STARTING UP and running your own business can be exciting and exhilarating. It can also be extremely daunting because, as any fledgling entrepreneur quickly discovers, there is no manual or guidebook that comes with the keys to the office to tell you what to do and what not to do.
In reality, every day is a blank sheet of paper and you need to think on your feet at every step. It can be frighteningly easy for the unwary to fall into traps and come unstuck by pursuing plans and strategies that may seem a good idea at the time, but can quickly lead to disaster.
Running a small business is often just as much about what you don’t do as what you do. What can seem the obvious solution can turn out to be the exact opposite.
So here are the seven deadly sins most often committed by small firms — and ways to avoid them:
1 Not doing enough market research
You may think you have the most fantastic product in the world, but if there are not enough people who want to buy it at the price you want to sell it, you are in big trouble. Just because there is a gap in the market doesn’t necessarily mean there is a market in the gap. Find out first what people want and then offer it to them. And don’t just ask your friends what they think of your idea — they are bound to say it sounds great.
The solution: Use the internet to find out what people are looking for. Go to http://inventory.overture.com. It will tell you how many times people have searched for a particular word on Yahoo, the search engine, in the past month, and is a fantastic rough-and-ready guide to how many people are interested in bath toys or whatever. Last month, for example, there were 1,702 hits for fish-tank stands while indoor orange trees got only 103 hits.
2 Overspending on advertising
Too many small businesses waste huge sums of money on advertising because they think that it is something they should be doing without giving it any more thought. They take a small ad in the back of a glossy magazine at a cost of perhaps £3,000 a year and then they sit back and hope for the best. Unfortunately, with so many ads competing for readers’ attention, it is likely to be money down the drain.
The solution: Spend time on PR instead. If you are prepared to think creatively, there are many ways of bringing your product or service to the public’s attention — free or for little cost. Offer a prize for a competition in your local newspaper, sponsor the cricket team or a float in your town’s summer carnival. And contact the trade magazine that covers your industry if your company does anything newsworthy — it may want to write about you.
3 Making yourself indispensable
If you have started a business from scratch, it can be easy to think that you are the only person who can possibly make a decision or carry out a task. But as your business grows, you will quickly find yourself with so many things to do you can hardly keep up and you will start to fall behind with your accounts, the sourcing of products and so on. As a result, your business will be stifled.
The solution: Delegate. Write a manual for every single task you perform in the company, from answering the phone to filling in an invoice, no matter how trivial it seems. Then delegate them to your staff. That way you can be confident that the business will continue to function when you are not there — and you will be able to clear some space to think about the bigger picture of where your company is heading.
4 Not charging sensible prices
Many small businesses, particularly those of first-time owners, undercharge for their goods because they lack confidence and undervalue their time. But selling things too cheaply is counterproductive because customers think they are getting an inferior product or service and will be put off.
The solution: look at what your competitors are charging and then analyse where your products and services fit into the market. If you find this hard to do, then ask someone else — a fellow business owner or your accountant — to help you. Remember, being in business is about projecting confidence, and if you are being meek about yours it will not be around for very long.
5 Not making the best use of technology
It is tempting to think that because you are a small business you can act in a small way. Nothing could be further from the truth. Investing in up-to-date technology in the form of efficient phone systems, websites and so on does not cost a fortune and can spell the difference between a customer bothering to contact you or not.
The solution: Get a website and make it as user-friendly as possible. Send your existing customers regular e-mails, perhaps in the form of a newsletter. Improve your telephone systems so that customers get through first time. If you don’t know how to do any of this yourself, go on a course or ask someone who does.
6 Not setting goals
If you don’t know what you want to achieve, you will never get there. And don’t set your sights too low. You need to set yourself a challenge and then pour all your energies into achieving it.
The solution: Set yourself a goal of a certain level of annual turnover and then work backwards — break it down to work out how many sales you will need to have each month, each week, each day, to achieve that turnover goal.
7 Having a great idea and not doing anything about it
Procrastination stops 99% of wannabe entrepreneurs from taking the plunge. Don’t let that be you.
The solution: Stop waiting for things to be perfect before starting your business — they never will be. Do not wait until the economy is better /you have moved house / you have lost weight / your children have left home. The chances are you will end up proscrastinating forever. The right time to start your business is now.
- LUCIE STORRS is the owner of Period Features, a shop and mail-order company based in Leek, Staffordshire, which provides the finishing touches for period homes, from paint to lighting. She admits committing all the sins listed, apart from the last one. Fortunately, she realised her mistakes in time and her business, which she started in 2001, now has five staff and will have a turnover of more than £250,000 this year. Storrs, 38, said: ‘I had been running my business for about six months when it slowly dawned on me that it was not going to work. There were days when we didn’t take any money at all and I could so easily have gone under. But I decided to find out what was not working and then change it. As I started trying new ways of running my business I realised that there is a solution to every problem.’
