If you recently launched a new business, you’re not alone. New business creation rose in 2020 and 2021 due to pandemic layoffs, the online commerce boom, and the shift to working from home. Since June 2020, the average number of monthly business applications has been 92% higher than between July 2004 and February 2020. 1 Strangler, Dane. New Business Creation In 2022: Continued Surge—Or Another Slump? Forbes. December 29, 2021.
Despite this enthusiasm for entrepreneurship, the reality is not all businesses survive the steep learning curve associated with being your own boss. According to the U.S. Bureau of Labor Statistics, 20% of new businesses fail during the first two years of operation and about 50% don’t survive past the fifth year.
We don’t want this to happen to you.
That’s why we’re sharing business lessons of what never to do, according to leading consumer packaged goods (CPG) companies as well as start-ups. We want you to avoid costly pitfalls that erode productivity and profitability as you build, grow, or stabilize your brand.
Even big brands bomb (and that’s okay)
Companies of all sizes make mistakes, which can serve as lessons for us to apply to our own ventures. Here are some classic examples of CPG giants whose retail initiatives flopped.
- Coca-Cola: In 1985, Coca-Cola launched New Coke as soft drink competition intensified. Immediately, the press declared that New Coke tasted sweeter and more like Pepsi, which led Coca-Cola stocks to fall. Also, 8,000 disgruntled consumers called the brand per day to complain.2 Klein, Christopher. Why Coca-Cola’s ‘New Coke’ Flopped. History.com. March 13, 2020. Lesson: Never underestimate loyal consumers’ emotional attachments to your brand.
- Dasani: In 2004, the bottled water brand’s U.K. launch made headlines due to the PR crises. Consumers were furious to discover Dasani was simply purified tap water and scientific findings showed the products contained twice the legal amount of the chemical bromate.3 Why Dasani failed to tap into the UK bottled water market. WalesOnline. April 3, 2004. Lesson: Never ignore due diligence, including consumer safety, regulatory compliance, and transparency.
- Frito-Lay: In 1998, the snack leader tried to extend its brand into beverages with the launch of Frito-Lay Lemonade. Consumers thought the new sweet drink had little connection to the brand’s salty snacks, which confused them and eroded the core brand’s value.4 Haig, Matt. Brand Failures: The Truth About the 100 Biggest Branding Mistakes of All Time. Kogan Page. 2011. Lesson: Never assume brand equity will translate to new brand extensions.
- General Foods: In 1990, the CPG giant launched Maxwell House Ready-To-Drink Coffee. However, the foil-lined packaging couldn’t be used in a microwave, customers weren’t sure whether to drink it hot or cold, and automatic drip coffee makers were far more popular.5 Glass, Sandie. What Were They Thinking? The Morning Java That Left Us Cold. Fast Company. February 7, 2012. Lesson: Never rush product testing, which can reveal make-or-break issues.
Steer clear of these business pitfalls
It’s risky to build, launch, and grow a new brand, and mistakes are an inevitable part of the learning process. Here are some lessons on what not to do, which can help protect your own business’s success.
Never wing it
Instead, create a strategic plan to align your entire team. Set weekly, monthly, quarterly, and annual goals to move your business forward. Review your strategic plan at least semi-annually to keep it relevant and on track.6 Sydney, Lynda. How to Avoid the Most Common Small Business Pitfalls. RBC Royal Bank. April 27, 2017.
Never chase every opportunity
Time is precious, so be discerning. Focus on opportunities to lead with your strengths and serve customers who will help you move your business forward. Check that you have the bandwidth and expertise before you say yes to a new opportunity.7 Expert Panel, Forbes Coaches Council. 15 Common Pitfalls To Avoid As A New Business Owner Or Entrepreneur. Forbes. November 26, 2019.
Never grow too fast
Developing too many products too quickly can overwhelm your business. Once your core products succeed, take your time and expand with care.
Never run out of cash
Create a reasonable budget and stick to it by resisting the temptation to spend on unnecessary items.8 Anderson, Summer. 8 entrepreneurial mistakes that can be easily avoided. StartUp Mindset. 2019. Know your numbers to ensure you charge enough to cover your expenses, make a profit, and reinvest in your growth.
Never blend in
Take the risk to separate your business from the masses. Be bold and distinct by articulating what truly differentiates you.9 Expert Panel, Forbes Coaches Council. 15 Common Pitfalls To Avoid As A New Business Owner Or Entrepreneur. Forbes. November 26, 2019.
Never ignore your customers
Rather than creating your offering in private, engage your customers throughout your process. Make sure you understand their needs and solve their pain points.10 Expert Panel, Forbes Coaches Council. 15 Common Pitfalls To Avoid As A New Business Owner Or Entrepreneur. Forbes. November 26, 2019.
Never try to do it all yourself
Wearing all the hats can lead to burnout. Ask for help and delegate tasks to free up time for your greatest strengths. Working with a mentor or coach can keep you accountable, and hiring a virtual assistant or accountant can shrink your to-do list.11 Anderson, Summer. 8 entrepreneurial mistakes that can be easily avoided. StartUp Mindset. 2019.
Brand owners share their stories
We asked some successful CPG suppliers to share their wisdom, including mistakes when launching their brands. Here’s what they had to say.
What is one thing you would advise an entrepreneur to avoid doing?
“Trying to do everything on your own. Even as a solopreneur, you have a strong support group behind you, including your team, family, people that want to see you succeed and would be excited to help on your journey. Do not be afraid to reach out and just ask, ‘Hey, I need some help, can you … ?’”
~ Dr. Zonram Liao, CEO/Founder, Wellnergy Pets
“While it may be tempting to start on a large scale, it can be a costly mistake. Before taking on too much inventory, you should determine the existing demand for your product or service. It is important to talk to consumers and understand what they like about your product. This will provide invaluable insight into your customers and the market potential of your product.”
~ Kelley Higney, Founder & CEO, Bug Bite Thing
“I would recommend that when you are starting your business you grow slowly and carefully, with the goal of achieving profitability as soon as possible. Avoid taking out large investments or accruing debt early, as this can be a pitfall for many businesses. See that the ability to get yourself out of debt is possible based on factual data; don’t assume constant growth.”
~ Billal Sidiq, Chief Executive Officer, Bolani
“Trust yourself, trust your instincts, and trust in the power of your product and what it can become! So, avoid giving away too much equity early in the life of your business. Twenty-five percent % for working capital to get started may not seem like a lot to give up to get started or scale, BUT, 25% of a $ 10 million business is a different story. You want to be in a position to retain ownership when raising funds AND still have equity to offer investors when you make your BIG scale moves.”
~ Joye B. Moore, Founder & Chief Executive Officer, Joyebells Sweet Potato Pies
What is a mistake you had to overcome or adjust from?
“I used to be too hard on myself. If I failed to make this sale, or to get my product into this store, I would get very disappointed in myself. And while it was motivational to an extent, it can cause some depressing times. Just enjoy it all as part of the journey, take things as a learning experience, and you will be better next time. Don’t be too hard on yourself.”
~ Dr. Zonram Liao, CEO/Founder, Wellnergy Pets
“When we launched Bug Bite Thing, we targeted male outdoorsmen. And while that demographic remains one piece of our market, we were missing out on so many others, especially those who have turned out to be our biggest group of consumers — moms, like me, who are on a mission to help their kids! If something isn’t working for your business, don’t be afraid to pivot.”
~ Kelley Higney, Founder & CEO, Bug Bite Thing
“A mistake we had to overcome and adjust from is not getting an accountant sooner, who can help you with identifying your profit margin, analyzing your cost of goods, and help you with forecasting. This information is vital to keeping your business afloat. Some things are best left to the experts!”
~ Billal Sidiq, Chief Executive Officer, Bolani
“Undervaluing our product in the beginning. We were just happy to be in the room. But we belong in the room and our margin requirements are just as important to the day to day operations of JOYEBELLS, as it is to our partners sustainability. KNOW your worth. You don’t always get pricing and margins that you want or deserve, but don’t make settling the norm. Every opportunity for shelf placement is not always an opportunity.”
~ Joye B. Moore, Founder & Chief Executive Officer, Joyebells Sweet Potato Pies
Learning from others’ business wisdom, including their missteps, can help you strengthen your own business strategy and operations. Apply these never-do tips to save time, avoid hassles, reduce risk, and grow faster by flattening the steep learning curve of launching a new brand.
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