Opinion: Common small business mistakes to avoid

Launching a new business venture is a dream for many, but the path to success is rarely clear, simple or easy. Whether it is a one-person show or a small empire, there are many possible mistakes one can make in the early stages of a business. One of the biggest mistakes on the startup journey is the faulty belief that there is only “one biggest mistake” to clear the hurdle of.

Jakob Pallesen

How do we know this? This is something we see every day with the business clients our Small Business Development Center (SBDC) team works with. The SBDC helps entrepreneurs through coaching, strategy, business planning and financial forecasting. We don’t solve every problem and we don’t have every answer, but we focus on helping find the answers that will work for each specific business venture.

From working with hundreds of regional startups and businesses, the SBDC continues to see the same mistakes and patterns. Here, let’s dive into some of those areas where many entrepreneurs find themselves in deep waters without the proper gear, knowledge and experience to swim. Every single entrepreneur struggles and works hard to navigate challenges like these, especially the ones who seem perfectly successful. They just keep at it anyways, because that’s what it takes to stay in the game.

Getting honest customer feedback

A lot of trouble can be traced back to the common mistake of making most of your business decisions on untested assumptions. If you find yourself saying things like, “Who wouldn’t love this?” or “I just know it’ll be a huge success,” then, you’re probably driving off this cliff. Not testing and gathering honest customer feedback about an idea is detrimental to any business.

Assembling a good team

Riding solo is another red flag. Having a solid team of people around you (mentors, advisors, technical experts, shoulders to cry on) is what success is built on. You may only see the face and name of the singular entrepreneurial hero on the cover of magazines, but in reality, there is a whole team behind the picture. No one succeeds on a one-person island.

Planning for unexpected expenses

There are many unexpected expenses associated with starting a business. Please don’t assume you’ll have little expenses because you can get your mom to help out for zero pay, and use social media to market your business for free. Good and effective digital marketing costs money and time. If you want to see results, you typically need to make an investment.

Also, there will almost always be an unexpected expense or cost you’ll run into. Even if you are lucky enough to have a sweet mother to help you out for free, it is not a sustainable business model. It’s hard to pin-point exactly what the unexpected costs will be (hence the “unexpected” nature of it), but it’s often in areas such as software for running the business, payment for technical professionals, new equipment and expenses for fixing thing that break. If you’ve ever been told you should save 20% of your paycheck for emergencies and retirement, that exact same thinking should be applied to all businesses.

Forgetting important permits and license requirements

Overlooking all the licenses and requirements needed to operate a business can become problematic. The type of licenses you’ll need depends on the industry you’re in, but you should be prepared to have the basics such as an operating agreement, LLC articles of organization, Federal EIN, Missouri Tax ID, local city or county business license and liability insurance. This preparation will help you check those boxes and avoid receiving an angry letter from a government department. This is also where we remind entrepreneurs that working with a good business attorney and CPA isn’t an expense, but an investment that will save you money, time and massive headaches down the road.

Having a work, life balance

Being in love with the entrepreneurial dream without having a reality check on how it fits into your personal life (today and in the coming years), goes high on the list of problems the SBDC encounters. Not every type of business is the right fit for someone who aspires to be a business owner. The best thing to do before you commit your life and sanity to a business is to have a few friendly chats with business owners in similar industries. Ask questions such as “How do they spend their time?” or “What headaches they hate the most?” and “What keeps them up at night?” This can help you get an honest sense of what it might be like to operate a similar business.

Learning all-around business skills

Just because you’re good at doing a particular job, doesn’t mean you’ll be great at running a business that provides that job to customers. The classic example of this is the chef who is amazing at developing recipes and cooking, but fails to realize that running a business requires managerial and entrepreneurial skills that are wildly different (and take up a lot of time) from the technical job of cooking food in a restaurant. It’s important to learn all-around business skills before jumping into a passion project if you want to succeed.

Neglecting customer experience

Focusing only on the price and “quality” of your product or service tends to neglect the customer’s experience with your business. We recommend reading some reviews from successful businesses to see how often happy customers really talk about the price or product itself. You’ll probably find that most raving fans are happy because of the experience they had with the people, the service, the follow-up and the extra icing on top of the cherry pie. There are many ways customers engage with a business that are not solely about the price or product.

Also, don’t just pay attention to the positive reviews. Be sure to read the negative feedback from upset customers. This doesn’t mean you should take every ALL CAPS angry review at face value and start accommodating their crazy demands, but rather find the glimmers of truth in those bad customer experiences. There is always something to be learned and improved to make more customers love what you offer.

In a nutshell, most mistakes can be avoided or minimized by having good people and perspective around you, using frameworks to help explore your business strategy, creating processes and checklists to manage and grow from and defining a clear vision of what your business’ success should look like in five years.

Jakob Palleson is the Small Business Development Center (SBDC) director and business counselor for the Southeast Missouri Region. Palleson received his bachelor’s and master’s degrees from Southeast Missouri State University. He has worked at the SBDC for six years, helping entrepreneurs at the idea stage of their business to helping established companies expand into international markets. His passion for helping entrepreneurs launch and grow their businesses is particularly focused on exploring strategy, branding, consumer psychology and market research with them.