5 Easy Mistakes to Make in Business

The more time you spend studying business the easier it is to spot the mistakes people make over and over again – and I’ve made many of these myself! Read on to find out the mistakes I spot most often!

1. Creating something people don’t want

Probably the easiest mistake you can make. You have a eureka idea and you get carried away with your passion and enthusiasm. Your ‘market research’ extends to your friends and family who see your happy little face and say they’d invest their life savings, if they had any. Full of confidence you launch your product or service and nobody buys it. You feel deflated and resign yourself to a life stacking shelves in Tesco.

How to avoid it

Be absolutely dogged and thorough in your market research. Research the size of your market. Research the demographics and spending power of your target market. Run focus groups. Carry out surveys. Do as much research as you can possibly stand and assess the findings with a critical eye. Don’t launch unless you’re as sure as you can be that this is a product or service that is something people will pay good money for. No amount of clever marketing can make up for a lack of desire or need for a product.

2. Creating a business that can’t be scaled

Do you want a self employed job, or are you really after a business that can grow beyond the hours you put in yourself? Many of us start small businesses, then realise we’ve created something that can’t grow profitably. The most obvious business that springs to mind here is the card making business. If you know you want to scale your business then you need to ensure that you have the profit margins that allow you to grow. You can make a small profit creating and selling cards yourself. When you try and employ people to create the cards for you there aren’t the profit margins to pay staff as well as make a profit yourself. The business model falls down. You feel deflated and resign yourself to plucking chicken feathers at the local abattoir.

How to avoid it

Before launching your business consider your goals and what you wish to achieve. Do a cashflow forecast and look at potential income and expenses. Consider how the business might scale. Is this business going to be able to support you in the way you want it to? Don’t take the plunge until the answer is yes.

3. Not keeping an eye on the finances

The statistics for the average UK adult’s maths ability are pretty shocking. In business you need to understand the basics. When I realised that maths was a weak area for me I went to college and did a course to brush up. I also took an accounting and finance module at University. Don’t let a lack of aptitude for maths hold you back. Learn the basics. It’s important to understand income, turnover, profit and what it all means for your business. You should also know what your profit margins are. You should have a cashflow forecast and understand the implications of selling less than expected. So many businesses fail due to a lack of cashflow, don’t let your business be one of them. You don’t want to end up running out of cash and washing dishes at the local greasy spoon.

How to avoid it

Educate yourself and get a good bookkeeper or accountant. These are the best two things you can do to ensure you stay on top of your finances.

4. Lack of business strategy

Lack of understanding for what your business is trying to achieve can lead you off on all sorts of tangents. A lack of focus can be dangerous in business. As an entrepreneur it’s easy to be distracted by the next shiny thing, but if you want success you need to stick at one thing until it is successful before moving on. A good understanding of business and marketing theory can go a long way to helping you cut to the really important parts of what will make your business successful. Being a success in business comes down to ensuring that the majority of your decisions are correct ones. Make too many errors and it’s game over and you could see yourself waiting tables for a living (not that bad a job, but very tiring, speaking from experience here!)

How to avoid it

Again it comes down to education. When you’re employed it’s your employer’s responsibility to ensure that you’re kept up to date with the appropriate training. When you’re self-employed, like everything else, that responsibility falls on you! Create time and a budget for personal development.

5. Poor understanding of marketing

A lot of people think they understand marketing, “It’s just advertising, isn’t it?”. Well actually, no! If you don’t understanding marketing concepts you don’t really understand business at all. Without effective marketing there is no business. Failure to get to grips with marketing can mean even the best businesses with the greatest products can struggle. Get to grips with marketing if you don’t want to end up cleaning portable toilets for a living, especially with festival season upon us!

How to avoid it

Learn marketing concepts from books and courses and apply them to your business. Test different strategies and adopt those that work and eliminate those that don’t.