7 common small business mistakes and how to avoid them

Small business owners are some of the most passionate and driven leaders in the world. Having survived the pandemic and now navigating an economic downturn, they have developed an incredible layer of resilience. What’s more, while adapting to a new landscape, SMEs have contributed half a trillion dollars to the Australian economy and provide 5.1 million jobs to Australian residents.  

But with so many plates to keep spinning to make ends meet, it's no wonder that some of them fall to the ground by mistake. Here are some of the most common small business mistakes, and how to avoid them. By learning from others that have gone before you, you can stand out from your competition and help your business thrive. 

Not having a business plan 

Writing a business plan can create that all-important business momentum, giving you a big-picture vision and a roadmap to follow, as well as clarity around priorities and objectives. And if you’re in need of funding, a business plan is something that shows you mean business. 

Of course, your plan may change as your business grows, so make sure you revisit it regularly. There are plenty of business templates available online, such as this one. 

Not knowing your target customer 

Knowing the audiences your business is set up to service is crucial, so spend time on research to discover who your customers are and what they want from you. This should be something you do on both an upfront and ongoing basis and build your products & services towards solving these customer problems. 

Segment your target audience and build customer profiles on each segment. Doing this with your existing customers will help you get an idea of what they need, and what services or products are driving the most traction. 

Once you make a start, you’ll soon find that customer segments can have more granular niches within them – revealing a range of opportunities for your business. 

Not having a trade mark 

It’s common to overlook the benefits of a business trade mark. A trade mark is a sign you use to distinguish your goods and services from other businesses. It can come in many forms, such as a business name, product name or logo. 

A common misconception is that registering a business name gives you exclusive rights to it. However, it doesn’t prevent other businesses from registering or using names very similar to yours. 

Registering your trade mark gives you exclusive rights to use your trade mark in Australia and legally deters others from using your trade mark on similar goods or services. Aside from the legal right to take action for trade mark infringement, there are non-legal benefits of trade mark registration, such as protecting your brand reputation and helping you stand out from other businesses. 

You should do a cost-benefit analysis to decide if having a trade mark is a good idea for your business. Make sure you’re across the requirements and process. You can find more information here. 

Not preparing for cash flow fluctuations 

Many small business owners struggle to stay on top of cash flow. The need to keep paying suppliers while dealing with seasonal fluctuations in trade, unpaid invoices and unexpected costs is all part of the deal. 

Cash flow fluctuations are more common than most people realise, so it can be helpful to have a back-up plan. Options include a line of credit, which can provide you with a safety net of funds to keep your cash flow on track. 

Prospa is a dedicated small business lender, and offers a facility limit of up to $150,000. Customers only pay interest on the funds they use, while they use them – and can make lump sum repayments when cash flow fluctuations allow. 

Not delegating 

Small business owners often feel like they can take on the world and that means it’s not uncommon for them to fall into the trap of feeling like they need to do everything themselves. As the business grows, it’s important that they consider whether it could be more efficient to start delegating or outsourcing some tasks. 

Automate what you can by implementing new tools and technologies and then assess which tasks you could delegate. You’ll also need to consider what information and resources you’ll need to prepare, and how you’ll establish clear ways of communicating to ensure success. Whether you hire a contractor, freelancer or full-timer to handle your marketing, order stock, or deal directly with customers, the decision to delegate means you can get on with what you do best: running your business. 

Focusing on the money, not the business 

Sure, money is the name of the game, but if you’re hoping to get rich overnight by running a small business, you’re probably going to be disappointed. 

Small business ownership takes perseverance, and in many cases some luck. It’s about being in the right place at the right time and consistently working hard. 

The statistics paint the picture. There are roughly 2.5m actively trading businesses in Australia, with almost 500,000 new businesses launching in the year to 30 June, 2022. But many businesses don’t make it past their first year. Seeking help and support in that first year can be vital to your success. 

Not setting a clear marketing strategy 

You’re going to need to put a plan in place to present a clear, consistent business message to the world. Known as a marketing strategy, this is the tactical roadmap that describes your initiatives, sets clear, realistic and measurable marketing objectives, and includes your budget. 

It doesn’t have to cost the earth, either. A simple sandwich board can alert passers-by to your in-store specials, while a social media presence can build over time and help get the word out to new and existing customers. 

A marketing strategy will help to keep your marketing efforts focused, and ensure you connect with the right customers. Revisit your marketing plan regularly and tinker with it as your business evolves over time.