7 Common Yet Costly Mistakes New Business Owners Make

Tips From The Good Business Witch Team

It may sound easy, but every new business owner can attest to the fact that starting a business is anything but easy. Building a successful business is a roller-coaster, as it takes time, hard work, and commitment to bring your idea to fruition. On top of that, it is crucial to be aware of common mistakes that can negatively impact your business and block your path to success.

According to the U.S. Bureau of Labor Statistics, 20% of new businesses fail within the first two years of operation, and almost 50% of all companies crumble before reaching the five-year mark.

To help you avoid failure, we’ll share seven common errors that new business owners and entrepreneurs make when starting a small business.

1.     Not Having a Marketing Plan

A marketing plan goes hand-in-hand with your business plan. Without a marketing plan, you’re apt to waste time and money without bringing in any business. Your marketing plan must identify your ideal customer and how to best way to appeal to them. With your marketing strategy, you’ll be able to build a brand that’s recognizable and trusted, that your customers will help you get more clients (through reviews, word-of-mouth, referrals, etc).

2.     Neglecting Your Marketing and Failing To Budget For It

A common error by new business owners is not implementing their marketing strategies. While many may have a written marketing plan, they still do not use it. Often times, this is because most new business owners fail to budget for marketing. Customers must know you for them to choose your product or services over your competitors. And the only way they will know you is if you invest in your marketing. 

3.     Trying To Go At It Alone

Another common yet big mistake that new business owners make is trying to do everything alone. They often believe that if you want to make something happen, you have to do it yourself. This is false! Going at it alone will require you to invest your energy in too many directions, which will cause you to not perform at your peak.

It’s better to surround yourself with wise counsel and discuss your ideas with trustworthy partners and advisors. The truth is, the more you engage with others, the better your plan will become, and the more fun you’ll have in building your product or service.

4.     Not Having a Written Agreement with Your Business Partners

When you’ve found your business partners, don’t forget to put everything in writing. Whether it’s a partnership agreement, an LLC operating agreement, or other structure, every business needs a written document that explains each partner’s rights and responsibilities. The agreement must also describe what will happen if one partner leaves the company. If ever disputes between partners arise, your written agreement can help you resolve it quickly and with fewer headaches.

5.     Not Understanding Laws That Can Impact You

Not fully understanding local, state, and national laws and the effect they can have on a business can be a pitfall for new business owners. Laws about copyrights, licensing, taxes, trademarks, renewals, and more can impact the business. To avoid trouble with the law, business owners can do research, get legal counsel and seek guidance to get a full understanding of how the process works.

6.     Undervaluing Your Products or Services

Many times entrepreneurs undervalue their product or service due to a lack of confidence and fear of failure. This is a slippery path to take since it undermines your unique value and opens up the possibility of resentment and frustration in the long run. It’s important not to price too low, but to price per the value of your product.

7.     Not Forming the Right Business Entity

Sometimes new business owners wait to set up a business entity or hastily form a limited liability company. But choosing the wrong business entity—or not setting one up at all—can have serious consequences down the road. Take your time and do in-depth research before you start. Get some startup advice from legal or financial professionals if you have to. Whatever you do, make sure you pick the right business entity. Failing to do this correctly, will require valuable time and money to correct.

Final Thoughts

Starting your business is exciting, but if you want your business to succeed, you must take the time to plan and protect yourself. And then be patient and give your business time to grow. If you can do that and remain resilient when you do make a mistake, success will be within your reach.