I have worked with many small and medium-sized businesses in my career as an entrepreneur. The majority of them operated by themselves and invested a lot of money and effort in order to grow their business.
Some of them became really successful and some of them closed down their business after a few years. If you ask me what period of time is the most common among them, I would say that they either closed down after 1st or the 5th year.
And why is that? How come some entrepreneurs can build a successful business and some of them don’t?
Why is it that they close down their business early? And what about those that last around 5 years? Why do they close down too?
Well, simply said, there are some mistakes they do.
And what are the mistakes entrepreneurs and small business owners make?
- They are not committed enough
- They do not reinvest their income back into their business
- They lack knowledge about marketing
- They do not improve their product or service
- They do not analyze the data
They are not committed enough.
I would say that the first mistake entrepreneurs do is actually not being committed enough to their business.
Some of my clients started with huge enthusiasm and had really great plans, products, or services. But when it came to doing the actual work, they simply, stumbled.
To be more specific, they lost the motivation of doing many tasks from their list even though we agreed they will deliver them. And you know what is the worst part? They did not even try it.
Soon after they stopped working, other issues appeared. With a lack of commitment, they lost some part of their motivation, started to have excuses for everything, and actually lost their interest in growing their business.
They do not reinvest their income back into their businesses.
Not being committed enough is already a show-stopper in some cases. But not reinvesting money will definitely finish off your business quickly.
Many entrepreneurs, especially small ones, take all their earnings and invest them only to live a fancy life. They buy some stuff just to show off or impress a friend or family member.
I was one of them at the beginning too. I thought that all the money I make is simply mine and I can do with it whatever I want.
Well yes and no.
If you spend all your money how will you grow and improve? How will you manage to increase your online presence and get new leads and sales? How will you improve your product or service?
If you think you can achieve this without investment, you are wrong. And I speak here from my own experience.
Luckily for me, I have learned very quickly (thanks also to the Rich Dad, Poor Dad book) that one of the best ways to create a successful business is to reinvest your income. Today I have a fixed budget that is around 30-40% of my income, which I can spend on whatever activity I want. Also, to keep it professional I set two simple rules: the activity has to be business related and it has to be something I have never done before.
This way, I can test different things and see what works and what doesn’t. And because in my mind that money is already gone (separated from the rest of my income), I am not afraid to spend it.
PS: the business that does not reinvest their income or at least some part of it, are the ones that shut down in 1 year.
They lack marketing knowledge.
Some of my clients thought at the beginning that they can do their marketing by themselves. That they can buy some ads on social media or Google, run their social media campaigns, build email lists or even do SEO.
The worst part though is that they believed that they know it all. That they have all the knowledge required to do all these things meanwhile they could still focus on product production or delivering their services.
All sounds pretty easy, right?
It is simply impossible to run all of these things by yourself. And also, it is very hard to stay updated and have knowledge about all the changes and updates that are popping up in marketing each day, week, or month.
The world of marketing is constantly changing and to say that you have 5-10 years of experience means nothing to me.
But don’t worry, there is good news 🙂
If you really mean it with your business, set some money aside and invest it into marketing. Hire an agency or a freelancer that will help you. Start small and grow later if needed.
Working with marketing enthusiasts will not only improve your business but you will also learn new things that might be useful later.
They do not improve their product or service.
Do you remember when I told you at the beginning that some small businesses shut down after 5 years?
One of the main reasons they do so is because they do not evolve. Entrepreneurs sometimes believe that their product or service is so good that it is better not to touch it.
If this would be true, we wouldn’t have a new iPhone coming out each year.
When you observe the big players they have one thing in common. They constantly improve.
Just look at Netflix. In the beginning, they were sending out real DVDs with movies to clients by mail. Just after a few years of seeing that the environment has changed they launched movie streaming and become the company we know today.
The same should be valid for small businesses too.
In the past few years, I have constantly evolved my entrepreneurship. I started out as a life and business coach, then I launched my food blog and become a food photographer, after that I discovered the world of SEO and digital marketing. I co-founded a digital agency and launched my own SEO agency.
Some of you could say that I am searching for my niche or do not know what I do.
Honestly said, this is the first time that I exactly know what I a doing and what I want to achieve. And everything I did in the past made me the entrepreneur that I am today.
As an old proverb says “The only constant in life is change”-Heraclitus.
“The only constant in life is change”— Heraclitus
They do not analyze the data.
I have already spoken about entrepreneurs that lack knowledge about marketing and do not improve their products or services.
Another mistake that is very harmful in my opinion is not analyzing the data.
And I do not mean only sales data.
What I mean here is to analyze all the data you collect. From social media analytics to click-through rate on your website, to ads and SEO performance.
If you are one of those entrepreneurs that checks the numbers rarely, you should definitely start doing it.
Set a day in your calendar and go through your Google Search Console, Google Analytics, and Social Media analytics. Analyze the numbers and look for the best and low performers. Being it a product page, blog post, or a particular Instagram story.
Check it all and check it often so you become an expert in your numbers.
The good thing here is that you do not need to be a data guru in order to get complex charts. You can use tools like Databox that can help you create well-looking and easy-to-understand data charts in no time.
So what’s next?
As you see being an entrepreneur is not easy and sometimes it can be overwhelming. You have to learn new things, analyze data, and spend money while still producing your products or delivering your services.
On the flip side, it is really nice to work for yourself and on the things you genuinely like.
Being an entrepreneur is challenging and as you grow you will make some mistakes. Hopefully, this blog post gave you some hints about how to avoid the mistakes other entrepreneurs did already.