To err is human. Many entrepreneurs make mistakes when starting a new company, and that can often result in the downfall of a company. It’s not because they pigheadedly or recklessly jump on a new business idea. Enthusiasm and passion are requirements to succeed. However, small business owners make errors without actually understanding or even realizing it until it’s too late.
These may be sparked by idealism or even eagerness to get ahead. There is one truth, though, that often gets ignored: there is no secret elevator to success. You have to take the stairs. It’s commonly in our habit to believe we can find shortcuts and make mistakes that drain the budget. Heading into business thinking we are always the exception and the one in a million that can find success without hard work leads to subtle errors.
Your Marketing Gets Too Complex, Too Fast
Many entrepreneurs know the real power of excellent marketing. However, it can go from your strongest asset to your biggest liability. Ineffective marketing that you cannot measure is a potential money drain on your company that you should remove. It’s paramount to pay attention if you are using services of other PR firms. It’s often that they cannot be held accountable for the results. And if you can’t feel or measure the success rate, it’s a drain on your funds.
For a small business, you first need to focus on generating revenue and understanding how you can improve. It’s not a time for extravagant marketing efforts. Start small. If there is a part of your marketing that leaves you with more questions than answers, it’s a drain. Glossy branded materials are part of it. You might get pleasure from investing in business cards, mugs, t-shirts, or other things that have your company’s name on it. These are part of the money leaks that need fixing and can cut your budget dramatically. Focus on your customer first, and then on yourself.
You’re Trying to Find the Shortcut to A Vast Customer Database
You can’t buy customer engagement and loyalty. It’s as simple as that, no matter the guarantees of other parties who promise a large user base of followers and likes on social media. In this day and age, it’s almost shocking how many businesses believe this is a good investment. It rarely works, and it’s, unfortunately, difficult to measure. Even if it looks good for your page to have thousands of followers and even more people to email, “bought people” will only hurt your image and waste your money.
It will harm your outreach efforts. And that’s because these bots are obviously fake, and people will realize it. You will gain accounts that follow hundreds of other people, but nobody will follow them. That means that they will not be using their “influence” to draw people to your business. These “fans” and “customers” have no interest in your services or products, and they are not your target audience. They are a waste of money that could be better spent finding clients the authentic way.
You’re Investing in Technology You Don’t Need
While purchasing expensive office equipment is a clear waste, the subtlest culprit is an investment in expensive subscription-based software. More often than not, this refers to marketing automation programs, custom services (such as a tailored design for your website), or even cloud storage software that you do not truly need. It’s natural to want the best and pay for the best. You may afford it, but it becomes a waste of your money when you do not use it to a full extent.
Stick to your budget. Many SaaS solutions have big corporations in mind. Thus, their services might not be of use to you or, at the very least, not at full price. It’s one of the reasons why most startups fail and it’s certainly applicable to established small businesses. It’s a small leak. However, “Beware of little expenses. A small leak will sink a great ship.” (Benjamin Franklin)
You’re Focusing On Hiring More, Instead of Better
Even though you shouldn’t neglect your employees, there is such a thing as over-investment in your staff. This ranges from expensive office equipment to certain commodities that are not truly needed. However, the true waste of money is hiring errors. Whether it’s an unbalance between departments or simply inexperienced people that need to training and reach no results, it can place a severe strain on the budget.
Business owners often neglect the time and money spent on each new trainee. It can become an unknown way to waste money, and you would be better off opting for freelancers. While it’s certainly exciting to see your small business grow, it can become a drain really fast.
Due to some major mistakes, studies have estimated that 3 out of 10 new businesses fail in less than two years. As time goes on, this number increases to 5 out of 10 within the first five years. While the numbers are not encouraging, they can be avoided.
The most important aspect to remember is that you need to assess and reassess constantly. Don’t focus solely on success stories. Those may reach your ears easier, but they’re in the minority. The rest are not an overnight success and instead have been carefully avoiding mistakes.
Author: Ioana Sima: Writer. Gamer. Architecture student. Coffee Addict. CMO at DigitalWebProperties. Follow Ioana on Twitter for random musings & online marketing news.