16 mistakes people make when opening a small business and how you can avoid them

Jürg Widmer Probst

16 mistakes people make when opening a small business and how you can avoid them

Starting a new business is not for the faint-hearted. A company’s success relies on much more than just a good idea. It demands hard work, in-depth research, and impeccable planning to name a few things.

Almost 20% of new businesses face failure within 2 years, and as many as 60% of UK small businesses fail within 5 years of opening. If you want to ensure that your small business isn’t among these broken dreams, you’ll need to learn what mistakes most people make and how you can avoid or correct them.

The success or failure of a business relies heavily on the planning and opening stages. Preparation can effectively arm you against many of the most frequent errors and provide your small business with the best chance of success.


What are the most common mistakes people make when opening a small business?

Unfortunately, people make many big and small mistakes when opening a business. Understanding how to spot these missteps as you plan to open your business will help you avoid them or ensure you can correct them.


1. Failing to create a business plan.

You should make a business plan well before you even begin thinking about opening your business. You must be extremely thorough and should spend time covering aspects like who your prospective consumers will be and how you will reach them. You should also consider your operational costs, funding possibilities, and selling expectations at various stages of development.

There are several great funding possibilities for small businesses, and you should look into these when you create your plan.


2. Letting fear take over.

It may be easier said than done but try not to let fear rule your decisions. Opening and running a small business is a nerve-wracking endeavour, and it’s good to be cautious, but a negative attitude can tank a business. If you expect to fail, it will colour your business plan and likely put off potential investors, customers, and partners.


3. Not organising your time and resources.

There will be numerous things on your plate when you start your business. Make sure you have a list and understand the priority of different tasks and set yourself reasonable deadlines. Doing so will help to keep you on track and prevent you from being overwhelmed.


4. Rushing your market research.

Is there a demand for the product or service you are offering? Do you know your ideal customer base, and have you tested your products or services with real people? The more research and testing you conduct, the more confident you can be in the success of your business. It is best to check if your business is viable before investing all your time and money.


5. Understanding what makes your business special.

Every business should have a USP (unique selling point). What makes your business stand out from the competition, and why would someone want to use your business over another? You will need to have clear answers to questions like this to communicate the value of your business to potential customers and investors.


6. Incorrect business registration.

The legalities of setting up a business can be confusing. You must choose a legal structure, register your business, and protect your intellectual property.


7. Trying to do everything alone.

If you try and do everything alone, you risk becoming exhausted and missing out on alternative perspectives. It is best to seek the help of experienced advisors where possible, as these individuals can offer crucial advice and guidance.


8. Partnering with the first investors you meet.

Not every investor will be the right fit for your business. While you might not want to be too picky, you should try and pick investors who are confident in and passionate about your business.


9. Making poor hiring decisions.

Too often, new business owners hire people who don’t suit their company or hire too early. You don’t want to spend more than you have to in the early stages so consider hiring fewer people or part-time individuals rather than jumping straight to full-time employees.


10. Not planning for unforeseen circumstances.

There will always be unexpected occurrences in business, especially new ones. While you can’t plan exactly when you don’t know what’s coming, you can set aside funds and resources for emergencies.


11. Careless money management.

Most small businesses open with limited funds. You’ll need to be extra careful and plan thoroughly when you don’t have money to spare.


12. Paying yourself too much or too little.

Allocate yourself a percentage of your profits. It’s easy to become overworked and overwhelmed if you pay yourself too little, and likewise, you don’t want to take away from the business by taking out money that you should reinvest in growth.


13. Not checking out the competition.

Get to know your potential competition’s price, approach, and customer base. Then, consider if the market is saturated or if there is room for you to make an impact. This research will help you set your business up appropriately and give you an edge.


14. Ignoring marketing needs.

If you are serious about succeeding long-term, you’ll need a marketing plan. Consider employing modern technology and software to assist your efforts and guarantee your sales continue to grow with returning and new customers.


15. Over or underselling your products or services.

Avoid disappointing customers with overhyped descriptions or putting them off with unremarkable messaging. Instead, try to be honest and appealing when selling your services or products for the best results and the happiest customers.


16. Not operating a business according to your strengths.

Passion is essential, but it’s not the only thing that matters. While it is great to do what you love, there is no point in opening a business doing what you love if you aren’t good at it or there isn’t a market demand for it.


Are you ready to open your small business?

Remember, opening a business is a marathon, not a sprint. So it’s worth taking some time to consider why you want to open a small business and if you’re ready for the venture before you invest too much time or money.

You will need to put in lots of time and research before opening. As excited as you might be to launch your great idea, you’ll massively decrease your chances of success if you don’t approach things with care and patience.

Break your business and opening plan into bite-size pieces to tackle things one at a time and ensure that you remain on track with your dream.




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