Starting and running a business is not for the faint of heart. All kinds of issues can and will arise in the course of operations, requiring you to act and innovate with care.
Unfortunately, common mistakes and pitfalls cause 20 per cent of small businesses to fail within a year and another 30 per cent within the second year of operation. However, these are common mistakes that can be avoided through careful planning, effective leadership, and positive company culture.
As a business owner or entrepreneur, you can avoid seven of these common mistakes by taking actionable steps for success long term. Follow these strategies to develop a smarter, safer approach to business.
1. Make a Thorough Business Plan
One of the most detrimental the common mistakes new business owners make is failing to develop a thorough business plan. This plan is essential, as it will detail everything from your overall strategy to the individual steps you take to fulfil that strategy.
A business plan should include all of the following elements to be thorough:
- An executive summary
- A description of products, services, and your unique selling point
- A market and industry analysis
- An operations and management layout
- A strategy and implementation plan
- Financial projections and goals
These are just your baseline needs for an adequate business plan. You may choose to add additional information, such as a full marketing campaign analysis or complete production outlines.
The key is to be prepared. Every business (new and long-operating) has to address the workflow and the risks involved. Fortunately, a positive working environment also helps to mitigate risks while streamlining productivity.
2. Develop an Empathetic Company Culture
Labour shortages have been a significant pain point for companies of late. The “Great Resignation” is ongoing, a period in which workers are resigning and looking for new jobs at record numbers.
For instance, 41 per cent of the global workforce reportedly is considering quitting their jobs. Meanwhile, toxic corporate cultures have been cited as the number one reason for these resignations.
Under these circumstances, it is in the best interests of business owners to develop a strong ethical and empathetic company culture that puts people at the forefront of its considerations.
This starts with making empathy a core value of your company culture. From here, develop meetings, workflows, production strategies, and operational accommodations that work for your employees and customers.
Optimize your team by integrating these strategies, including but not limited to:
- Cultural sensitivity training.
- Open discussions and meetings.
- Zero-retaliation problem reporting policies.
- Flexible work schedules and work-from-home integration.
- Integrated employee feedback and innovation opportunities.
With an inclusive environment in which employees feel heard, you can better catch and resolve problems that make their way to your customers. In the meantime, you’ll have a loyal workforce that can survive the Great Resignation era.
Develop an empathetic workforce to avoid the common mistake of burning out your workforce. From here, tackle all other challenges with built-in measurements for success.
3. Take a S.M.A.R.T. Approach to Business
Another common mistake in business planning comes from failing to set feasible and measurable goals. That’s what the S.M.A.R.T. approach is all about.
Your business should take on every obstacle with this powerful framework in mind. This means instituting goals and processes that are:
What does this mean? Simply that you should guide every business action through clearly defined goalposts, with built-in determiners for success.
For example, a S.M.A.R.T. goal might look like the following: Obtain two new million-dollar clients and increase revenue by 2.5 per cent for the fiscal year.
In this example, goals are detailed enough so that at the end of the pre-described timeframe, a company might instantly be able to measure its success. If they are unsuccessful, these goals also allow a business to explore why through the acronym.
Failure might result from unattainable goals. Increased revenue during a global pandemic, for instance, was impossible for a wide variety of business models.
Alternatively, your goals can be irrelevant to the current market. Shifting customer behaviours and new competition might require an entirely different business strategy.
One way to help ensure the relevance of your goals is to gather helpful tools and resources.
4. Build a Helpful Tech Stack
We live in the age of data. The big four tech companies store an estimated 1.2 million terabytes of information among them. Now democratized data tools make it easy to store your pool of data.
However, you’ll need the right tech stack to make this process worthwhile. Data is only useful if it is relevant and capable of being analyzed for actionable business strategies. Fortunately, modern technological innovations make this easier than ever.
For example, cloud-based information systems provide a means for gathering decentralized data streams into one cohesive location. From here, artificial intelligence and deep learning algorithms help process this data for analysis.
Businesses in the modern era commonly make the mistake of collecting data without considering the technologies that maximize the usefulness of this information. You can avoid this mistake by building the right tech stack for your business.
This starts with aligning tech with your business needs. Whether you hope to streamline production or customer outreach, there are tools some tools Internet of Things (IoT), for example, is a category of tech that includes all kinds of sensors and monitors built for gathering real-time operational data. Then, information and content management systems further streamline the insights generated from the IoT.
With the right tools, you can potentially automate processes, reduce maintenance costs, and build a better business. However, you’ll also need to take steps to protect your tech stack.
5. Create a Strong Cybersecurity System
Businesses frequently underestimate the importance of cybersecurity. This common mistake can have devastating consequences. With the average cost of a data breach at $4.24 million and climbing, you can’t afford to neglect cybersecurity.
The more data you collect from your customers, competitors, and internal processes, the more liable you are to a cyber attack. Fortunately, security technology is evolving just as fast as offensive tools.
You can better protect your data and systems with the right strategies and technologies. The following are best practices for avoiding digital vulnerabilities:
- Create a well-documented cybersecurity program.
- Conduct frequent security reviews and risk assessments for assets and data stored in the cloud.
- Train staff periodically and consistently in cybersecurity awareness.
- Encrypt sensitive data.
- Make use of well-reviewed and tested security tools.
With a thorough approach to cybersecurity, you significantly reduce the risk of cyberattacks. Unfortunately, however, there are still other threats to worry about.
6. Don’t Neglect Physical and Financial Security
Businesses also commonly make the mistake of neglecting the security of their assets. As the economy experiences pain points, employee theft is up. The data reveals that 20 per cent of every dollar earned by a U.S. company is lost to employee theft, while half of all bankruptcies are directly caused by the same.
With these shocking numbers in mind, businesses must create a means of protecting their assets. This should start with a system of checks involving your physical and financial security.
First, ensure your business plan includes security procedures. These might range from cash handling workflows to the installation of metal detectors. The important part is to cover all your bases.
Secondly, protect your financial assets with bookkeeping security. Evolving technology supports techniques like triple-entry accounting, in which financial data is stored immutably in three different ledger systems. From here, auditing your finances is simple and traceable.
While you don’t want to assume criminality from your employees, incorporating common-sense security procedures ensures you don’t fall into this common mistake. From here, look for other means of growing and protecting your business.
7. Continuously Assess and Innovate
Finally, avoid the common mistake of becoming static and irrelevant through unchanging business practices. The market is always changing. To keep up, you’ll need to innovate.
Whether you are looking for ways to get over a business failure or simply seeking out growth opportunities, innovation is key to success. Fortunately, the other helpful strategies listed here will help in this regard.
That is because thorough business plans, empathetic cultures, smart goals, helpful tech, and security all build an environment in which new ideas can thrive. Employees will be able to share their ideas and have the tools to make them work. Meanwhile, your new strategies will be protected against theft and vulnerability.
Use the data you collect alongside the expertise of your workforce to continuously innovate. You never know when an idea proposed in a meeting could spiral into a multi-million dollar business strategy.
Avoid stasis and similar mistakes with these actionable approaches to business. As a result, you’ll design a business model capable of thriving in any economy.
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Ainsley Lawrence is a writer who loves to talk about good health, balanced life, and better living through technology. She is frequently lost in a good book.