It’s a competitive landscape for small business owners. Between fighting amongst the ranks of the big box retailers and holding your own against similar operations, staying afloat can be challenging. It’s important to understand and game plan for hurdles you know you are likely to face. Avoiding common pitfalls that you know can lead to trouble, such as taking out too big of a loan or not understanding your market, can help ensure your success down the road. Here are a few common mistakes store owners make and ways to avoid them.
Banking on making an immediate profit. It’s typical for small businesses to not be profitable their first couple of years in business. You should never open a new store or business and expect to live off of those earnings alone those first few years. An additional source of income or a significant amount in savings is crucial to keep you afloat. Keeping this in mind, taking out an extensive loan and expecting to earn the income in order to pay it off right away is likely to put you in some hot water. You should have a substantial amount of money saved to put towards your business versus taking out a huge loan that you will have a hard time paying off.
Not fully understanding the market. Without fully understanding the market you plan to cater to, you simply cannot formulate the best business strategy and growth plan. You need to know who your customers are, who your competitors are and formulate a growth strategy that is practical and maintainable. It is possible to grow too big too fast, which puts a strain on the resources you have and can potentially harm your value.
Investing in more than you need. Of course it’s important to have the optimal space and number of employees to conduct good business, but hiring too many employees and renting out a space that is too extravagant can bring you down pretty quickly. Here are additional tips for beginning the hiring process. Renting a space is expensive, and you don’t want all your profits to go right back to the landlord. Here is some helpful information on finding and leasing a retail space.
Relying on verbal agreements. Official agreements should always be put on paper. When business is booming this might not seem so important, but when you hit the inevitable bumps in the road you’ll be happy you secured yourself with legal documentation.
Underestimating the retail workload. Opening a retail store is an expensive and time consuming endeavor. From fully understanding the costs to knowing the risks, going into this new chapter with clearly set expectations and a realistic view on the challenges involved will allow you to better adapt to any curveballs thrown your way.