With the advances in technology and easy access to marketing through the social media, it has become easier than ever to become an entrepreneur. More and more people are giving up the safety of a salaried job and taking the plunge. At the same time, due to the increased competition and marketplace crowding, many are closing shop due to failure.
Owning a business might have been your dream for a very long time. No one can ensure your long-term success, but making sure you are doing the right thing at the right time can go a long way towards marketplace success. Avoiding these basic beginner’s mistakes can make your journey easier and be the difference between failure and success:
1. Lack of market research: Before you start any business, you should know your customers. This will help you understand the feasibility of your idea or product and allow you to test it out to judge interest. It will also give you some initial feedback which will help you improve your product or service. Focus on your target market and try to get answers to your research survey – through the telephone, face-to-face or through social media.
2. No business plan or a bad one: A detailed business plan helps take your idea to the next stage. It makes you focus on specifics like short-term and long-term goals, financial requirements etc. A business plan is not mandatory, but it is very helpful to fix targets, projections etc. and to get funding from financial institutions.
3. Not getting the company structure right: What sort of entity do you want your business to be? Sole proprietorship, partnership or limited company? Just because it is your unique idea does not mean doing it alone will be the most successful path. Consulting a legal adviser is advisable at this stage to avoid making a mistake.
4. Choosing a narrow product line: Developing a product or service for a small niche market can sound appealing, but it often leads to a path with no opportunities for growth. If not many people want your product or service, your business will soon achieve its potential maximum and there will only be a downwards path.
5. Not studying the competition: This is one of the most important steps, if you want to avoid business failure: Understand the competition and their success. Does your product or service have a Unique Selling Point which makes it different? Is it priced competitively? Is the market already too saturated for you to make an entry?
6. Borrowing from friends and family: If you have confidence in your business venture, you will be able to find professional backers. Though borrowing from friends and family will get you lower interest rates, in the long run, it usually causes trouble. Is it worth losing your relationship with someone you love?
7. Choosing the wrong partners: If you are starting a partnership business, it is essential that the person you choose shares your core beliefs, vision for the company and is fully committed to the idea. He/she should also complement your strengths and weaknesses and should be an asset to your company.
8. Unstructured approach to hiring and handling employees: You should have a hiring plan in place with well-designed parameters for your staff like leave policies, benefits etc. Sometimes employees try to take advantage of your inexperience and lack of process or procedure. Having well-defined policies help to avoid this situation and get the best out of your staff.
9. Not marketing aggressively: This does not mean taking out ads in newspapers and prime time television. Today, it is easy to use social media to your advantage and make your business the current buzzword without spending much on advertising. An effective social media campaign just before your business opens can provide the right initial boost for your business.
10. Not taking enough risks: Some entrepreneurs struggle with taking risks. For a starting business, a risk can often mean an opportunity. In fact, trying to avoid risks can actually be risky for a business. A bit of confidence and a proper risk management strategy can help you handle this.
11. Taking too many risks: This is the opposite side of the problem. Diversifying your product line without proper research, expanding too soon, overspending on frivolous things etc. can sometimes be extremely damaging and impossible to recover from. It is also dangerous to overestimate demand for your product and plan accordingly.
12. Not preparing for growth: Every business should have a growth plan in place for eventual growth. Having a scalable business model helps you tackle growth without putting a strain on your infrastructure. It is also essential to constantly be looking for ways to widen your customer base through effective marketing.
13. Lack of delegation: It is important to realise from the beginning that one person cannot handle all the responsibilities associated with running a business, even a very small one. Accounting, legal tasks etc. may be outsourced to professionals so that you can focus on the actual business affairs. A successful entrepreneur usually has a loyal team who are all experts in their own fields.
14. Not listening to customer feedback: Never lose touch with your customers, however loyal they might be. The internet can be very helpful for getting actual customer feedback which can be effectively used to improve your business. Engaging with your customers also allows you to understand the customers’ needs which might even allow you to develop a new product line.
15. Giving up easily: When things go wrong, it can be tempting to just quit. But in many situations, once the initial hiccups are sorted out, there is the potential for success.
Whilst there is no single formula for success, learning from other’s mistakes can keep you from committing the same ones and put you on the path for long-term success.