Did you know that according to Statistics Canada, nearly half of all Canadian small businesses call it quits before they hit their fifth anniversary? The numbers also show the success rate starts to decline in year two, where only about 70 percent of firms survive after that second year in business. Too many business mistakes are being made by inexperienced entrepreneurs.
While the reasons for why companies fail are numerous, many business blunders are in fact avoidable and can be prevented with the right knowledge from the get-go.
We can’t stress enough how a solid business plan can contribute to your business’s success.
We’re all about the killer tips, so we’ve come up with some of the biggest business mistakes entrepreneurs make and how to avoid them.
Business mistakes to avoid:
Mistake #1: Drawing the conclusion that since you think your business idea is great, it will be successful
- Do a competitive analysis to investigate whether there’s room for your product or service in that niche.
- Do your market research. Conduct a survey and test your product/service out on your target audience to ensure it’s truly filling a need in the marketplace.
Mistake #2: Being far too optimistic in your financial projections, particularly in the valuation of your business and potential earnings projections
- Account for what you’ll need by listing predicted earnings and expenses for each month, making a best-case and worst-case scenario.
- If numbers aren’t your thing, get professional advice. In fact, get a second opinion even if you’re a financial whiz. Professionals at your financial institution, Service Canada and Small Business BC can help make your plan bulletproof.
Mistake #3: Assuming your product will sell itself and not bothering to budget for marketing
- Develop a marketing plan with tactics to help you reach your target audience. This truly can make the difference between success and failure.
Mistake #4: Hiring too many staff initially
- This may not be the most economical use of your resources when you’re just starting out. Short-term contractors can be a good compromise if you need workers with a specialized skill set.
Mistake #5: Hiring the wrong staff
- Before you hire, outline the exact tasks you need done and the skill sets required, then hire based on those criteria. Hiring your less-than-qualified best friend or family member could spell disaster for your business, both in the work they actually do (or fail to do properly), and in the impression hiring them makes on potential investors or lenders.
Find more information for small businesses at Small Business BC and check out our small business banking solutions.