Starting a business of your own is no easy feat. There are so many factors to consider, aspects to cover, strategies to devise and plans to implement. At times the confidence and excitement can drive you to make miscalculated decisions while at other times the pressure takes a toll on you and you end up making a wrong move.
Statistics show that eight out of ten new business owners fail within 18 months due to one reason or the other. While there is no set formula to achieve business startup success, there are several common mistakes that entrepreneurs make which affect their business negatively and set them back. So, whether you’re planning to launch a competitor for Optimum promotions or wish to join the ranks of a top-notch beverage company, here’s what you should know to avoid the pitfalls that can cause your business to suffer and fail.
1. Skipping the Planning Phase
Even if you have a great business idea and resources, you must not skip the planning phase. It may be a tedious process but without a strong plan, there wouldn’t be a sense of direction and you’d be operating in the dark. You need to do thorough research regarding the market potential and the business idea. The most important plans to review include your financial plan, marketing plan, and business plan.
2. Doing Too Much Too Soon
When starting a business, it’s easy to get carried away and use up all mental and physical resources at once, but remember that desperation is likely to end up as frustration. Many new entrepreneurs make the mistake of employing all strategies and utilizing all resources at a very early stage. You need to give time for strategies to take effect and be able to pace yourself so that you can stay in the game for the long term. Being patient and taking each step cautiously would be beneficial for your business.
3. Overlooking Marketing
If you think success awaits you simply because you’ve built a great product or are offering a service that the audience won’t find elsewhere, you’re hugely mistaken. Hari Ravichandran has spent $8K of his savings on marketing before getting his first client. Even a superior product and great service needs to be marketed well in order to draw customers towards it. There have been several examples of inferior products achieving more success than quality products only because of smart marketing tactics.
4. Mixing Personal and Business Finances
When you launch your business, remember to open a separate business account. This would provide you a record of all business-related transactions and you’ll have a clear head regarding the finances. If you are lazy about opening a business account or think you can mix personal and business finances yet keep track of everything, you’re making a big mistake. Sooner or later, you’d have to face its consequences which would be bad for your reputation as well as business operations. You’d be inviting the IRS to question you about different transactions and you’ll have a hard time untangling the mess when you’re selected for an audit.
5. Overspending or Underspending
Some new entrepreneurs feel that they need to spend a lot to acquire the best of everything that is required for the success of a business. Hence, they spend hefty amounts on equipment, software and marketing. If you do your research well, you’re likely to find equally viable options at a lesser price. On the other hand, some small new business owners fall on the other end of the spectrum; they even refuse to spend on important areas assuming they’d increase their profit margin by limiting their expenses. Both extremes are wrong approaches and won’t do any good for your startup. You need to have a solid financial plan and should stick to it without overspending or underspending.
6. Equating Personal Experience with Business Expertise
Being good at a certain activity or task doesn’t necessarily mean you can run a business based on it. You may be a fitness enthusiast but that does not make you capable of running a gym. Business is a totally different ballgame. So, it pays to enroll yourself in some entrepreneurship courses to learn to survive and thrive in the market.