Mistakes You Shouldn't Make In Your Business
Not many employees will readily agree that their jobs are exciting. The vast majority of people working in regular jobs often find themselves grumbling about everything that their job is not. Yet, when it comes to taking concrete steps and doing something about it, many shy away from the challenge. The few, who take up the challenge, move away from the security offered by a regular job. However, even this is not as easy as it seems.
The Amazon Story – A Prime Example of a Successful Start-Up
Jeff Bezos was an NYC hedge fund manager, working at DE Shaw back in 1994. At the time, he was a senior vice president – the youngest to hold that position in the firm. The question that troubled him was whether he should stay put in a job that gave him pretty much what he needed. The alternative was to quit and to start a business of his own. Staying put was the safe option. Moving out was the challenge.
He decided to quit his job. In the next few days, he purchased the domain rights to a website and set up an online bookstore. Amazon.com went live on July 16, 1995. Within a couple of months, it was registering sales worth $20,000 per week. Nearly two decades later, Amazon is the world’s largest online retailer, and the man who might have probably retired as a successful hedge fund manager has a personal wealth of over $32 billion today.
Not All that Glitters is Gold – New Start-Ups and Small Businesses in Numbers
The success of ventures like Amazon and Facebook inspire many people to emulate them. According to this article on Forbes, around 543,000 new businesses start functioning each month. However, for every Amazon that achieves success, there are several failures too. So, if you’re planning to start your own business, consider the odds of success mentioned in the article.
- About seven of 10 new employer firms survive for at least two years
- Half of all new employer firms last for a minimum of five years
- A third of all new employer firms stays operational for at least 10 years and,
- About 25 percent of all new employer firms stay in business for 15 years or more
Therefore, merely having a good business idea does not guarantee success. Implementing it with precision is important too.
6 Most Common Mistakes Made by New Businesses
It’s important to learn from your mistakes. However, it is wiser to learn from the mistakes of others. Given this backdrop, understanding the mistakes made by new businesses can be worthwhile. If you plan to launch your own start-up, knowing the pitfalls to avoid could help you keep your business alive and your dreams on track.
Here is a list of the major mistakes that new businesses make. Many new start-ups fail because they:
- Have No Clue About their Target Audience: Business owners spend most of their time dealing with products and services, supply and distribution chains, inventory levels and finances. As a result, many of them fail to focus on the most important element i.e. their customers. They do not spend sufficient time in identifying their target customers and their needs, as well as ways for fulfilling those needs. As a result, these ventures seldom end up attracting customers.
- Offer Something that Presents Little or No Value to their Customers: Customers purchase products or services that fulfil a need. This means that your product or service must be so unique and fresh that it captures your customers’ minds from the get-go. If your product or service is something that already exists, it must offer a unique value to your customers, which the existing products or services do not offer. If it doesn’t, you can hardly expect customers to make a beeline for your offering.
- Have No Business Strategy or Plan: Before you start your venture, you need to have a business plan based on market research and insight. The plan should comprise:
a. A financial forecast for expenses.
b. An initial marketing strategy.
c. An overview of your target audience.
d. An analysis of your competitors.
e. A plan that details how the business will become profitable.
Without this plan, your business could end up making no impact in the market.
- Lack Adequate Capital: People starting their own ventures often end up underestimating their expenses and overestimating the returns on their investment. They also expect to see profits from the get-go. However, businesses usually become profitable only after a few years. Therefore, business owners need to plan properly to ensure that they can manage their business during the lean times. To accomplish this, they need:
a. A detailed budget with forecasted expenses and incomes
b. Sufficient savings for six to 12 months for meeting all kinds of expenses
c. To consider approaching angel investors, venture capitalists etc.
- Have No Marketing Strategy: Business owners often focus entirely on their products and services that they often forget how to market them. Businesses become profitable based on the volume of sales. If you don’t know how to project your offerings to your customers, how will you convince them to buy your product or service?
- Don’t Understand the Value of Written Agreements: It is nice to have friendly relationships with all your business associates. However, trusting verbal agreements blindly could ruin your business. Ensure that you enter into written agreements with all the parties involved in a contract. Also, read the contract to obtain a complete understanding of the terms and conditions.
By avoiding these pitfalls, you could make your business soar. The key to running a business successfully is not just about doing something you enjoy. It also means managing all aspects of it equally well. A well-managed business will undoubtedly reflect this in its performance. Therefore, it is all the more important that you safeguard your business from these mistakes listed above. After all, you cannot let some careless mistakes rob you of your money and of your longstanding dream of running your own shop.
