delegate and find people to add to your team that excels in areas that may be a weakness for you – so you can get back to the aspects of running your business that you do best.
4. Not Developing a Good Budget
Failing to set and stick to a budget can result in your business losing money and not realizing it until it’s too late. You might miss just how much money is tied up in outstanding accounts receivable, for example. If you have a strong budget, you can spot red flags early enough to make changes, avoid a lot of stress and safeguard your business’ financial health.
Of course, mistakes are inevitable. The secret to success is being as prepared as you can be, never stop learning and when you fail, learn how to fail quickly. The most successful entrepreneurs turn life’s lessons to improve their practices.