10 Most Common Business Mistakes
10 Most Common Business Mistakes
Hint: You’re probably making #4!
We see companies grow daily. We also see companies make really simple mistakes that prevent them from growing.
Some companies are able to come back from these mistakes with a lesson learned, but some time + money lost.
But some companies aren’t able to bounce back and ultimately close (like in the case of #4)
1. You skipped the business plan
A business plan may seem outdated but it’s so important. It’s hard to reach your goal if you don’t know exactly what it is. As an entrepreneur, you’ll make a hundred decisions a day and a well-crafted business plan helps you make the right decisions. You need to be clear about your short + long term goals. You need to create a strategy for reaching those goals. And you need to be clear about the numbers on the way. A business plan helps you do all that.
Tip: Head to the Small Business Association for expert tips on creating a business plan
2. You didn’t register your company
If you’re operating a business without registering as an LLC or Corporation, you’re taking a big risk. Your personal assets can be taken to pay your business debts. That means you can lose your car, house, and bank account on a product injury, a bad business deal, or a freak accident. Is it likely? Probably not. Is it worth all that risk to save a few hundred bucks on registering? Definitely not. Register your company with the state and follow certain formalities, so only your company assets are at risk.
3. You’re working with a shady partner
A partnership is formed once you start operating a business with another person. That means once you start operating a business with another person, you're personally liable for their business decisions. Your personal assets, like your house, car, and bank account, can all be used to pay for their business debts...even the ones that you didn't agree to! Prevent this from day one by finding a partner you can trust and creating a partnership agreement that outlines your contributions, share of profits, decision making, and future plans. This will help you both to set expectations and prevent future problems.
4. You forgot the trademark
A trademark allows you to own your brand. It means you're the only company who can use your company name, logo, slogan, domain name, personal name, product name, or hashtags.
Trademarks give you the exclusive rights to use the name nationally. So if someone else registers your trademark, they’ll own the rights to your name nationally. You'll only be able to use it in your geographic region (typically your city). That's not ideal!
Think about how many brand pieces feature your company name: your website, social media, business cards, products, marketing materials, press links, inventory, etc. If you want to operate nationally, you'll need to change all of that + pull back all inventory with the brand on it, or possibly pay monetary damages. You'll lose customers, money, and valuable momentum.
Bottom line: if you’re building a brand, you need to own your trademark.
5. You built products for you
At the risk of sounding like your therapist, it’s not all about you! You should be building your products and services around what your customers want to buy, not around what you want to create. Consider:
Is it something people actually want?
Is it something people will actually buy?
Are there enough customers in the market for you to be profitable?
Start with a pop up or a beta launch and see if people will actually spend money on it. Ask your target customers if they’re interested or if they’d buy your products or services. Ask what you can do better. Then implement their feedback.
6. You didn’t have the right website terms + conditions
You need a personalized wholesale contract to protect your bottom line. Your website policies have a big impact on your customer service and your bottom line. Your policy tells customers what they need to know about ordering from your website. You'll want to spell out the rules for placing orders, shipping, returns, and where customers can contact your company.
7. You hired employees without paperwork
Hiring employees is one of the most confusing parts of running a business. There are serious local, state, and federal laws about being an employer. There are payroll responsibilities and employer taxes. And then there are employment contracts. You'll want to have all the legal paperwork in order so your employees can do their jobs well.
If you're hiring independent contractors, you'll need to have a contract in place that clarifies their contractor status, your intellectual property rights, and their tax responsibilities.
8. You aren’t tracking your numbers
Entrepreneurs like to trust our gut. It's what makes us dream big, create amazing products and services, and change the world. But that's only half of business. The other half is practical. It takes a long look at what's actually working and what improvements need to be made. Then it adjusts accordingly.
Too many entrepreneurs live in the fun, trust your gut side. And that's why too many entrepreneurs fail. It takes both sides to make a successful business. Do you think Apple is out there winging it? Hell no! They've got a team of data science experts breaking down every number imaginable and a team of MBAs crafting a strategy around those numbers. That's what successful businesses do!
9. You waited too long to prepare for investors
If you’re looking for investors, you’ll need to have your company setup properly from day one. Investors usually require that you’re registered as a company and have your trademark locked down. They’ll also want you to have a solid business plan with financial projections and a valuation. Lastly, you’ll need to develop a pitch deck that describes what your software does and why investors should fund you.
10. You set unrealistic goals
It’s great to dream big but make sure it’s attainable or you’ll end up disappointed. Please don’t set your first year sales goal to sell more products than Kylie Jenner. Set your sights on a 20-50% increase in sales and create a plan to reach that number.