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10 Startup Mistakes For Businesses To Avoid

10 Startup Mistakes For Businesses To Avoid

7th October 2021
15 Minute Read

Today’s guide will walk through some of the more common startup mistakes.


Written by Madeleine

7th October 2021
15 Minute Read

Startup Mistakes ⚠️

Many people won’t start a business because they’re afraid to make mistakes, but here’s the thing - mistakes won’t stop your momentum. They'll help you to figure out the right path.

One of the best confidence-building strategies is treating all mistakes made as learning experiences. Take it from us, in the world of entrepreneurship, mistakes will be made. There’s no avoiding that fact, but fortunately for you, some errors will be avoided with the help of this article.

So, with that being said, today’s guide will walk through some of the more common startup mistakes made by those who are new to business alongside our ecommerce tips to avoid failure.

10 Small Business Startup Mistakes

All businesses make mistakes and that’s okay. It’s just part of the territory, so you’ll have to be prepared for that. So, with that being said, here are the common mistakes that small businesses make and how you can avoid making them within your own company:

N0.1: A Business Plan

Creating a business plan is an important part of establishing a sustainable brand and standing out from the competition. A strategic plan will create momentum for any company, which means that a clear and researched idea, is more likely to succeed.

Many entrepreneurs who are new to the business game will begin their venture without thinking about the bigger picture and often there is little understanding of their business’; market, financials, model, or logistics and that lack of understanding is their downfall.

See, just like anything, going into ecommerce unprepared has consequences and in business, poor knowledge will cost; time, money and effort when things go wrong. However, startup mistakes such as this can be avoided and creating a sturdy business plan will help merchants to identify the gaps that need to be filled.

Every product created should relate to the business plan, as this will enable merchants to stay on track and meet their business goals. If you’re not sure where to start, Shopify has created a free business plan template to guide eager learners through the process.

N0.2: Cash Flow and Profits

One financial mistake that entrepreneurs often make is not paying attention to their store’s cash flow and profits. If you ask any seasoned entrepreneur what the most important skill of running a business is, they’re likely to say it’s down to the maths.

Many entrepreneurs will start their business as a hobby and won’t pay as much attention to the numbers as they should, however, business math works very simply. To see how profitable your business could be, we’d recommend using the formula below:

Profit = Demand x (Revenue - Expenses)

Let’s break down the profit formula above using an example, for instance, let’s assume that 20,000 people are searching for your product online per month. If you can put your brand in front of even half of those people, that’s already 10,000 potential buyers.

If you convert at an average of between 1% and 2%, 100 to 200 sales could be made. Additionally, if an average order value is $100 and the net profit margin is 30%, the profit generated could be anything from $3,000 and $6,000 per month.

Of course, these are rough estimations, but if you’ve taken the time to do the maths, you’ll know what you’re taking on. So, we’d suggest keeping track of potential profits and cash flow by utilising the formula above.

N0.3: Conducting Market Research

One of the biggest startup mistakes that entrepreneurs can make when starting a new business is not conducting a sufficient amount of market research. Eager learners should want to take the time to get to know more about their competition and understand how they can differentiate their company from the crowd.

Competition can be defined as the other small businesses out there who are carrying the same products as your store, or your competitors could even be market giants like Amazon.

On occasion, entrepreneurs will dive into a niche market without determining if it’s a good fit for their brand. Taking the time to conduct sufficient research into a niche market is very important as there will be several cases where a niche has a low demand and over established competition.

If this is the case, building a business around such as niche may not be the smartest idea, but to understand the market landscape that you’re interested in, you’ll need to conduct thorough research. So, to start, find your niche’s competitors and look at:

  • The number of online reviews that they receive.
  • The volume of the social engagement generated.
  • Any blogging habits.
  • The amount of press coverage received.
  • Search engine optimisation (SEO) rankings.

Note:One thing that any merchant should be sure of before they begin to build their brand within a particular business niche is whether the market is just a trend or whether it’s a sustainable category that can grow a presence over time.

N0.4: Spreading Yourself Thin

Another common attribute on the list of startup mistakes that ecommerce newbies make is spreading themselves thin by selling too many products.

Sometimes if one product doesn’t sell well, owners will add more products to their store to attract potential customers, but this doesn't always work. For instance, let’s say that you have a store that sells eco-friendly recyclable bags, but no customers are purchasing them so, you decide to add more eco-friendly products into your store from your supplier.

Eventually, the store would contain a whole medley of products with no relation between them besides being eco-friendly, but if the branding is centred around bags and not other eco-friendly products, we guess that it would be pretty hard to attract the right customer.

However, the situation here is more of a branding error than it is a product error, but building a brand is just as important as the products you’re planning to sell since branding is how people will perceive a business.

N0.5: Organic Marketing

The next common mistake that startup businesses make is not focusing on organic marketing. The lure of paid ads is reasonable, as merchants will pay for an ad, that a browser will click through and purchase a product.

However, what if we told you that you could receive website traffic for free? Despite the upfront cost of organic content marketing, it is thought that 70% of clicks go to organic Google search results. On page one, the first five organic results receive 67.6% of all clicks.

We get that sometimes it’s difficult to write content for a boring niche, because how much content can someone write about reusable bags? So, the key here is to carry out content marketing not according to a product, but according to your brand and its customers.

Think about it from a logical perspective, who would want reusable bags? Someone’s who is environmentally conscious, right? So, it’s likely that they are into eating healthily, working out, yoga and natural wellness too. These are all initial hunches, but a little bit of research can confirm the type of customers that you’re targeting.

By building a content marketing strategy around the ideal customer rather than around a product, you’ll have a lot more to write about and additional ways in which you can connect with your audience.

N0.6: Freebies and Competitions

The list of startup mistakes that we often see from new businesses on the block is overspending on providing customers with freebies and running competitions.

Freebies, competitions and giveaways are effective strategies for marketing products, but they won’t be a good fit for every niche. Freebies could work with perishable and consumable products such as; skincare, food and supplements, but it’s very hard to make this strategy work well with other products.

N0.7: Hiring Help

Going at it alone is the main train of thought for many entrepreneurs because, in economics, there is a concept of opportunity cost. Essentially when a merchant pursues an opportunity, the cost is that their time is no longer free. So, the cost of one opportunity is every other opportunity that they could have had.

However, if you’re bootstrapping your own business, the chances are that you’re doing everything yourself and while doing everything yourself is great, it’s also incredibly time-consuming.

So, we’d suggest automating as many necessary menial tasks as possible. Sure, this process will cost, but the headache and heartache that you’ll save will typically outweigh the money spent. Besides, you’ll often find people who will gladly perform tasks such as; inventory uploading and data entry for a reasonable sum.

Spending time on the necessary tasks will have a positive effect on your conversions, but you’ll only know how much of a positive impact this has created for your business once additional visitors and sales can be compared to past figures.

In short, one business decision that you may find yourself facing is whether you need help with your store. Help could come in the form of a; co-founder, freelancer or employee to check tasks off of the list and help you grow your business.

N0.8: Customer Profile

Exercising quality research comes in two parts - the first is to find product ideas and the second is to get to know your customers. The thing here is that a brand can build products around its customers, but it’s very difficult to have a product before customers.

Most of the conventional wisdom says to look at numbers and analytics when researching a niche and we agree that this is necessary, but one critical step that most entrepreneurs miss is finding an ideal customer and building a customer profile.

"The best approach a bootstrapping entrepreneur can take to understand their customers is to process consistent conversations with them," stated Adrienne Barnes, the Founder of Best Buyer Persona.
"Create an environment where every person who interacts with the customer is gathering data to know them better."

So, if your brand’s niche has sufficient demand and a good selection of products for customers to choose from, without knowing your ideal customer, it will be a lot harder to sell goods.

If you dig deep enough, you’ll find that niches have niches and the more you target, the better the results will be as it will be easier for your brand to identify with your customers and their needs.

N0.9: Marketing Plan

“Fail to prepare, prepare to fail” is a saying that we’ve all heard from a teacher at some point, but as we’re your teacher within today’s guide so, take it from us that this is true.

When you set up an ecommerce website and know who your customers are as well as where you can find them, creating a marketing plan should be easy.

However, if you don’t know either of these things, your marketing campaigns will be more of a rough estimate than a plan based on facts and figures. Hoping something sticks is simply not enough when it comes to executing a successful marketing strategy as it is thought that marketers who have a documented plan are 313% more likely to report success.

While every ecommerce business should have a well-rounded marketing plan, some channels will be more effective than others. One brand may do better with pay-per-click (PPC) ads, while another will shine with SEO and social media, but no matter the plan, make sure that it is in place from the time of launch.

Naturally, new opportunities will arise, but if your foundation is strong, it will allow for steady and scalable business growth.

N0.10: Securing Intellectual Property

Your business may have intellectual property (IP) and if it does, you’ll want to protect this from your competitors. Intellectual property includes; copyrights, trademarks, patents and trade secrets in addition to business property.

If intellectual property is stolen, regulations can be used to take your case to court and defend your IP. However, intellectual property rights do vary across the globe so merchants must protect their rights under the IPR laws of the country that they reside within.

With all of these startup mistakes laid out in black and white, we wouldn’t be surprised if you’re wondering how you’ll know when you’re on the right track?

In truth, no one can predict the future, but the following shortlist is made up of the worthwhile work that merchants should carry out. So, follow these ecommerce tips and you will increase your chances of successfully launching and running an online business:

  • Create a business plan.
  • Research your brand’s niche and ask yourself if there is a product demand?
  • Know your customers - who exactly are you solving a problem for?
  • Find a gap in the market - is there some value you can add?
  • Have a marketing plan in place and invest in organic search.
  • Hire help where needed.
  • Secure your intellectual property.

The truth is, even as your business grows and succeeds, the mistakes won’t stop coming, but what will change is how you'll overcome them. We learn just as much from our mistakes as we do from our success and by taking the time to understand these startup mistakes in the first place, you’ll be well on your way to overcoming the challenges that confront your business.

We hope that you have found our ecommerce tips useful. If you're already using some of these strategies and they're working well for your business, reach out and let us know.

If you’re actively looking to work with a Shopify agency designer or developer to assist you with your business, we’d love to hear from you. Get in touch to get started!

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If you're actively looking to work with a Shopify agency designer or developer to assist you with your business, we'd love to hear from you. Get in touch to get started!

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