The 7 most common mistakes small businesses make

Leading a small business success is one of the most challenging endeavours you can face. Avoid these top 7 mistakes to lead your startup to victory
Jun 25, 2020 • 9 minute read
Edward Kost @EdwardKost
Technical Co-pilot
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Avoid these commmon mistakes to prevent your small business from failing

Here's a much needed reality check, 90% of startups fail. When the odds of failing are so high, you can't afford to be complacent. Growing a small business is like navigating a ship through a storm, you can't let go of the helm and expect your vessel to continue on a straight path. Waves crash unexpectedly from all directions so you need to be constantly adjusting your bearings to navigate through them.

To help you survive this economic storm, we've aggregated the top 8 most common mistakes small businesses make. To avoid becoming another failure statistic, read on. 

1. Poor market research

To launch a successful business, you need to have solid validation of a market opportunity. That's a lot more than what you think is a good idea or what your friend and family validate as a good idea.

A comprehensive market research report should cover the following essential components:

Market definition
  • Who are your potential customers?
  • Geographic locations.
  • Customer profiles.
  • Market niche.
Market opportunity size
  • Estimated number of potential customers.
  • Percentage of the market you will be focusing on.
  • Is your market likely to grow?
Consumer segmentation
  • Refine your research by dividing your target market into groups of shared characteristics (age, specific interests, habits etc).

Insufficient market research results in small businesses undervaluing themselves. How can you set your pricing if you are unaware of industry benchmarks? A deep understanding of industry benchmarks will help you establish a more prestigious offering that will justify higher pricing, and in turn, result in a more profitable business.

Because effective market research has a direct impact on the future success (or failure) of your small business, you shouldn't trust yourself to complete it. Not only because you might lack experience but because your biased ambitions may skew your perception of the data. 

2. Lack of emphasis on the customer experience

Why should customers choose your business? Is it because you're cheaper than your competitors? That doesn't have to be the primary reason. Most small businesses incorrectly assume they need to underprice their competitors to have any chance of growing. 

This results in forced scaling to keep up with higher demands for cheaper business. But with lean profit margins, such scaling efforts are unsustainable and, eventually, destructive.

You don't need to undersell your small business to be successful. Customers will choose you over your competitors if you offer a superior customer experience, even if your pricing is much dearer. 

The reason for this is that we're spearheading into a future where the human interaction is being rapidly replaced by digital solutions. From one perspective this is lowering overheads and transforming businesses into hyper-efficient supercomputers, but from another perspective this is frustrating customers and plateauing growth.

It doesn't matter how technologically superior your small business, if your customers feel abandoned they'll abandon you and your 'impressive' enterprise.

There's nothing wrong with innovating, it's absolutely necessary to remain relevant in the quantum powered digital future of business. A perfect balance needs to be established between innovation and customer experience. 

The key to succeeding as a small business is to develop a customer centric organization powered by innovative digital solutions.

Perceptive businesses are noticing this profitable divide and are closing in on it. In the 2020 Digital Trends report by Adobe and Econsultancy, customer experience was voted one the most important business opportunities in 2020.

So, if you're worried about the future of your small business, don't start slicing your pricing, rather, focus your attention on the metric most businesses neglect, the customer. 

86% of buyers are willing to pay more for a great customer experience, so this strategy shift won't only save your small business, but it will also justify an increase to your pricing.

Here are a few bite sized tips to help you optimize the experience of your customers.

  • Always provide the option of speaking with a human (over the phone!)

Calling a business has almost become an extinct activity. Most businesses only offer email support, and those that do provide a phone number expect callers to endure prolonged wait times and disjointed resolution processes in addition to their merciful customer service.

Be different. Be better.

Display a phone number on your website, make it prominent. Don't just display it once, make it clear to your visitors that you and your team are always available to go above and beyond to help them, even over the phone.

Brag about your superior call handling system. Let your visitors know their queries will be answered and resolved by one person, no multiple transfers. No prolonged waiting times. No ignorance of their historical activity and requirements (if they're a client).

You'll be surprised at the positive impact this simple change will achieve. When was the last time you visited a website that provided a phone number?

Be different. Be better.

  • Know your customers

Are your visitors  pleased when they navigate your website, or are they a little frustrated? How do you know? 

How far do visitors step through your sales funnel before they bounce off your website?

How many visitors start filing in a contact form but never finish? Why?

If you don't confidentially know the answers to such questions, you don't know your customers. Which means you don't know what you need to improve to please them.

Luckily there are a wealth of software solutions available that can help you measure the website activity of our visitors. Hotjar is one such example that captures a visitor activity heatmap on all of your web pages. With this invaluable intel, you can identify possible frustrations and adjust your website's design to optimize the user experience. 

Besides digital solutions, the humble survey is a powerful method of learning about your customers. Periodically send a survey to your email list that leads with an open ended selfless question such as 'What can we do better to help you succeed?' Customers will stay loyal to a business that's continuously evolving to further the success of its clients.

3. Waiting too long to hire

When operating within a tight budget, it may seem prudent to do everything yourself. After all, it keeps overheads low and, therefore, increases the chances of survival right? Wrong. This approach, in fact, has the opposite result. It sets the timer for your business' demise.

You're not superhuman. Fatigue clouds reasoning and justifies terrible decisions that would have otherwise been avoided with a fresh mind. Rest is a weapon, take care of yourself.

There are much cheaper alternatives to hiring in house staff. Hiring freelancers is quickly becoming a popular solution amongst businesses. The efficiency and cost effectiveness of this option has been globally highlighted by the Coronavirus pandemic

Freelancers are cheaper because you don't need to pay them any benefits. It also takes only a few minutes to hire freelancer talent compared to an average of 36 days with conventional hiring methods. 

And because you're not obligated to keep them on board all year, you can simply hire freelancers to help you with any impromptu projects, for however long you need them. 

Times have dramatically changed for small businesses for the better. Now you can tap into expert talent across any industry, anywhere in the world, in a matter of minutes, from the comfort of your living room. 

Clever small businesses that take advantage of this can build an empire on the shoulders of masterful talent at a fraction of the cost.

4. Lack of Intrigue

Most prestigious businesses achieved their success through the subtle art of intrigue, yet, only a few understand how to implement it correctly. Intrigue is the compulsion to learn more. To ask questions, to investigate further.

When people see your business logo, do they want to find out what it means?

When people read your slogan, do they want to learn more about your offering?

When people visit your website, does its design encourage further perusal?

Clever graphic designers, web designers and content writers can coat every aspect of your business with a viscous layer of irresistible intrigue. This will transform every area of your business into a powerful customer acquisition vortex. 

5. Not having an emergency back up plan 

Many small businesses crumbled under the weight of the Coronavirus pandemic. This simple reason for this is that they weren't prepared for such a crisis. As customer activity plummeted, businesses resorted to mass layoffs in a panicked attempt to cut costs quickly.

But this solution was not sustainable. With little to no employees a business cannot keep functioning, so it eventually grinds to a disastrous stop. 

Every small business should have cheaper alternatives for all of its operations and an efficient method of substituting them during times of crisis.

As a crisis deepens, a small business should progress through each stage of its cheaper alternatives in a controlled manner that ensures the business always remains operational.

Besides conforming to the remote friendly staffing model brought forward by the Coronavirus, small businesses should have the backup option of switching to a complete freelancer workforce when employment costs need further tightening

A freelancer workforce can now be effectively managed and scaled with the assistance of a Technical Co-Pilot, so you don't need to worry about your growth aspirations being thwarted with this setup. 

freelancer technical copilot

6. Playing the experience game

Customers shouldn't choose your business because you have the most experience. They should choose you because you are the best. Period. 

There is no unspoken rule that says you need to state your years of experience on your website  to convert leads. Many years of experience means nothing at all if your offering is terrible and your methods are outdated.

Instead, demonstrate why you are the best at what you do. Display a portfolio of your completed work. Adorn your website with customer testimonials and social ratings. 

Which of the following do you think is a more compelling conclusion after visiting a business website:

  • This business can help me because they have 30 years of experience.


  • This business can help me because they have demonstrated their capabilities.

So stop boxing yourself into the 'experience game'. Even if you're the new kid on the block, you can still win by identifying the key issues your clients face and demonstrating how you can effectively solve them.

7. Premature scaling

The primary cause of startup failure is premature scaling. It's difficult to gauge when a small business should start scaling, and when it does take place, it should be controlled and meticulously monitored.

Your small business is in a position to start scaling when it meets all of the following criteria:

  • Positive cash flow 

  • Proven demand for your product / service 

  • All primary staff departments are established 

  • Sufficient legal support is in place

  • Operations are lean (mitigated wastage)

  • Staff onboarding and progression processes are in place

  • You're turning away clients due to significant workload

Most small businesses immediately start scaling when they begin turning away clients, but this is just one of at least 7 indicators of scaling readiness. Turning away clients feels like a detrimental decision for a business, so it's understandable why so many fall into the trap of premature scaling. 

Dashboards displaying all of your key metrics will keep you informed of the health status of your business and the effectiveness of your scaling methods. Never launch a scaling campaign blind. You need to have complete transparency into every dimension of each scaling campaign so that you can immediately discontinue the non-profitable ones. 

Freelancers can help you avoid common small business errors

Freelancers can help you avoid the common mistakes that destroy small businesses. And unlike the logistical nightmare of working with multiple businesses, you can manage all of your projects under the one convenient platform,

Here's how freelancers can help you:

A freelance market researcher can investigate the demand of your business solution and compile the findings in a detailed market research report. 

A freelance CX expert can help you establish a customer centric organisation with a steady stream of positive reviews and referrals.

A Technical Co-Pilot can source the best freelancer talent for any of your projects so that you don't overwork yourself to failure, They can even completely manage your freelancer workforce and help you scale them most efficiently.

You can work with a graphic designer, a web designer, and a content writer to coat every perspective of your business with irresistible intrigue.

Final thoughts

Unfortunately most small businesses fail, but by being aware of the common failures, and their warning signs, you'll give your small business the highest chances of survival. 

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