We all make mistakes. Even the best, most successful business owners I know have made some whoppers (and if they say they haven’t, they are straight-up lying, or sociopaths). As new business owners, you will make your fair share of mishaps–burn the coffee, take a wrong turn to a client’s home, confuse P&Ls with Balance Sheets—but if you can avoid some of the worst, and most common, you’ll be in a much better financial and mental space.
Advertising too much or too little
It’s a classic Catch-22: you need money to advertise, but you need to advertise to make money. So, what’s a business to do? This one can sneak up on a lot of new businesses. Bottom line, you need to allocate something to advertising. I know we all want to believe that free social media advertisements and word-of-mouth marketing will be all we need, and they most definitely help, but you will need to spend some serious thought in your advertising campaign plans.
There is no magic formula to follow, though I always recommend that businesses spend no more than 30% of their gross revenue on ad campaigns. However, each business is drastically different. A business with a younger demographic may get by longer utilizing only social media since that’s where their clients are, while a more affluent market will not be as susceptible to viral TikTok promotions. Strategy and diversification are everything! And the concept that “all publicity is good publicity” just isn’t relevant for a small business.
Learn from my mistake. I once spent $50,000 advertising in a high-end magazine because I wanted those readers to be my demographic. After a year of advertising without seeing any direct results (I used a specific promo code and promotions to track from that publication), I signed up for a second year in the hopes repetition would solidify my place in the market. I wanted so badly to be “worthy” of that publication, that I spent a ridiculous amount of money with absolutely zero return. Sure, it was cool to see my ad all shiny in that magazine, but it did jack-squat for my bottom line. Well, actually, it tanked my advertising budget. I was so stuck in my own pride, that I way over-spent and ignored the cold, hard facts. I was spending money for the business I wanted, not the business I had.
When you take a serious look at what you have to spend in marketing, you must consider how, where, and when that money will present itself. It’s not uncommon to spend money in the fourth quarter, even though you will not see reward until the first quarter of the following year—think of a gym advertising for the New Year’s resolution rush. Each business has its own path to follow and you need to consider all the little paths. If something isn’t working, change it. If you are running low on ideas, download my list of 150 Ways to Market Your Business. Many are totally free, but can have a lasting, and big impression on your bottom line.
Not focusing on sales enough
It seems strange to say it, but it’s possible to spend more money than you have. You get so caught up in the day-to-day of your business, that you lose sight of that bank number. You rely on credit cards and lines of credit to get you through the tough months, and then what?
Moreover, you can get so focused on creating new products and services, that you forget to get out of the office and actually sell your current offerings. Yes, innovation is important, but by forgetting to go after the sale, you will definitely see bottom line impacts.
Building too much too soon
There is such a thing as “too ambitious.” Passion, excitement, and drive can lead you down the path of over-extending yourself, your finances, and your business. The idea of building on momentum is an intoxicating one. Your business is doing great, you have a solid clientele, your image and branding are going strong, but if you build too much, too fast, all that hard work can pull you down.
Think of your business like a caravan. You’re leading the pack, but if you try to tow too many other cars, you’re going to miss the over-heating engine, the flat tire, a busted tow-hitch, the kid that fell out the back window, until eventually, your whole caravan breaks down or falls apart completely. Yes, build with passion, conviction, and speed, but build smartly, too.
Not hiring (or firing) soon enough
Sigh, this is another tough one. In my beginning days as a young entrepreneur, I lived by the motto “If you want it done right, do it yourself.” For years I was a one-woman show. When I finally brought on employees and contractors in a future endeavor, I had mixed results. Yes, I was delegating, but often with sub-par results. At that point I felt like I couldn’t fire anyone because I had set-up my systems to need more people. I had too many clients to take care of on my own, and a small market area, which provided me fewer potential (qualified) employees. I was stuck. I couldn’t fire my mediocre employees because I needed people to work and there just wasn’t anyone else available.
Wrong. By thinking I was stuck, I created a self-fulfilling prophecy. How could I hire someone better if the spot wasn’t available? I know it might seem scary to fire someone when you have no ideas or prospects on filling their position, but you will actually harm your company more by keeping them. In a small business, every employee counts, and if one, or two, or ten people are bringing down the group dynamic, it’s time to take a serious look at simply letting them go, or at the very least transitioning them into a different and more suitable position.
Conversely, don’t be afraid to hire sooner just because you’re not entirely sure where the money will come from. That’s not to say you should over extend your business, but consider what the right employee or contractor can do for you. If you pick the right person, you can delegate some of the more menial and time-consuming tasks while freeing yourself for more big-picture, money-making tasks. If you weren’t bogged down by logging daily sales or transcribing meeting minutes, what else could you accomplish? The key is to create the proper systems and delegate efficiently. You should only delegate what is well-defined, and time consuming, otherwise you’ll spend just as much time explaining what you want without getting the results you need.
Tip: Always call references when hiring! I hate being on the phone, but this simple step can save you a lot of later trouble. And you wouldn’t believe how many people fake this part of their resumes. Shocking!
You are unique. Your business is special. You don’t have any competitors, do you? Yes. Just because no one else sells underwater basket weaving equipment, doesn’t mean they aren’t selling scuba gear. Competition is fierce among small businesses, even if you don’t consider anyone to be a true competitor.
I have always felt that competing with other businesses was unnecessary (mostly because I don’t compete, I win). I am an individual and my business is a reflection of that. But that doesn’t mean that I ignore everyone else out there. There is room for everyone in commerce, for sure. And we can all go up together, absolutely. But if you want to survive, you must approach other businesses with a shrewd eye.
But competition isn’t merely the traditional ideas of direct and indirect competitors. So many things can be considered competition. In fact, I believe that if anything takes time or money away from your potential clients purchasing your goods and services, that is competition. Twitter, Facebook, TikTok—if they aren’t on your site, then that’s competition. This notion may be daunting to a lot of business owners, but competition is awesome. I have had some of my greatest ideas when faced with the strongest competition.
I once had a “competitor” who was my advertising shadow. If I did a sale, she did a sale. If I ran a group program, she ran one so similar it was almost comical. We weren’t in direct competition—she was in a different city—but we competed for a few cross-clients and for brand recognition. It was maddening.
Imitation is the sincerest form of flattery that the mediocrity can pay to greatness.
We weren’t really competitors, but it drove me insane. It also drove me to some of my most creative and inventive programming. I turned what could have been a constant sense of irritation into a creative solution. I even reached out to her to work on some events together.
I didn’t ignore her, but I didn’t turn our relationship into an ugly affair either. I acknowledged that we had a connection and then turned that to my benefit.
Embrace the competition! Think of it as something that stirs a fire in you and keeps you sharp, ambitious, and ready for anything.
A thought on mistakes
Mistakes are painful when they happen, but years later a collection of mistakes is what is called experience. -Denis Waitley
Mistakes are going to happen. You just can’t avoid it. But mistakes are proof that you are trying new things, putting yourself out there, and moving forward in your business. If you stumble, or fall flat on your face, remember that it’s not the mistake that matters, but how you react to it. How will you come back from an epic failure? How will you turn your mistakes into learning experiences and creative solutions? You’ve got this!
Photo by Liza Summer from Pexels