Twenty-seven ways you can mess up in small business means 27 ways you can learn something and do better the next time. You don't build success on success alone; you build success on one failure after another—if you learn from those failures. What can you learn from these real-life business mistakes? Here are the last nine.
19. Ignoring growth plateaus
Every small business will go through phases of growth and plateau, at least to some degree. Still, it's a deadly mistake to assume that you've simply reached the highest level of growth you can achieve and sit back. "If you're not growing, you're dying," is an adage every business owner should know. Growth must continue.
Lesson Learned: Don't let your business die because you assume a growth plateau is normal. When you reach a point of slow or no growth, go back and examine your revenue model, your customer service, your marketing, your everything. Tweak, test, repeat.
20. Letting "small purchases" in discretionary spending go unchecked
The strange dichotomy of small business finances is this: when you bootstrap your way up, you value money and guard it ferociously. Then you start making it and seeing those profits increase, and the ferocious guarding of money turns into a little extra spending, a few too many discretionary purchases.
Lesson Learned: Ed Buchholz of virtual CFO service 60mo says that new businesses, including his own, can unintentionally "hemorrhage funds for unnecessary dinners, travel, and swag when they don't have a clear budget and insight into their spending. The point of having a budget is to avoid waste."
21. Undervaluing your product
New businesses are especially susceptible to the lure of new customers. You're hungry for business, you're still establishing your costs and timing, and getting that contract matters more than getting an adequate deposit or a decent price. It's a mistake Craig Wolfe, president of Celebriducks, made early on by charging an inadequate deposit for what turned out to be a costly customer relationship.
Lesson Learned: As Wolfe says, "always know that you are never without options." Value your product or service adequately, even if you are desperate for customers; remember that once you set the value, it's difficult to raise it. So set it where it should be, produce something high-quality, market, and don't let temporary desperation push you in a deal that isn't a deal at all.
22. Not spelling out clear terms of contract
While most small business owners are aware of the need to create appropriate legal documents for their own business structures, they often overlook the need for clearly defined terms when setting up vendor contracts, customer agreements, and even employee descriptions. Lack of clearly defined terms, at best, will lead to confusion for all the people involved; at worst, it can lead to legal liability and significant loss of money and reputation.
Lesson Learned: Get it in writing. Every time. In every situation. You can get many business templates, customize them to your needs, and have a specialized contract, agreement, or letter ready in a short amount of time. All parties involved should read, sign, and date the document, at the least.
23. Going in with the wrong mindset
For professional speaker Norma T. Hollis, the switch to small business owner was a difficult one because of her background in non-profit work. "You cannot open a business with a non-profit way of viewing the financial world," says Hollis. The entrepreneur's life can require, on any given day, that you be ready to promote your business, win your investors, take calculated risks, think creatively, do your own guerrilla marketing, network incessantly, take some downtime, listen to new ideas, let go of old methodology, train new employees, answer customer questions and rethink your entire business strategy. An entrepreneurial mindset is different than most others.
Lesson Learned: Train yourself to break out of thinking like an employee, or assuming that things will be accomplished for you. Cultivate the gift of flexibility. Read the works of entrepreneurs. Be eager to learn.
24. Putting yourself in the wrong position
Hollis relates her initial attempt to establish a speakers' bureau business. "Right industry, wrong position in the industry. I really didn't know my gifts and talents and that my best skill is sharing my knowledge and helping other people. At a speakers' bureau the main role is marketing—lots and lots of marketing and that's not my strength."
Lesson Learned: Hollis switched from running a speakers' bureau to being a professional speaker, a role which fits her strengths and passions. You'll automatically be more successful at what you're good at and what you love to do. Figure out exactly what that is, and adjust your position in the business as needed.
25. Not knowing or accommodating your best work style
Some small business owners work best surrounded by people, in high-energy and high-pressure situations. Interaction stimulates their creativity. Others need space, quiet and time. Some work best with a steady daily schedule; others will pull all-nighters to get a project done, crash for a couple of days, and do it all over again. There's no right or wrong style of working; there's just the mistake of trying to make yourself work in a way that, literally, doesn't work for you.
Lesson Learned: Know thyself. You can't make everything just the way you want it, but if you know the factors that help you become most productive, you can build them into your life consciously, and reduce the situations that diminish your productivity.
26. Failing to validate the business model
Business consultant Michael Zipursky sees a common mistake made in entrepreneurial circles: "The single biggest mistake small business owners make is building without first validating their business model." You get excited about an idea, you ask a few friends what they think, and then you hit the ground running. Mistake.
Lesson Learned: "Small business owners need to ensure that people are willing to pay them real money for whatever it is they are offering," says Zipursky. "Without that validation... a lot of time and money can be wasted."
27. Failing to identify and use competitive advantage
Competitive advantage is the angle you have which separates you from the competition. It may be unique to your business. It may simply be an advantage that your competitors share but haven't used as an identifying feature. Either way, failing to find a strong competitive advantage and use it in your marketing is a common mistake, and one that can keep you from attracting and retaining customers who see no reason to switch from the competition to you.
Lesson Learned: Zipursky again: "Small business owners need to clearly articulate to their market what makes them different and why they are a better alternative to others offering the same products/services." With a clearly articulated competitive advantage, you're making it easy on customers to choose you rather than your competition.
Annie Mueller is a freelance writer based in St. Louis. She covers small business topics with a focus on lean/zero budget start-ups, business blogging, and simple (sane) ways business can use social media without selling their souls to Facebook. Her work can be seen online at Investopedia's Financial Edge blog, Young Entrepreneur, Wise Bread, Organic Authority, Modern Mom, and her own site, AnnieMueller.com. Find her on Twitter: @AnnieMueller.