7 Mistakes Every Business Makes

Mistakes business make

Last updated - April 13, 2023

After the 2020 COVID-19 pandemic forced many businesses to transition to an online marketplace, entrepreneurship surged, reaching a historic high. Even more exciting is that many of these up-and-coming business owners are first-timers! 

Besides the economic shutdown forcing workers to reconsider the direction of their careers, what else is driving this surge? It could be The Great Resignation at play, where some of the American workforces have decided to voluntarily quit their current careers in search of opportunities that offer better incentives.

If you’re a newly-minted business owner trying to start up a company, it’s important to know what pitfalls to avoid as you begin this exciting journey. Of course, mistakes are a part of the learning process, but if you’re a fledgling venture, you can’t afford to make them. So read on to learn what errors are frequently made and how to avoid them. 

Not Providing Workers’ Compensation Insurance

You insured your commercial vehicles, bought a policy to protect your equipment and tools, and made sure to include business interruption coverage if your company were to experience a shutdown and lose income. What about ensuring your employees can have their medical bills and wages paid if they get hurt on the job?

Workers’ comp is essential coverage that most states require businesses to carry if they have one or more employees. Failing to have one of these mandatory policies exposes your company to significant legal liability and consequences. For example, if a team member gets hurt or sick while performing their job, can you afford to pay for their related medical expenses and lost income out of your business assets?  

What if the injured employee feels their damages are the result of negligence on your part? How will you afford the cost of your legal fees if sued? This policy covers that cost too! So, if you haven’t already, you can buy workers’ compensation insurance online in just a few minutes and not risk the well-being of your team and business.

Failing to Delegate

Many entrepreneurs start going solo and gradually add more stakeholders to their operations as they expand. However, if you plan to always do everything on your own, you’ll likely delay your growth, limit your access to new opportunities, and potentially burn out. 

You’re a leader with a long-term vision to achieve for your new company. Delegating tasks so you can focus on more important issues is not only efficient, it’s smart. Leverage your skills and strengths wisely by only putting the responsibilities best suited for your time and effort on your plate. For example, you don’t need to personally answer every email that hits your inbox or spend hours daily on routine administrative tasks. 

Surround yourself with team members that can support you best by taking some of these duties off your shoulders. This gives you more freedom to focus on bigger priorities.

Poor Cash Flow Management

One of the primary reasons a business fails is it doesn’t have enough cash to keep going. Cash flow is a company’s lifeblood, but many entrepreneurs need to gain the necessary skills to manage their financials successfully. You may be a visionary with an eye to the future and all of the amazing goals your brand will achieve. Or, you might be focused on growing as rapidly as possible. You want to be profitable regardless of your approach, so watch your spending. 

Remember, every penny spent comes out of your profit margin when you’re investing in new equipment or creating an advertising budget. So if you want to protect against cash-flow headaches, try to keep a running balance equivalent to six months of operational costs. This will ensure you have a financial cushion if mistakes get made, or poor management habits come to light.

Marketing to Everyone and Anyone

Having a customer base is a top priority for many new business owners. In order to attract and grow your numbers, you may worry you need to reach a larger audience and cast too wide a net. The problem with this approach is that your advertising dollars will put your brand in front of those who are interested in something other than what you’re offering. Why put an ad on the radio offering a blue widget if only a handful of the listeners want it? 

Instead, determine your ideal customer and gear your marketing efforts toward their need. This will ensure that your ads reach those who are truly interested in what you’re offering and are more likely to convert into a sale. 

Not Having a Business Plan

No matter what industry you’re opening a business in, jumping in without a plan is never a good idea. Not only will it be difficult to stay on track to achieve goals, but not having a road map to your success often leads to financial woes and an inability to sustain growth. 

If you want to make sure your new venture runs smoothly, take time to outline how you plan to run your operations, what the market looks like for your unique selling proposition (USP), industry challenges, customer demographics, expected revenue and overhead, etc. Even if it’s just a single page, this document will prove invaluable in keeping your business on track and can help investors better understand how you plan to succeed. 

Unable to Adapt to a Changing Market

Market change is a fact of life as a business owner. Every week it seems there’s a new trending product or shift in consumer spending that requires companies to pivot or get left behind quickly. Likewise, the coronavirus pandemic highlighted how drastically and suddenly economies can turn sour, requiring entrepreneurs to transition to web-based marketplaces practically overnight. 

Unfortunately, many companies couldn’t adapt to the rapidly changing economy, and an additional 200,00 businesses permanently closed in 2021. That’s 30% more than the usual 600,000 closures expected each year. 

There are a few ways to help your company pivot in times of change, including:

  • Create greater operational efficiency to save on overhead costs
  • Expand products/services into additional markets
  • Evaluate additional pricing strategies to make up for lost revenue
  • Cross-train employees to avoid layoffs based on needed skillsets
  • Diversify your supply chain to lessen the impact of shipping delays

While not every market change is a negative experience, not having the ability to take advantage of new opportunities could give your competitor’s the advantage needed to edge you out.

Preparation is Key When Mistakes are Made

With all of the potential pitfalls that could threaten the long-term sustainability of a business, opening a new company can be an anxiety-ridden experience. Fortunately, this can be different if you perform your due diligence when first starting out. 

Creating a business plan and implementing a comprehensive risk management strategy that includes important coverages like workers’ compensation and general liability insurance is a wise first step. These policies will minimize the impact of mistakes on your bottom line ad help your organization recover quickly. 

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