by Nellie Akalp
All small business owners make mistakes—and that’s a good thing. It means we’re taking risks, and that’s how we grow our businesses. But making too many mistakes during the startup phase could lead to business failure. The key to small business survival is to learn from your mistakes as well as those you see other businesses making.
After selling my first business, my entrepreneurial synapses were firing a mile a minute with new ideas, and I was eager to start another business. My biggest startup mistake in starting my second company was thinking that if I approached the new business in the same manner I did my first company, I would hit the jackpot again. After all, I had been successful once, so I figured I could make it happen again by taking the same steps.
Boy, was I wrong.
I quickly learned that in the years between my two startups, times had changed and the business landscape was different. The way I started my first company wouldn’t work for the second. For one thing, consumers were much more experienced about online purchases. Expectations for what you could achieve online were higher; you couldn’t just create a website and watch the business flow in. I had so much to learn about website development, SEO and more. Plus, clients were more knowledgeable about what they needed, so I had to step up our game.
The competition had changed, too. More and more companies were pulling in traffic using bait-and-switch techniques such as offering free services and then upselling. I knew I needed to change my business model immediately. I started from the ground up, improved the product, and marketed both digitally and face-to-face. By taking a different approach, I found success once again—but it required a new road map.
Common Startup Mistakes
Here are a few more startup mistakes that other entrepreneurs I know have made and learned from:
- Pricing: When it comes to pricing, service businesses have it a little tougher. They don’t have a clear-cut cost of goods sold, and it’s easy to underestimate the time a job will take. Your industry association can help you determine average prices for your type of business, clientele and location.
- Contracts: Contracts or letters of agreement (LOAs) are there to protect you. Never start work for a customer before you spell out each side’s expectations, establish deadlines and payment schedules, decide how you’ll handle disputes and more.
- Social media: Are you checking all your social networking platforms to establish relationships and answer customers’ questions? According to Social Media Today, 84 percent of consumers expect companies to respond to their posts on social media within 24 hours, while 72 percent of Twitter complainants expect a response within an hour. (One hour!)
- Business entity: Choosing the wrong business structure for your company can affect the amount of taxes you pay, how much paperwork you need to deal with, and whether your personal assets are protected in case of a lawsuit. The three most common types of business structures are the sole proprietorship, the LLC (Limited Liability Company), and the C corporation.
- Hiring: Are you waiting to hire until business picks up, or do you have issues delegating? Either way, waiting too long to hire can prevent your startup from growing. Try outsourcing to a freelancer/independent contractor when starting, or investigate internship programs in your community. If you can use a virtual worker, check out resources like Upwork and Internships.com to get started finding good candidates.
As always, starting a second business was quite the learning experience and one of the crucial lessons I learned was how to be flexible. When the market changed, my old business plan had to be thrown out the window and rewritten to reflect the new landscape. I might be on Plan B (or C) but I’m still running my business—and it’s successful.
What are some startup mistakes you’ve had to overcome? I’d love to hear about them. Please share below.