Association of Female Executives of Trinidad and Tobago

Starting up and running a new business can be exhilarating. It is also quite daunting because as any entrepreneur quickly discovers there is no guidebook, and you have to think on your feet each step of the way. The unwary can easily become unstuck by plans that lead to disaster, and have to remember that sometimes an obvious solution can turn out to be the exact opposite.

Today we discuss seven common mistakes made by small businesses, and some suggestions on how to avoid them.

1. Not doing enough market research.
You and your boyfriend may think your product is the best thing since sliced bread, but if there are not enough potential customers out there who want to buy it at the price you are selling it for, you will be in trouble. Gaps in the market are sometimes illusions – find out what people really want and then give it to them. And don’t just ask your friends – they are bound to say it is a great idea. Go online to start your research. For example http://inventory.overture.com shows you how many times people have searched for a particular word on Yahoo, giving you a good idea as to it’s popularity.

2. Not charging sensible prices.
Many small business owners undercharge for their products or services because they undervalue their time. This can be counter productive because customers may think they are getting an inferior offering, and be put off. Look at what your competitors charge and analyze where you fit into the market, asking business colleagues such as your accountant and lawyer for their advice too. Being in business is about projecting confidence.

3. Overspending on advertising.
Many small firms spend a fortune on advertising because they think they should. In 10 years of running my organization, we have done only a handful of ads, primarily on the request of clients, and still have grown into one of the largest agencies on the island. Instead of advertising, focus your efforts on PR. Ask the newspapers to do a feature on your firm, sponsor a local sporting competition .. anything to get your name out there in a positive light. And network like crazy to spread the word.

4. Not making the best use of technology.
Just because you are a small business does not mean you should act in a small way. You need to invest in current and relevant technology. This can make the difference between whether the customer calls you or not. Nothing screams ‘amateur’ more than a firm with no website or email. And when you get the technology, use it. Don’t be one of those annoying business people who never responds to emails or returns phone calls. The tools are only as good as the professionals using them, so employ them to deliver timely and effective customer service. Invest in decent IT support if you can not do these things yourself, make sure your website is user friendly and that people can reach you easily by phone. Trust me – communication is a cornerstone of success.

5. Making yourself indispensable.
If you have started a business from scratch, it can be easy to think that you are the only person who can complete a task or make a decision. But as the business grows you will struggle to keep up, and fall behind with deliveries, accounts etc .. all of which can stifle your organization. So learn to delegate early. Write clear instructions on how you wish things to be done, from answering the phone to logging invoices, and teach others how. One of the best decisions I ever made was promoting, training and empowering a staff member to become a company director, who now makes decisions and allows me to take long holidays without worrying about the company!

6. Not setting goals.
You all know the importance of goals, and with a small business there is no difference. Set yourself realistic but ambitious targets and pour your energy into achieving them. A good way to start is with annual income – set a goal for the year and then work backwards breaking it down into monthly sales targets, factoring in peak seasons, etc.

7. Having a good idea and not doing anything about it.
Procrastination stops most people from ever starting their own business. Stop waiting for things to be perfect before starting your firm – they never will be. Don’t wait until the economy is better / you have lost weight / the kids have left home. The chances are you will end up procrastinating forever. So if you have a good idea and are passionate about it, start your small business now.

Adapted from ‘Beware the Deadly Sins of Start Ups’, Sunday Times 30th April 2006