There can be no definitive manual on setting up and running a small business. It's one of those things that you inevitably only learn through your own experience. The successes and failures of others, however, can provide extremely valuable information to guide you on your path. So from my own experience and from the common stories I hear from being involved with over 4000 small business clients, I have compiled what I see as the five biggest mistakes people make when running a small businesses.
1. Underestimating the Amount of Effort Involved
One of the biggest frustrations I have in business is how simple and quick it is to have an idea, but how long and how much effort it takes for that idea to actually manifest itself as a living reality. In business, things seldom go exactly to plan, they take longer than expected and almost always require more resources to complete than originally planned. Being aware of this and cooperating with it allows you to plan more effectively and alleviate a lot of surprises and stress.
Also when you're running a small business you are responsible for everything so anything that hasn't been delegated will always end up on your plate -- this can accumulate to be a huge amount of "stuff." So be realistic, be prepared, keep things as simple as possible and try to delegate or out-source aspects of your business as soon as you can.
2. Not Having a Plan
Unless it's part of an investment pitch I personally don't think you don't need a lengthy and highly detailed business plan, but you still must have a plan. Without one you'll be making reactive decisions without perspective. So you need a focus, strategy and game plan to use as a guide and reference point. Use your plan to pull you out of the endless barrage of daily tasks, remember where you are going, course correct and prioritize if need be, and then get back into it. Have business goals at three months, six months, one year, two years and five years. Keep your plan simple and realistic so it can be easily revised as the needs goals of your business change.
3. Failing to be Agile
Just because you have a plan doesn't mean everything will go to plan. It is important to have a clear focus but it is equally important to be flexible. You need to be very mindful of what is and isn't working. Quite often the business you start will not be the business that you end up with. It will morph and change. Keep your eyes open for the opportunities and the possible threats. Be willing to shift your focus into what is working. Holding on too tight to your original ideas or plans of how things "should" go and fighting for that plan may not be your best path for success. Be flexible and go where the money is, not where you want it to be. Among the advantages of being small is that you can adapt quickly. Be open to the feedback that you get from staff, customers, and competitors, and be willing to course correct.
4. Not Hiring Help
Know what you are good at and not good at, and be realistic about how much time you have. It can be easier to identify what we are good at but it can take real honesty and vulnerability to look at yourself and assess your own weaknesses.
From my experience the greatest momentum I have had in my business was when I let go of what I wasn't great at and hired people who are great. When running a small business there is a tendency to want to do everything yourself. It seems logical to save money and keep control, but both of these motivations can be very limiting. When you are in touch and attuned to the reality of what you are good at and bad at you will be placing yourself and the business in the best possible context for success. Do what you do well and look to hire, or out source, in those areas that you are weak.
5. Not Keeping Your Bookkeeping in Order
If you think this point sounds boring or unimportant you need to pay attention. Without accurate bookkeeping you are flying blind. Imagine driving a car and suddenly closing your eyes -- it can be that dangerous. Whether or not you're a numbers person, you need to make sure your bookkeeping and finances are kept in order, and then pay attention to the figures.
Ultimately the success or failure of your business is measured by your financial records. The more accurate your records are the more informed you will be to make intelligent decisions about the business and to course correct when needed -- whether that's avoiding trouble or capitalizing on what's working.
You may have heard that "what you do after you fail determines your ultimate success," so try and make your failures as small as you can. Expect to make mistakes, but plan to succeed. Be focused but stay flexible. Be creative but be open to the experience of others.
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