Starting a business of your own tends to arouse in you a great sense of achievement. It comes with the conceptualization of the financial liberation and freedom associated with successful entrepreneurs and enterprises. Not excluding the heightened feeling of responsibility that comes with being a business owner, knowing that you will be responsible to a number of persons whose need you will be obliged to cater to—your clients or customers.
Every successful and up and coming entrepreneur has, at the time of founding their business, had this pleasurable burst of emotions right from the conception of the idea. That feeling of being free from being told what to do—becoming your own boss—you call the shots now, and in a matter of time, you would be living the luxurious and flamboyant life typical of most successful businesspersons. Or at least that is just what you think—not all that glitters is gold. The journey of an entrepreneur is not a bed of roses because an awful whole lot can go wrong if the right measures are not taken.
Tragic: about 20% of small businesses shutdown in the first two years of their inception according to the US Bureau of Labour Statistics (BLS). A whooping 45% of small business startups fail in the first five (5) years of their founding, and the list lengthens. Consequently, the joy and excitement is short-lived. Suffice it to say that the excitement of starting up an enterprise solely managed by yours truly (yourself), can be very intriguing, cajoling a large number of noobie business owners into make arbitrary decisions concerning their businesses without prior consultation from experts or sourcing for information. Such illogical decisions inevitably lead to the collapse of small businesses.
The forgoing sections of this article are geared towards addressing some of the most common mistakes that small business owners make namely; Technical approach to business, Disorganization, Absence of an accountability system, Poor or no research, and Lack of Innovation.
Table of Content
- Introduction
- Mistakes Small Business Owners Make:
- Technical Approach to Business
- Disorganization
- Absence of an Accountability System
- Poor or No Research
- Lack of Innovation
Technical Approach to Business
A technical approach to business tops the chart on the five (5) common mistakes small business owners make. This is in no way coincidental as most individuals, before resolving to start their own organizations, have at one time or the other been subjugated to being told what to do and how to do it either in their former place of work, at college or even in their homes. They develop the habit of following instructions, only engaging in technical works without having to think of innovative ways to do things or creating an order on which activities should take place (management). Such individuals end up carrying over these behaviors over to their businesses indulging only in the technical aspects of their businesses like technicians.
Who is a Technician?
A technician is a person who possesses the necessary skills to get the work done. They are persons with experience and the technical know-how, involved in the production process of commodities or rendering of services. These individuals include; Tailors, Cooks, Teachers, Clerks, Secretaries, to mention a few. They are only involved in the production aspect of a business. For instance, a teacher has the responsibility of imparting students with knowledge, while the principal steers the affairs of a school.
So by default, every startup small business owner is a technician except they have acquired the necessary knowledge for running a successful business. This technical personality of individuals manifests in their sole concentration on producing as many commodities as possible to meet up with the demands of their potential clients thereby ignoring the management and innovative aspects of an enterprise. A triumphant business cannot be sustained by a technician alone hence the need for business owners to awaken their managerial and entrepreneurial personalities. Since you will be the only one running your business for the time being, you will have to take up the roles of the employer, the manager as well as the employee.
The entrepreneurial personality is involved in coming up with innovative ideas that drive a business forward, thinking up new and improved ways to do business effectively and at a lower cost. This is basically the brain box personality also responsible for making the crucial decisions in a business. For instance, the CEO of a company who comes up with the innovative ideas on which aspect of a business to improve on which method to be adopted in interacting with clients among others, possesses the entrepreneurial quality.
The managerial personality is order itself. It ensures that a structure is put in place to ensure that things are done accordingly and with the right approach, preventing arbitrary choices and setting up rules that guide the code of conduct which improve the wellbeing of a business. For instance, the manager at a firm or the human resource officer who ensures that each employee fulfills their duties ensuring a favourable working environment for them and enforcing the rules of a corporation.
These two personalities of a business owner cannot be overlooked neither can their use in isolation yield results in a business. Which is why it is imperative for entrepreneurs to make judicious use of the three personalities to achieve the best results in their enterprises.
Disorganization
When you fail to plan, you plan to fail. Nothing kills a corporation faster than disorganization. Where there is no order in an organization, such an organization will inevitably fail because its activities will depend solely on choice rather than necessity. Arbitrary decisions will be made to suit each individuals whims rather than to see to the advancement of an organization.
Disorganization in a business is a state of lawlessness and disorder. It is a situation whereby there are no laid down rules or standards by which a business operates in order to deliver optimal results to the community for which it is intended.
Many a time, a business is the reflection of the body that operates it. Put another way, it embodies the personality or character trait of the individual(s) reflected in the business they manage. For instance, if an individual is disorderly, the organization he or she controls will reflect such character traits because charity begins at home—yourself. In order to sidestep the harsh realities of a disorganized corporation such as:
- Poor decision making
- Low output
- Inconsistency
- Poor customer service
- Low revenue among others,
it is imperative that you, first of all, come up with a primary aim or goal for your life. You need to ask yourself certain questions:
- What do I want to achieve in life?
- Where do I see myself in the next five (5) or ten (10) years?
- How do I want people to describe me?
- What impact do I want to have on society?
When you have successfully noted down your life goals, this next step is to align them with your business by creating business goals that help you realize your life goals.
First, you need to come up with innovative strategies to position your business in a way that will help you achieve your set goals. Such strategies may include;
- Locating your ideal clients
- Identifying their needs
- Coming up with innovative means to meet those needs at their convenience
- Creating a business structure that operates in your absence
- Leveraging social media
Next, you need to apply quantification to your business. That is, you need to quantify relevant data in your business which include;
- The number of clients or potential clients you meet in a day
- The number of clients that patronize you in a day
- The number of customers that return to your establishment
- The number of sales you make in a day
- The amount of money you make per day.
And the list goes on.
Finally, you need to apply orchestration to your business. Orchestration is the process of charting the order of events. That is, you need to draw from the results of your innovative strategies and data gotten from your quantification and apply them towards generating a structure for your business. You do this by creating a plan on how you will interact with your clients, increase sales, organize your financial records, increase profit without overpricing your commodities, to mention a few. Orchestration helps you manage your business in order to achieve the goals you have laid out for your enterprise and that is where you get a functional business model.
What is a business model?
A business model is a business system that produces the exact result anywhere it is applied. Or, it is a template that determines the order of activities in a business ranging from employees dressing, customer care, production of commodities to management of staff, improvement of working facilities among others. An organized business must have a business model that dictates its modus operandi to save it from the agony associated with a disorganized business.
Absence of an Accountability System
To whom much is given, much is expected. At every point in time, being saddled with a responsibility however big or small requires that the one to whom it is allocated gives an account, on a regular basis of how they carried out their duties. In simpler terms, being responsible for a position demands that you account for how you utilize the resources available to you in the discharge of your duties.
In the context of business, an accountability system is an organized system that allows business owners, small business owners, to be able to evaluate their business performances in the recent past. That is, a system that affords entrepreneurs the opportunity to account for their business activities in the last week, month, year, five (5) years, etc. It is an effective check on the performance of a business as it helps businesspersons mak strategic decisions based on the outcome of their performances in the past.
Importance of an Accountability System
- It helps to monitor growth.
- It influences decision making.
- It ensures orderliness.
- It helps in crafting a framework for improvement.
- It helps in monitoring resource allocation.
Most small business owners tend to overlook this aspect of business because they feel they are now their own bosses and so do not think it necessary to be accountable to anybody—they should be accountable to themselves. However, what they fail to realize is that they will not always be the only ones managing their businesses. At some point, they would need more hands on deck—employees. If at such a critical moment, they fail to implement an accountability system, such businesspersons would be unable to measure their progresses and losses. What is more, they would be unable to detect if resources are being misused or mismanaged and may eventually end up back at square one—where they started from.
Accountability is necessary for every organization regardless of its size as it helps to keep things on track and people in check. Here are some ways to foster accountability:
- Open a business register.
- Write down:
- The dates for each business day
- Opening time and closing time for each day
- Number of goods sold on each day
- Income received for each day
- Profit made for each day
- At the end of each month, collate the results for the number of sales for each day and compare with the previous months.
- Also, subtract the cost price of your commodities from the selling price to determine your profit and compare with the previous months.
The results of the data collated will indicate if your business is advancing or not and you can decide ways forward from consideration of the results.
Poor or No Research
Why do you think people in the days of old, even now, used sticks to test the depth of a river before crossing it? It is simply because, customarily, it is advisable to test an unfamiliar water body before attempting to walk across it. Hence the expression: "Testing the waters". Most individuals jump into the realm of commerce without any prior knowledge whatsoever of the workings of a business enterprise. Consequently, they end up making arbitrary decisions, choices, they feel are right and necessary for their businesses without consideration of what works and what does not in the field they choose.
"It is my business and I will manage it the way I want to—I'm the boss!"
Some would say, but the aftermath of such start ups far negate those boastful claims. You need to understand that you are not the boss, the system is the boss and it is only when you get to understand how the system works that you become the boss. This is because by the time you learn how it works, you would also be knowledgeable of how to make it work for you. Does that make any sense? Have you ever heard the expression: " You are a slave to what you don't know"? This expression is a factual statement. Ignorance enslaves while enlightenment births liberation which is why you must embark on rigorous research before starting up a business.
Research in business, is the act of sourcing for information concerning the business you wish to venture into. Information, which can be obtained from Google search, YouTube, Seminars, Consultants to mention a few, go a long way in ascertaining whether or not you should proceed to set up your choice-business or not. For instance, some nichés are over saturated such that a small business, especially without sufficient capital, will not survive a few months in the competition, while some enterprises have nothing to offer—they either make little to no progress or yield no return at all. Which is why you cannot afford to blindly jump head-first into commerce. You must, first, be enlightened before making your selection.
Some Advantages of Research in Business
- Choosing the right business
- Formulating the right strategies
- Promoting the right way
- Selling to the right people
- Growing the right way
The disadvantages, however, of research in business amounts to the reverse of the advantages above:
- Choosing the wrong business
- Formulating the wrong strategies
- Promoting the wrong way
- Selling to the wrong people
- Growing the wrong way
While researching your choice-business is important, their are some key areas you cannot afford to leave out on your research as they can make or mar your selection. These areas are the demographics and psychographics of your potential clients.
What is Demographics?
Demographics envisages tangible information about your potential clients—people who need and can pay for your goods and services. Such information include, but are not limited to:
- Age
- Gender
- Geography
- Occupation
- Level of education, etc.
What is Psychographics?
Psychographics has to do with entities that influence the purchasing decisions of your target audience. This is where you ask questions such as.
How does my target audience/ potential client arrive at a purchasing decision?
What criterias play key roles in influencing these decisions?
Some of such factors include;
- Colour, and
- Shape
Colours play crucial roles in businesses as they can determine the success or failure of a business. The colours you choose to represent your business are very important which is why you cannot afford to make arbitrary choices or pick at random. Your choices must be well-informed to avoid an inevitable loss. For instance, the colour, blue, is known to resonate well with both men and women and salespersons on blue outfits tend to convert better than salespersons dressed in other colours.
Just as colour plays an instrumental role in determining and influencing the purchasing decisions of potential clients, shapes are also key factors that lead to business success. Rounded edges shapes are known to resonate well with people and convert better than other shapes hence most organizations create their logos from shapes with rounded edges in order to better influence the purchasing choices of their audience.
Lack of Innovation
Who would have thought that we would, one day, come to depend on the Internet as much as we do today? Someone had envisioned it and that is why we have the internet today. A small business owner cannot but be innovative, constantly coming up with brilliant ideas that will make a difference in the world. Ideas that are uncommon and capable of generating lots of income when realized in the physical world.
What is Innovation?
Innovation is the process of foreseeing unanticipated challenges that people are likely to encounter and providing solution to those challenges. It provides solutions to needs people never thought they had or existed . Just like the earlier mentioned example, it is very likely that at the emergence of the Internet, most people had no clue that they had great need of the Internet, but most of us today depend greatly on it thanks to an amazing entrepreneur's foresight. Someone was able to fathom such an unanticipated need and figure out a way to cater to the need—that is called innovation.
Most persons tend to use creativity as a substitute for innovation—they use both terms interchangeably which is a widespread misconception. Creativity is the process of making something new out of that which exists. It refines objects and assigns new use to them. For example, the process of putrefying precious stones like Gold and Diamond is a creative process because it creates something new (the end products: gold, diamond, etc) from objects that were already in existence (the crude stones). Innovation, however, conceptualizes needs that people never thought they had and looks for ways to cater to those needs. Providing solutions to problems that have not been anticipated.
Innovation has a number of relevance to a business, namely;
- Increased output
- Increase income
- Achievement of primary goals
- Early retirement
Although, most small business owners fail to be innovative in their businesses. They stick to the old ways of doing things without trying to introduce change hoping to get the same results as those before them. Suffice it to say, while this is a noble idea, if you do not find a way to distinguish your business from the competition, you may never make the mark. The business you started few days ago is not the first of its kind, there have been many before it which people actively patronize.
So for them to turn their attention in the direction of your establishment, you need to do something that they are yet to experience from the competition—that is how you stand out! When your start up stands out, people will come running to observe and associate with your enterprise and that is how you make a name for your business. You have to do something different and spectacular that also adds value to people.
This is why as a businessperson, you must be innovative, imagining, even dreaming of things no one else has thought of and thinking up ways to executive them such that they divert the attention of your target audience from the competition and direct it to you establishment—you need a business model to achieve that.
Innovation is a tool of change. The world keeps evolving, today a fantastic idea is brought to life, tomorrow there is another and with time these ideas become regular. So as a business owner, it is your duty to think ahead of others. Think beyond what they can anticipate and be the first to create the next big thing—then watch your business hit the top.
While it is a great experience and feeling of self-sufficiency to start up a business of your own, the heart-wrenching reality of the number of businesses that fail in their first years does a great deal of disservice to aspiring entrepreneurs, knowing deep down that they might meet the same fate.
The good news is, your business does not have to be among those that fall flat on their faces. You just have to be mindful of the mistakes that those entrepreneurs, whose businesses fail, make such as applying a technical approach to business, being disorderly, lacking an accountability system, embarking on poor or no research at all, and lacking in innovation. Though there are more errors to look out for, these mistakes require special attention as sidestepping them can lead to the death of a business start up.
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