How to Start a Business – Common Mistakes to Avoid
I remember when I was younger and I took off to doing business. I had a series of failures on my early entrepreneurial journey. Though my business lessons are not yet over, but “How to start a business” can make or mar your success.
How I wish someone showed me years ago how to start a business and common mistakes to avoid.
Fortunately some of these early business mistakes that I have gone through I want to share with you today.
I am sure I’m not alone in this. According to Bloomberg, a whopping 80% of start-up businesses crash in less than 2 years. Tell me, out of the 20% left how many would make it to the 5th year? Yes very few businesses make it to their 5th year.
Startup business failure is usually down to a number of clearly identifiable mistakes, which if start-up entrepreneurs are aware of, can increase their chances of survival.
Here are the top 10 common mistakes which start-up businesses tend to make and some help to avoid it.
Having No Plan
It is easy for a startup entrepreneur to believe he has his business idea figured out in his head. Then wisdom requires that you write it out. That is why we have what we call business plan.
Having a business plan helps you to get clear in your head what you want to achieve and how you want to go about it. It also helps you to easily pitch your idea to any investor or partner you want to bring in.
Be sure to write a business plan. It doesn’t necessarily need to be a volume of pages; one page business plan can still suffice. Now, note that your business plan cannot be perfect and would always need improvement now and again.
If you do not know how to write a business plan consult a professional or simply go online and search for how to write a business plan. Learn what you have to and get straight ahead to write out your business plan.
Poor Market Research
You have this perfect business idea. Yes, one you cannot wait to sell to the world. then you think, should I do market research or not? Then you think again, I have figured everything out and I am sure I understand what the customer would want. Do you think you really know what the customer needs? Well think again.
To conduct market research for your business is very important. It helps to determine if your business is viable, if your pricing is competitive enough for the market and if you can make adequate profit that would sustain the business.
Conducting market research also helps to avoid making unrealistic forecasts. Also consider the danger that comes from selling to the wrong market because of not making adequate market research.
One way to make good market research is by putting the word out to people you can trust, this way you can objective feedback. You can also brainstorm with your colleagues, take note of the ideas you get and use it in developing the business.
Use information you can get on the internet or data gathered by the government or from your own network of contacts.
If you can afford it carry out field research and discover buying trends.
Poor Record Keeping
Poor record management can be a major issue for small business enterprises. It is easy to want to focus on the business and put off record keeping for the last.
Although it may not be easily noticeably, but poor record keeping can bring a number of consequences such as difficulty in tax, budget and payroll management, and worse of all it can cause a company to close down.
The time you would invest in trying to put together a disorganized record can drag working hours or business. Imagine facing legal action because of your not giving accurate company audit.
Another cause of poor record keeping is having multiple records in a company which can lead to discrepancies in numbers and information.
Good record keeping include carefully documenting all sales, purchases and other expenditure and evaluating your profit and loss progress. This also means issuing invoices and following them up promptly to avoid payment delay.
Having insufficient capital can be a serious drawback for any business especially for a startup. It is easy for a new business to have some saved up cash for the business, but most times startup entrepreneurs easily forget that they’d need working capital to keep the business running day to day for a while before customers start paying.
This makes small businesses fail because they don’t have sufficient cash to meet their business expenses.
If you wish to survive make sure you set aside enough cash to meet all your needs for the first few months. So be sure to make your calculations well to avoid spending a lot of initial investment and end up hanging on the road.
Ignoring Effective Marketing
Effective marketing is at the heart of your business success. You cannot afford to display a lackadaisical attitude towards your marketing efforts. More than 60% of what you do with your business is about marketing. It affects most aspects of your business.
Without marketing, your business may offer the best products or services, but no one would know about it. Marketing is a process by which a product or service is introduced and promoted to potential customers. Without effective marketing, sales may crash and companies may end up closing.
Make effort to ensure your marketing covers the following aspects – advertising, public relations, promotions and sales.
There are many modern ways to promote your business even on a small budget especially with the surge of the internet. You just be inventive, creative and persistent.
Whatever you do, don’t assume that people will quickly know you are in business – they won’t, unless you tell them.
Ignoring Changes in the Market Place
As you develop your great business idea it is important to be on the lookout for what is happening in your industry niche.
As a small business owner it’s very easy to get immersed in driving your business growth ignoring what is happening around your market place.
Be alert to the competition and what your customers want. Stay in the know.
Sam Walton once said, “There is only one boss, the customer. And he can fire everybody in the company, from the chairman to the least staff, simply by sending his money somewhere else.” He was very right. That means we have to be very careful the way we treat our customers.
We do not want to display a proud attitude to show the customer who is the boss. It is very easily to feel very important because you have a business which it into a show of prideful attitude towards our customer.
The real boss in your business is the customer and not you. Always remember that.
Poor Financial Decisions
It is very easy for a new business to be carried away by the in surge of profits in their business. Many of the startup companies that end in failure usually are a result of poor financial decisions.
As a business profit grows, it is important to think about pushing these cash towards improving your products, the services you offer your customers or reaching out to more customers.
Some areas to evaluate in your expenditure is hiring employees, business travel, poor marketing campaigns, work materials, over spending on salaries and goods among others.
Without sufficient cash no business can operate, so any dollar wasted can cost you a lot in your business future growth.
Growing Too Quickly
Envisioning the huge income that they possibly make most small businesses plan to grow quickly. That can be a problem. This is because the more you grow the more you will need resources – material and human – to take up customer needs.
Failure to meet up with customers request can be disappointing and can lead new and old clients to head to your competition.
So, proper thought must be placed by startup businesses while trying to grow quickly.
Trying To Do Everything
At the start-up of your business it is very likely that you would do most of the work. This is especially of the cost of hiring staff.
However, as business progress be aware that you cannot continue to do everything alone. The influx of demands and customers would require that you hire more hands. This is especially so if you want to expand, make more money and avoid disappointing existing customers or new customers.
They are however some who are skeptically of employing more hands. Maybe such ones are satisfied with the present income. Well for me I’d say, if you are in the business of making money and you have a system that makes money with little risk then why not make it big.
Yes, taking on an extra pair of hands will increase your costs but you will be surprised at how much time will be saved, allowing you to do what you do best and give satisfactory delivery to your customers.