Business Mistakes

Starting and running a business is hard enough without making the same business mistakes as everyone else.

After all, managing a team and keeping the business on track is hard enough without having to worry about running yourself into the ground through hiring too quickly, targeting a bad niche, or just plain overspending until the bank cracks.

That’s why we have scoured the advice of experts such as Paul Graham, Joel Gascoigne, and Sam Altman to highlight the business mistakes you should avoid, and how to do that without tearing your hair out.

Let’s get stuck in!

1. Growing your team too quickly

While it’s tempting to grow your team rapidly in an attempt to scale your success while the going is good, it’s vital that resources aren’t stretched too thin by hiring too many people at once. It’s a delicate balance, but one that needs to be carefully considered, as the business’ long-term health should almost always rank above a short-term growth spurt.

Hiring too quickly weakens a business by limiting their cash flow which, in turn, can prevent the funds being available to buy other (potentially more useful) resources such as training courses and better materials.

Buffer found this out the hard way in 2016 when, after growing the company from 34 to 94 team members over a year, they found that they had to fire 10 employees in order to stay afloat.

“We moved into a house that we couldn’t afford with our monthly paycheck.” – Joel Gascoigne, Tough News: We’ve Made 10 Layoffs

buffer team growth


Even if you can afford to support a massive team expansion, that doesn’t always mean that you should. Larger teams encourage a different kind of culture to grow – one that is much more detached and professional – which can be damaging to morale your team was previously a small, tight-knit unit.

… most of your people will be employees rather than founders. They won’t be as committed…” – Paul Graham, The 18 Mistakes That Kill Startups

Combined with the time and money wasted by hiring and onboarding employees you can’t afford to keep, and you have a recipe for a massive blow to any business looking to grow their ranks.

It’s much better to instead grow your team according to your regular cash flow and what you can reasonably afford than to attempt to kickstart your growth with new employees and make up the difference that way.

2. Hiring for expense instead of expertise

It should go without saying, but hiring employees based on their pay grade rather than their expertise, experience or attitude is a surefire way to nuke your capabilities.

Yes, hiring cheaper might let you get twice as many people on board for the same price, but if those hires don’t have the motivation or dedication required to hit their targets then the whole process will be a waste of time.

Think about it this way; replacing a staff member can cost upwards of $40,000, so it’s best to hire staff who will be with you for the long-haul. In order to do that you need to get people who buy into your business’ mission and values and who are valuable enough to keep around for that long.

3. Raising salaries instead of equity

equity mistakes


Tying into the “get employees who will stick around” idea is the ability to give equity. Now, this is obviously a rather limited practice, and will only really affect your initial team members and/or long-term employees, but a great way to cut costs is to offer equity instead of raising salaries.

This fulfills two purposes, both of which are useful at any stage but are vital when starting out.

First, it cuts some of the biggest ongoing costs in business; employee pay. This frees up a greater cash flow which, in turn, allows the money to be spent on other resources to train employees further, provide better technology, outsource busy work, and so on.

Second, it creates long-lasting ties to your business by giving your employees a stake in its success. This can double up by boosting their motivation, as any successes they have (roughly speaking) make their stake worth more.

4. Going for niches instead of great ideas

When starting a new business it’s tempting to aim for a niche with very little competition using a slight variation on a more widely successful product or structure. The trouble with doing this is that you’re intentionally limiting the scope of the business, leaving very little room to grow and expand into different areas.

It might seem easier to take advantage of an untapped niche, but unless you’re doing so with a truly great idea then you’ll be left behind by the competition which appears further down the line.

Now, this isn’t to say that it’s always a bad idea to target a small niche market. However, it pays to put the pursuit of a great idea before the desire to target something where there is currently little competition.

Basically, think of the long-term prospect of the business, whether your idea will be able to live up to the opportunity, and then consider the competition (or lack thereof).

5. Starting in a bad location

startup location


Location isn’t vitally important to every business. Online businesses in particular are much more flexible when it comes to physical location, especially when hiring remote team members and cutting out the need for a set office space.

However, without at least considering the location which you’re launching in it’s entirely possible to miss out on great opportunities to get your name recognized, get better deals on resources, have greater access to promising employees, and so on.

The ideal location really depends on the business, its target, what it’s selling, and the team structure, but a little research can go a long way towards identifying the hub areas of your chosen niche.

For example, Silicon Valley is a great location for startups due to the close proximity to investors and other startups, ingrained startup culture, and general reputation among highly qualified employees. It’s far from guaranteed that starting in Silicon Valley will cause a startup to succeed (or vice versa) but it will certainly give you a head start.

6. Refusing to pivot

It’s easy to get lost in an idea for a perfect product or business, but things practically never work out the way they were initially intended. Point being, if you aren’t prepared to listen to feedback and pivot if something isn’t working, the business is doomed to fail.

This is especially true when the problem your business solves isn’t easily (or specifically) defined. Startups, for example, often don’t know what problem they’re solving when they first start out. Most success stories shift multiple times as they develop.

One of the best ways to analyze the need to pivot is to talk to your users or customers. These are the people who are buying into your business, and if they aren’t excited about a new direction you want to take, chances are that it won’t be very successful.

Also, try not to start from scratch every time. Extreme pivots might require a lot of rebuilding, but they should ideally follow a progression which lets you reuse most of what you already have.

7. Having only short or long-term goals

business goals


Yes, it’s a basic tip, but having short and long-term goals is the only way to make sure that you know what direction the business should be going in. Without both of these there’s very little hope for creating a coherent approach to your operations, as there won’t be anything to center your efforts around.

The same could be said of any project, task, hobby or job; having a long-term goal gives meaning and direction to your actions, while short-term goals let you create a plan of attack to achieve those aims.

Your goals don’t have to be anything fancy in order to work. If nothing else, try defining where you want your business to be (or what you want to do with it) in 5 years time, then work out how to reach that goal and plan out your time and efforts accordingly.

At the very least it beats stumbling through and relying on luck for your successes.

8. Lacking accountability

“Accountability” is a term often thrown around without any real sense of what it means or how to encourage it in a business. Most know that it’s a way to measure how accountable your employees are for their decisions and actions, but it’s much more difficult to know how to measure or enforce it.

Nevertheless, when it is lacking it becomes all too easy for deadlines to be missed and projects to fall apart.

Everyone should know exactly what they are expected to do, when it is due for, who they will be relying on to get work done, and who is relying on them in turn. By taking the time to do this in team meetings, you make sure that everyone feels the weight of the work they’re assigned to, and feels the pressure of being identified as a potential bottleneck.

Not to mention that knowing who is relying on their work will smooth out the process of dealing with delays, as those further down the workflow can be notified long before the original deadline.

… if you have a specific accountability appointment with a person you’ve committed, you will increase your chance of success by up to 95%” – Thomas Oppong, This is How to Increase The Odds of Reaching Your Goals by 95%

9. Having one founder

While this more applies to startups seeking investors, it can be a negative to have only one founder to a business’ name. Paul Graham makes the case for this very convincingly, saying that very few successful startups have only one founder.

paul graham


From an investor’s point of view, having a single founder can be seen as a kind of vote of no confidence, since the founder has not been able to convince even their friends to join their endeavor. Not only that, but it sets alarm bells ringing from the sheer amount of work involved – there’s realistically too much for one person to shoulder when starting a business.

Graham also notes the mental strain of founding a business, stating that co-founders can help keep each other sane and motivated (if only to not let the others down) when times get hard.

It’s not impossible to start a business by yourself, but not having a co-founder is a business mistake which puts you at an immediate disadvantage.

10. Not setting boundaries with co-founders/partners

Co-founders are important, but can quickly become a problem if boundaries aren’t set to make sure that you each know what kind of relationship you both will have to the business.

This is as much for the founders’ sake as it is for the employees; by having set areas of expertise and jurisdiction, you can avoid overwriting each-others’ opinions and orders and thus avoid confusing or annoying your team.

Not to mention that this lets you play on the strengths of each founder and buoy up their weaknesses. For example, if one founder is a gifted programmer while the other excels at management, it only makes sense to assign the former as the CTO and the latter as the CEO.

Whatever the decision as to the relationship, make sure that it’s clearly documented and signed by all parties. That way there should be no confusion – the document or agreement can always be iterated on later with the appropriate permission anyway.

11. Launching too slowly

release date


Yes, you want to have everything planned and sorted before you launch your business. No, the world won’t wait for you to do so with the final version of your product.

Most businesses evolve over time, and the only way to make reliable progress is to iterate on your design. To do that there’s no way around the need to just launch your business or product already.

I’m not saying that you should rush towards launch so quickly that you don’t have time to get all of your marketing material together or troubleshoot core bugs out of your software. However, you should commit to a date in order to enforce a deadline.

Not only that, but your product or service should be the minimum of being useful on its own, but with the ability to be expanded. That way the launch will still be significant and you can begin to grow an actual customer base, but you launch quick enough to avoid losing momentum.

12. Not documenting (and maintaining) processes

In a 2016 survey, Łukasz Tartanus found that 69% of companies had documented, repeatable processes but only 4% measured and managed them. This is alarming, especially when considering what having documented processes does for your business.

Processes are the lifeblood of a consistent business. Without recording your tasks into a checklist which can be executed by anyone at any time and with a high level of accuracy, you leave the success of practically any and all operations to the whims of human error.

The best way to do this is to use process documentation software, such as Process Street. Create a free account and import one of our premade templates to get started.

Check out our free business process management guide for more information.

13. Doing everything yourself

While it should be fairly evident, it’s a very bad idea to try and do everything yourself, whether you’re looking to start up a new business, create a new project, or micromanage your team. Trying to do so will only lead to burnout and frustration, not to mention a lackluster performance.

Overworking yourself will only make everything you do less effective as you wear yourself out.

Instead, use outsourcing or business process automation to take care of the tasks which either aren’t in your field of expertise or aren’t realistically worth your time.

That is to say, you need to analyze your tasks and assess which of them have to be done by you, and which could be completed by someone else.

If someone else can do the task, hand it off.

14. Sacrificing quality for action speed

acting fast


I’ve already mentioned the need to act fast (eg, not launching slowly) but it’s just as, if not more, important to make sure that said speed does not come at the expense of execution quality.

No matter how fast your business is running and iterating, if everything you do blows up in your customers’ faces, they won’t be sticking around for you to clean up shop.

Again, it’s all about finding the balance. Moving quickly is important (momentum is hard to generate and even more difficult to re-ignite) but doing so beyond your team’s capability to produce quality results will do far more harm than good.

15. Having no specific audience in mind

Sometimes it’s difficult to know who your audience is, but that doesn’t mean you can afford to go without having at least a couple of rough personas in mind when forging ahead. This gives you a framework to see what the most valuable next step to take could be, and what your business could stand to cut in order to save resources for more lucrative actions.

This business mistake crosses over with building for yourself in mind. Yes, that technically gives you a user persona to work with (one which you know very well, in fact), but the issue comes with the lack of context that brings. It’s hard to tell how widespread opinion will stand on a change when the persona you’re using is so close to home.

If you already have customers, this issue can be easily solved – just talk to them. Get an idea of who is using your business, what they’re using it for, what they value, and what they feel about potential changes.

16. Ignoring the competition


Burying your head in the sand and ignoring competition doesn’t do you any favors. If anything, it helps them by a significant degree.

Now, it’s true that aping your competitions’ every move is a bad play, for the same reasons that being derivative is. Reacting to their plan will always leave you one step behind.

Instead, it pays to keep an eye out for your competition, analyze what they do well and how they sell themselves, and then adjust your approach accordingly. If you fulfill the same qualities as them, only better, then it might be worth targeting their market in the same way. If not, figure out what you have over them and how you can use it to your advantage.

17. Losing momentum

This is a simple business mistake which can be solved with an old proverb; strike while the iron is hot.

There’s little worse than putting all of your effort into a feature or product launch, only to fumble the delivery and let potentially useful influencers and partners know about it too late to affect the launch’s success. You put in all the effort, but leaving time between your opportunities and following up on them stops any momentum you could have gained dead in its tracks.

Thankfully, with a little consistent diligence and a single question, this is a reasonably easy problem to solve (or, at least, address).

When making a decision, be it releasing a blog post, creating an ebook, designing a new product, or signing up a new partner, take the time to ask yourself (and your team) whether you could be getting more out of it.

Have you reached out to influencers in your market to spread the news? Could you add a content upgrade to increase conversions? Is there a way to repurpose your content to get more bang for your buck?

18. Burning cash too quickly

Spending too much money is a fairly obvious problem and overlaps with many other issues in this post. For example, one of the key reasons it’s a bad idea to grow your team at a rapid pace is because of the ongoing costs this infers.

However, it’s also true that sometimes you’ll need to spend a significant portion in order to complete a project or kickstart your growth in some other manner. The key is to not go too far.

As a basic rule, you shouldn’t be spending more money than you can comfortably support with your current monthly income. This is less true for young startups which don’t have that consistent cash flow as of yet, but in this case it’s paramount to make those funds last as long as possible while still making significant progress.

19. Not paying for expert advice



Yes, yes, I know that I just said that it’s vital to not spend too much money. However, paying for quality expert advice early on can save a massive headache further down the line.

Whether you’re reaching out to discuss a business plan, get advice in terms of your marketing funnel, or just straight-up hiring a consultant to help structure your business, it’s worth paying to take advantage of their expertise. You get what you pay for, so don’t expect quality advice to come cheap, but when the alternative is losing 10x more money than you spent to correct fundamental flaws later down the line, it’s a small price to pay.

Research which experts are experienced with the type of business and tasks you need help with, then make a judgment on their pricing and relative merits.

20. Lacking transparency

Whether it’s with your employees, users, or stakeholders, transparency is never a bad thing. In fact, a lack of it can be a crippling business mistake, especially if whatever you’re not disclosing comes to light in a negative manner.

On the other hand, having a more transparent business setup is a draw for employees and customers alike. That’s because transparency inspires trust – you’re not hiding or obscuring anything, so people know exactly what to expect.

It also helps to reduce any confusion surrounding your business both internally and externally. Employees know what their mission is and what the company values are, and customers can clearly see those values in their interactions and have clear information about aspects like your pricing plan.

21. Avoiding NDAs



No matter how good an idea is, it pays to have a second (and third) opinion from those close to you. Even if you’re just spit-balling different approaches, having a second voice to weigh in on the discussion can rapidly help you sift through the trash to find those golden decisions.

However, when doing this (and carrying out business in general) you need to first ensure your safety with an NDA. This should be drawn up by an experienced lawyer to make sure that the agreement is binding and doesn’t contain any nasty loopholes.

By getting your team to sign an NDA you can freely make suggestions and pitch ideas for feedback without fear of being beaten to the punch or (worse still) having your intellectual property stolen and patented before you get around to doing so.

Speaking of which…

22. Not using patents and trademarks

NDAs are a kind of guardian for what could eventually turn into material that’s worth patenting or trademarking. Doing one without the other, therefore, is at best a wasted opportunity, and at worse a glaring security error.

Patents and trademarks have their flaws (heck, patent trolls exist for a reason) but they ultimately exist to protect your intellectual property. By using these, you can legally prevent anyone from using (or copying) your logo, products, and so on, without permission.

This is especially important if you’re going into a field with a lot of established competition or if your success is causing competitors to crop up. Still, the earlier your property is protected, the better, and you’ll once again want to hire an experienced lawyer to help with this process.

Don’t fall prey to these business mistakes

Running a successful business isn’t easy, but by avoiding the 22 business mistakes outlined above you can put your best foot forward and avoid the more common pitfalls that swallow many small businesses.

While this won’t necessarily guarantee your success (you still need a solid idea, business plan, marketing, sales, and so on), all of these are reasonably easy aspects to keep in mind and will serve to keep your business on track through its vital formative years.

So, get out there, lawyer up, track your competition, create a sustainable growth rate, and above all else make sure that you document your processes! After all, how will you know what you’re doing right and what’s going wrong without consistently carrying out your tasks and tracking the results?

Do you have any business tips of your own that you’d like to share? I’d love to hear from you in the comments below.