Small Business Survival 101: 6 Blunders You Can’t Afford to Make

I don't want to be dramatic but small business owners are a Greek tragedy written all over bounced checks, missed payrolls and locked doors.

The question "How hard can it be?" has been asked and answered millions of times and yet, to this day, people fail to understand that starting a small business is not an easy option towards a safe and secure business future. According to this article from LinkedIn, more than 20% of small businesses fail before the end of their first year, and this percentage climbs to 50% by the end of their 5th year.

Don't get me wrong, it's not rocket science either but some basic concepts need to be fully understood and comprehended before you even think about becoming a business owner. Afterall, all these mistakes are truly "textbook". We all made them, you'll probably make them too. The thing is, you need to be able to bounce back fast and be prepared. This way these mistakes will have less impact on the future of your business.

Poetic writing is my lover but let's cut to the chase. You are here for the 6 most common mistakes people do in small businesses! I, unfortunately, have made all of them and then some; so I know what I'm talking about. Imagine my consultations as your typical AA meetings where I'm sober and a great sponsor to you ownership junkies out there. I've been there, I've done that, I survived and I'm here to give you a helping hand.

Pricing

Pricing is an entire chapter by itself, or maybe more of a book. If you don’t understand pricing, skip business ownership altogether until you do. Of course you will overcharge and undercharge at some point but if you understand the principles of pricing, eventually you'll find that sweet spot where customers are happy with what they are paying and you are happily paying all of your dues.

Pricing ain’t just about balancing the books. It’s a delicate dance between costs, profit margins, selling prices, market prices, and that elusive break-even point. But let’s be honest: the right price isn’t about scraping by; it’s about making enough dough to reinvest and watch your business grow. It’s like a well-orchestrated symphony, where all the elements come together harmoniously to create a melody of profit. Otherwise, why have you lost your sleep and your smile for brah?

This is one of the mistakes that people usually don't understand until it's too late and they're already in trouble. The right price tag will bring enough money for your business to be profitable and growing, while the customer won't feel like you're ripping them off. Imagine like your business is the body; the money is the blood and the pricing is the heart that pumps blood. No heart pumping, no blood running, no life. Pricing does exactly that, it pumps money to every business function so that you can keep the lights on and then some to get your baby business to adult size.

The relationship between costs and price is a matter of life and death. Don't overestimate, don't underestimate. Put pen to paper and start doing the math. This is what you've signed up for.

Money

There are lots of professional and scientific terms to talk about money, but after years in retail, I've found that street talk gets you there faster and with less misunderstandings.

When it comes to money, there's only one rule: "There's never enough money".

When you make the original estimates.. double them. There are lots of reasons for that. One is just inflation overall. You may start planning on May and don't start the project until late November. You just jumped maybe 8- 10% in prices. Another reason is the miscalculations, they happen.. trust me on this one. Maybe you buy with credit, another 10% jump! There's always the chance you need something here now; you gotta pay for that fucking fast expediting. And, of course, don't forget the risk factors, someone's delivering late; someone's delivering the wrong inventory which you can't return for whatever the reason; you overestimated sales and you're left with so much inventory; someone came up with a similar product right before you launched; your product/service became obsolete overnight… the list goes on and on. I know it sounds edgy and too much, but these factors are a reality in business, and if you haven't planned for them, they will put you out of business before you have the chance to lift your feet of the ground.

For these original estimates, imagine having a baby that is exclusively being breastfed for a couple of years. Well, you are the boobs in this parallel. You must be able to keep it well fed. Sure, there's a chance that the business will generate money immediately but this is not profit. You start making profit, the minute you have doubled the money you put into your business. Up until then, you are the boobs. You need to hold enough milk to have your baby fed for at least the first year of their life. From rent, to salaries, to inventory, you should be able to cover 6 months to a year out of pocket. Again, this sounds edgy but a cold hearted reality in the small business life-cycle.

Now, you've made all the right choices and you ended up with a small business! Congratulations. You'll never sleep again.

While you're running your business, alocating the money you're making is the next big thing after the pricing. Pricing will get you the right amount of money in the business, you need to make sure that these money go to the right purpose/ function. I know you want the new fancier equipment Lola but unless it creates better profit margings and you are out of short-term debt, put the fucking credit card away!

Inventory

Inventory; one word too many problems. Let me throw some business terms to make me sound smarter and like a specialist. Slow moving inventory can result to tied-up capital, reduced profitability and, massive storage costs.

Overstocking and understocking; honestly, can't pick the worst if I had to. Overstocking leads to excess cost; which means that you are overpaying to store your stock and insure it (inventory cost) while at the same time you're tieing up capital that could be used for other, more profitable functions (opportunity cost). Understocking is as awful! You are facing lost sales and damaged reputation that can lead to your customers not returning. You are also missing on opportunities to capitalize on seasonal trends and demand surges.

And these are just preventable for sure but then you have faulty material, faulty final product, wrong incoming stock, unprofessional vendors, you get the vibe; situations you cannot prevent BUT you can be absolutely be prepared.

Inventory, I've come to realize, includes heavy doses of pure luck. You can have everything under control and then a restocking order doesn't come through, so you leave your customers hanging while presales are still going through, your phones are ringing like a broadway show and your sanity has gone with the wind.

Here's where the knowledge kicks in! The experience in managing customer demands and complaints; in handling unprofessional vendors; in selling faulty products with heavy discounts or even giving them away because it's not 100% according to your standards. True stories people.. true stories.

Marketing

I know boo, you just sold your kidney to get your business up and running. All you're missing now, are customers. You need to get them at your door and in your business. Marketing will do that for you but you've run out of money.

I'll share an internet story with you. Picture this, black & female 20sth. Can't get harder than this to open and manage a business, since the world is a fucking shit show where equal opportunity rarely exists.

This girl has an idea for a hair product, targeting black people's hair. She knows the target group, she's one of them. She sold her soul to create the perfect product but she run out money before she had a chance to produce her initial stock. Her, being a freaking mastermind, instead of finding investors (she tried but, again, shit show) who didn't believe in her product, she started posting videos of her using her product on tiktok. She also shared her journey of creating the product. She created the demand for her product all by herself, organically.

But!! She still didn't have the money to produce the stock. This motherfucker, created a website and started presales!! She sold around $10k, before she even had a stock. She took the money, stocked with her product and started her business. She actually kept working like that. She only worked with pre-sales until she had enough money to have a risk averse business model.

This is marketing genius 101! She created the demand without spending a dime. Not everybody can do that, so please, spend a dime to people who can showcase their previous results. Focus on your digital presence and create a strong, consistent brand that customers find hard to not remember or recognize.

Oh, by the way, your digital presence & marketing tactics are not uploading once in a blue moon; or even daily for the matter of fact. Digital marketing requires you to know who you are, what you are selling and too whom you are selling to. If you don't know these three, don't expect return on your investment.

Customer Care

Customers; those little assholes! If you have ever worked in retail, you definately have a story about a Karen or a Chucky from hell. I'm curious, have you ever responded as they deserved; I have, what a devine feeling.

I know we all hate this person who thinks that being a customers is reason enough to be entitled to our sanity but the thing is, not all pigs have the same face. Some of them our cutsy and polite, and make you laugh. If the majority of your customers are Karens & Chuckys, I'm sorry but you are the problem. Most people tend to be happy and polite when they enter a small business. However, if they don't feel being heard or that their needs are being met, they get a bit crunky. At this point, your job is to not let things escalate. Forget it, one more asshole to talk about over tekila! This is some serious psychology shit I'm telling you; let go!

Turn the situation around and make them feel like you are listening. It's ok that you don't have a vegan burger for the only vegan in the friend group, you do offer this amazing vegeterian salad that can easily become vegan so now, all the customer is gonna remember is this not boring kick ass salad that you made especially for them after you promised to add more vegan options for the next time.

Oh! And since you promised, you better fucking deliver!

Now, if we get the rude people thing out of the way, customer care is actually a great job. You get to cover people's needs or even create them sometimes. Don't ignore your customers. They'll tell you what to sell.

This is important! Pay attention! Nobody cares what you want to sell. You must sell, what people want to buy. If your restaurant customers ask for a vegan menu again and again, you only have one chance before they go to another restaurant the next time. I don't care if you hate lentils Jessika, they make a kick ass vegan pattie and you'll sell it like it's made out of gold!

Your customer service must be one of your top priorities. Pricing and marketing and financial management are great but once they put the customer in your door, it's your job to make the sale and keep them coming back. If your personel is inadequately trained, it is obvious to the mistreated customers. If you don't care about their wants and needs, they will know. If you're investing in their royalty, they'll spend their money on your business!

Remember, customer relatioships are human relationships. Solve their problems and they will keep coming back.

Personnel

When it comes to your internal customers, that is your employees, you can usually screw up in several different ways.

You'll hire the wrong people. That's ok, that's not really a mistake. The mistake is to listen to your ego about not wanting to admit that you made a bad hire. When someone is not a good fit for your business, you need to let them go. If you don't, you'll face low morale, decreased productivity and increased turnover; people will actually start leaving your business.

Another stupid thing to do is inadequate training. Training has nothing to do with your hire's abilities and knowledge. It has everything to do with how you want your business to operate under the same requirements for everyone. Training is more about employees understanding the culture and what exactly they are being asked to do. This sense of security and understanding creates an umbrella under which everyone knows what they are expected to do, so there are no misunderstandings.

Employees are people. Don't expect them to care about your business like you do. They have zero reasons to care about it as much. They won't work as hard as you do and you shouldn't expect them to. This is your business, you should be the hardest working employee in the room, not Sara from Sales!

On the other hand, if you want them to work hard enough.. you should motivate them. Recognize their efforts, reward their results, help them evolve as people and invest in their on-the-job training. This will only benefit your business. You won't lose money if you let Sara from Sales leave an hour early to go their kids' thing. You won't lose money if you pay for her continued education.

As TikTok taught as in every HR related post, "People don't quit jobs, they quit managers". So don't let them quit you. Give them more reasons to stay with you and work towards achieving your business goals!

Conclusion

In small businesses, you must understand that shit happens! However, when you have the experience and/or knowledge, you just wipe your butt clean, put on your underwear and go back to work. You will cry a little, maybe have a panic attack or two, but it will all get better in time.

Worst case scenario, you sell the damn thing and move on with your life! DON'T hang in there. Don't accumulate debt hoping you'll turn things around. It is Titanic, you may think that your ship is unsinkable but Leonardo is lost for ever. Don't do the same mistake!

I do want to leave you on a positive note though.

I know I made small business ownership sounds like a hellhole, which it is, but it is also very rewarding once you get the hang of it and learn how to deal with disparities.

The good thing is that most businesses fail or succeed for similar reasons, so if you really want your business to succeed, do your research and be well prepared. Being prepared for the mistakes is your business' way to longevity.