Statistics reveal that half of businesses collapse by their fifth year of operation.
On the other hand, entrepreneurs who succeed focus on critical areas of management, disaster preparation, governance, and infrastructure development. Running a company requires making crucial decisions that can make or break your business.
For small businesses, decision-making and outcomes are the full responsibility of the founder, and sometimes no matter how professional you are, mistakes are inevitable. Fortunately, the key to success is identifying your errors and learning from them. Here are five common mistakes that can ruin your small business.
- Not knowing your competition
Consumers often have multiple brands to choose from. So think about what else a buyer could do instead of ordering your products/services. You may have the latest and greatest approaches to innovation, but don’t conclude that there is no challenger. The competition goes beyond direct and obvious competitors. It includes all the available alternatives. For instance, a business that manufactures fruit juice may be in direct competition with other juice companies. However, a water production company could be an indirect competitor to both brands since the product seeks to satisfy the need for a drink. Identifying your competition will help you find ways to beat the rivals.
- Inability to optimize the business model
Many founders strongly believe in their business models and fail to get feedback from team members. However, in many cases, a business model that focuses on the formation of the company is not enough to sustain or attract investment. You have to create a process for listening to signals from your partners and consumers. This will let you determine when to make a change. An optimized business model is vital to assess, plan for, and adjust operations. The optimization process should center on listening for, recognizing, and analyzing change opportunities alongside effective team communication and engagement to support the execution of adjustments and pivots.
- Lack of flexibility and strategic thinking
A lack of strategic thinking and flexibility can also destroy a business. Stay committed to your decisions, but embrace flexibility in your approach. You cannot afford to make the mistake of choosing things that are only good for your needs. CEOs have dozens of tasks to handle simultaneously, and that includes planning for the future and making big decisions that take care of customer needs.
- Not tracking finances
You could be making a mistake if you don’t track your finances. This means you have no idea if your revenue is growing or if you need to strategize your business model. You must keep an eye on your finances to help identify services that make the most money or cost you the least effort. This information can come in handy when you want to measure success and correct mistakes. Use finance tracking apps to organize and evaluate reports like income, expenses, and product sales.
- Bad pricing model
Your pricing model is a key factor that determines how much money your business generates. If you sell too low to attract buyers, you may make less income than your competitor. On the other hand, expensive prices can drive buyers away, resulting in your business making less money. Therefore, be strategic with your pricing model to ensure your business succeeds financially.
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