According to the Australian Bureau of Statistics, by June 30 2021, there were 2.4 million active businesses in Australia. In 2020-21, 365 thousand new enterprises were established.
Entrepreneurship is still rising; more businesses come into play each year, even in the Pandemic era. But one ratio remains about the same; 90% of startups eventually fail, and that`s due to some common business mistakes.
The interesting thing is that business failure is well studied, and business mistakes are prevalent. But somehow, that doesn’t prevent businesses from making them again and again.
Because let’s face it, not all organisations are led by business management professionals. Today, business managers come from various backgrounds and learn how businesses function on the job.
We keep neglecting that business management is a science like medicine, engineering or software development.
Haven’t we all been anxious if a content writer or a sous chef put our dislocated shoulder back in place? That immediately doesn’t sound right, but we don’t seem to be as picky when it comes to business management!
6 Mistakes Most Businesses Make & How To Avoid Them
Like other human beings, business people are prone to making minor errors in their everyday work.
But for our purposes, we are about to discuss big mistakes that can potentially lead to business failure.
1- Lack of Vision, Strategy & Goals
In simple terms, vision is knowing where you go. Once that’s in place, you could start thinking of how to get there, and that’s business strategy!
When the business strategy is sorted, it’s easy to divide this into smaller pieces, coming up with departmental goals or targets.
You would be surprised how many businesses, new or established, don’t have a clear vision. The same goes for business strategy and department goals.
Here is a compact guide on how to create a business vision!
Often, each business function focuses on individual goals; it’s like pulling a boat from different angles and expecting it to move in the same direction!
If you know where you are going, you just drive, but you might end up circling when you don’t.It’s pretty much the same in business. Being directionless is a big business mistake!
2- Not Being Sales-Oriented
No one doubt that the number one priority in a business is making a profit. That’s how businesses stay alive.
But surprisingly enough, we face organisations that are not marketing or sales-oriented. (We aren’t talking about the sales orientation that neglects customers’ needs!)
Companies with large teams on production such as food, construction or software tend to become product, process or IT-oriented.
Let’s take a software startup with 20 developers and 10 marketers and salespeople as an example.
This company is likely to shift its main focus towards IT and processes because the developer team will outweigh the marketing & sales team.
This is exactly where the trouble is! Because the objective of this business is still making a profit, yet the company is not mainly discussing that!
Production is far more complicated than selling. That’s why complex thinking is needed & appreciated.
But selling is simple, where we have to get the basics right. If you underestimate this simple, your business becomes vulnerable.
3- Neglecting Marketing
Believe it or not, some companies continue their life without a single native marketer in their workforce!
The vast majority of marketing teams are 1-2 people and very few organisations truly put together an optimal marketing team.
It’s no different when it comes to coming up with a couple of effective marketing strategies!
But when you reserve engineer making profit – the core objective of any business – the very first function that comes into mind is marketing.
Your business is like a theory, and you can only validate that theory by marketing.
If your theory is correct, you should start selling and dealing with customers.
Marketing is the utmost initiator in a business. Therefore, it’s hard to get the ball rolling when marketing is disregarded.
Here is an insightful smallbusiness.co.uk article on the effects of neglecting marketing!
To quickly understand if marketing is neglected, you could investigate the marketing budget at a company.
If an organisation can’t give you a precise number regarding their marketing budget, that’s already calling for trouble.
4- Poor Accounting & Financial Management
As the name suggests, there are two main types of business mistakes related to money.
The first one is not being aware of your costs and revenue. That’s poor accounting. Thanks to various online accounting tools, it’s not very hard to fix this.
And the second one is finance-related; in simple terms, do you have enough money to operate a healthy business? Can you bootstrap, or do you need investors or credit?
Did you know that 82% of businesses fail due to money mismanagement? This is an area that all entrepreneurs must pay close attention to!
5- Weak Company Culture & HR Policies
Companies are still run by humans today, and not all of us are identical. That’s where creating a company culture might come in handy.
Company culture defines how things work in a company; it’s like a manual where you can find shared values, attitudes and goals.
The problem is most organisations take culture as the responsibility of HR. Nevertheless, today’s outstanding leadership is closely tied to creating a culture and managing it.
There is even a saying that culture eats strategy for breakfast! There is no character when there is no culture, so going in the same direction gets tough.
Check out Remote’s publicly available handbook here. What a brilliant example of solid company culture! Creating this sort of document would be a great start for most organisations.
6- Avoiding Customer Feedback
We saved the most significant business mistake for the last one!
Sadly some of the new generation companies seem to avoid customer feedback, claiming they have their agenda!
This is undoubtedly a dangerous game because customers are directly tied to profit, which is the only reason businesses exist.
We are not suggesting you make critical changes to your product development due to single customer feedback.
But being responsive to customer feedback and proactively engaging with customers as a game plan have outstanding ROI.
That might explain why they became billion-dollar companies in no time. Avoid these business mistakes to make sure your venture is a long-lasting one!