No one is perfect, and this is never more clear than when one is trying to start a business. Mistakes will be made — some avoidable and some not so much. The key is to recognize them, fix them, and quickly move beyond them.
“Sometimes when you innovate, you make mistakes. It is best to admit them quickly and get on with improving your other innovations.” — Steve Jobs
Here are five of the most commonly made mistakes by those starting a small business, and some practical ways to move beyond them to success.
If you are selling a product, you are going to have to deal with the issue of beginning inventory. How much do you need to have enough but not too much? There are ways to get a close estimate with market research and such, but in the end it is an estimate only. There has yet to be an invention that can predict the future, therefore the chance of underestimating demand and ending up with a huge inventory surplus and lack of cash is a very real possibility.
Though optimism is a great trait, do remain realistic. If you see product is not moving as you thought it would, you have a couple of options. First, you can try to increase demand. Consider a sale, a contest to draw in customers, or a buy one, get one free type of deal. Get the word out about what you offer and why they need it.
The other option is to sell some of it off in bulk to other suppliers that may have a better demand base. For example, if you are selling sunglasses on the beach, you could consider selling a chunk of your inventory to another dealer on another beach in order to liquidate some of it. This does not have to mean the end of your business,it is just a way to balance out the inventory to meet the lesser demand.
The opposite could also happen, and though it may not seem so, the result can be just as devastating if not handled properly. If you are having trouble keeping up with demand, the sooner you realize it, the better. If you are continually unable to provide customers with what they want, they will become frustrated and dissatisfied, leading them to look for what they want elsewhere. If you do not meet demand, someone will.
Many business owners shy away from borrowing money so early in the life of their business, especially if they are already in debt from financing the startup. If demand is high however, it could be well worth it to borrow in order to meet demand by purchasing more inventory. Consider using an online platform such as Biz2Credit.com, which connects small business borrowers with banks, credit unions, microlenders and other alternative lenders. The site can help entrepreneurs secure small business loans, expansion capital, and business lines of credit. This can save precious time in getting connected to the right small business financial product.
Underestimating Staffing Needs
This is a common mistake and probably the easiest of fixes. Simply hire more people. Do not get in such a rush that you hire the wrong people, but do get a move on and start interviewing for good help.
Overestimating Staff Needs
This one is a bit harder. If you have more people than you need, you are going to have to cut someone. You could explore the option of moving people around on the schedule or cutting hours, but in the end if you have too many people, someone is going to have to go. This is a better option than cutting pay, as employees are not going to be happy working for less than what they originally agreed. Take some time to think about the most effective and efficient way to make this happen, but for their sakes and the sake of your business, do it sooner rather than later.
Underestimating Funding Needs
You thought you could start your business for a certain amount, but now you are still in startup mode and the money is gone. This is a relatively common mistake, according to Biz2Credit CEO Rohit Arora. “If you run out of money quickly, it could indicate to lenders that you estimated poorly, are inefficient, or, worse yet, are unable to keep a handle on your finances,” Arora says. “However, there may be some unexpected potholes along the way that lenders might understand. It’s challenging, but not impossible, to get a second round of funding if you have the right documentation.”
The truth is, all of these mistakes are fairly easily avoided. As mentioned before, no one is perfect. Steve Jobs himself acknowledged this in the quote above. Once you realize you’ve fallen, pick yourself back up and get back on the proverbial horse. Mistakes are bound to happen. Fix them and move on.
This article was submitted by Faith Stewart. Faith Stewart has a BBA with a major in accounting and spent 10 years working in the various aspects of accounting and finance before pursuing her passion for writing.