5 Common Mistakes Small Business Make and How to Avoid Them

Business owners often have great ideas, but poor execution. Knowing what to do and not do is key to launching your successful business.

Don’t cast a wide net, instead be laser focused

As a business owner, it is crucial to understand your customer’s pain point that is solved by using your product or service. While it may be appealing to aim for a broad audience, it is often impractical and expensive in the long term. Focusing on a specific niche allows for better targeting and increases the likelihood of reaching specific goals. 

Take the time to write a robust business plan

A well-thought out business plan serves as a roadmap for your business, outlining the direction it intends to go. It provides a structured framework to strategize and organize essential components as you move forward. Without it, it’s like sailing across the Atlantic without navigation or enough fuel.  The business plan determines how much capital is required to grow your business, and the specific tasks required to reach your destination. 

If you’ve never written a business plan, you can start with a template, or get help from your trusted business or accounting advisors.

Not having an online marketing plan & failing to define your target audience with it 

Having a business plan is important, but without dedicating time to develop a marketing strategy, your customers will never hear about your products. A marketing plan is the driving force behind your sales.

After identifying your specific target market, it is vital to segment and prioritize them accordingly staying laser focused on your highest priority potential customers.  Casting a broad net will dilute your message, and in a noisy world your voice will get drowned out by the crowd.  Defining your target market requires understanding your customers demographic characteristics, including age, gender, income and location. Even their psychographic traits, such as interests, values, personality, and beliefs.  Once you have a strong understanding of your target audience you can identify where they congregate. 

For example, associations, forums etc, allowing you to tell your story of how you can help solve their pain point with your product or service.  Understanding this is fundamental to growing any small business.

Budgeting and Cash Flow Forecasting

There’s one rule in business strategy, don’t run out of cash so that you can survive long enough to make strategy.  The most common reason that small businesses fail, is that they run out of cash.  Unfortunately most small business owners don’t have an operating budget, and are not well versed in cash flow forecasting.  This can result in nasty financial surprises or even insolvency.

Whether your business is growing rapidly or distressed, it is important to engage a professional to help with budgeting, forecasting and financial planning.  Good planning hygiene will result in better decision making and a more predictable business cycle.  For example, all businesses should have a contingency plan for an economic downturn so that the response is thoughtfully managed and exceptionally well executed.  

One of the biggest root causes we see in failing businesses is not understanding cash flow forecasting. Small business owners should create an income statement monthly to record financial statements, calculate profitability, and know where their money is being spent. It’s important to understand the basic principles of accounting while running your small business. However, it is beneficial to collaborate with an accountant to help review and maintain accurate financial records, develop a tax optimization strategy and keep your business in compliance. Having a trusted accountant can greatly contribute to the profitability of your small business as well giving you the confidence in making decisions in your business. 

Trying to do everything yourself

As businesses grow it becomes increasingly important to specialize and delegate.  To build an enduring company it is necessary to master the art of delegation and employ individuals who can assist in the sustained growth of your company.  The most common mistake that founders make is to wait too long to delegate non-core functions, instead choosing to do everything themselves. 

Areas of your business that make sense to delegate or outsource include marketing, accounting, legal and administrative functions.  As a business owner your most important responsibility is to focus on your core business and the delivery of value to your customers.  Reconciling your accounts does not add value, and can easily be outsourced.