Whether you are a brand new entrepreneur or a seasoned veteran, you will make mistakes in
the future regarding your business. You have also probably made a few already. However, while
no one is perfect, some mistakes are entirely avoidable with some knowledge and some
foresight. As a business owner, it is your responsibility to insulate your business from harm, and
that includes keeping your errors to a minimum.
Even a tiny error can have an outsized effect on your company. There can be ripple effects or
reputational losses that can end up costing thousands and thousands of dollars. However, by
identifying ways that businesses most often make mistakes, you can do whatever you can to
avoid repeating them. With knowledge, more and more entrepreneurs are learning about what
to avoid. Here are some universal mistakes that businesses are avoiding in 2022.
Not Having a Plan
Maybe you had a great idea, and it took on a life of its own. You put up a website and started
marketing a unique new product, and the sales came in fast and furious. While this scenario is
unlikely, it could have happened to you. However, after that initial opening burst, then what? Or,
as your business grew, how did you upscale effectively without having the infrastructure in place
to manage it?
These are essential questions, and they could have been answered with a business plan. Even
if you are very excited about getting a new business off the ground, you need to slow yourself
down and create a plan. A business plan will detail how you will run your operations, what your
costs are projected to be, and your strategy in the first phase of your business. Without a plan,
even that early success can go for naught. You may overextend yourself or even under-invest in
certain aspects, like marketing. As a result, your business will flounder, and it will be part of a
long list of early startup failures.
There are many myths about entrepreneurs, but one of the most persistent is that they work
hard hours long into the night alone, creating their brilliant plans and ideas. While yes, many
entrepreneurs do work long hours and come up with great ideas, the best ones are never alone.
They have a strong team, or at least a partner or two, to help them grow their business.
Too many new entrepreneurs think they must also take on everything themselves. They try to
be a jack of all trades and become a master of none. What does this do? It makes for sub-par
work since there are so many competing responsibilities, but it is also not sustainable. You will
not be able to keep up with that schedule for long, and you will burn yourself out. Every “self-
made” entrepreneur actually has a strong team behind them to help get things done.
Not Having Insurance
There’s no excuse not to have insurance for your business. No matter how small, every
business can use the protection that the right insurance provides. However, how much
insurance you need and what kind of coverage will depend on your type of business. For
example, a single freelancer working from home may not need commercial vehicle insurance,
but they may need property insurance if their home equipment is costly. If you have employees,
you will need to have workers’ compensation coverage in every state but one. These are just a
couple of examples.
A single incident can cause financial disaster for any business, and it’s simply not worth the risk
to go without. For example, you might run the safest store in your area, but that doesn’t mean
that nobody could ever get hurt. Or, if you store sensitive customer data, you could be the victim
of a cyber attack. The right insurance will help weather those storms and keep your business
afloat. You can get business insurance, such as general liability, commercial auto insurance,
property insurance, and workers comp insurance online to get covered as fast as possible.
Not Valuing Your Products or Services Properly
One of the most common mistakes new entrepreneurs make is thinking that they have to charge
less for their products or services because they are new. They assume that they will have to
give discounts to get clients to take a chance on them. This can be financially crippling if those
low prices are not allowing the business to have strong margins.
The value of your products or services should not be based on what you think it is worth. It
should be based on what you think you can get people to pay. That means doing market
research and seeing what competitors and similar businesses are charging. Instead of using
your pricing to help with marketing, use our marketing to justify your charging prices. If you are
worried about getting more customers at your higher price point, show them why there is still
Not Accounting for Cash Flow
Let’s say your business is booming. You have several clients right off the bat, and you’ve sent
them all invoices. You are excited about what is to come. However, what happens when all of
your bills, including employee salaries, come due before you get payments for those invoices?
You don’t have cash in the bank, and you need to pay your staff and keep the lights on.
While this is a simplistic scenario, it is all too familiar. When making a business plan before
launch, never assume that you will have enough money in those first few months. In fact,
assume that you won’t. You need to keep a handle on your cash flow, so that simple timing
doesn’t cause damage to your business. The last thing you need is for your staff to quit because
they haven’t been paid during a time when you are experiencing growth. Make sure that you
have enough financing to cover you for at least several months after launch, even if you don’t
bring in a penny. That way, you can be sure that your cash flow will be covered.
Mistakes will happen. The best entrepreneurs make them, and you will make them too. What’s
important is that you minimize the amount and the impact of the mistakes you make. Keep
these common mistakes in mind to make sure that you can avoid them in 2022 and in the years to come.