Fifty percent of the small-scale businesses fail within the first five years of their journey. This statistic gives a clear notion of the perilous nature of small businesses.
The entrepreneur needs to develop the product idea and services that the business going to market, acquire talents, create marketing strategies, customer management and take care of finances as well. In short, he needs to take care of conception to running the show and thus making mistakes is common.
Here are the ten most common mistakes of small businesses.
- No market research: Small-scale businesses mainly fail due to a lack of understanding of the market. To build a suitable product for the market, you need market information. One can launch market-viable products (MVPs) to test the waters. It might be a demo of the product or a video of how to use the proposed product or services on a popular platform to understand customer’s preference.
- Ignoring Customers: Small-scale business On top of that, sales and marketing have to be in process whether it’s a boom period or slowdown. It is necessary to educate customers continuously about your product and services. This will help in continuous flow of customers.
- Not having the right people: Hiring members without proper screening results in inefficiency in the business. To avoid this issue, one needs to screen people according to their skills, career expectations, ability to handle responsibilities and most importantly analyze whether they fit into your organization’s culture or not. Another reason is the greed to save on human resources ends up collecting inefficient employees.
- Poor Cash flow maintenance: Cash is a primary requirement for any business. If the entrepreneur cannot interpret cash flow statements or only focus on sales and profit figures, business is definitely going to be in trouble. It is very important to have the required amount of working capital to run the business efficiently.
- Trying to Make a perfect plan: Small businesses either do not make a proper plan and even if they do, they do not act upon it. In the quest of making a perfect plan, they lose the time for implementing the plans. Small businesses will always have to adapt to  There is no perfect plan for small-scale businesses.
- Ignoring Technology: Small-scale business owners often ignore the blessings of technology. It is mainly due to poor understanding of the technologies and cost factor. However, there are many technologies which are developed for bettering small-scale businesses. They can be cost effective and provide different opportunities to the business.
- Improper valuation of products and services: For the sake of competition, often small businesses cut their prices too low that affects their cash flow generation. To avoid this, prices should be determined according to the quality of the product. If the product has better quality, you can charge higher prices than your competitors.
- Poor work delegation: If the entrepreneur tries to do all the work by himself, he is definitely going to make mistakes. It is very important to delegate work amongst the team members efficiently.
- Feeling Embarrassed of being small: Often Small business owners do not feel comfortable of being a small organization. They do not interact and connect because of . However, their size can be their strength if they embrace it.
- : Small businesses often fall for wrong partners which ruin their businesses. While choosing a partner or an investor, be sure of and purpose of collaboration.
According to Business Insider, forty-two percent of the businesses fail due to lack of planning their products according to the market trend. Due to cash flow problems, more than 82% of the small businesses fail while twenty-three percent fail due to inefficient team. These figures emphasize the need to avoid the above mentioned mistakes to run a successful business.