The changes Covid-19 brought to the world economy are starting to get clearer a year and a half into the pandemic. Recent studies by the U.S. Small Business Administration show that the number of small businesses in the U.S. alone reached 31.7 million or 99.9% of U.S. businesses. With a higher risk of job loss, people are opting to become entrepreneurs instead. But this statistic doesn’t mean that everyone is thriving.
The Bureau of Labor Statistics states that within the first year of establishment, 20% of small businesses fail. This is because lack of experience and the “new normal” combined is a recipe for disaster. But don’t throw in the towel yet. Help will always be available if you know where to look. Here are four common small-business mistakes and ways you can avoid them:
Financial Restrictions and Unplanned Growth
Marketing is one of the most important factors that play in a business’s success. It doesn’t matter if you are in the service provider industry or if you are selling products. Not having a way to market what’s being sold is like selling ice to an Eskimo.
Researching and finding new marketing techniques online isn’t that hard anymore. Getting the capital to do it, though, is an entirely different predicament. Startups usually fail due to the lack of funding needed for marketing consistency. Getting the capital you need isn’t an easy feat, but it does not mean there aren’t other ways to solve this problem.
1. Establish limitations
Having a small business as the only source of income isn’t rare these days. But it’s vital to draw the line between your personal financial needs and your business’s lifeline. Open a separate bank account for your business. Monitor the cash flow and pay any amount you take for personal reasons. If you don’t have a lot of money to spend, spend less instead.
2. Find cheaper ways
Go digital. Use social media as a means to market your business. A lot of businesses use Pinterest, Instagram, and TikTok to promote their products or services. One viral post could lead to a surge in sales. It’s accessible, and, more importantly, it’s free. You can also outsource online. Facebook can be a free employment agency. And most people who use social media to look for jobs are either students or fresh graduates. That means entry-level salaries and employees who are eager to learn and prove themselves.
3. Prioritize a steady flow of profit
Focus on saving. As exciting as good days may seem, remember that bad days aren’t improbable. And remember that bad days could turn into bad months. Secure a rainy day fund.
Do not get fooled by the initial support hype. Family and friends will show support as much as they can. This makes the first few months particularly easy. But seeing how easy and how much you can earn on a good day often leads to false confidence. Do not bite off more than you can chew. Startup entrepreneurs who rely on small-business loans to go big put themselves on a dangerous path by not considering the damages if things don’t go as planned.
Successful businesses usually grow bigger but getting bigger doesn’t necessarily translate to success. Expanding immediately can be very exciting, but with an upscale market, demand can grow instantly. Without fully preparing for that, the quality of the product suffers. Understand that the market in a world affected by an ongoing pandemic is unstable. And for a small business to thrive, sustainability and stability should be on top of the priority list.
Ruthless Competitors and Idealistic Stubbornness
Microbusiness owners aren’t only facing little problems. More popular brands with bigger marketing budgets monopolize visibility. It’s been known that large corporations bully small and local businesses.
Shein, a popular Chinese company, has been on the receiving end of a parade of lawsuits for “deliberate and calculated” trademark infringement. Known brands like Dr. Martens and Levi’s aren’t the only ones voicing their grievances recently. Many independent online shops are claiming that the Chinese online fast-fashion retailer stole the designs of their products. Unfortunately, this is only one of many cases that small independent businesses don’t have the luxury of legally fighting.
1. Prevention is better than cure
To avoid this from happening, getting your designs and original products trademarked and patented is a must. Considering legal help is necessary when creating business plans. And having lawyers specializing in small businesses on speed dial when things go south could be what saves you and your business from going under.
2. Analyze and innovate
One of the dilemmas of having a small business is the freedom it presents. Known organizations take more time when improving their products. With fewer people involved, adjusting isn’t as tedious. You know your goals, you manage your pace, and you control the outcome. You don’t have board members to please and strict company policies to follow. But having too much freedom can also be harmful. Most entrepreneurs are strong-willed and stubborn. That’s how they can persevere and be successful. But that’s also how most of them failed.
Check and analyze your sales. Know what your market likes and predict what your market needs. You may use Instagram Insights and Facebook Analytic Tools to view consumer behavior.
3. Invest in customer service
Establishing personal relationships with your market increase trust and loyalty. Produce a deeper emotional attachment to your brand by listening to their feedback.
More importantly, do not be afraid of changes. Being able to adapt to a volatile and ever-changing market is how you will thrive as an entrepreneur.