10 Mistakes that could Sink your Business and How to Avoid them
No one goes into business hoping to make mistakes that might end up sinking their business. But mistakes happen. Some of these mistakes are minor while others are so fatal that the business may not survive them.
The best way to stay ahead and avoid making such costly mistakes is to learn from the mistakes of other entrepreneurs and equip yourself with knowledge of them, enough to overcome even when they happen.
Let’s walk you through the ten 10 mistakes that could mar your business and how you can avoid them.
1. Lack of Proper Planning and Research
One of the biggest mistakes business owners make is starting without proper market research and mediocre planning. Many people start businesses just because they heard someone else is making money doing that business.
No research, no solid plans, just a hope that they too would make money doing the same business. This is a classic example of planning to fail. This mistake often leads to the fall of businesses.
To avoid this error, you must carry out a considerably in-depth analysis of the market and industry you want to go into. Learn from the players and stakeholders in the industry, learn about the sub-sectors in the industry, learn as much as possible about your target consumers – know their income level, their pain points, etc.
This research would provide you with the necessary information you need to draft a solid plan that would guide your business to success.
However, bear in mind that you would not learn some things about the business until you start. There is so much more you’d learn on the job but do as much pre-learning as you can before jumping inside the pool.
2. Poor Money Management
Raising money for business is dire and appropriating the funds is even more crucial.
Mismanagement of finances, such as borrowing unnecessarily, overspending, diverting business funds for personal use, poor bookkeeping habits amongst others can wreck your business fast.
Business owners must learn to separate business spending from their personal expenses. Draw a budget and stick to it, and pay attention to your cash flow by keeping proper records of financial transactions.
Until you master this skill, your business has low chance of making it pass 5 years. And if it does, its growth would be stunted.
3. Failure To Adapt
Many small business owners, especially when they have been in business for a while, assume that things would always be the same. They are rigid to change, even as their customers or the market dynamics change.
This ends up being a costly mistake that ruins their business. They soon find out that they are losing customers to competitors, and cannot satisfy the few customers they have left.
To avoid this mistake, businesses must be ready to change as the needs of their customers change and adopt new technology and modern techniques to meet the growing demands of the consumer.
4. Poor Pricing of Products and Services
The price of a product or service plays an important role in the success of a business. Unfortunately, some entrepreneurs either price too low or too high.
This can occur when businesses overvalue or undervalue their products or services, causing them to lose customers to the competition.
Business owners must factor in all the costs associated with their products or services and execute a pricing strategy that’s a good fit for them while keeping in mind the standard market pricing.
5. Poor Marketing
Marketing is the engine of a business. No matter how awesome your product or service is, customers cannot patronise you if they don’t know you exist.
It’s often said that a good product will market itself. No, it won’t. If you think customers would find your business on social media without running ads, think again. It’s like buying a brand new car and expecting it would start working without fueling it.
You have to intentionally and aggressively get more eyeballs to see and experience your business. Then, having an excellent product would keep them coming back and encourage buyers to refer you to their family and friends, and even their enemies if your product is that good.
This means you need to have marketing goals and a budget. You have to invest in marketing for your business to succeed.
6. Failure To Provide Legal Protection
One common mistake business people make in Nigeria today is that they fail to provide legal protection for their businesses.
Some business owners did not register their business as a legal entity or hastily registered it wrongly – exposing them to liabilities they could have been protected from. Plus, many businesses fail to provide legal protection for their deals with suppliers, partners, and customers by not having a written agreement.
These mistakes have caused some businesses to lose millions, and many others to sink.
As a business owner, you must ensure that your business is properly registered with the relevant authority in your country. And always draw up a formal agreement to forestall impending dangers that may arise.
7. Failure To Hire The Right People
The right or wrong employee can make or mar your business. The worst mistake a business can make is hiring based on sentiments. This happens a lot with African businesses and this is because Africans value family ties.
They overlook merit to favour their relatives, friends, tribesmen, or religious associates at the expense of their business. Oftentimes, the beneficiaries end up becoming liabilities to the business.
Frankly, sentiments have no place in business. People should be offered positions purely based on competence.
Business owners must make a conscious effort to seek out the best people and provide an environment that enables them to add value to the business.
8. Lack of Business Structure and Succession Plans
It’s unfortunate that many businesses, especially in Africa, cannot survive without the active involvement of the owners. If the owners die, the businesses die with them.
There are many stories of successful businesses that could not continue because the owner suddenly passed on, or because of a dispute between partners.
This can be avoided when businesses are set up with systems, exit plans, and a proper governance framework that makes it possible to operate and succeed without the owners.
9. Failure To Seek Help
No man is an island. Some business owners want to do it all. No, you cannot build anything meaningful alone. You need strategic partnerships and collaborations.
Especially nowadays, only businesses that acknowledge their weakness and seek help can last long.
10. Ignoring The Bigger Picture
Entrepreneurs often get engrossed in their day-to-day business operations that they forget about the bigger picture. Losing sight of the overall vision for your business can undermine your growth and makes it easy for you to veer off your roadmap to success.
And naturally, if your business is not growing, it is declining. It’s just a matter of time before you close shop.
Always create time to reflect on the long-term goals for your business. If possible, stick it to your office or room walls. Keep it in sight and mind, all the time.
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