I’ve been apart of almost 10 new ventures before turning 35, and I will tell you that those first few years can be both brutal (hello, it’s expensive) and exciting.

I am big on the “BIG IDEA” – honestly, I could come up with BIG IDEAS all day long (I am a branding nerd!) and so it’s been a huge learning curve for me over the years to get past the big idea and really build the systems I need to make the company not only survive but thrive.

I’m still learning, and honestly, I know that I (and all of you other entrepreneurs out there hitting the pavement with me!) will continue to fail – it’s my hope that this little bit of knowledge I have to share with you today can help us all fail forward.

Here are some common mistakes that new business owners make in the first year of being open and what prevents most small businesses from staying afloat:

1. Insufficient Planning

Many new business owners make the mistake of underestimating the amount of planning and preparation required to start and run a successful business. Without a solid business plan and a clear understanding of their target market, new business owners may struggle to attract customers or secure funding.

It has been incredibly beneficial to me to be the one that builds the business plan for myself. Through building a SWOT analysis, spending the time to research my audience, and making concrete plans with my lawyer about how the business is structured and registered with the government, I’ve been able to build stronger foundations for the businesses themselves. (Not to mention, a very clear depiction of my target audience.)

 

2. Lack of Financial Management

Financial mismanagement is one of the most common reasons why new businesses fail. This includes not keeping track of expenses and revenues, not budgeting properly, and not having a contingency plan for unexpected expenses or setbacks.

Get a great accountant and/or Bookkeeper to help you, and set up the systems to track where the money is going to and coming from.

 

3. Relying too Greatly on One Customer or Client

Relying too heavily on one customer or client can be risky, especially if that customer or client decides to take their business elsewhere. It’s so easy to sit back and enjoy the ease of one client or buyers reliance on you, especially since you’re so busy managing all the other details of your business, but you cannot afford to let that one relationship carry you. Diversify your customer base.

 

4. Inadequate Marketing

Without effective marketing, (IE: Building a marketing plan, working with your team to build a super strong SWOT – Strengths, Weaknesses, Opportunities, Threats – analysis of your brand, and a clear idea of who your target customer is) a new business may struggle to attract customers and generate revenue. New business owners should develop a comprehensive marketing plan that includes a mix of online and offline strategies to reach their target audience.

 

5. Poor Customer Service

Good customer service is essential for any business, but it’s especially important for new businesses that are still building their reputation. New business owners should prioritize customer satisfaction and make sure their customers are happy with their products or services.

PRO TIP: Use the fact that your business is new and your team is small to get your first customers on your side. People love to feel like they’re the first ones to know a thing, and they love even more to feel like they know the person that built that thing. It’s a point of pride. Go out of your way for them. Make them feel like you are in it for them. Give them a reason to be your biggest fan, and they will continue to be the strongest marketing tool you will ever have.

 

6. Failure to Adapt

You have got to stay light on your feet. Adapt or die.

Markets and consumer preferences can change quickly, and new businesses that fail to adapt may quickly fall behind. Don’t be too precious with the idea of your company or brand that you had in the beginning. People change, their needs change, and culture does shift – rapidly.

Remember that famous Einstein quote: “The definition of insanity is doing the same thing over and over again and expecting different results.”

New business owners should be not only open to the possibility of change, but ready for its inevitability and able to pivot their strategy when it is necessary.

 

Conclusion

At the end of the day, every single new brand or business is its own thing. There’s never going to be one silver bullet answer for how to survive the first 5 years. It’s brutal out there.

However, I can tell you, if you plan well, create systems that make it easy for people to come on board smoothly, and stay adaptable, you will set yourself up to better navigate the challenges that WILL come.
Oh, and definitely get yourself a great lawyer. 😉