7 Common Mistakes Newbie Business Owners make
Just got a new business idea and you are excited to launch? Read this first.
Starting a new business can be overwhelming, especially if you are not equipped with the right knowledge from the beginning. Worse still, you are at risk of making fatal mistakes that will cost you a lot.
To avoid that, we asked our community members some of the mistakes they made as newbie business owners and we received some insightful responses that will help you.
Let's dive in.
7 Common Mistakes Newbie Business Owners Make and How to Avoid Them
Mistakes are part of learning, and everyone makes one. However, it is better to learn from the mistakes of others than one's mistakes. The following are mistakes to avoid to build a successful business as a newbie.
1. Not Learning about the Business before Starting
Ochi Ekene, the founder of Feetz Luxuries, said, “I didn't get enough knowledge about my business before I started, and it affected me a lot."
Are you also guilty of this? Do you have adequate knowledge about this business you want to start, or are you just moving on vibes?
Gaining knowledge about your business idea is vital, as it sets the right foundation that your business needs to grow. You can gain this knowledge by speaking to or observing individuals and businesses in your niche and glean from their wealth of experience.
Now, I understand the mindset of seeing these individuals as competitors. However, you can choose to have the perspective that your competitors are experienced people whose wealth of knowledge you can tap into to succeed.
You can also acquire knowledge by reading books, joining business accelerators, speaking to a business coach, joining a business community, and more. Beyond learning about your niche, you should also gain general knowledge on how to run a successful business.
2. Not Identifying the Right Audience to Target
Another common mistake newbie business owners make is not identifying their target audience. We discussed this in our business community, and many people said they had this challenge.
Seeing that many people mentioned this, we concluded that it was a significant problem that needed to be addressed.
Knowing your target audience is important for many reasons. First, it helps you create relevant content that solves their problems and identify the right channels to attract them.
A lack of knowledge of your target audience is like shooting in the dark - you will keep missing your target. Read our guide on how to identify your target audience to learn more.
3. Not Separating Your Business Bank Account from Your Personal Account
When we asked people to state the business mistakes they made when starting, two people said this.
According to Eunice Adekunle, the founder of SBC, "One mistake I made with my printing business was not creating a separate bank account for it. This resulted in not being able to give an account of money made, and it affected the business badly that I had to start all over again.”
This is one example out of a million that shows how combining your funds with business funds can prove fatal for your business.
We also spoke to Helen Olayiwola, the CEO of Asher Resource Centre for Kids, and she stated something similar.
She said, “I combined my business funds with personal funds and spent them together as they came. This affected me as I was often stranded whenever I needed to restock goods for the business. So, I had to always wait till the end of the month to take out funds from my full-time job salary to fund my business.”
To avoid this mistake, open a business account for your business activities as soon as you begin operations. Even if your business is not registered, you can open an account in your name dedicated to the business.
This makes tracking your business finances easy, enhances better decision-making, and helps you attract the finance you need to grow.
4. Not Crafting a Business Plan
Without a business plan, you have no clear plan on how your business will operate and this is a mistake you can't afford to make.
Your business plan is an architectural plan that gives a clear overview of your business, such as goals, financial projections, marketing plans, products/services, target audience, etc. Thus, it is an important document that helps you communicate everything about your business to relevant stakeholders and guides your business operations.
However, if creating a business plan seems like a lot of work, you can create a mini-business plan, known as a business model canvas.
A business model canvas is a mini document, usually one -page, which gives a clear view of how your business should operate to prevent overwhelm. It also helps you understand your target audience and the value your product provides to them.
With our business model canvas, you will gain clarity on your business operations and get equipped on how to scale. Get a copy to move your business fast ahead.
Need to get your business documents together? Let's help you.
5. Not Keeping Financial Records
We spoke to a business owner who spoke about how this mistake made him lose #93,000 as a student entrepreneur.
Here's the story as told by Mustapha Ibrahim of Musty Telecom.
"In 2020, I got a startup capital from my cousin to start a POS terminal business. The business was very successful, but I realized a big mistake I had been making two years later in 2022.
At this time, I was in school for my final year projects and exams and couldn't handle the business as before. So, I employed someone, and due to the trust I had in her, I allowed her to make transactions without checking in.
The day I realized my mistake was when I came around and she made a failed transaction. The transaction responded with insufficient funds but she wanted to pay the person.
Thankfully, I paid attention to the sound of the terminal, so I asked to check the transaction and saw that it was indeed unsuccessful. At this moment, I started calculating and realized I had lost about #93,000 as an undergraduate student striving to prosper.
Must-read: Does your Hustle Pay? And other questions for small owners
I felt so broken and disturbed. From that day, I returned to the financial record template my cousin gave me, and I've been following it hook, line, and sinker!
I have discovered that documentation and record-keeping are paramount in business. The loss is what I call 'Break to Make' ".
Helen of Arc Children also spoke of how not keeping financial records made her lose an opportunity. "Not keeping my financial books hindered me from winning a business pitch sometime in 2022, as I had no backing for financial projections."
I am sure you have picked many lessons from those stories already. Let's get to the next one.
Need to get a hang of your business finances? Hit us up!
6. Focusing More on Your Product Instead of People
I was scrolling on WhatsApp when I saw a business owner post about how she made a design for her customer, but the customer didn't like it and asked for another. She then had to make another design by changing the font and the client loved it.
According to her, this second design wasn’t so fine. But for the customer, it was the best. This reveals that you are in your business for the people you serve (target audience/ customers). So, they must be your focus.
As a newbie business owner, it can be tempting to focus on your business and speak like it is the best thing after sliced bread. However, you will have a better chance of succeeding when you focus on what your customers want and not what you think they should want.
Putting your product first and chasing money instead of prioritizing customers’ satisfaction is the fastest way to go under. You definitely don’t want that.
7. Not having a Marketing Plan
Another mistake many new business owners make is not creating a marketing strategy. Many newbie business owners mostly rely on their friends and families and word of mouth for sales. However, this is not sustainable in the long term and will stunt your growth.
To succeed in business, you need to plan on how to reach individuals outside your circle of influence. By leveraging various marketing channels such as social media marketing, paid ads, SEO, content marketing, and more, you will be on your way to success.
Marketing is a non-negotiable part of every business. And yours is no exception, regardless of how great your product/service may be.
Related:#LoudIt: Want your small business to be seen and heard? Tell a story!
Starting your New Business like a Pro
Starting a new business can be likened to a 1-year-old learning to walk. He/she will not get it right at first.
However, with a new business, you needn't do trial and error. You can get ahead of the curve by seeking knowledge from those ahead and being part of a community that truly supports your growth.
At Triift Africa, we provide business owners with resources to start and grow their businesses successfully. In our community, you also get to learn and network with other Savvy business owners to take your business from hustle to portfolio. Join us today.
