What is the Biggest Mistake Small Businesses Make?

As a marketing professional, naturally, I think the biggest mistake small businesses make is not hiring a professional marketing firm to develop their brand, that is, if you are not a marketer yourself. And then, even so, sometimes, we marketers have a more challenging time marketing ourselves because we are too close to the subject. In other words, the number one reason small businesses fail is because they fail to market.

In my experience, I have also seen small businesses make the mistake of selecting the wrong location. When that happens, we suggest that our clients do complete market research to secure the best possible location for their business. And when it comes time to make that commercial move, hiring a company that offers a commercial moving service coordinator is most advantageous.

They will understand the importance of minimizing downtime and disruptions to your business operations. With a comprehensive range of services, they will handle every aspect of your move, including packing, transportation, and unpacking, ensuring a smooth transition for your company. Commercially skilled movers are trained to handle sensitive equipment, office furniture, and confidential documents with utmost care and confidentiality, guaranteeing that your assets are protected throughout the entire process. It is highly suggested not to make a location move without a team of experts.

Fortunately, I have also had the experience of growing up in a family that ran a construction company and, unfortunately, learned what NOT to do. With my uncle at the helm, disregarding his partner’s warnings and forebodings, not researching a viable location, and mismanaging the finances, he ran it right into the ground.

On the other hand, the company I work for made a couple of key moves that landed us right in the middle of the Detroit marketing “mecca” off the historic Woodward Avenue. We made the move over ten years ago, and because we utilized services with a strategic marketing partner to form a business location strategy, our business is thriving.

Small businesses often make several common mistakes that can hinder their success. Let’s see what else could impede small business growth.

Common small business mistakes

Business News Daily wrote, “Companies can fail for a number of reasons. Common causes include not securing enough business financing, assembling an inexperienced management team, and not implementing a marketing strategy.”

There’s that marketing piece I was talking about! Ever wonder why large companies continue to advertise even when the market is unstable? Because when businesses make the mistake of cutting their advertising budget when the market is unstable, the companies that continue to advertise, will gain more than their competitors’ client’s attention; they gain market share.

Below is a list of the most common small business mistakes:

• Neglecting to have a solid business plan: Failing to outline clear goals, strategies, and financial projections can lead to confusion and poor decision-making.
• Overlooking the importance of a marketing plan: Without a well-crafted marketing strategy, reaching target customers and establishing brand visibility becomes challenging.
• Not conducting thorough location scouting: Choosing the wrong location can significantly impact customer footfall and sales.
• Impatience: Expecting instant success and not allowing enough time for business growth can lead to premature closures.
• Overspending: Mismanaging finances and overspending on unnecessary expenses can drain your resources and hinder profitability.
• Underpricing products or services: Setting prices too low to attract customers can result in decreased profit margins and a perception of poor quality.
• Not forming the correct business entity: Failing to choose the appropriate legal structure can expose entrepreneurs to personal liability and potential tax issues.
• Thinking you don’t need insurance: Neglecting to have adequate insurance coverage puts businesses at risk of significant financial losses due to accidents, lawsuits, or natural disasters.
• Not having a written agreement with business partners: Not documenting roles, responsibilities, profit-sharing, and dispute-resolution methods can result in misunderstandings and conflicts.
• Poor hiring and team management: Not investing enough time in hiring qualified employees or neglecting their development can impact productivity and customer satisfaction.
• Failing to adapt to technology changes: Not keeping up with evolving technologies and industry trends can make businesses less competitive and hinder growth.
• Ignoring customer feedback and reviews: Overlooking customer feedback can lead to a decline in customer loyalty and negative word-of-mouth.
• Lack of financial management skills: Poor handling of financial records and inadequate tracking of cash flow can lead to financial instability and even bankruptcy.
• Not investing in sufficient marketing efforts: Insufficient marketing activities can limit brand exposure and customer acquisition.
• Relying solely on one revenue stream: Depending too heavily on a single product or service can leave businesses vulnerable if that stream declines or becomes obsolete.

According to Forbes, “One in five businesses fail within the first year. Chances are you’re familiar with the statistic that half of all businesses fail. However, this only paints a partial picture. To get the complete picture, it should be noted that 20% of businesses fail in the first year, 30% in the second year, and 50% by year five.”

Ok, so we’ve talked about what NOT to do and why some small businesses fail. Let’s see what we can do in a positive approach to ensure greater success.

10 factors to consider when choosing a business location

A business location strategy is your plan to find the optimal location for an organization, requiring an analysis of company goals and objectives and finding a location that meets them. A company’s location strategy should align with any overriding corporate structure or strategy. Again, it is best to leave this key strategy to the pros. Below are ten considerations when choosing a location:

1. Competition locations
2. Demographics: Research your target audience
3. Zoning
4. Parking and Accessibility
5. Rent cost
6. Foot traffic
7. Growth potential
8. Infrastructure
9. Set a budget and outline your business’s specific needs
10. Research government incentives and determine crucial tax implications

The United States Small Business Association (SBA) suggests, “…update your marketing plan with your new location in mind. Think about your target customer, sales plan, and competitive advantage. Compare your business to the competition…Review your business finances. Build a forecast that projects estimated costs and estimated revenue for your new location.”

What is the biggest mistake small businesses make?

In conclusion, and although I might be partial, the biggest mistake small businesses make is failing to market effectively. Other common mistakes include neglecting to have a solid business plan, overlooking the importance of a marketing strategy, and choosing the wrong location.