Common Mistakes New Small Businesses Make
With any new venture, mistakes are par for the course. While some mistakes can cause a slight setback, others may set your business on a collision course. Industry Canada found that 15 percent of Canadian businesses fail in the first year and 50 percent don’t make it to the fifth.
You can minimize rookie errors by learning from the mistakes made by other new companies. You’ll probably still commit some blunders, but if you can avoid these major missteps, you’ll be off to a strong start.
You don’t fully understand the industry.
If you fail to plan, you plan to fail. Almost 70 percent of Canadian small business operators launched their business within six months of coming up with a concept, while one-third of millennial entrepreneurs launched within one month, according to the Intuit Canada 2015 Small Business Landscape Study. Just about every veteran wedding planner can tell you about a bride who so enjoyed the process of wedding planning that she decided to start her own business. However, getting married doesn’t make you a wedding planning expert. The same can be said for any entrepreneur who decides to set up shop in a particular industry before gaining a thorough understanding of and respect for the business at hand. Prior to starting a business in an unfamiliar industry, you need to educate yourself. Talk to experts and trusted advisers, and develop a thorough understanding of the industry before moving forward. You don’t want to be learning on the job if you can help it.
You make a product no one wants.
The biggest reason startups fail is perhaps the most obvious: No one is buying what you’re selling. Lack of market need is the downfall of many businesses – manufacturing has the second highest number of small business insolvencies according to Stats Canada. So even if your product is born out of your own personal need, don’t assume others share that necessity. Or, they might indeed want the product, but not at the price at which you can offer it. Find out if the market is saturated, and don’t be so committed to an idea that you can’t let it go if it becomes clear that the chances of success are slim.
You don’t trust your employees.
When you don’t trust your staff to do their jobs efficiently and effectively, you micromanage. And when you micromanage, you alienate your staff. Pretty soon they will quit and you’ll be in an even bigger mess. To avoid this situation, make sure to be thoughtful and deliberate about the hiring process. After all, according to Fortune, 23 percent of new companies fail because they don’t have the right team. Hire the best people you can, and once you bring them on, give them the autonomy to do their jobs. The odds are good that they’ll do better work that way.
You expand too quickly.
In the early stages of your business, especially when you’re starting to gain attention and traction, it can be tempting to move forward at full speed. But that’s the worst thing you can do. Don’t hire until you find the right people and absolutely need them, and resist the urge to spend even if you have the funding. Be patient, even if you feel like your competitors are zooming ahead. Because in six months or a year, they could be out of business after making rash decisions, whereas you’ll be in a more stable position because you made decisions that were right for your company.