The Most Valuable Business Mistakes

You’ve probably come across the idea that we learn from our mistakes, but a fear of failure can often stop us from trying in the first place. With 84% of small business owners seeing mistakes as an opportunity for growth, those hurdles can help you and your business grow.

Making mistakes when starting a business shouldn’t get you down, or put you off chasing your dream altogether. In fact, a bump in the road could be a learning curve, or serve as an opportunity to improve your business for better chances of success. 

We’ve explored the most valuable mistakes when starting a business, gathering top tips from business owners, as they share their mistakes in business and the steps they took to overcome them. With this knowledge, you should feel empowered to embrace the uncertainties that come with starting a business.

The top reasons startups fail

Wondering how many startups fail? According to research by NerdWallet [1], 20% of small businesses fail in their first year, with 60% failing within the first three years. Instead of worrying your new venture might not make it, why not use that figure to encourage your success? 

There are multiple reasons why businesses struggle, and many causes can be preventable. Some mistakes to avoid when starting a business include:

Running out of cash/failing to raise new capital

We’re not going to downplay it - starting a business is likely to cost you. The average budget for a new UK startup is £5,000, and that budget should cover not only the launch of your business but the strategy for it to survive long-term. 38% of startups[1] fail due to running out of money or failing to raise new funds, which is why having a strong business plan is so vital. 

Your business plan works as your guidebook for how you’ll run your company, detailing your plans for the future, your objectives and your financial situation. A business plan also encourages you to evaluate your business costs by looking at your expenses and how you’re going to fund your new adventure. The more planning you put in, the better prepared you’ll be for any obstacles that may come your way.

Declining market need

35% of startups[1] fail because of a lack of market demand. When starting your business, it can be all too easy to focus on your new product or service rather than the market you plan to operate in. After all, the product or service you’re launching is your passion, right? 

Just remember to get to know your market, your competitors and the needs of your target audience. Does your product or service solve a problem? Is there demand for your business right now? 

Equally, even if you have identified a market need, make sure your pricing and features appeal to your target market. If your product or service ticks the boxes of your customer base, you don’t want to put them off with a mismatch in pricing for example. Try and go above and beyond by offering something your competitors haven’t thought of to improve your chances of success.

Got outcompeted 

After spending time and money getting your business off the ground, the last thing you want is a competitor stealing the spotlight. With 20% of startups failing due[1] to being outcompeted, it’s worth prioritising what makes your business competitive. What is your strongest asset? What makes your business stand out from the competition? 

If you’re competing in a saturated market, you may want to adopt a niche or new approach to your business. For example, if you’re a dog walking business, you may choose to specialise in a particular breed of dog to appear as a specialist in that area. 

Take a look at the top 10 reasons startups fail below: 

Industry experts share their business mistakes and how to overcome them

We asked the following computer programming and consultancy experts all about their business mistakes and the lessons they’ve learnt during their entrepreneurial journeys.

Ronald Osborne, Business Coach

If you had to pick one, what was your most valuable business mistake to date?

I hired a friend who never found any success to run the civil construction side of my multi-million turnover business. There were a lot of red flags early on that I overlooked based on our personal relationship, and it hurt my team and me greatly. 

Once all was said and done, he cost my business upwards of £100k, plus the loss of two great employees. 

My valuable takeaway was never to hire friends or family unless they met strict criteria and would be suitable for the role in the first place. 

I urge all business owners to take the time to find the right person for the job, even if it means passing over a close friend. It will protect your money and your personal relationships.

Joshua Pearson, Managing Director, Preaco Marketing

If you had to pick one, what was your most valuable business mistake to date?

My most valuable mistake as a marketing agency has to be taking on bad clients. While clients are incredible, of course, some clients are just not compatible with the style or nature of work you are able to provide at a particular time.

What impact did this have on your business - initially and after you’d learnt from it?

Through trial and error, I am much more selective of who I work with and make sure that it’s only ever an organisation that I know I can help. This has led to a much more positive environment and a happier work-life, as well as happier clients.  

What would you recommend to new small business owners off the back of this learning?

I would always suggest not saying yes to anything and everything just because it pays. In the long term, it really doesn't. Instead, put the effort into finding the right clients first.

Are there any other valuable business mistakes that come close? And any other lessons to share with other new business owners?

I learn more about business every single day, and a lot of that comes from small mistakes, but those mistakes become less and less of a problem as things grow and scale up.

Claire Bartlett - Director, Arden Bookkeeping Ltd

If you had to pick one, what was your most valuable business mistake to date?

I own a bookkeeping practice which I have run for eight years now. My most valuable business mistake was believing I had to accept every potential client that came my way. In the beginning, it’s hard to not just chase money and agree to work with everyone. But I soon learnt to listen to my gut and if a client felt like they wouldn't be a good fit, they most likely wouldn't be! 

It is much harder to disengage with a client than say no at the beginning. Always make sure your clients share the same values and work ethic as you otherwise it can make your working day very difficult.

What impact did this have on your business - initially and after you’d learnt from it? 

Accepting the wrong type of client added so much stress and negativity to myself and my team. I’d worry about when the client would call and feel frustrated about repeating myself. And these clients tend to linger, they fight against fee increases and just take the joy out of your work. 

Since learning the hard way I am much more conscientious about who I accept as clients and it has made the working day so much more enjoyable. We love speaking to all our clients now and have mutual respect which is needed in a business relationship like ours.

What would you recommend to new small business owners off the back of this learning?

I know it’s difficult to not be blinded by the fee you could earn and to just accept all new business that comes your way in the beginning. But you need to keep the faith that your ideal client will come your way, and filling your time up with the wrong clients takes away your resources to help the perfect client when they do come to you.

Are there any other valuable business mistakes that come close? And any other lessons to share with other new business owners?

Business is all about making mistakes but the important thing is to learn from them. When you are new to business everything is uncharted water and you’ll sometimes take the wrong turn. Another mistake I made early on was not listening to my gut when recruiting new staff. It is very important in every decision you make to listen to your own intuition.

Have you ever made these mistakes again, perhaps in a slightly different way? Or did you make a similar decision but something else made that decision work in your favour?

I did go against what I’d learnt regarding ideal clients when it came to friends. I have had friends ask me to help them with accounts and despite my intuition telling me to not mix my personal life with my work, I didn’t listen and again I learnt the hard way. I now keep these two areas of my life completely separate but have peers in the industry I can recommend to friends if needed.

Izabela Wisniewska - Founder, Creatos Media

If you had to pick one, what was your most valuable business mistake to date?

It’s hard to choose really but I think not treating my business as one of my clients was the biggest one to date, and I really struggled to turn this around - both since starting Creatos Media and even before that when I was freelancing. I was freelancing alongside full-time jobs so it wasn't such a big issue at the time but if I opened my eyes sooner, Creatos Media could have had an easier start! 

I still struggle sometimes but I really try to treat my business as if it’s one of my clients now and spend a fair share of time on marketing, networking, collaborating and getting out there. Because the only way people will want to work with me is if they trust me, and they won't trust me without knowing me first.

What impact did this have on your business - initially and after you’d learnt from it?

Initially, I didn't know what the impact was. I was getting my clients from one place and that was a website for freelancers. I did have some reviews and I just went off of that alone. But now I know that if I can easily show that I am good at what I do, people are more likely to work with me. 

It is easier to sign up clients nowadays, and I get clients from various events as well. My company is growing but it could have easily been what it is now five years ago, if I only treated my business as if it was one of my clients from the beginning.

What would you recommend to new small business owners off the back of this learning?

Make sure you invest (not necessarily a lot of money from the start, but time!) in marketing for your own business. Make sure you start building your own brand, and showing you are a top voice in your industry from the very beginning. It is so easy to forget about this aspect as you have so much to do, but this is critical for any business to really grow.

Are there any other valuable business mistakes that come close? And any other lessons to share with other new business owners?

Many! But the one that I think comes close is never passing up an opportunity to learn more, to attend events and network. It will all benefit building your brand as well.

Have you ever made these mistakes again, perhaps in a slightly different way? Or did you make a similar decision but something else made that decision work in your favour?

I think I still sometimes make the mistakes I mentioned, but I am coming back to the right track. I understand it’s critical for my business so even if I’m very busy, I will soon come back from it. 

Ready to start your business journey?

Ready to make your business dreams come to life? We’ve covered the most valuable business mistakes above, so you can feel prepared for whatever eventualities come your way. After all, making mistakes only better equips us for the future. 

Here are some key takeaways to keep in mind:

• Take your time to find the right client or person for a job. Make sure your clients share your values and you have mutual respect for each other.  

• You’re allowed to say no! Some clients might not be compatible with your business and that’s okay. 

• Invest (not just money, but time) into marketing your business and building your brand - it’s a vital step in growing your company and getting your name out there.

Our company formation service takes care of the complicated stuff for you, with support there whenever you need it, helping you get on the road to starting a business. Form your company today with SUAZ. 

Sources

[1] NerdWallet - How Many Businesses Fail in the First Year in the UK? https://www.nerdwallet.com/uk/business/start-up-failure-statistics/ 

Data used for copy and design.