Common Mistakes of Small Businesses – and How to Avoid Them

Common Mistakes of Small Businesses – and How to Avoid Them

When the pandemic forced employees to work from home, it accelerated the desire of many to launch their own small businesses.

The thought of going back to the daily grind of the office spurred a new wave of entrepreneurs, especially ambitious youths, to try to go it alone in the gig economy.

For example, in the US the number of startups rocketed by 55 percent in 2021 compared to the previous year.

Although the wave has lost momentum in 2022 due to high inflation and jittery markets, there is still a steady stream of startups entering the market.

The harsh reality, however, is that most of them will fail.

According to the Bureau of Labor, about 20 percent of small businesses fail within the first year, 30 percent by the end of the second year, 50 percent within five years, and 70 percent within a decade.

Warren Buffet’s assessment is even more sobering: 98 percent of people will fail and only two percent will succeed.

In this article, we will highlight the common mistakes that small business owners make and offer some tips on how to avoid them when launching a business in Cyprus.

1. Not Following the Rules

Although Cyprus is regarded as one of the easier countries in the EU to set up a business, entrepreneurs must follow the rules and procedures as determined by the government. Failure to adhere strictly to the set formula could see your company closed down. You may also be fined.

2. Insufficient Planning

The saying goes that if you fail to plan, you are planning to fail.
Every startup should at least have a basic business plan that sets out expected operating costs and turnover as well as anticipated market reach.

3. Poor Market Research

Many fledgling entrepreneurs try to market their product or service to as wide an audience as possible. This is costly and futile. It is far better to define your niche and concentrate your marketing efforts—and budget—in that direction.

The market in Cyprus is very limited due to the island’s small population so, unless you can expand into the international arena, you need to choose your niche very carefully.

Seedtable’s list of Cyprus startups to watch gives a good idea of the kind of ventures that are succeeding on the island. Remember, however, that the companies listed will have a head start on you and will be your fierce competitors in the marketplace.

4. Ignoring Supply Chain Disruptions

The disruptions to global supply chains caused by the pandemic have continued into 2022, affecting businesses that sell products. Cyprus is particularly vulnerable to supply chain bottlenecks since all goods must be brought to the island by plane or ship.

Instead of operating on a just-in-time model, business owners in Cyprus must adapt to keeping an abundance of stock on hand even if this means incurring extra storage costs. Making a sale but not being able to supply the product to the customer will be the kiss of death for the business.

5. Trying to be a One-person Show

It is impossible to micromanage every aspect of a business without suffering burnout within a few months. If you can’t afford to hire extra hands, rope family members and friends in to help you get your business up and running.

In the longer term, you may want to consider employing one or more virtual assistants, who typically charge per hour for their services with no overheads for yourself.

An online search for virtual assistants will leave you spoiled for choice. Those based in the Philippines, however, have earned a good reputation for efficiency, reliability, reasonable rates, and a high standard of English.

6. Being Too Casual with Cash

If money makes the world go round, lack of it brings everything to a grinding halt. Many small business owners spend too much when launching their ventures and quickly run into cash flow problems.

A survey of SMEs found that running out of cash was the top reason given by entrepreneurs for the collapse of their companies.

Economists warn that the only way to shield yourself from cash flow issues is to maintain an account balance of three to six months of operating expenses.

Give Yourself the Best Chance of Succeeding: Do Your Homework

Starry-eyed budding entrepreneurs can easily let enthusiasm get in the way of practicalities. Get-rich-quickly schemes are often the speediest path to poverty.

Before borrowing money from friends and family and squandering your savings on your dream business, take time to study market trends, understand what is selling and what is not, and thoroughly research your opposition’s business models.

Once you are sure that you can cut it in the gig economy—it might take a year of research—go all out to make a success of your venture. We wish you the best of luck.

By The Editors of Headliner Cyprus

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