1) Failure to prepare a business plan
I’d be a wealthy woman if I had fifty cents for every time someone asked me, “Is this a decent business idea?” throughout the years. The difficulty is that unless I draught a business strategy, I won’t know – and neither will you. A company plan’s principal goal is to achieve this. There are other compelling reasons to write a business plan; for more information, read 5 Reasons to Write a Business Plan.
Yes, it takes time and requires extensive study, but investing time now will save you time and money in the long run.
2) Pursuing Your Passion
The phrase “do what you love” has been repeated ad nauseam in the corporate world. However, for many others, it is a major business blunder.
The truth is that there are a lot of people who enjoy doing things they’re not very good at. I’m sure you can name a few off the top of your head. The individual who believes she is an excellent cook but isn’t. The individual who believes he can fix almost anything but actually can’t. What’s my official guidance for launching a company? Do what you’re good at and what people will pay you (well) for, not what you love. It’s not as catchy, but it’s a lot more profitable – and isn’t that why you’re starting a business in the first place?
3) Failure to conduct market research
I’m seeing an increasing number of people establish businesses without doing any of this, only to be heartbroken when their new venture, in which they’ve committed so much time and money, fails. Before you establish a business, test your products and services. If you don’t, you’ll have no clue whether or not people will want to buy them. You may believe you make the best pierogi on the planet. Will anyone else join in?
4) Disregarding the Competitors
Another potentially catastrophic business mistake is ignoring the competitors. Simple question #1: How many thingamabobs are you going to sell if you’re selling your thingamabobs for $10.00 each and Vera down the street is selling her thingamabobs for $6.00 each?
What if Vera’s trinkets look, smell, feel, and taste better than yours? 6 Ways to See What Your Competitors Are Up To To will show you how to keep track of the important competition.
Market saturation is another facet of competition to be aware of. Every product or service has a finite amount of pie to offer. For example, if you wish to create a dog grooming business, there may not be any “room” left in your local region due to the quantity of existing dog grooming firms; the market is “saturated” with this type of business.
5) Failure to consider your own strengths and weaknesses
We’ve all got them. Unfortunately, our skills and shortcomings don’t often mesh well with the business model we want to adopt, which can lead to disastrous outcomes. Retail, for example, is not for you if you’re not a sociable, outgoing person with good people skills. It doesn’t matter how long you’ve wanted to operate an ice cream shop or a bookshop; it’s not for you.
That isn’t to say you can’t acquire or establish a similar business; nevertheless, in order for it to flourish, you must understand that working behind the counter is not something you should do; you will need to recruit people straight away.
6) You don’t know what you’re really selling
Helena Rubinstein, the first self-made female millionaire, made her fortune selling cosmetic products rather than face cream. (“There are no ugly women, only lazy ones,” she used to say.) If you want your new firm to succeed, you need to know exactly what you’re selling and tailor your unique selling proposition accordingly.
7) Not Double-Checking Your Financial Situation
Ninety-five percent of businesses will lose money when they initially launch, and a considerable minority of new businesses will lose money for years. (The 5% that earn money when they first open are enterprises that are essentially “carry-overs,” or employees who become contractors, which is a fairly frequent procedure in fields like IT.)
That means you (and your family) must have enough money to live on while your new business is establishing itself, as well as enough money for it to survive and expand. It is a big business blunder to not have the funds in place to do this before starting your small business.
Small business funding, whether through a regular lender or a non-traditional alternative, is the most obvious way to do this. You might be eligible for a starting grant.
Other techniques to make money while beginning a small business are included in How to Get Your New Small Business to Make Money.
8) Failure to invest in marketing
Another big business blunder is to follow the widespread advice “build it and they will come.” Where did you come from? Why? When is it going to happen? Without some efficient marketing, no one will know.
Many small businesses are hesitant to spend any money on marketing, much less a large amount of money. Free marketing can be quite effective, but most free marketing tactics take a long time to become effective. (Examples include referrals and social media marketing.)
If you want your firm to succeed, make a marketing plan, put up some marketing initiatives, and stick to it.
My best piece of advice? Before you open your firm, you should market it. There’s no rule stating that you must wait until your physical or virtual doors are open.