5 Lessons I Learned the Hard Way as a Small Business Owner
David Bakke run an online reselling business and also writes about small business success and money management tips on Money Crashers Personal Finance.
The Internet is filled with stories of making $50k in the first year of self-employment and six figure incomes shortly thereafter. Unfortunately, these examples aren’t the norm. I launched two home-based businesses about three years ago and have had decent success with both.
While the risk of failure is substantial, with some common-sense, frugal spending, and research, there’s no reason to think you can’t succeed. Just don’t expect your business to be an overnight sensation, and do expect to make plenty of rookie errors.
Here are a few to look out for:
1. Not Sticking With What You Know
In the beginning, I found a variety of ways to make money that seemed easy. However, one key component was missing: I didn’t know anything about the industries. No matter how lucrative any venture seems, if you aren’t well-versed in the area, you’re better off passing on it. This is especially true if you are a first time small business owner. Rookie entrepreneurs will have enough on their plate without trying to get up to speed in an unfamiliar industry.
2. Underestimating the Importance of Customer Service
When first starting off, concerns about inventory, profits, and expenses can make you forget about customer service. This is a big mistake. If you’re a newbie, or even a seasoned veteran, stellar customer service should always be a priority. You can have a great small business idea, but if you can’t deliver it to your customers in a fast, convenient, and friendly manner, all your efforts could be for naught.
3. Forgetting That Every Penny Counts
Overspending is a big no-no, no matter what stage your business is in. In order to be successful, you’ve got to save every penny you can by utilizing cost cutting ideas for your small business. Buy used equipment, barter your services for the things you need, and do whatever it takes to save money. Keep in mind that you can reinvest whatever you save to further expand your business.
4. Being Afraid to Ask a Higher Price
Whether you’re running a goods or service-based business, you’ve got to know when to undercut the competition because you’re a newbie, and when to command a higher price. In the beginning, you’ll want to make a name for yourself based on price, but after you have enough referrals, recommendations, and reviews under your belt, it’s time to increase your profits. Once you know what you’re doing, you no longer need to be the cheapest kid on the block.
5. Thinking Your Product Will Sell Itself
Whether your business is online or brick and mortar, you can never underestimate the power of marketing. You’ll want to start off with at least a modest website where customers can get information about your venture. Use social media sites like Facebook, Twitter, and LinkedIn to build your business. These platforms are inexpensive, though will require a time commitment in order to be effective. To create an interactive experience for potential customers, respond to all questions and comments in a prompt fashion. Next, investigate other forms of small business marketing like email, direct mail, and a frequently updated blog to complement your website and social media efforts.
Be sure to investigate your niche thoroughly before you launch, but don’t over-research such that you keep yourself from launching. There will come a point in time where you either need to fish or cut bait. You can also be assured that no matter how much research you do, you can’t anticipate every problem you’ll face. So get out there with what you’ve got, and keep these rookie mistakes in mind to minimize the problems you do encounter.
What errors have you made as a small business owner?
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