First of all, congrats on making the bold decision to start a new business. This can be the beginning of an amazing venture – as long as you stay smart and focused. Mistakes will be made. The point is to build a strong foundation so that if you do fall, getting up will be easier.
With preparation and planning you can save yourself from the major flops. These are some of the more common errors you need to stay away from:
Not Researching Your Target Market
Discover as much information about your target audience as possible. You need to know their habits and behavior as consumers: where they “hang”; their favorite media channels; their income levels and so on. The more you know about the people you want as your clients, the more focused and cost-effective your marketing plan will be.
Sketchy Business Plan
Starting a business without a solid and responsible plan is delusional. You must have some type of financial forecast for expenditures, an initial marketing plan, a breakdown of your target audience and your competition, and most importantly some idea of how you plan to be profitable. Without a business plan that is based on research and insight, you will not be taken seriously by anyone on the market, and you will find it nearly impossible to manage your business.
Getting Loans from Friends and Family
This usually ends in a catastrophe. If you have a great idea and a well-organized business plan, you should be able to receive loans from institutions that specialize in these matters. Do you really want family and friends involved in your business decisions? Do you want to risk the relationship with people that you love? Be smart and resist the temptation, even if they offer.
Expecting Immediate Profit
New businesses usually take two years to become profitable. Make sure you have enough capital to carry you through, because in the beginning you will mostly be spending money, not making it. Knowing and preparing for this situation will not only help keep you afloat, it will also prevent demoralization during the rough period of growing pains.
Not Focusing on the Customer
Today’s economy is very people-driven. You need to focus on offering solutions and on your customers’ best interest – that is where your real profit lies. If your business provides them something of substantial value to their lives, they will remain loyal clients that happily recommend your services.
Disregarding Controlled Testing
The only way to find out exactly what works for your business is to plan, test and analyze. This must be done in a controlled fashion and on a small scale if possible. Don’t just blow all of your investment money on random advertising or mass marketing. Test out different strategies on a small group and obtain feedback before you make any major move.
Relying on Your Own Legal and Accounting Skills
Bottom line is, if you do not have years of experience practicing business law and keeping books, you probably should not trust yourself with something so critical as your own business. Experts are considered experts for a reason
Trusting Verbal Agreements
Having friendly relationships with service providers is terrific. Still, when money is involved, you need to have a written agreement to secure your interests. Contracts are not just a formality. When you sign one, make sure you actually understand and agree with its content.
Trying to Do Everything Alone
There are so many things to look after with a new business. Even if you’re planning a small operation, you will find yourself in need of assistance – even on a part-time basis. Seek out people whose abilities balance out yours, so that you can focus on developing your ideas and making deals.
Sacrificing Personal Relationships for the Biz
Most entrepreneurial efforts require around the clock attention, and can strain family and close relationships if you allow them to. You need the support of your loved ones, so don’t neglect them. Maintaining a healthy private life is crucial for your well-being. If you don’t, eventually, your business will also be affected by it.