Starting Your First Small Business: 7 Mistakes to Avoid

It’s common that everyone makes mistakes, especially when they are just starting out.  If you know the most common pitfalls, you’ll be less likely to struggle in your path to starting your first small business.  I’ve rounded up the seven most common mistakes that you should avoid when starting your first small business.

Mistake One: Thinking You Can Make a Million Overnight.  You cannot, I repeat, cannot, become an instant millionaire.  I don’t care how fast you are at website design or how fast some program claims you can be making money online, it simply takes time.  Yes, there are sites that can make it in the first week or so of their publication, but they have money backing them–and lots of it.  For us mere mortals without a million in the bank, building a website and getting it seen online takes time.

Mistake Two: Forgetting to Pay Your Taxes.  Yikes.  But many new small business owners have no idea when, or how much taxes they need to be paying.  Call a tax guy and chat with him about your situation.  Tell him what you sell and how much you’ve been making.  You might have to shell out a bit of cash, but it’s much better than the IRS pounding on your door.

Mistake Three: Not Checking on Inventory Sources.  Many new small businesses drop ship their products.  This means that they select a drop shipper who has something they’d like to sell, and they place that product up for sale on their website.  When a sale comes in, the business owner sends an email to the drop shipper, who then charges wholesale costs for the product.  The drop shipper then ships out the product for the business owner.  It sounds like a beautiful relationship, and often it is.  But sometimes, the drop shipper simply cannot be trusted.  They ship late, they never tell the business owner when a product gets back-ordered, or worse discontinued, and often they have high drop ship rates.  Before using a drop shipper, always do a little research (try Rip Off Report.com).

Mistake Four: Pricing Too High or Too Low.  It’s easy to get carried away and price 500% over wholesale, thinking you’ll make a killing on those designer handbags.  The truth is that 150-200% over wholesale is acceptable, even desirable, and you’ll make a good profit.  Don’t be greedy.  Your only problem comes in when a drop shipper has fees that have to be considered in the price, or if shipping costs need to be determined.  Then, consider how much those fees are, how much the wholesale cost of the product is, and calculate 150-200% over that number.

Mistake Five: Trying to be a Super Affiliate.  Being an affiliate for a product is a fun and easy way to make money fast online.  Promote a good product and you can see decent, if not great, rewards.  However, often, it “looks” like people make a lot of money as affiliates, when actually they are scrambling just to keep their shorts.  It’s common to see affiliates spending $15,000 a week in pay per click, just to make $5,000 in conversions.  That $5,000 in one hour looks pretty good on a sales page, but if it took $15,000 out of pocket to get there, that isn’t a wise business decision.

Mistake Six: No Search Engine Optimization.  This one should be a given.  You cannot have a successful website anymore unless you learn a bit about search engine optimization.  You can’t even trust an “expert” to do it for you because they just overcharge and under-perform.  You must learn to do this yourself.  It isn’t hard, and it doesn’t take very much time.  It only sounds scary because it is a concept that has even the gurus scrambling to get their acts together on.  They didn’t learn it because they always had pay per click and affiliates to fall back on.  Their websites never had to perform in the search engines, let alone do well.  Now, we’ve seen the gurus crash and fall because they’ve made this fatal, yet preventable, mistake.

Mistake Seven: Not Having Enough Content.  As they say, content is king.  For your site to perform well, you need to write some content for it.  You just do.  It doesn’t matter if you can’t write to save your life, you need this part to happen if you want to be successful.  And, the truth is that if you can’t write 300 words about the product or service you are selling, perhaps you shouldn’t be selling it.  Take a deep breath and consider the product you are selling.  What are the highlights?  What are the low-lights?  What are the specific benefits?  What color/texture/fabric/etc  is it?  What would you tell a friend about your product?  What would you tell a complete stranger?  Answer these few basic questions and you’ll be surprised how much content you can come up with.