Small businesses are the backbone of the Canadian economy. According to statistics, they account for more than half of all private sector employment and generate about two-thirds of new jobs. So it’s no wonder that so many people aspire to own their own small business.
The problem is that most small businesses don’t make it past the five-year mark. In fact, according to research, only about one-third of small businesses survive more than five years, and only half make it 10 years or more.
Growing a small business can be a daunting task. There are so many things to think about, and it can be easy to make mistakes along the way.
10 Common Mistakes Small Businesses Make When Growing
In this article we’re going to explore 10 common mistakes owners make when growing a small business. They’re not the only mistakes, but they’re ones many make and that can be avoided with a little forethought. We’ll look at:
- Neglecting their existing customer base
- Failing to differentiate themselves
- Not investing in marketing
- Growing a small business too quickly
- Not having a plan
- Not doing enough market research
- Failing to set realistic goals
- Overlooking the importance of cash flow
- Not investing in your team
- Trying to do everything yourself
1. Neglecting their existing customer base
In the rush to attract new customers, small businesses often forget about the people who have already been supporting them. It’s important to nurture your existing relationships as you try to grow your business.
This not only risks losing some of these customers, but overlooks them as sources of potential growth.
Your existing customers are a great source of referrals for new business if you know how to ask. It’s also much easier to get more business from a happy customer than it is to bring in a new one, so think about additional products or services you could offer that would be of value to them.
2. Failing to differentiate themselves
With so many small businesses competing for attention, it’s important to make sure that you stand out from the crowd. What makes your business unique? What can you offer that others can’t?
If you haven’t defined your ideal customer and your core message of difference, you’re going to have a tough time knowing how to attract more of them.
3. Not investing in marketing
Marketing is an essential part of growing a small business, but it’s often one of the first things that gets cut when budgets get tight. Investing in marketing will help you reach new customers and grow your business.
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4. Growing a small business too quickly
Growing a small business too rapidly can be just as damaging as not growing at all. Small businesses need to be strategic about their growth and taking on too much too soon can lead to problems down the road.
5. Not having a plan
Probably the most common mistake made when growing a small business is failing to plan for their growth. Without a clear vision and goals, it’s hard to know where you’re going or how to get there. Take the time to sit down and map out your plans for growth, and you’ll be much more likely to achieve success.
When you’re mapping out that plan, make sure you’re asking yourself what’s preventing your growth right now?
6. Not doing enough market research
Before you start pumping money into marketing and advertising, make sure you know who your target audience is and what needs or wants your product or service meets. Maybe you’re looking to grow into a very small or competitive niche when there is a much larger, underserved one that could really benefit from your product or service.
Do the leg work upfront and save yourself rework and lost efforts down the road.
7. Failing to set realistic goals
It’s important to have ambitious growth goals, but if they’re not realistic, you’re setting yourself up for disappointment. Make sure your plans are achievable and that you have a clear path to reaching them.
Aim for SMART goals : Specific, Measurable, Achievable, Realistic, Timely.
8. Overlooking the importance of cash flow
To grow, most businesses need access to capital, whether it’s through investments, loans, or lines of credit. But if you don’t have a handle on your cash flow, you could find yourself quickly sinking into debt. Make sure you have a solid plan in place for managing your finances as you expand.
If you have one, speak to your accountant and let them advise you on the financial aspects of your plan. Have a good look at your cash flow statement and make sure you understand it.
9. Not investing in your team
Your employees are your most valuable asset, so if you’re not investing in their development, you’re not doing everything you can to help your business grow. Provide coaching and training opportunities for your team members and create an environment that supports creativity and collaboration.
Get them not just ready for growth, but equip them to deliver amazing experiences to your existing customers that will help fuel that growth.
10. Trying to do everything yourself
As a small business owner, it’s natural to want to be involved in every aspect of your company, in the early stages it’s even necessary. This can lead to overwhelm and burnout. As you expand, delegate tasks to employees or subcontractors whenever possible to free up your time to focus on more important things.
Learn to let go and trust that others will do a good job in carrying out your vision and leverage systems to help set them up for success.
Every small business is going to face unique challenges when they try to grow to the next stage. Some of these challenges you’re just not going to see until you get there, but you can prepare for and avoid the common ones we’ve talked about here and that’s going to dramatically improve your ability to grow.
The important thing to remember is to not do it alone. Lean on your network, on your internal experts, and on your strategic partners like a good CPA, coach, or small business marketing consultant who can help you navigate and shorten your path to success.