Mistakes have a bad reputation in society, and we always try to avoid them, but mistakes can be seen as a lesson. Most people are afraid of opening their own business because they don’t want to make mistakes. However, those who own a business know that mistakes happen, and what you do after that matters.
Business mistakes don’t stop your company from succeeding, but what they can do is help you figure out where you went wrong and help you create a better plan for the next time. Of course, you can’t avoid mistakes, but you can turn them into a learning experience and build a better company from them.
The good thing is that we can prepare for some mistakes and hopefully prevent them from happening! So today, we will go through some of the top mistakes new business owners make and how to avoid doing it yourself.
5 Common Mistakes New Businesses Make
Mistakes happen, and that’s okay! The key to avoiding them is having prevention plans in place. Here are the common mistakes we’re going to cover today and how you can avoid them:
- Don’t Forget Your Business Plan
- Know Your Finances
- Don’t Spread Yourself too Thin
- Know Your Target Audience
- Don’t Forget Your Marketing Plan
Before you begin your business, one of the first things you should create is your business plan. This plan alone can help you succeed and stand out from competitors. What a plan can do for you is help you build momentum by creating a clear and researched idea that you can now put into play.
Many people who want to start their own business tend to bite the bullet and do so without constructing a plan. Unfortunately, when you don’t know your niche, finances, business model, and logistics, you’re setting yourself up for future problems. These mistakes will cost you money, time, and effort.
To avoid these mistakes, you need to create your business plan first and identify any unknown aspects before starting. For example, how are you going to ship your products? Where are you going to buy inventory from? How will you get your product out there?
Whenever you create or do something in your business, read back on your business plan to ensure your logistics, finances, and marketing can handle it. By creating your plan and having something to reference when making changes, you can fully comprehend what is happening in your company and improve.
Know Your Finances
When you don’t know your financial health, your company could be in trouble.
When you start your business based on a hobby, we often skip the part where we get our ducks for finances. However, ask any business owner, and they’ll tell you that knowing your finances is one of the most important things to stay on top of.
The good thing about business math is it’s pretty simple seeing how profitable your business can be:
Profit = Demand x (Revenue – Expenses)
The thing is, these expenses are everywhere and can pile up quickly if you don’t stay on top of them. Here are some of the costs you can accumulate in your business:
Here’s an example of the profit formula in play:
Assume 10,000 people are searching for handbags online per month. If half of this audience finds your e-shop, that is 5,000 potential buyers.
Now let’s convert these viewers at an average of between 1% and 2%; that’s 50-100 sales. So if your average order value is $100 and you have a net profit margin of 30%, your profit will be anything between $1,500 and $3,000 per month.
While these are rough estimates, if you’ve done the math on your product or service, you know what to expect once sales begin. Avoid common financial mistakes by keeping track of your potential profits and cash flow using the above formula.
Need help creating your business finance budget? Check out our article here on how to make your budget and calculate profit today.
Don’t Spread Yourself Too Thin
While it can be exciting to open up your shop, one of the common mistakes many make is selling too many products. We know that when one item doesn’t sell well, our first response could be to add new and exciting products, but this isn’t always the best solution.
Remember to focus on your brand, not the products, when it comes to deciding what merchandise you’re going to sell in your shop. For example, if your brand focuses on a niche for handbags, you shouldn’t post products that aren’t related, like pet accessories or gadgets. Knowing your brand and audience is how you’ll obtain sales.
A better example of adding a product is if you create handbags, you can add new products like wallets. It keeps within your niche and stays true to your brand. Spreading yourself thin with by-products can often be due to not knowing your brand or audience well, so it’s best to plan out what products you’d want to create first, then make and add them.
Know Your Target Audience
When you’re planning your business, take into account who your target audience is. The best research for this will lead you in the right direction for what products to create and where you can reach your audience. It’s easier to create a product for an established niche than to create a place for a product.
When it comes to researching your niche, keep in mind to review their numbers and analytics and how to interact with them. Keeping up with your niche can assist you in making sales, updating or creating new products, and building that connection between your business and the consumer.
Remember, even niches have niches, and finding your ideal customer can take time and research.
Have trouble finding your niche? Check out our article here for some tips to start today.
Don’t Forget Your Marketing Plan
You could have the best product in the world, but without proper marketing, no one will know about it. So if you’re setting up your online shop, that should mean you have a business plan ready. Within this should be your target audience. Creating your marketing plan should be easy once you know who your customers are!
Keep in mind that if you don’t know who your customers are or where to find them, you will have a difficult time creating a marketing plan.
Try and focus on a well-rounded marketing plan that hits all corners of your niche. Of course, some channels will have more traffic than others, which is okay! However, whatever channels you decide to market on, make sure that they receive the focus needed to get your brand and product out there. Whether organic (non-paid) or non-organic (paid advertising), ensure your plan is in place before opening your shop.
Have trouble creating a marketing plan? Check out our article here on how to write your marketing plan today.
Mistakes Happen, Be Prepared!
Don’t let mistakes be taboo for you and your company. No one can predict when things will go sideways, but we can be prepared and ready to bring it right back on track. Keep in mind these tasks below when it’s time to start your small business:
- Make sure to create a business plan
- Keep up with finances and have a budget ready.
- Focus on what products are essential, and stay away from stretching yourself too thin.
- Know who your niche is and how to reach them
- Create your marketing plan before setting up a shop
These tasks may take some hard work, but you’ll be happier with the success rate of your company and the comfort of having something to follow along with or fall back on when those mistakes happen.
Are you ready to start planning your business? Join us here to learn more about how JUKI can help you become your own boss today!