Starting a business is a big step, and it’s easy to make mistakes. To help you avoid common pitfalls and set your business on the path to success, we’ve compiled a list of the most frequent mistakes entrepreneurs make. Read on to learn how to sidestep these errors and build a sustainable business .

Avoid these common mistakes when starting a business!

Starting a business can be a challenging journey, and mistakes are inevitable. However, some errors are more common than others, and new small business owners should be especially mindful of them. In this article, we'll explore these common pitfalls in detail, helping you avoid them. Additionally, we've included a new section that covers the common mistakes businesses are making in 2024, particularly with advancements in AI and technology and the aftermath of the COVID-19 pandemic. This will ensure you're well-equipped to navigate the current landscape successfully.

1. Not treating your business like a business from the offset

The biggest mistake you could make is not taking your business seriously, especially if you are starting out at home or in your spare time alongside a full-time job. Many new business owners start out treating their venture as more of a hobby rather than a legitimate business. This can lead to a lack of structure and professionalism. If you treat your small business as if it is a hobby, then this is all it will ever be. It will never be anything more than this, so be mindful and make sure that this is not the case with your venture. 

Actionable Solution:

• Set regular business hours and stick to them. Even if you're working from home, create a designated workspace to separate your personal life from your professional one. This will help you stay focused, productive, and maintain a clear boundary between work and relaxation.

2. Thinking it will be easy

You should never underestimate how hard it is to start a business. It takes a lot more than just an idea and some money to get started in this industry.

The biggest mistake that people make when they start their own business is not being aware of all the risks involved with doing so. They don’t realise how much work it will take or what they will have to sacrifice in order to keep their company afloat and successful - like time with family, sleep, or even their personal finances.

Underestimating the demands of business is probably one of the biggest mistakes all entrepreneurs and wannabe-business-owners make!  As I once heard someone say at a business networking event "I always thought I'd worked hard, until I ran my own business!"

Actionable Solution:

• Prepare yourself for challenges and setbacks. Set realistic goals and be ready to invest time and effort into learning. Surround yourself with a support network that can guide and encourage you when things get tough.

3. Not having a business plan

To help your small business grow and get off on the right foot, you need to first treat it as a proper business.  It can be exciting coming up with a business name and logo, but there's a lot more to running a business and you need to have a plan in place.  

The business plan is a document that outlines the strategy for a company and is often used to describe the company’s mission, goals, and objectives and how the company will achieve these.  The first step in creating a successful business plan is to identify the mission of the company. Once you know what you want your company to do, you can create a roadmap that will take your company in that direction.

It is very important to have a plan for how your business will generate enough revenue to be profitable. It might seem like you're just starting your business, but it's never too early to think about this.  If you don't have a plan for how your business will generate profitable revenue, then you might be making one of the most common mistakes that entrepreneurs make. This is a big mistake that could lead to your business failing before it even starts.

This plan should outline the different ways you will make money and the risks associated with each. Without a plan, it can be difficult to know what direction to take your business in and how much time and resources to invest in various areas of the company.  If you don't know where to begin, you'll be able to find a business plan template and pointers online. 

You need to realise if your plan is feasible. There’s no point in planning to open a pound store on eBay if you’ll be at a loss once you factor in shipping costs, eBay fees, payment processing fees and the cost of the item.

It's so important to have a business plan from the offset which covers exactly how you will be profitable, among other business ideas.  Without a plan in place, you will have no idea what your business is about or where it's going. You need to know who your customers are and what their needs are before you can create something for them.  Not having a business plan may leave you susceptible to random ideas, which are not suitable for the business or costly mistakes.

Actionable Solution:

• Always create a detailed business plan before launching. Outline your goals, target audience, financial projections, and marketing strategies. Even a basic plan will provide a roadmap for your business and help you stay on track.

4. Overcomplicating the business plan

Although a business plan is important, a new business owner should not overcomplicate their business plan.

Some startups spend too long on these starting tasks instead of just getting the business up and running. Just start with the basics, create. a solid foundation and build up from there.

A simple and straightforward business plan is best because it's easier to keep track of and it's easier to make adjustments. A plan that is based on the future, not just the present. A plan that is flexible and can adapt to changes in the market or economy.

Actionable Solution:

• Keep your business plan simple and focused on the key elements: vision, mission, target market, competition, and finances. Avoid overwhelming yourself with unnecessary details early on.

5. Choosing a bad partner

The first thing you need to know is that you do not need a partner to get started. However, sometimes you may need a partner, depending on the company's size you want to start. This comes with a lot of pressure, especially on decision-making, financing, organisation, and other aspects determining how the business is run.

Your business partner should be someone that shares the same vision and passion as you. You need a partner you can strategize with and make changes without a fight. However, remember that disagreements are normal in a partnership. You just need to find an amicable solution to solve your issues. You should ensure you choose your business partner very carefully. Find someone who is intellectually competent to help you make sound business decisions.

And always make sure you have a signed written agreement with your partner!

Actionable Solution:

• Carefully vet potential partners. Make sure you share the same values, business goals, and work ethic. Open and honest communication is key to a successful partnership.

6. Inadequate financial preparations

It is common for a start-up to ignore vital financial planning and how much capital is needed to start and run the business. This may lead to inadequate financial resources you need to achieve your business objectives. Some uncertainties may require emergency financing. Failure to have this in mind may lead to business closure.

To avoid this problem, you have to ensure you are financially prepared by outlining all your projections for the first year and five years. This will also help you secure investment if raising capital is required to get your business dreams off the ground. Once you have your finances sorted out, you may need a company formation strategy, depending on the planned structure of your business (LLC: limited liability company, PLC: public liability company, self-employed, sole trader/sole proprietorship, freelancer, limited company, partnership, charity, non-profit).

Failing to set up a solid financial plan or budget can be disastrous for a new business. Without proper planning, expenses can quickly spiral out of control.

Actionable Solution:

• Create a detailed budget, accounting for all possible expenses, and stick to it. Use financial software or apps to track your spending and ensure you're staying on target. Review your finances monthly to adjust for any changes or surprises.

7. Not doing enough research

You may be under the impression that you are setting up the best business ever, but you have to remember that sometimes, there just isn’t the market for it. You can’t make the kind of money you want to make. If you want to avoid this, then you have to put in the work and do market research to make sure your business is a sustainable idea before you get too involved investing time and money.

Actionable Solution:

• Conduct thorough research into your market, industry, and competitors. Use surveys, focus groups, or online tools to gather insights that will inform your business decisions.

8. Duplicating ideas

Have you seen another business doing well, and you feel you can also start a similar business successfully? Think again. Most start-ups fail because they copy what other people do in the business environment.

Authenticity is vital if you want to grow and survive in the competitive business environment. As much as the environment is saturated, you can always find a gap and fill it. Therefore, you do not have to copy what your competition is doing. Brainstorm to find unique ideas. You can do market research to determine what clients want and how you can provide something more than the competition. Such business gaps should give you a unique business idea and a competitive edge.

Actionable Solution:

• Instead of copying others, focus on offering something unique or improving upon existing ideas. Identify a gap in the market or find a creative way to differentiate your product or service.

9. Ignoring your competition

Another mistake many start-ups make is to ignore the competition. This is one of the fatal business mistakes you can make. The business environment is already saturated. And the chances are that what you want to do is already in the market. The pie is only big enough. Because the market is already saturated, you need to research competition to determine if you can survive.

Researching your competition is essential if you want to gain a competitive edge in the business environment. Find out what your competition is not doing right and capitalise on it. Additionally, you can start a customer survey to determine what clients love and are missing in the market. This way, you can tailor your products and services to meet unique demands. 

Actionable Solution:

• Regularly monitor your competitors. Understand their strengths and weaknesses, and find ways to provide a better or more unique offering. Stay informed about market trends to maintain a competitive edge.

10. Not focusing on your target audience

This is a huge mistake, to say the least. When you are just starting your company, you may feel as though everything is about you, your brand, your business.

It's not all about you.  It is about your audience as well and it is your job to make sure that you are able to provide them with the services and products that they need. You need to know their pain points and how your business can help solve their problems.  You may know why your new business is great, but let your customers know why it is great for them.

You also have to build a relationship with your customers so they know they can trust you. If you can get to this point, then you will be able to really benefit yourself. If you can take the time to understand their needs, then this will help you to cater for them much more efficiently.

Actionable Solution:

• Define your ideal customer and tailor your marketing, products, and services to meet their needs. Create customer personas to help you stay focused on delivering value to your target audience.

11. Not providing customer satisfaction

As well as knowing and understanding your customers and your ideal target audience, you also need to listen to their wants and needs when it comes to your business and how you serve them.

For example, maybe you run a beauty salon from home and you want your customers to pay in cash.  In this day and age, most people don’t carry cash around with them.  It can be an inconvenience to have to visit a cashpoint to use your business.

If you know that your customers like to pay on card, then now would be the time for you to get your own credit card reader.  Or if they want to pay by bank transfer then let them do this.

The same goes for communication.  People are busy and often distracted and need a way to contact you that is suitable at what particular moment.  If they have a hectic houseful with noisy children then ringing might not be their preferred option, instead, they may prefer email or messages.  Or if they’re rushing between appointments and out and about a lot, they might prefer the convenience of a quick call.  Offer a variety of solutions for contacting your business from messaging, phone, email or social media.  And definitely avoid chatbots!  Make your contact messages clear and accessible.

Actionable Solution:

• Always aim to exceed customer expectations. Implement customer feedback channels, respond to complaints promptly, and offer excellent customer service. Satisfied customers will return and recommend your business.

12. Foregoing marketing

Starting a business and hoping that customers will walk through the doors is a grave mistake you cannot afford to make. Why would they even come if you do not attract them with offers and campaigns? That is where marketing comes in.

Many start-ups and small businesses do not invest in marketing, which becomes the beginning of their failure. A marketing plan is essential if you want your business to grow. Therefore, you need a marketing strategy that works for your company. Set up online marketing campaigns that draw customers to your business.

Actionable Solution:

• Invest in marketing from day one. Create an online presence, utilise social media, and implement a content marketing strategy. Even a small marketing budget can go a long way in attracting new customers.

13. Ignoring record keeping

Starting a business is not a walk in the park. Expect long hours, moments of self-doubt, and mental breakdowns as you strive to get deals over the line. That is not to say multitasking to complete tasks within the set deadlines. Therefore, many entrepreneurs decide to put off various tasks, such as record keeping and budgeting. This is a business mistake you should never make when getting started or at any stage of running the business. Financial record keeping is a vital business requirement if you want to grow and survive.

You will always need a point of reference when you want to make business decisions. The added complexities that come with the need for financial reporting and accounting make it even more important to keep proper records. Additionally, financial records can help you get financing and attract investments.

Actionable Solution:

• Stay organised by maintaining clear and accurate financial records. Use accounting software or hire an accountant to track income, expenses, and taxes. Keeping records will help you make informed decisions and stay compliant.

14. Overlooking the administrative side of business

To be successful in business, it is important to understand the importance of the administrative side of things. This includes everything from managing paperwork and contracts, receiving and sending emails, hiring and managing employees, updating accounts and bookkeeping, and even maintaining your company’s social media presence.

A business owner should not overlook the administrative side of their business. They should have a plan for the day-to-day tasks and delegate them to employees, freelancers or contractors if available, or ensure these tasks are scheduled at an appropriate time so they are not forgotten.

Overlooking the administrative side of their business can lead to several issues including: not being able to keep up with paperwork or contracts, not responding to customers/clients quickly enough, not posting enough on social media accounts and not staying on top of business tax records and finance.

Actionable Solution:

• Create systems for managing the day-to-day administrative tasks. Use tools like project management software or hire staff to help with paperwork, scheduling, and other operational tasks to ensure everything runs smoothly.

15. Forgetting to get a business license

In different locations there are different rules for different types of industries. For example, if you want to set up a business at home then you will need to check if you have permission to run a business at home.

Next, you’ll want to see if your business type requires a business licence. Some industries require you to apply and pay for a business licence BEFORE you start practising.

Forgetting to get a business license can lead to fines and other penalties. Your local government or council website will advise on whether you need a licence for your industry and how to apply.

Actionable Solution:

• Check local regulations and obtain the necessary licenses or permits before operating your business. Ensure you’re compliant with local laws to avoid fines or business interruptions.

16. Using a personal bank account for business

It's not uncommon for new business owners to use a personal bank account for their business. It's a mistake because it can be difficult to separate personal finances from professional ones, which can lead to money management mistakes and tax issues.

It is always a good idea to start a new business with a separate account. This will help you keep your personal and business life separate and will also be easier to manage your expenses.

Actionable Solution:

• Open a separate business bank account to keep your personal and business finances distinct. This will make managing your cash flow easier and ensure accurate tax reporting.

17. Not taking the time to ask for help

It’s really difficult to do everything by yourself when starting up a new business venture, especially as it grows and the workload increases. You might need help with different aspects of your company like finances or marketing strategies which is why it’s important to plan ahead and establish the right connections.

Hiring an accountant to deal with the financial side of your business, a marketing team to increase awareness of your brand and a virtual assistant to handle emails (once your company can afford this) can allow you to concentrate on the areas of the business you prefer for better business growth.

You can research why businesses choose to outsource certain tasks and whether this is the right strategy for you.

Actionable Solution:

• Don’t hesitate to ask for guidance. Reach out to mentors, industry professionals, or hire experts when needed. Getting advice from those who have experience can save you time, money, and frustration.

18. Setting unrealistic expectations

When you start up a new business, it’s important not to set too high of expectations so that you don't get discouraged if you can't meet them. It’s great to have an aim and aspiration, but ensure it’s realistic. Making your first million within a year is a pretty unlikely goal and most people won’t achieve this!

Actionable Solution:

• Set achievable goals and expectations. Break larger objectives into smaller, manageable tasks and celebrate small wins along the way. Patience and persistence are key to long-term success.

The final word on common business mistakes to avoid as a startup:

Although it's not rocket science, starting a business is not always as easy as it seems. There are so many things to consider before you even start. You have to have a plan for how your business will generate revenue, what type of customers you want to attract, and what your marketing strategy will be, just to name a few.

These are a few common mistakes startups make. Now that you know what not to do when starting a business, you can ensure you avoid making some of the biggest mistakes and instead put your best foot forward for startup success. 

However, don’t let any mistakes put you off, simply learn from them and grow.  Entrepreneur mistakes and failures are a part of the journey.  No business is ever 100% perfect from the get-go.

To round up, some of the common mistakes to avoid when starting a new business are:

1. Not treating your business like a business from the offset
2. Thinking it will be easy
3. Skipping a business plan
4. Overcomplicating the business plan
5. Choosing a bad partner
6. Inadequate financial preparations
7. Not doing enough research
8. Duplicating ideas
9. Ignoring your competition
10. Not focusing on your target audience
11. Not providing customer satisfaction
12. Foregoing marketing
13. Ignoring record keeping
14. Overlooking the administrative side of business
15. Forgetting to get a business license
16. Using a personal bank account for business
17. Not taking the time to ask for help
18. Setting unrealistic expectations

Starting your own business can be one of the most rewarding ventures, but avoiding these common mistakes will help you build a solid foundation for success. Stay focused, be prepared, and don’t hesitate to ask for help when needed. If you're ready to take the next step, check out our additional resources on business planning and growth.

 

Additional tips: Common business mistakes to avoid in 2024 and beyond

I originally wrote this post in 2021, but since then, the business landscape has shifted dramatically. The impact of COVID-19, combined with rapid advancements in AI and technology, has forced many businesses to rethink their strategies. As we move into 2024, it's essential to be aware of some of the mistakes that could still be holding businesses back.

1. Failing to Adapt to Remote Work
The pandemic forced many businesses to shift to remote work, but in 2024, some companies are still hesitant to fully embrace it. With the rise of hybrid work models, businesses that don’t adjust may face challenges in employee satisfaction, productivity, and talent retention.

2. Ignoring the Role of AI and Automation
With advancements in AI and automation, businesses that don’t integrate these technologies risk falling behind competitors. From customer service chatbots to automating repetitive tasks, ignoring AI could mean missing out on efficiency and cost-saving opportunities.

3. Not Focusing on Digital Transformation
Companies that failed to fully embrace digital tools during the pandemic may now find themselves at a disadvantage. In 2024, businesses need to be digital-first, using tools for customer relationship management, marketing, and operational efficiencies.

4. Neglecting Cybersecurity
With more businesses going digital, cybersecurity is more important than ever. The rise in cyber-attacks during the pandemic means that businesses that don’t invest in strong cybersecurity measures risk data breaches and financial losses.

5. Underestimating the Power of Data Analytics
Business decisions based on intuition are less effective than data-driven ones. The rise of big data and advanced analytics tools means businesses can make more informed decisions. Not using data to track performance and trends can result in missed opportunities.

 

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